The downside of IMO’s container weighing rule
An International Maritime Organization (IMO) rule that took effect on 1 July, mandating shippers to verify and declare the weight of a cargo container before it can be loaded onto a ship, has cast an extra financial burden on Indian exporters.
Different intermediaries between exporters and the shipping line are trying to wrest control over this requirement and extract money from it.
While India’s maritime administrator, the directorate general of shipping (DGS), has framed national rules to comply with the IMO convention, it did not envisage this to be a money-making exercise entailing the exploitation and harassment of India’s exporters.
In fact, the DGS says the container weighing rule aimed at boosting maritime safety “should not be used by intermediaries between the shipper and the ship to impose additional burden on the exporter of cargo from lndia, thereby hindering the export trade of India”.
The entreaty by the DGS has not been heeded so far by the stakeholders in the container logistics chain. To be fair, the DGS has only laid down the broad framework to implement the IMO rule, but this has spawned businesses to tap the demand.
It costs as much as Rs.500 to weigh a container on a weigh bridge outside the ports. Companies formed to undertake this work are asking for a one-time registration fee of Rs.15,000 from customers. There are others who are charging Rs.1.5 lakh for installing the programme in the customers’ office.
Freight forwarders are charging $20 per shipment as administration fee for complying with the Safety of Life at Sea (SOLAS) Convention on weighing containers and $5 per cu. m as weighing fee for less than a containerload (LCL) cargo.
For a full containerload (FCL) cargo, the forwarders are charging a SOLAS administration fee of $25 per container.
Some container freight stations (CFS) are asking for Rs.2,600 to weigh a container and issue a weight certificate.
Shipping lines are charging some $70 to convert the manual verified gross mass (VGM) document into electronic format. It is more than the freight rate to some places.
If all this was not enough, the loaded/packed container is weighed all over again at the container terminal, the last point of handover to the shipping line, for a charge. These terminals have installed special load cells on their cranes and software to implement the IMO rule.
Some container terminals, particularly those located at state-owned ports such as Jawaharlal Nehru Port near Mumbai, are charging for weighing a container even after the VGM certificate has been submitted by the shipper/exporter. Some other terminals are collecting additional charges for variances in the VGM declaration even though the weight of the container remains within the permissible limits.
To facilitate ease of compliance during the initial days of implementation of the IMO rule, the DGS has permitted a variation of up to plus or minus (+ or -) 1,000kg between the weights obtained at different locations.
The rule has sparked a tussle between container terminals and other intermediaries on the right to weigh containers and collect charges.
The container terminal operators, under the banner of the Indian Private Ports and Terminals Association (IPPTA), an industry lobby, has underlined its “uncontested role” in implementing the SOLAS regulation.
IPPTA has referred to a circular issued by IMO for implementing the weighment rule to support its case. “Any discrepancy between a verified gross mass of a packed container obtained prior to the container’s delivery to the port terminal facility and a verified gross mass of that container obtained by that port facility’s weighing of the container should be resolved by use of the latter verified gross mass obtained by the port terminal facility”, according to the IMO circular.
The IMO circular, according to IPPTA, clearly establishes the need for a re-verification process once the container has been delivered to the port terminal facility to ensure the accuracy of reporting. “Unless there is an established process of weighment in place, no discrepancy would ever come to light,” a spokesman for IPPTA said.
“The terminal is the last frontier after which there is no recall of the vessel or the cargo or the people on board should an unfortunate event happens. It is, therefore, uncontested that the terminal’s role is of vital importance for overall safety at sea,” according to IPPTA.
Container terminals say they are ready to carry out weighment and issue VGM document as needed by law on behalf of the shippers on a request from the shipping lines where all legal liabilities and responsibilities continue to rest with the shipper/exporter. This will help generate VGM without the hassles faced by the shippers and there will be no additional financial burden before the container reaches the terminal.
However, the DGS says that its rules to implement the SOLAS regulation do not envisage a mandatory requirement for ports/terminals to weigh containers to verify its gross mass. Nor does it support the imposition of additional process by ports/terminals on weighing containers, which constrain trade movements.
Shippers can verify elsewhere and send it across to the ports. The IMO convention is mandatory, but its circular is a guidance document which is not mandatory for every country to abide by it fully, says DGS.
As this argument over jurisdiction lingers, one key point has gone unnoticed, i.e., the charge levied by the container terminals on weighing containers does not have the backing of the rate regulator for state-owned ports such as Jawaharlal Nehru Port.
The Tariff Authority for Major Ports (TAMP) confirmed that the container terminals have not applied to levy a container weighment charge nor has it approved it. “This is required as per law; otherwise, it is illegal” a spokesman for India’s shipping ministry said.
State-owned port authorities say that they have taken up the matter with the private container terminals operating at its ports. “It is an unapproved charge,” a spokesman for JN Port, India’s busiest container gateway, said.
Some shippers such as R. Venkatesh, president of the Western India Shippers Association, say that the best way to sort out this vexed issue is to let the container terminals weigh the containers and declare the weight. “If that happens, life becomes easy for exporters”, he said.
If the weight is declared by the terminals, the cost will probably be drastically reduced. Because there is a volume related to the amount of containers terminals handle. The cost automatically comes down because of economies of scale.
If the terminals charge, say Rs.2,000, for this, it still makes sense because at least the process will be smooth. You are not going to have to deal with hundreds of people in between.
“Once you put it on the terminals, the terminals at state-owned ports are regulated by TAMP, so the rates cannot go up. There will be some form of oversight,” says Venkatesh.
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