Chinese cargo agents complain of shipper-carrier VGM squeeze

Cargo agents in China, who handle a huge amount of containers exported from the country, are being caught between shippers unwilling to pay verified gross mass (VGM) weighing charges and carriers who will not load boxes without the weight data.

From 1 July, in accordance with an amendment to the International Maritime Organization's Safety of Life at Sea (SOLAS) convention, shippers across the globe are required to submit to carriers and terminals a VGM of all export containers in time for a ship to plan its stowage.

In China, while some ports provide weighing services, much of the container weighing is done by independent companies that are charging between CNY50 (USD7.50) and CNY100 per feu for the service. However IHS Fairplay has learned that cargo agents are being relied upon to get the boxes weighed, and that they are not happy with the arrangement.

Zhu Jian, general manager of Shanghai Seachain International Logistics, said agents are under pressure from shippers who expect no delays or extra costs and from shipping lines that require accurate VGM data in time to plan stowage.

Some cargo agents complained to IHS Fairplay that carriers make them sign commitment letters, making it their responsibility to apply for the VGM. If agents refuse to sign, they risk losing cargo booking privileges from carriers and the exporter turning to other cargo agents.

When this was put to Li Linhai, general secretary of Shanghai International Freight Forwarders Association, he said agents do not own the cargo and cannot be held liable for the VGM, warning that the arrangement would be invalid.

"It is an issue about liability rather than charges" he said, adding that the government would regulate non-compliance by some sectors in the logistics industry.

Other associations have also weighed into the issue. The Shanghai Transport Trade Association released a notice on June 24, calling on its members to reject weighing charges - in any form - as VGM is the shippers' responsibility.

The association also warned its members not to accept commission from shippers to weigh containers. "Once you accept the commission, you may have liability if the container cannot get loaded or is fined or detained by authorities because of an inaccurate VGM supplied by a third party."

China's Ministry of Transport (MOT) does not have requirements on where the containers should be weighed, leaving that to shippers to decide as long as the weighing equipment complies with required accuracy and tolerance levels. The ministry said fees charged for weighing would be determined by the market, and charging criteria would be adapted to suit the requirements of various authorities.

While the new VGM rules will help increase the stability of container transport and reduce the risk of casualties and cargo damage, Ma Tu, an analyst at the Shanghai Shipping Exchange, said he expected the implementation of the new rules to take a long time.

"It is foreseeable that in the coming quarter, it could be messy to weigh the containers", Ma said. "No matter who will be in charge of the weighing, it will take money and time."

China will play an enormous part in rolling out the new VGM rule as it is where a vast amount of export boxes originate. At the end of April the MOT issued industry guidelines, announcing it would conduct random inspections on export containers at the country's ports from 1 July as part of its enforcement of the new container weighing requirements.

"All marine management agencies should perform random checks on the verified gross mass of packed containers loaded onto vessels",  the guidelines stated. The IMO subsequently issued a call for maritime authorities to take a 'lenient and pragmatic' approach to enforcement.

Article by Angela Yu, China reporter, IHS Fairplay