What is SOLAS and What Does it Mean for Shippers?
Over the past week I couldn't help but notice the amount of articles dedicated to SOLAS verified weight requirements, which go into effect July 1, 2016. Since the requirements have been public for a few years, the sheer volume of articles is a good indicator that actors within the supply chain are concerned about the new regulation going into effect, assuming the publishers are accurately gauging their audience.SOLAS' verified weight requirements and its potential impact on the supply chain speaks to the challenges continually presented to the supply chain industry.
The reasons for SOLAS verified weight requirements are certainly justified. However, the implementation of the new requirement is resulting in challenging questions about how to comply and who will pay for such compliance. Created in 1914 following the Titanic disaster, SOLAS stands for Safety of Life at Sea, is an international treaty created and administered by the International Maritime Organization, or IMO for short [1]. The IMO is a United Nations Specialized Agency responsible for the safety and security of shipping and prevention of marine pollution by shipping. SOLAS has been revised over time by what are called Conventions, or conferences in which the terms of SOLAS are discussed and reaffirmed by the member nations.
From time to time, SOLAS is amended to strengthen provisions based upon current realities. In response to several shipping disasters relating to unsafe shipping tonnage, SOLAS was amended in 2014 to require that all containers have a verified weight before being loaded onto a ship [2]. Currently, shippers can declare the weight of their packages using the estimated weight of the container contents plus the tare weight of the container. Under the 2014 amendment, the weight of the packed container will need to be accurately verified. The responsible party for verifying the weight of the container and contents is the shipper on the bill of lading (hereafter referred to as the "Shipper") [3].
The Shipper must choose one of two methods to comply with the SOLAS container weight mandate. Method 1 is taking a loaded container over a nationally certified and calibrated weighbridge or similarly accurate device to get the total weight of the truck, fuel, chassis and filled container and subtract weight of the truck, fuel, and chassis to get the net loaded weight of the packed container. Method 2 is weighing all goods and materials to be packed into the container and add them to the weight of the container to obtain the weight of the packed container. A great infographic on this is found on the Journal of Commerce website here.
The penalty for not complying with the SOLAS mandate is significant. If the Shipper does not comply with the mandate, the ocean carrier may not allow the container to be loaded onto the vessel until a verified weight is produced. Therefore, the Shipper must have the ability to verify the container weight prior to loading the container onto a ship for export. Realistically, they would need to provide the verified container weight to the ocean carriers and terminals in advance of arriving at the dock, since the ship's stowage plan needs to be completed prior to loading any containers.
This requirement means that the Shipper would need to have the supply chain infrastructure to meet the requirements of Method 1 or Method 2. If they do not possess the infrastructure, total landed costs are sure to increase. Furthermore, it means that there is an additional step in the supply chain which can cause delays and disruptions. Both Methods can be time consuming, even if the required equipment is available.
Lastly, the SOLAS weight verification mandate could have an impact on supply chain real estate, mostly in and around the ports of export. There could be increased demand from Shippers for locations suitable to install weighbridges and yard space to efficiently operate Method 1. One could also imagine an increase in 3rd parties who would lease facilities dedicated to offering either Method. Additionally, there may be an increased demand from Shippers to control the "last mile" delivery of the container to the port (as opposed to using a 3rd party).Whatever its impact on real estate, it will be very interesting to see how the supply chain industry handles these new SOLAS requirements starting on July 1st.
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1 "International-Convention-for-the-Safety-of-Life-at-Sea-(SOLAS),-1974 International Convention for the Safety of Life at Sea (SOLAS), 1974 //." International Convention for the Safety of Life at Sea (SOLAS), 1974. International Maritime Organization, n.d. Web. 19 Apr. 2016. <http://www.imo.org/en/About/Conventions/ListOfConventions/Pages/International-Convention-for-the-Safety-of-Life-at-Sea-(SOLAS),-1974.aspx>.2 Leach, Peter T. "Container Weight Compliance to Boost Costs for Shippers." Trade and Container Shipping News. Journal of Commerce, 11 Apr. 2016. Web. 19 Apr. 2016. <http://www.joc.com/maritime-news/international-freight-shipping/container-weight-compliance-boost-costs-shippers_20160411.html>.3 2015, February. "The SOLAS Container Weight Verification Requirement." The SOLAS Container Weight Verification Requirement (2016): n. pag. Feb. 2015. Web. 19 Apr. 2016. <http://www.worldshipping.org/industry-issues/safety/WSC_Summarizes_the_Basic_Elements_of_the_SOLAS_Container_Weight_Verification_Requirement___February_2015.pdf>.
