SOLAS and the VGM Canadian International Freight Forwarders Association Montreal May 3 Toronto May 6
CIFFA s Directive for Compliance to The Competition Act Commitment to full compliance with both the letter and the spirit of the antitrust laws is a fundamental commitment of the Canadian International Freight Forwarders Association (CIFFA). The Competition Bureau of Canada is an organization that investigates anti-competitive practices and promotes compliance with the laws under its jurisdiction. The following is CIFFA s directive: All meetings will be conducted in compliance with the provisions of the Competition Act. Meetings will not discuss or take action on any subject related to restraint of trade, price fixing, compensation, reimbursement, rate setting, marketing strategies and any other topics that could be considered anti-competitive. 2
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Today s Agenda Introductions IMO SOLAS: Safety of Life at Sea amendment requiring Verified Gross Mass (VGM) Whose responsibility is it anyway? Things that could go wrong Getting ready 4
Learning objectives Identify why this regulation and why now? Understand the requirements in Canada for compliance. Understand the roles and responsibilities of various parties. Recognize new risks and possible mitigation strategies. Identify best practices and apply back in the workplace. 5
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A Little History Lesson International Convention for the Safety of Life at Sea (SOLAS), 1974 Resolution MSC.380(94), amendments to SOLAS, Chapter VI, Regulation 2, paragraphs 4 to 6). Canada Shipping Act, 2001 and the Cargo, Fumigation and Tackle Regulations section 104.(1) of the Cargo, Fumigation and Tackle Regulations (CFTR), coming into force on 1 July 2016 Enforcement by Transport Canada Marine Safety and Security 7
Role of the Shipper Ensure that the verified gross mass of the container is stated in a shipping document, the shipping document is signed by a person duly authorized by the shipper and submitted to the ship master or his representative and to the terminal representative sufficiently in advance of loading onto a vessel so that it could be used in the preparation of the ship s stowage plan. 8
Implications of the New IMO Weight Verification Rule JOC & IHS 9
Consequences of No VGM A. Trucker is turned away and charges extra run costs to shipper B. Shipment misses sailing date and Letter of Credit shipped on board date is missed so exporter doesn t get paid. C. Container is grounded at the terminal, incurring extra handling charges. D. Container must be weighed, moved, incurring scaling costs etc. E. Any of the above 10
Verified Gross Mass (VGM) In order to verify the gross mass of a packed container in Canada the shipper shall either a) weigh the loaded container (Method one); or b) weigh all the items loaded into the container (including dunnage, securing material, etc.) and add the tare mass of the container to the sum of those single masses (Method two). using calibrated and certified weighing equipment 11
a) weigh the loaded container (Method one); Where will the loaded container be weighed? At the shipper s premises? At a third party / highway weigh scale? At the terminal or railhead? When will the loaded container be weighed? When does the carrier require the VGM? Local availability of scales or weighing equipment? How does that VGM data and the name of the authorized person get to the ocean carrier???? 12
b) weigh all the items loaded into the container (Method two) Step one - Determine the weight of each item of cargo, dunnage and securing material to be loaded into a container. A) Weigh each item of cargo B) Where a solid bulk cargo (e.g. unbagged grain use a weighing system installed on continuous loading equipment C) Predetermined quantity packages use the gross mass clearly and permanently marked on the surface of each package. 13
b) weigh all the items loaded into the container (Method two) Step two Determine the tare mass of the container. The tare mass of a container shall be taken as marked on the container (Usually on the door) Step Three Calculate the VGM of the packed container Do the math! + Combined weight of the cargo items + packaging + pallets + securing materials + dunnage + tare mass of the container. 14
LCL / NVOCC Groupage (Method two) Where will Less than Container Load cargo be weighed? At the shipper s premises by the shipper? At a third party at shipper s request? At the receiving warehouse/ CFS? Who pays for the weighing? Shipper? Consignee? How does that VGM data and the name of the authorized person get to the ocean carrier???? 15
There the similarities end 16
Role of the Freight Forwarder: Agent Full Container Load (Method One) (Scenario One): Obtain the documented VGM data from the shipper Obtain the name of the authorized person from the shipper Provide (transmit) those data to the carrier as stipulated in the carrier s requirements Maintain (documentary) evidence of the data provided by the shipper This can be electronic records 17
Role of the Freight Forwarder: Agent Back to Back Liability? Full Container Load (Method One) (Scenario Two): Obtain written instructions from the shipper to weigh the loaded container Arrange to have the loaded container weighed and to receive documentary evidence of the verified weight. Obtain the name of the authorized person from the shipper Provide (transmit) those data to the carrier as stipulated in the carrier s requirements Maintain (documentary) evidence of the data provided by the shipper and the weighing facility 18
