Until very recently, Hanjin Shipping was South Korea’s largest and one of the world’s top ten container carriers.
Hanjin is filing for court bankruptcy protection in about 10 countries, including Canada, Germany and the U.K. this week and later expand that to 43 jurisdictions to protect its ships and other assets from being seized by creditors, and the company is taking further legal action in countries beyond the U.S. for protection of its assets as it works to get a frozen supply chain moving again, with more than half its vessels stranded in ports world-wide and at sea.
Hanjin ships have been seized by creditors or turned away from ports, with terminals refusing to work with the company’s cargo for fear they won’t get paid. Analysts say Hanjin should seek to file for bankruptcy protection as quickly as possible in the jurisdictions it operates in to get ships back to port and containers unloaded.
Chinese ports and terminals that accepted Hanjin ships before the company announced bankruptcy proceedings are charging container-handling deposits of up to $1,800, say freight agents. Seven Hanjin ships remain stranded outside Chinese ports.
Hanjin is the largest shipping company in Korea, operating about 60 regular lines world-wide and transporting over 100 million tons of cargo a year, according to court papers. Its failure would be the largest in the history of the container-shipping industry, dwarfing all previous carrier bankruptcies.
Hanjin’s bankruptcy filing has sent spot shipping rates soaring by as much as 40% on routes from Asia to the Americas, according to analysts.
On the West Coast, terminal operators in Los Angeles and Long Beach are unloading all of the containers from the vessels. Containers that do not belong to Hanjin are processed according to normal procedures and terminals are holding onto import loads in Hanjin containers and will deliver the containers to truckers only if the beneficial cargo owners pay the terminal cargo-handling charges upfront. The terminals are not accepting Hanjin export loads and empty containers.
At the Northwest Seaport Alliance of Seattle and Tacoma there were no Hanjin vessels in port on Friday, according to spokesperson Tara Mattina. The Hanjin Scarlet is due to arrive at Terminal 46 in Seattle on Saturday, although the schedule may not hold up. As of Friday, the was anchored outside Prince Rupert, British Columbia, where its entry was refused, she said.
Terminal 46 is now accepting import containers, but is not accepting export loads and empties. Olympic Container Terminal in Tacoma is not accepting any Hanjin deliveries for now and the Husky Terminal is not accepting exports or empties, but is unloading imports and is encouraging truckers to bring their own chassis, Mattina said.
In Vancouver, Global Container Terminal said it will no longer receive Hanjin ships. One Hanjin ship is at the port waiting to be moved on.
On the East Coast, the largest terminal in the Port of New York and New Jersey, Maher Terminals, has made no statement on if, or how much, shippers must pay to get Hanjin containers. However, the terminal has told customers that Hanjin import deliveries must be pre-paid and that Hanjin exports won’t be accepted. One motor carrier advised he was required to pay $395.20 per container to cover stevedoring charges before he could remove a Hanjin box from the terminal.
Maher is the only New York-New Jersey terminal that receives Hanjin ships, and APM Terminals, Port Newark Container Terminal, and Global Container Terminals didn’t disclose how they are handling Hanjin containers.
Down the coast in Baltimore, Ports America Chesapeake, which operates the Seagirt Terminal in Baltimore didn’t disclose how it’s handling already received Hanjin containers. The terminal did say it will not accept any inbound Hanjin cargo, and they will continue receiving but not delivering Hanjin empty containers. The Maryland Port Administration said a barge loaded with Hanjin containers is sitting in the port.
At the Port of Virginia, Hanjin export containers may be picked-up at the terminals by the original shipper only with authorization from Hanjin. In these occurrences, all terminal service charges shall be waived and the shipper will be responsible for all associated chassis charges and fees. All import containers on terminal by Tuesday with the appropriate documentation will be available per normal policy. Starting Wednesday the charge to release Hanjin import containers will be $325, but all demurrage charges will be waived and shippers must have authorization from Hanjin.
At the Port of Wilmington, North Carolina, a Hanjin ship, Seaspan Efficiency, left late Tuesday and cargo from the vessel is being stored at the port. “North Carolina Ports will deliver all import loads and receive back all empties (originally discharged and currently at the Port of Wilmington), including Hanjin Shipping containers,” said a spokesperson.
Further south, the South Carolina Ports Authority has waived the non-vessel delivery fee for export loads out-gated and all import loads discharged on or after September 1 will be placed on hold until such time as all SCPA charges are settled. The South Carolina Ports Authority will collect all port and throughput charges totaling $350 per container from the BCO/responsible party with authorization required from Hanjin. This process will be further refined, but payment is required prior to manual release of hold and outgate.
