Safety of Life at Sea (SOLAS) Verified Gross Mass (VGM)

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1 Safety of Life at Sea (SOLAS) Verified Gross Mass (VGM) Background on the new IMO requirements scheduled to become effective July 1, 2016 and general FAQ regarding MOL s implementation procedures. (As of June 1, 2016)

2 Background Before 2014 SOLAS convention only required that prior to loading a shipper must: Provide ship s master or representative with the gross mass of the container. Ensure the actual gross mass is in accordance with the declared gross mass. No effective enforcement in most jurisdictions. No IMO requirement to verify actual weights. Key points Despite industry efforts to reduce incidences of shippers providing incorrect container weights, the problem continues. The problem is significant and arises in almost every trade and in some trades, it is rampant. An investigation of an ocean carrier s structural failure incident in 2007 found that 20 percent of the containers on deck had actual weights that differed more than three tons from their declared weights and that the largest difference was 20 tons. It was also found that the total weight of the 20 percent misdeclared containers was 312 tons heavier than indicated on the cargo manifest (gross mass declared by shippers) in shipping instructions provided to the ocean carrier. In October 2012, over a two-week period, Ukraine Customs weighed all containers discharged in Ukrainian ports. It was found that 56 percent of the containers had an actual weight greater than the weight stated in the carrier s cargo manifest. Similar findings have been reported by other customs agencies. Consequences of misdeclared weights lead to: Risk of personal injury or death to crew and shore side workers, ship instability, incorrect vessel stowage, collapsed container stacks, rehandling and re-stowing, higher operating costs, chassis and ship damage, supply chain delay, shut-out of accurately declared cargoes, road safety problems, etc Source: World Shipping Council SOLAS Weight Requirements

3 What is Changing? In November 2014 the International Maritime Organization (IMO) adopted mandatory amendments to the International Convention for the Safety of Life at Sea (SOLAS) Chapter VI, Part A, regulation 2 - Cargo information. SOLAS convention is applicable global law. The SOLAS amendments become effective on July 1, 2016 for packed containers received for transportation (gate-in or off-rail). New SOLAS amendments basic principles 1. Before a packed container can be loaded onto a ship, its weight must be determined through weighing A verified weight is a condition for loading a packed container onto a ship. No Verified Weight means No Load. 2. Estimating weight is not permitted. Shippers must weigh or arrange for weighing of packed container or its contents. 3. Two permissible methods for weighing: Method 1: Weigh the packed container. Method 2: Weigh the cargo and other contents and add tare mass of the container. (Packages that have the accurate mass clearly and permanently marked on their surfaces do not need to be weighed again when they are packed into the container.) 4. Shipper may rely on beneficial cargo owners (BCO s) or other forwarders properly derived weights, using Method 1 or 2. But -- shippers remain responsible for verified weight. Shipper means the party identified on the maritime carrier s Bill of Lading. 5. Governments may apply enforcement tolerance limits. Does not relieve the shipper from obligation to provide verified weight obtained from weighing. 6. Lack of signed shipper weight verification can be remedied by weighing the packed container at port or elsewhere. Subject to the Carriers and port terminals agreement on how such situations will be handled. 7. Government implementation - Commercial parties need to understand and arrange for compliance with national/local requirements (e.g., certification and documentation.)

