What if Shippers Miss Weight Rule Deadline?
It seems increasingly unlikely that all shippers will be ready to meet their new verified gross mass obligation in July. What impact will this have on supply chains?
Drewry has previously alerted exporters and importers of the lack of progress and the many uncertainties left before they are ready to comply with the mandatory regulation of the International Maritime Organisation (IMO) on container weights, which becomes effective in July 2016.
Three months on, we are seeing some progress, but equally it is becoming clear that not all shippers will be ready to comply with the new IMO rule. A poll of 410 customers of booking portal Inttra in October 2015 found that 66% expected “a moderate or major disruption in the industry”.
On the plus side, major exporters have assessed whether their internal systems (typically ERP) can produce the required added-up weight. INTTRA has worked on an electronic solution.
Large companies which export the same products on a regular basis with the same stowage pattern will not have difficulties identifying the weight of the products in the container but still need to find a way to capture the tare weight of the empty container.
However it is important to realise that there are high risk areas and cases.
If your supply chains fall in any or several of these categories, then beware.
In Drewry’s opinion, the highest risks of non-compliance will be for:
1. Inbound supply chains from more exotic origin countries, due to the lack of process, IT, infrastructure and weighing machinery.
2. Shipments of smaller exporters and exporters shipping various combinations of packaged products with various securing equipment or loose products in containers.
3. For companies importing under FCA or FOB terms who rely on smaller Asian or African suppliers to provide accurate container packing weights (the onus of declaring verified weights will be on the importer shown as the shipper on the B/L, not on the suppliers, in these cases).
4. Shipments from already congested ports, where any container rolls and delays will make a bad situation worse.
The impact on supply chains of the new regulation in July will include:
– Many importers will build safety stocks during the transition process and there could be a late June surge in shipment volume.
– Supply chain managers are unlikely to switch mode from ocean transport to air across the board but, for emergencies, they will use air more after 1 July. (We note that the International Air Transport Association notified its member airlines about possible disruptions to the ocean freight sector that could lead to spikes in airfreight volume.)
– There will be delays, cargo rolls, operational disruption and extra costs for shippers at origin ports, particularly in Asia and in Africa.
– Following from these, some shipments will arrive late and some ships will sail with empty slots.
– There will be demand for emergency services by forwarders and inland transport operators to have the containers trucked back and forth when there are mismatches between the declared weight and the checked weight, which can become particularly tedious when a cold chain has to be maintained.
The impact on supply chains of the new regulation will depend on the delay in complying and the extent of non-compliance. There is still time to minimise and mitigate the negative impact.
