Commentary: VGM saga shows maritime industry lacks singular voice

Forget playing the blame game, the fraught implementation of container weighing rules came down to the fact that the container shipping industry has no single trusted information source.    I’ve had a number of e-mail and phone conversations with shippers, software vendors and logistics companies in recent days about their experience with implementation of the International Maritime Organization’s (IMO) verified gross mass (VGM) rule.
   The resounding feeling is that things are going pretty smoothly, all-in-all. There have been some reported hiccups, predominantly in Asia, where small suppliers might still not be aware of the container weighing rule, much less be a in position to comply with it by collecting and submitting the verified weight of the boxes they’re exporting to U.S. importers.
   So the good news is that, as usual, the industry rose to the challenge. Everyone figured out a way to not let this new regulation completely hamstring the flow of cargo.
   The bad news is that all the hand-wringing leading up to the July 1 implementation deadline feels like it could have been easily avoided. Here’s why, in my opinion, this rule caused so much consternation among shippers, forwarders, port authorities, terminal operators and steamship lines.
   For a start, there is no single coordinating body that has the ear of the entire container shipping industry. But before anyone gets all bent out of shape about it, there’s no real blame to be meted out here. It is what is.
   When shippers want to learn about pending regulations to the maritime industry, to whom do they instinctively turn? I’d suggest they’re more likely to turn to their service providers – be it the ocean carriers, non-vessel operating common carriers or freight forwarders -than bodies like the IMO or the World Shipping Council (WSC).
   And that’s no knock on the IMO or WSC, the two entities primarily responsible for formulating the VGM rule and getting it ratified globally. Anyone who sought out WSC’s own comprehensive information page on VGM could have learned a ton about the rule in a hurry.
   My contention is that shippers and consolidators didn’t think like this: “I hear there’s a new rule affecting the weight of my boxes. Let me check with the WSC.”
   Maybe that’s because the WSC is perceived as an organization purely representing steamship lines, and not the industry at large. Compare it to, say, the International Air Transport Association (IATA), which represents more than 80 percent of airlines globally, both passenger and cargo interests.
   IATA is the “organization of record” for the airline industry, despite the fact that it’s a trade association for airlines. By the way, IATA is primarily concerned with air security and safety, the latter issue at the heart of the VGM rule. Why couldn’t the WSC become the trusted source of information for the global shipping industry?
   Let’s put it this way – it’s hard to imagine airfreight shipper groups railing at IATA the way groups like the Agriculture Transportation Coalition (AgTC) did at the WSC over the VGM rule in the first half of 2016.
   There’s a certain respect and clout that IATA has, and it’s partly because the association has marketed itself as the voice of the industry. It pushes for new initiatives, whether they pertain to security, or paperless documentation; publishes economic forecasts, and aggregated regional performance metrics for its members; and, as such, it feels like an inclusive body. Even most airline passengers know of IATA.
   And maybe IATA’s position in the airline industry, at least as it relates to cargo, is a function of the structure of that industry. The vast majority of air cargo is shipped via forwarders, and if there’s a substantive change to safety or security regulations, it’s forwarders who are on the front lines of resolving those issues. Airfreight shippers expect their forwarders to either handle it on their behalf or inform them of changes.
   The ocean freight market structure is different, with shippers and beneficial cargo owners (BCOs) heavily involved in the procurement and execution of their own cargo moves through dealing direct with the carriers.
   The acrimony over VGM implementation brought into stark contrast just how much distrust there is between shippers and carriers. Most didn’t really take stock of the coming rule until Christmas 2015 at the earliest, after a prominent ocean freight management software vendor produced unnerving statistics about industry readiness.
   That would be like LinkedIn telling an employee they were going to be relocated instead of the employer itself.
   But here’s where the WSC, if it was thought of as the single source of information about carrier safety and regulation, might have been in a position to calm industry fears about the VGM rule. I get the sense ocean shippers just don’t have the same respect and trust for the WSC as airfreight shippers have for IATA, and saw WSC’s information leading up to implementation not as guidance, but as carrier rhetoric.
   Perhaps the last six months could be the catalyst needed in order for an “organization of record” for the maritime industry to emerge. It’s sorely needed. There are so many shippers and so many logistics services providers and no real unified industry voice. It’s a fragmented industry calling out for a hub, for a single source of the regulatory “truth,” as the software industry likes to call it now.
   Without that singular body, the awareness and implementation phases of the VGM rule were disorganized, desperate affairs, causing the industry to engage in last-minute planning it could have easily spaced out over several months.
   In the absence of a singular body, shipper groups in the United States fought vehemently for changes to the implementation guidelines as they were first proposed, which were largely seen as carrier-driven and impractical for customers (i.e. shippers).
   It would be nice if the WSC could emerge from this as that maritime organization of record, and not be seen just as a lobbying body for carriers. But the WSC is a tiny fraction of the size of IATA, and it’s hard to see it growing (or wanting to grow) in such a substantial way. The WSC’s primary role is to represent carriers and part of that representation was informing carrier customers about a safety rule they would need to comply with so that carriers could comply with international maritime safety regulations.
   If that sentence seems convoluted, it goes some way to stating how complicated it might be to eventually establish a group the industry sees as a neutral source of information.
   The lesson from the VGM implementation is that container shipping remains a dysfunctional and fragmented industry, from pricing to service to basic sharing of information. And for better or worse, it’s hard to see that changing anytime soon.