4 MOL Implementation Frequently Asked Questions What is the actual effective date for your company to enforce the VGM transmission? (For example, if a container is loaded before July 1, 2016 but transships after July 1, 2016.) The effective date will be as from the first IMO loading port on or after July 1, How to handle Intermodal and transshipment containers? A container, transported under SOLAS requirements should already have a VGM when leaving the First Port of Load. As such, further weighing at the transshipment port facility is not required. How and when will MOL transmit VGM data to the terminal? MOL will send VGM data to the terminal by EDI according to agreed/required schedule. What is the timing of (or when is) MOL s VGM cut-off requirement? VGM cut-off dates/times are likely to vary from country to country, from port to port, and from terminal to terminal. As a general rule, the VGM cut-off time is at the latest at CY cut-off time. To ensure a smooth transition into the new process as well as proper VGM info handling, MOL s initial request will be that VGM submission is provided 12 hours before a container arrives at the terminal for the gate in operation. Please note that MOL will endeavor to reduce this lead time period as the process stabilizes. Does MOL have information about the different terminal policies? MOL is coordinating closely with all of the terminals in our network regarding their respective VGM implementation policies. Customers should be aware that while some terminals will allow containers with no VGM submission to enter their terminal others will not and therefore shippers will need to be mindful of this fact when considering timely submission of VGM. Please refer to which provides a current update on terminal gate in (MOL operations) acceptance procedure.

5 MOL Implementation Frequently Asked Questions In what format will MOL receive the VGM from customers? MOL encourages its customers to submit their VGM data using one of the following electronic methods: EDI (VERMAS, ANSI 300, 304, UN/EDIFACT.), Portal (INTTRA, GT Nexus, CargoSmart) or MOL s website For those customers who are unable to submit their VGM data using one of these electronic methods, they may input their VGM into MOL s standard pre-formatted template and submit by . Which VGM data elements are required to be transmitted? According to SOLAS requirement for VGM, the basic information is a) VGM, b) shipper s authorized signature, c) date of weighing and d) container number. For MOL internal control purposes, we will also request the booking number to link with VGM basic information and will request as mandatory any additional items demanded by local regulatory requirements. In what format will MOL receive Shipper Verification with Signature? MOL will require that the signature field includes the shipper s authorized signature in capital letters for the submission method used (EDI, MOLPower.com, , etc.). How to know if the submitted VGM is successful? MOL is aware of this concern. This will be one of the features that MOL will have on (VGM Page). MOL will provide an online query tool available for shipper or customer to track the status of their VGM submission against the container number or BL number. We will share the process and details later when the properties are defined. Can VGM be amended after submission? Yes, VGM information can be amended up until VGM cut-off. We encourage customers to submit their amendments using MOLpower.com.

6 MOL Implementation Frequently Asked Questions What will happen if there is no VGM information when a packed container is gate-in at terminal? Each terminal may have its own local rule/practice whether to allow containers to gate-in without VGM. Should such a container be accepted by the terminal, following SOLAS requirement a unit cannot load without fulfilling VGM. MOL may accept VGM information after container gate-in as long as it does not create constraints with operational procedure. Please note that any costs incurred as a result of a shipment entering a terminal without VGM certification will be to the account of cargo. How to handle discrepancies in VGM? Some terminals announced that packed containers will be weighed for VGM verification. If there is any discrepancy beyond the defined tolerance level, the VGM of the container weighed at the terminal will be used to determine the proper stowage or handling of the container Is VGM mandatory on the Bill of Lading? No, the VGM is not a requirement on the Bill of lading, only the Cargo Weight is required. Will MOL check the weighing equipment to ensure it is certified and calibrated to meet VGM requirements? MOL will not check the certification and calibration of the equipment used for the weighing. The shipper must ensure that the weighing equipment or service they choose to use is appropriate and meets VGM requirements Is a VGM required for empty tanks with residue? According to the established maritime handling procedures, an empty tank with residue is considered a laden container and thus a VGM is required. Please note that portable tank is an example of a container where Method 2 is inappropriate, while Method 1 would be more suitable.