Role of the Shipper: Third Party Obligations 2. If a container is packed by multiple parties, the shipper of the container is responsible for obtaining from those parties the documents. 3. Any third party that has performed some or all of the packing of the container shall determine the mass of all the items that the party has loaded into the container, properly document the process of determining that mass and provide the documents to the shipper 4. In a normal situation,, the shipper shall obtain the documents from the third party confirming that on a certain date the identifiable items (cargo, dunnage, securing materials, etc.) loaded by this third party into the container was weighed using the identifiable certified and calibrated equipment. 19
Role of the Freight Forwarder: NVOCC Back to Back Liability? Less than Container Load cargo Obtain the documented VGM data from the shipper Obtain the name of the authorized person from the shipper OR Weigh all cargo on receipt before loading into container Use these data under Method Two Freight forwarder issues NVOCC bill or housebill = All the responsibilities of the shipper 20
Role of the Carrier Develop and communicate procedures to capture the VGM and Authorized Person Provide the Verified Gross Mass to the terminal in time for stowage and load planning Ensure terminal does not load any container that doesn t have a VGM 21
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Role of the Terminal To communicate container acceptance procedures at In-Gate to trucker/ shipper To document and communicate procedures for containers arriving without a VGM To load only containers with a VGM 23
Risks and Mitigation Strategies: Shipper Additional costs to cargo to obtain the VGM Purchasing and maintaining calibrated weighing equipment Maintaining documented procedures to weigh Training Possible Do Not Load Possible Assessment of Monetary Penalties (AMPs) 24
Risks and Mitigation Strategies: Forwarder Customers/ Shippers don t know the new rules their responsibilities and liabilities Inform shippers: ebulletin, link to Transport Canada s Procedures Review all quotations. Stipulate the need for the shipper to provide the VGM and authorized person OR cargo will be weighed 25
Risks and Mitigation Strategies: Forwarder Customers/ Shippers Clearly indicate any fees or charges that will be applied for providing weighing services Inform customers/ shippers of maximum weight and dimensions for cargo for which your warehouse can provide verified weights Create a list of other weighing options for cargo that is over those dimensions or weight Send CIFFA Standard Trading Conditions Send Indemnification / Liability letter 26
Risks and Mitigation Strategies: Forwarder 8. CUSTOMER S RESPONSIBILITY FOR PACKAGED AND CONTAINERIZED GOODS (A) Except where the Company has accepted instructions in respect of the preparation, packing, stowage, labeling or marking of the goods the Customer warrants that all goods have been properly and sufficiently prepared, packed, stowed, labeled and/or marked, and that the preparation, packing, stowage, labeling and marking are appropriate to any operations or transactions affecting the goods and the characteristics of the goods. http://www.ciffa.com/toolbox/standard-trading-conditions/#customerpackaged 27
Risks and Mitigation Strategies: Forwarder (Third Party) Warehouses don t know the new rules / their responsibilities / liabilities Inform: ebulletin, link to Transport Canada s Procedures, register for CIFFA s webinars May 16, 30, June 10 Review your warehouse/ container loading agreements. Identify which cargo must be weighed Document the requirement of the warehouse to provide documentary evidence of the VGM and the date. 28
Risks and Mitigation Strategies: Trucker Trucker Drayage Company Arrival at In-Gate without a VGM Ask the question and require notation on dispatch that VGM was provided by shipper to carrier Amend tariffs to include possible charges (dead-run / weighing at terminal etc.) 29
Risks and Mitigation Strategies: Importer Importer Make your shipper aware of responsibility for delays, demurrage, all costs if container is not loaded due to lack of VGM Incoterms 2010 Purchase Order The packer of the container is responsible for providing the VGM 30
Reference Material Canada Shipping Act, 2001 http://laws-lois.justice.gc.ca/eng/acts/c-10.15/ Cargo, Fumigation and Tackle Regulations (SOR/2007-128) http://laws- lois.justice.gc.ca/eng/regulations/sor-2007-128/ Measurements Canada https://www.ic.gc.ca/eic/site/mc-mc.nsf/eng/home FIATA Guidelines http://www.ciffa.com/toolbox/fact-sheet/ IMO Guidelines http://www.imo.org/en/ourwork/safety/cargoes/containers/ Pages/Verification-of-the-gross-mass.aspx WSC guidelines http://www.worldshipping.org/industry-issues/safety/cargoweight CEFIC/CLECAT/ESC/GSF guidelines http://www.cefic.org/documents/industrysupport/transport -and-logistics/best%20practice%20guidelines%20- %20General%20Guidelines/Joint-Industry-Guidance- Mandatory-Weighing-of-Containers-Cefic-ESC-CLECAT- GSF.pdf WSC, the TT Club, ICHCA and the GSF: FAQs can be downloaded from any of the following links: http://www.worldshipping.org/industry-issues/safety/faqs http://www.ttclub.com/lossprevention/publications/container-weighing/ http://ichca.com/container-weighing 31
Taking Action A. Inform customers B. Send CIFFA Standard Trading Conditions to all shippers C. Revise quotations and tariffs D. Document procedures for warehouse receiving, ocean export staff/ customer service, drayage operations to include SOLAS VGM E. Revise standard operating procedures regarding transmission of data and maintenance of records F. Review Errors and Omissions Insurance with provider 32
Bowl for KIDZ Summer Camp Fundraiser May 5, Montreal CIFFA Annual General Meeting June 16, Montreal 2pm 5pm FCA Gala Dinner June 16, Montreal Crowne Plaza 5:30 33