May 20, 2016

Proposed pact between OCEMA, six ports changes course of container weight issue

Agreement injects needed flexibility in carrier group's previously rigid stance, U.S. exporters say.

By Mark B. Solomon

In a stunning about-face, 19 steamship lines and six U.S. East and Gulf Coast ports have agreed to certify the gross mass of an ocean container, and then use the information as evidence that U.S. exporters have complied with an international treaty requiring that each box have a verified weight before it can be placed aboard ship.

The compact between the Ocean Carrier Equipment Management Association (OCEMA) and ports in Georgia, South Carolina, Virginia, Massachusetts, North Carolina, and Houston, calls for a uniform "terminal weighing approach" to provide what has become known as the "verified gross mass" (VGM) of each container about to be laden on a vessel. Each terminal would weigh a container on certified scales, the results from which exporters could use to certify that the accurate weight had been calculated. Under a 2014 amendment to the century-old Safety of Lives at Sea (SOLAS) treaty, shippers are required by July 1 to provide verified container weight information to the carrier or terminal operator before their containers can be loaded. The amendment has the force of law in the 170 nations that are part of the International Maritime organization (IMO), which administers the treaty.

In a statement issued yesterday, OCEMA said its proposal "aims to ensure fluidity" of operations at the six participating ports, and would "provide flexibility" for exporters shipping from there. OCEMA Chairman Frank Grossi called the proposal "an unprecedented effort" by ports and carriers to ensure a common VGM framework by the July 1 deadline. The proposal must be approved by the Federal Maritime Commission (FMC). FMC Chairman Mario Cordero said today that the plan is under review.

U.S. exporter interests said the proposal moves OCEMA off a previously inflexible approach to resolving the issue. It also represents a change of heart at the Georgia Ports Authority, which operates the Savannah container port, the nation's fourth busiest. In a mid-February interview, outgoing Executive Director Curtis J. Foltz said shippers should be the parties responsible for certifying the total weight because they know the specifics of their shipments better than anyone. Foltz retires from the GPA June 30.

Perhaps more significant, the agreement appears to relieve exporters of what they called the unreasonable burden of certifying the tare weight of empty containers that they neither own nor control. Exporters have said they would continue to certify the weight of the contents of the container. Details of the proposal were still being worked out as of yesterday, OCEMA and the ports said.

Peter Friedmann, executive director of the Agriculture Transportation Coalition, which represents U.S. agricultural and forest-products exporters, said today that the carriers, which pushed for the amendment over concerns an illegally overloaded vessel in transit could be damaged or sunk, "thought they could do this in the dark of night" via the IMO process. "And they almost got away with it," he added.

The situation changed in late April, when the U.S. Coast Guard, the lead U.S. agency on SOLAS because it involves maritime safety, called for a flexible, multi-stakeholder approach to resolving the problem and signed off on two methods it would find acceptable under international rules. The Coast Guard's action was a setback for OCEMA, Friedmann said.

The U.S. House and Senate subsequently held hearings where exporters voiced their concerns over compliance. Late Wednesday night, Sen. John Thune, (R-S.D.), who chairs the Senate Commerce Committee and is the Senate's leading lawmaker on transport issues, requested the FMC brief his staff by month's end on the amendment's potential effect on exporters, the steps industry is taking to comply with the language, and whether carriers and terminal operators are acting within the legal boundaries of the agreements that are on file with the agency. Friedmann expects further movement from the IMO and ports to avert what he has called a "catastrophe" if nothing changes from the amendment's current language. There has been no word from any of the major West Coast ports, or from New York and New Jersey, Baltimore, Philadelphia, or the Florida ports, on a possible agreement with carriers. Art Wong, a spokesman for the Port of Long Beach, said terminal operators there and at the adjacent Port of Los Angeles, which together comprise the nation's busiest port complex, are weighing their options. "Their current position is that they will not provide weighing services," Wong said.

In his letter to FMC Chairman Cordero, Thune said a broad range of U.S. exporters "continue to raise concerns" over the amendment's implementation on the technological, regulatory and commercial fronts. Thune said the FMC should inform his office of "any appropriate actions to prevent unnecessary disruptions, delays, or burdens to our nation's supply chain." In an interview yesterday, Cordero said that the agency is engaged in the issue and that Sen. Thune is "taking advantage of our expertise" in evaluating the amendment's impact on the seagoing supply chain. Cordero said he was optimistic shipper, carrier, port, and terminal-operator interests will find common ground before July 1.

Up till now, the FMC has acted in a facilitator's role, helping improve communications and bridging differences among stakeholders.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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