Verified Gross Mass: A Forwarder's Perspective
The Federal Maritime Commission (FMC), the government entity entrusted with regulating International shipping in and out of U.S. territories, recently formed a Supply Chain Innovations Teams that will develop commercial solutions to supply chain challenges and related port congestion concerns.
While I do believe that there is still some concern over port congestion that needs to be solved, I am not sure that this team is the best solution. What FMC should be focusing on is abolishing rules and regulations in the industry that are no longer relevant, bringing the industry into sync with the modern day.
For example, in order for a company to get licensed, it has to fill out an extensive application that takes three to six months to be approved in Washington. After the company is approved, it is required to post a bond for $100,000 to validate the license, then continue to file pricing and terms in tariff publications for FMC compliance. This process involves very detailed information that costs thousands of dollars annually just to maintain. Companies must hire employees dedicated to handling these compliance issues, which costs money and creates a bottleneck in day-to-day operations. In the normal course of business, these regulations add little value for the consumer.
The SOLAS Verified Gross Mass regulations that took effect July 1 are another example of a regulation that is not necessary. Ports already have container weights from weighing the container as it comes through the gate and they are weighed again when the crane lifts a container to load the ship, but the new regulation requires that whoever is listed as the shipper is legally obligated to give the precise weight of the loaded container. This includes both the goods and the weight of the actual container, which the shipper doesn’t own.
The Coast Guard has recognized this and has allowed the shipper to use the port-generated weights. However, the ports' and carriers' views were not clear in advance, and the International Maritime Organization didn’t specify clearly what was acceptable and what was not, so we were proactive in our approach to compliance because we did not want any disruptions for our customers. We have tracked the weight of shipments at the SKU level and the case level for a long time, so it is a relatively simple matter to use our own software to add up the weight of all the goods. We add that weight to the tare weight for the shipping container and submit the total as the verified gross mass to the carrier. We have 99 percent accuracy with this method, but it adds time and cost.
For freight forwarders who may not have access to actual data at the time of shipping, or who may not be as well organized, shipments originating in some countries (like China) may have to have each loaded container weighed by a third party before it goes into the port to satisfy the local application of the SOLAS rules. If truckers have to stop at a separate weighing facility, they have to join two lines to get into the port to discharge the containers – adding more time and cost.
The cost of this process can vary significantly based on location. In fact, sometimes choices are limited and cartel prices must be paid to avoid the possibility of your container not getting into the port for loading. We have, for the most part, avoided this by planning ahead and teaming up with agents who work diligently to obtain the data we need to comply.
These are just two examples of the regulations that we have to satisfy every day. They duplicate existing information, raise costs and add little value to our customers’ supply chain. Millions of dollars will be wasted on compliance on a global scale; forwarders could conduct business much more efficiently without the added burden of these rules.
Ron Atapattu is the founder and CEO of Overseas Cargo, Inc. (ShipOCI), based in Miami, Florida.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.