The following is an interview between the Journal of Commerce and Chris Welsh, secretary general of the Global Shippers’ Forum
Too few shippers are ready to meet new global regulations requiring the weighing of containers before they are allowed to be loaded onto a ship, said Chris Welsh, secretary general of the Global Shippers’ Forum, the largest global shipper group. Welsh spoke with JOC.com Executive Editor Mark Szakonyi in late September about the risks of not complying with the rules set to take effect July 1, ways to meet the International Maritime Organization regulations and the complicated issue of who exactly is a “shipper.”
JOC: What’s the risk for shippers of not complying with the new regulation on verification?
Welsh: At the most basic level, the risk is your container won’t get shipped. It would be turned away from the terminal. So the commercial impact is a dissatisfied customer. Carriers may choose to just not accept the container, and won’t legally be allowed to load it.
JOC: What’s the threat to the carrier if they break the rule?
Welsh: Depending on national legislation, national maritime administrations can levy punishments ranging from fines and sanctions to jail time. In the U.K., fines and imprisonment are possibilities.
JOC: How can shippers stay within the bounds of the new regulation?
Welsh: There are two ways. The first is weighing the whole container on a certified and calibrated weighbridge or scale, and subtracting the weight of the container, which is standardized, to determine the weight of the goods in the box. The second method is that a shipper can weigh a pallet of goods, take televisions for example. You weigh a pallet and then sum the weight of the number of pallets.
JOC: I imagine the trick is when it comes to less-than-container load. You would have to do the first method or have somebody on site with a consolidator.
Welsh: Yes, and LCL is very rarely done by the shipper. It’s done by a third party and then the third party becomes responsible for the verification of the gross mass. This is where who is the shipper and who is responsible under the new regulation diverge.
While it may seem confusing because of various commercial arrangements, there’s a clear definition of a shipper that helps settle how this will be treated by national administrations, and shipowners in particular. And that definition is that the shipper is a legal entity or person named on the bill of lading, or transport document, like a seaway bill.
Essentially, the person who enters into the contract of carriage with the shipowner whose name appears on the bill of lading or the transport document will be treated as the actual shipper and they will be legally responsible for the declaration of the verified gross mass of the loaded container.
JOC: What about in the case of, for example, freight forwarders?
Welsh: Well, here is where it gets interesting. For example, if you are an exporter sending goods from say the U.K. to China, you may instruct a forwarding agent to pack it, weigh it, and forward it to the terminal. But the forwarder is acting purely on the instructions of the shipper to undertake that work on his behalf. In this situation, the exporter is responsible for verifying the gross mass weight. The forwarder is just performing a service, it’s not responsible.
Now, this is only one scenario of many. For example, if a Chinese buyer wants something from the U.K., a freight forwarder may collect the goods, package them, deliver them to port, and enter a contract of carriage with the shipping line on behalf of the buyer. In this situation, the forwarder is the shipper, legally, because he has signed the transport document with the carrier.
This legal understanding of who is the shipper, the name on the bill of lading or transport document, and how the shipper can change depending on the circumstance, means there is a lot more risk exposure for shippers and they must do their due diligence to ensure that containers are weighed in line with the new regulations.
JOC: Once the shipper has the document with the verified gross mass, what happens next?
Welsh: The shipper will give it to the shipping line, which must give it to the terminal so the terminal can determine whether or not to accept the container.
JOC: And what if that documentation isn’t there?
Welsh: The terminal is going to do one of two things. It will either refuse to accept the container, or it will take it and try to stow it somewhere, which would be a lot of physical moving on the terminal. That’s going to be a lot of time, a lot of cost, so shippers could be in for additional charges.
JOC: Is there a sense of what it’s going to cost for the shipper?
Welsh: Well, no, not really. I would have thought of about on average $50 a box with traditional weighbridges and scales, but its really too early to tell. There are other options, like sensors, where the cost would be relatively small, say 25 cents per container.
JOC: And that will probably be passed on to the shipper, correct?
Welsh: Yes, there is a commercial opportunity for terminals in the future if they want to get involved in this. And people like DP World have indicated they will look to provide it as a service.
JOC: Will enforcement be total, will 100 percent of containers be inspected?
Welsh: No. It’s not going to happen around the rest of the world. Hundred percent weighing is not going to happen across the world. There’s an indication that national maritime administrations are going to be doing random checks on containers for weight.
JOC: Are you getting a sense that the implementation is going to be delayed considering how many shippers and even government officials are kind of caught flatfooted on this?
Welsh: No. at this stage, clearly we and the World Shipping Council and others are now making it clear to national administrations that they need to issue clear guidelines to trade in their countries as to how they’re going to implement it on the ground.