American Shipper Special Report Summary — Weighing on an Industry: Shipper, NVO and Carrier Perspectives on VGM

   In late 2015 there was a collective realization that a major deadline was looming ahead of the container-shipping industry. A little known convention of the International Maritime Organization governing the safety of crews aboard commercial vessels was soon to be become a household name among shippers, freight forwarders, and non-vessel-operating common carriers. That’s because, amid little fanfare, the IMO adopted a critical amendment to its so-called Safety of Life at Sea convention (SOLAS) in November 2014.
   That amendment, called verified gross mass (VGM), requires the weight of laden containers to be verified before being loaded on a containership. The amendment provided two methods for calculating the VGM: the physical weighing of the laden container; or a calculation of the weight of the cargo, plus all the pallets, dunnage and other securing material, plus the tare weight of the container.
   The amendment did not, however, provide clear rules as to how it would be implemented by the 171 nations that comprise the IMO’s membership. As such, the period between Christmas 2015 and the deadline has been a fraught time for cargo interests. Details of the process for obtaining the VGM data and submitting that data to carriers were slow to materialize, as was clarity on who would enforce the amendment. Would it be a governmental agency? And which one? Would there be penalties?
   As it turns out, in the United States, enforcement of VGM is shaping up to be a shipping line responsibility, as the U.S. Coast Guard has said it will not enforce the amendment on shippers and has characterized the collection of VGM as a commercial matter. In other countries, clarity on enforcement is lacking.
   According to research by the shipment software company CargoSmart, only 11 of 171 IMO member countries had provided guidance on VGM enforcement as of mid-April. The amendment goes into effect July 1. Why this issue languished until late 2015 is somewhat understandable, at least in a U.S. context. Shippers and carriers were grappling with extreme port congestion and the threat of strikes or lockouts at U.S. West Coast ports in late 2014 and early 2015. By the time they had recovered from the desperation of that period, peak season was well underway. It wasn’t until late 2015 that this issue gained traction.
   And yet, so much remains unclear. Amid that ongoing confusion, American Shipper surveyed 521 shippers, carriers, forwarders, NVOs, 3PLs, consultants, port authorities and technology companies to evaluate what the industry understood about the VGM amendment, and how they thought it might be put into practice.
   This in-depth report looks into the industry’s perspectives on this critical issue. Respondents were surveyed between Feb. 8 and March 7, 2016. Of the respondents, 45 percent were shippers; 36 percent were forwarders, NVOs, or logistics providers; and 13 percent were carriers. More than 80 percent of respondents import and export, while the remainder were split evenly between those that import to or export from North America only.