Perhaps more than any other U.S. shippers’ group, agricultural exporters are upset with the SOLAS amendment dictating containerized cargo must have a reported verified gross mass, or VGM, reported before the vessel sails. With the July 1st implementation date right around the corner, determining how the VGM will be measured and reported is a weighty question. Some of America’s biggest agricultural exporters and their shippers have squared off against ocean container lines over who weighs what when. It sounds like nitpicking, but there could be monumental consequences and millions of dollars in lost business is at stake. “What seems like a simple thing is a big deal,” said Donna Lemm, vice president of Mallory Alexander International Logistics. “We have exporters who could lose up to half their sales.” On July 1, 2016, shipping lines are scheduled to implement a change globally in the Safety of Life at Sea Convention, or SOLAS. Under this amendment, containerized cargo must have verified gross mass, or VGM, reported to the vessel before sailing. According to IMO guidelines being pushed by the shipping lines, the shipper must provide the VGM to the carrier. This changes current policy, at least in the US, where the shipping line and shipper share responsibility. The amendment stems from widespread abuse of weight declarations, especially in some emerging markets in Africa, Asia and Latin America. Discussions on this issue have been taking place since 2010. The trade associations World Shipping Council and Ocean Carrier Equipment Management Association, or OCEMA, are leading the charge for these changes. Authorities in the vast majority of countries have simply ignored the issue. According to Lemm, only 11 of 177 countries have “announced a position about implementing this amendment.” Only three countries have issued final rules. US Exporters and VGM It’s a radically different scene in the US. The fight has been elevated to the point where American senators and Congressmen convened hearings on the issue, where the US Coast Guard has had to repeatedly respond and where US ports must decide whether to allow these commodities to even enter the terminals. According to new guidelines, there are only two ways to verify weight: The first is to weigh the packed container. The second is to weigh the cargo and packing materials and then add the empty weight of the container, which is known as the tare weight. According to testimony by John Butler, the World Shipping Council’s president and CEO, the tare weight is marked on the outside of every ocean-bound container and can easily be grabbed by shippers. Shippers have in the past weighed the actual cargo, which, for agricultural products is strictly regulated by a number of authorities; that won’t change. The dispute here centers on verifying the weight of the empty containers. Shipping lines say this will become the responsibility of shippers. According to Butler, the process itself and the software that supports it demand unified electronic transmission from a single source – the shipper. Having to determine whether the VGM is complete or partial introduces a second step that will slow down the process considerably, he said. Shippers respond that this shift of responsibility makes no sense. Shipping lines provide shippers with the containers, which the lines either own or lease. Since the lines have empty container weights at hand, shippers maintain they shouldn’t be forced to weigh them again or assume liability for a weight the carriers have posted, a calculation shippers must add, certify as correct and transmit many times at the last minute. “We know the gross cargo weight well before it enters the port. All that’s in place,” said Perry Bourne, director of international transportation and rail operations for Tyson Foods Inc., one of the world’s largest food companies. “For our industry, we don’t know what the container will be until we’re trans-loading the cargo just hours before it’s supposed to deliver.” To accommodate the reporting of VGM, carriers have said they must move up the cutoff time for delivery from 5pm until noon. With this new schedule, shippers could well lose an entire day, Lemm said. “You can’t get the job done the way cargo moves so quickly through the supply chain,” said Bourne. Verifying Weight Versus Just-in-Time Weighing the packed containers in many locations doesn’t appear to be a viable alternative for shippers themselves. According to Lemm, most scales are miles away from the terminals, if they’re to be found at all. She cited New Orleans that has a single scale 12 miles from the port. In a telephone interview with AJOT, Bourne described how Tyson each week moves anywhere from 60 to 70 truckloads of chilled beef and pork from plants in the Midwest to the West Coast, where it is trans-loaded into containers dockside, containers that are immediately loaded onto ships bound for Asia. Schedules are extremely tight, he said. Tyson ships loads of chilled meat by truck Wednesday through Friday, arriving at the ports Sunday and Monday. If Tyson misses a sailing, Bourne said, the company can’t just order up another ship, as its customers expect weekly shipments. “It’s all just-in-time,” he said. “Customers will cancel or insist the order is shipped by air,” Bourne believes, a cost of $40,000 for one shipment. Missing a ship also means Tyson will be forced to sell the meat as frozen, at a much lower rate. “Shippers should provide what they know,” Bourne said. “Carriers should provide what they know.” Tyson is by no means alone in its opposition. American fruit and vegetable exporters face the same issue. “Margins are very thin with agricultural and forest products,” said Lemm, who also is chair of the Agriculture Transportation Coalition’s container weight committee. The coalition has emerged the principal voice opposing VGM implementation, as directed by the council. “There’s not a lot of room for additional costs.” There are broader trade issues as well, the exporters say. They fear this will give another leg up to other countries competing for agribusiness. American exporters are already reeling from the strong dollar. “We’re concerned about being labeled an inconsistent or unreliable commodity source,” stressed Bourne, who said his company and other exporters were hit hard by the West Coast ports slowdown. “We can’t afford another breakdown,” he said. Ports are caught in the middle. Some ports and terminals such as Los Angeles and Long Beach and Maher, at the Port of New York and New Jersey, are saying they are incapable of weighing the filled containers. These ports and terminals say come July they will refuse to accept cargo without VGM. In April, for example, the three Oakland terminals issued a joint release that said they lack “terminal infrastructure necessary to obtain VGMs using the methods specified within the guideline amendments.” Flexibility Others are attempting to be more flexible. The Port of Charleston has said it will offer to weigh containers for $25 each. The Georgia Ports Authority has gone one better and is offering to weigh containers for free and then share the information with both shippers and carriers. The Virginia Port Authority shows just how unsettled the issue is. In February, the authority said it would refuse to accept cargo that didn’t have VGM verification. Then, it reversed itself in May, saying it would continue to accept containers at the gate and will provide “OSHA-compliant weights to line operators for their potential use in order that they may comply with SOLAS VGM requirements.” The Virginia Port Authority cited the Coast Guard as prompting a change of heart. In an April memo, the Coast Guard said it had determined existing US laws satisfy SOLAS requirements through what is called equivalency and said there are numerous ways for shippers and carriers to comply. A month earlier, Rear Adm. Paul Thomas, the Coast Guard’s assistant commandant, said in a memo that shippers and carriers have been compliant with SOLAS since the convention was adopted in 1994 and termed the new regulations “business to business requirement.” The IMO guidelines on implementation, he said, “are not mandatory under SOLAS, and carriers are not required to meet non-mandatory SOLAS guidelines. The regulation itself provides great flexibility in how compliance can be achieved by carriers who are working with their business partners. There is no ‘one-size-fits-all’ requirement.” Just what is behind the carriers’ hardline stance is far from clear – legal liability, perhaps, or insurance demands. There’s more than a bit of brinksmanship at play. If a compromise isn’t reached, will the shipping lines simply refuse to accept containers from shippers who haven’t provided the VGM? That would be commercially insane. “We need each other,” Lemm said.