7 MOL Implementation Frequently Asked Questions Will MOL have a weight tolerance acceptance for the VGM of a container? And does it apply as a global standard? MOL will continue to review any accommodative tolerance range/ranges in line with local/international regulatory acceptance standards. Is MOL going to provide the Container Tare Weight? The container tare weight is visible on the exterior door-side of the container. Shippers using Method 2 may weigh all packages and cargo items, including the mass of pallets, dunnage and other packing and securing material to be packed in the container, and add the tare mass of the container to the sum of the single masses of the container contents. As responsible party for VGM information, shipper must submit a single weight by adding all the items mentioned. In addition, MOL will be launching an online query tool on (VGM Page) to allow shippers to query the tare weight of their laden MOL containers. How is net weight of a container equipment determined? The Container shows the three weights on the container doors. (1) Max Payload the maximum weight of cargo to be loaded onto the container, (2) Tare Weight the weight of the empty container to be used for VGM Method 2 declaration and (3) MGW is the Maximum Gross Weight is composed of (1) Max Payload + (2) Tare Weight. It must not be exceeded. What if the Tare Weight is missing or not visible on the exterior door-side of the container? Where the tare weight is missing or believed to be inaccurate on the exterior door-side of the container, shippers can go to (VGM Page) to query the container numbers to find their corresponding tare weights.

8 MOL Implementation Frequently Asked Questions Do the G6 Alliance members have a common understanding regarding SOLAS requirements? A process of VGM information exchange among the partners will be defined upon the final development of common procedures. Who is the Governing party for SOLAS VGM implementations in each Country? While some countries have yet to determine the appointed official authority for SOLAS regulations, you may refer to the survey and consolidated list of designated Authorities per Country provided by The Federation of National Associations of Ship Brokers and Agents (FONASBA). Please visit as a reference guide. MOL Liner appoints all its offices and agents around the world to determine and ensure MOL s compliance with the appointed authorities (confirmed and to be determined), hence you may also check or contact local MOL representatives in your country. Will SOLAS be enforced differently by different local authorities? The individual authorities of each country will have their own guidelines and final directives to enforce SOLAS requirements. As an example, each country may have different policies regarding certification of weighing service providers, tolerance or allowance for VGM versus actual mass variance, weighing scales calibrations and methods, etc. Any other informative reference on SOLAS VGM? Other than the wide overview, documents and sources available on SOLAS which have been jointly published by IMO, WSC, TT Club, ICHCA, GSF, FONASBA, etc, you can also refer to the Ocean Carrier Equipment Management Association (OCEMA) recommendations for how and when shippers should submit SOLAS container weight verification data ahead of the July 1 implementation deadline. Please visit as a quick reference where you can find the OCEMA reference materials.

9 MOL Implementation Frequently Asked Questions As a shipper, what do I need to be aware of or required to do? MOL recommends shippers to be prepared well in advance for SOLAS VGM requirements: To make sure VGM requirements and processes is established. As an example, who is the legally defined shipper (yourself or a logistics provider)? Determine your weighing options i.e. weighing service provider, method 1 or 2, costs, procedures, etc. Be aware of local authorities SOLAS VGM implementation guidelines, policies, rules, penalties, etc. Ensure all parties in your supply chain are aware of SOLAS VGM and their role. Be sure to clarify all concerns you have with carriers, the terminal, local authorities or designated authorities. What are some possible consequences from failing to meet VGM requirements? Stevedoring and/or transport costs associated to the exception handling of the container; Inspection and/ or survey costs; Storage fees and/ or container demurrage; Weighing costs if the carrier/ terminal weighs; Stuffing/ de-stuffing or any additional steps required to obtain the VGM; Penalties and/ or administrative charges; Removing container from the vessel if VGM is found to be incorrect; Shipment delays and impact on the supply chain; Plus, any other costs that may be incurred.

10 Additional References Source: World Shipping Council. _Container_Weight_Verification_Requirement.pdf. Industry_FAQs_Dec_2015_ US_letter_WEB.pdf If you have further questions, please contact your local MOL Liner office. Source: Journal of Commerce

11 Disclaimer This presentation contains background on the new IMO requirements scheduled to become effective July 1, 2016 and general FAQ regarding MOL s implementation procedures. All details set forth herein remain subject to revision. The information contained herein is intended solely for background and guidance for customers of MOL Liner. Any use, distribution or replication in whole or in part without the express written consent of MOL is strictly prohibited.

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