The Georgia Ports Authority, which oversees the second-largest port on the East Coast, Savannah, wasn’t available to comment, nor was Port Miami. The Port of Jacksonville said it does not have any calls from Hanjin or other CKYHE Alliance members.
Along the Gulf Coast, Houston is holding containers until they receive $100 to cover the Port of Houston Authority’s terminal throughput charges, which are separate from stevedoring costs. The port authority is considering whether to also require guarantees or payment for stevedoring bills for Hanjin boxes that will be discharged from a China Cosco Shipping vessel expected in next week.
Mobile only had three Hanjin containers at the terminal so the operator there, APMT, is checking with the individual customers to see how they would like to proceed. New Orleans, like Jacksonville, has no Hanjin or other CKYHE calls.
Hanjin’s unprecedented bankruptcy will have a significant impact on the cost and effectiveness of all container shipping routes worldwide, so please contact your forwarder to confirm how this may affect you !
Courtesy : WSJ, JOC, CBS, BBC, Reuters
What is the SOLAS Container Weight Rule?
In brief, the SOLAS Rules from the IMO state that, effective July 1 2016, ocean freight carriers worldwide will be prohibited from loading a container aboard vessels in 162 countries worldwide unless the shipper has provided the carrier with the verified gross mass (VGM) of the container. The VGM must be provided to the carrier either digitally or signed and noted on the bill of lading prior to vessel loading.
How is the new SOLAS Rule being implemented for US export shipments with effect from July 1 2016?
With a few exceptions, as it stands today the standard rules as published by the shipping lines require their receipt from the shipper of a certified VGM prior to the container arriving in to port for onward shipment, otherwise cost may be incurred for delay and/or port handling. Currently the VGM should be determined using either Method 1 or 2 as per our previous message on the subject and remains the responsibility of the shipper as per the B/L.
What, if anything, has changed ?
With just days before the SOLAS container weight rule takes effect, ports, marine terminals and container lines are coming closer to creating a system that will use pre-existing weighing processes to alleviate the burden on U.S. exporters. Regulators have given the go-ahead that allows a group of six East and Gulf coast ports and 19 ocean carriers to develop a common strategy for using existing weighing processes that satisfy federal regulations to meet the new international rule, and with multiple shipping lines backing the approach and the head of the Federal Maritime Commission urging the industry to embrace the same path, more announcements from terminals and carriers are expected before the rule takes effect on Friday.
In fact, a number of shipping lines have today confirmed that they will receive the certified scaled weight electronically from the terminal, and this will be used as the VGM.
As a shipper, do I still need to ensure that a VGM is correctly submitted on my behalf ?
Yes, until we have clear confirmation otherwise – the new rule’s rollout is just days away, but guidance from operating ports, carriers, terminal operators and nation states has been variable and prone to change with little or no notice.
What happens next ?
We believe that the process, standards and responsibilities for the implementation for the VGM rule under SOLAS rule will become less arduous to the commercial shipper over the next few days, weeks and months but would recommend close compliance with current methodology in the meantime until such time as any new regulations are finalised.We will continue to keep you updated on developments, and please be assured that we will work with everyone on a case by case basis to ensure that shipments are in compliance with the new rulings, and avoid unnecessary cost or delay on export.
In the meantime, please do not hesitate to let us know if we can help in any way !
A big thanks to the exhibitors, attendees and organisers of 2016 workspace at INDEX for a fabulous show in Dubai 23-26 May 2016. Some images below !
What is the SOLAS Container Weight Rule?
The International Maritime Organization (IMO) has amended the Safety of Life at Sea (SOLAS) convention in the wake of several maritime safety incidents between 2007 and 2015 believed to be linked to inaccurately-reported container weights.
Under the new rule, effective July 1, 2016, ocean freight carriers worldwide will be prohibited from loading a container aboard vessels in 162 countries worldwide unless the Shipper (as identified by the Shipping Line B/L) has provided the carrier with the verified gross mass (VGM) of the container. The VGM must be provided to the carrier either digitally or signed and noted on the bill of lading prior to vessel loading.
How is the New SOLAS Rule Being Implemented?
Two methods have been outlined for determining the VGM of a container:
Method 1: Weighing the loaded container
Method 2: Adding the verified weight of the contents of each container to the container tare weight.
Though enforcement of the new rule will go into effect on July 1, questions that stakeholders around the world are struggling to address include how container weights should be determined, be reported to carriers, how will the rule be enforced, and what is the implication of non-compliance.
At present no single global standard exists for the above, and it appears unlikely that such a standard will be adopted prior to July 1. Even within the United States, there is no uniform standard for how to obtain container weights and communicate them to carriers.
There is also uncertainty over how far in advance VGMs will need to be submitted to carriers. It appears that carrier cutoff times for VGMs will vary from vessel cutoff times – with VGM deadline dates occurring earlier than general cutoffs, depending on the carrier.
As a general rule, carriers are requiring VGM receipt prior to containers being received at port for export. Carriers are further advising that if the VGM is not received by their deadline, costs will be incurred for the account of cargo which may include port weighing charges, additional terminal handling, container roll charges and demurrage.
To further complicate implementation, the IMO did not specify a uniform margin of error for declared container weight vs. actual weight. As a result, each of the 162 effected countries will be able to define their own margin of error and terms for enforcement. Below is a snapshot of how different countries are approaching enforcement:
- Argentina – Weight must be accurate within 5%.
- Brazil – The countries container terminals have an existing policy in place of weighing containers upon receipt at port. The terminals plan on charging the carriers 40-60 reais/container for VGM input
- Canada – Spot checks will be performed on container weight. Violators will be fined ranging from C$600-C$1,200.
- China – Weight should be within 5% or 1 Ton.
- India – Weight must be exact within 200 kg.
- Japan – Fine of up to USD 2,600 per violation if there is a discrepancy of more than 5% in container weight.
- Russia – Terminals such as Container Terminal Saint Petersburg and NUTEP Novorossiysk will allow container weighing at the port, though it is unclear whether the necessary infrastructure will be in place by July 1.
- South Africa – Auditing, inspections to ensure compliance. Violators can be imprisoned for up to one year or fined.
- United Kingdom – Shippers planning to weigh the contents and packaging of a container as per Method 2 will have to become certified by the U.K. Maritime and Coast Guard Agency, and pay a fee for their application. Shippers will need to fill out a checklist and provide documented evidence in order to receive MCGA approval, and once certified, will be added to a publicly available database tracking exporters. Shippers must have documented evidence of a process control system such as an ISO 9000 certification, the weighing method used, detailed information of weighing equipment that will be used, equipment maintenance and calibration processes, record retention, training in equipment use and procedures for dealing with faulty equipment. Failure to adhere to the new law (weight must be accurate within 5%) will constitute a criminal offense punishable by imprisonment or significant fine.
- UAE – DP World has advised they will weigh each container at the terminal and provide the VGM for a fee per container.
- United States – Coast Guard is leaving enforcement of the rule up to interpretation of, and enforcement by, the shipping industry. Congress refuses to clarify official U.S. Government stance. Speculation of possible involvement by Federal Maritime Commission (FMC) to set clearer guidelines.
Summary – US exports
As far as shipments from the US are concerned, the practical application of the new regulations, whilst still in the process of being formalised, can currently be summarised as follows :
- The shipper (as identified by the Shipping Line’s B/L) is responsible to declare the VGM to the Carrier.
- The VGM is currently expected to be an electronic declaration to the carrier.
- The VGM should be transmitted by the shipper’s authorised forwarder or the NVOCC (if not a direct shipment), based on the verified container contents information confirmed by the shipper, including shipment weight (product and packaging), loading/dunnage materials, added to the tare weight of the container.
- The shipper should have a method in place to determine the actual weight of the contents of the container. Methods could include :
- weighing the contents prior to loading,or
- using published manufacturer’s weights if product is shipped in manufacturer packaging and the weight is printed on that packaging, or
- for manufacturers, using standardised shipment weights where weights of samples have been separately verified, or
- any combination of the above.
- The shipping lines will generally require receipt of the VGM information prior to the container arriving in to port for onward shipment, otherwise cost will be incurred for delay / port handling – which cost will not be inconsequential.
- In the case of a less than container load shipment, the responsibility for verifying the detail of, and transmission of, the VGM remains with the NVOCC/consolidator/master loader.
We will continue to keep you updated on developments, and please be assured that we will work with each of our customers on a case by case basis to ensure that shipments are in compliance with the new rulings, and do not incur unnecessary cost or delay on export.
Courtesy : JOC, American Shipper, CargoSmart, Cargo Business, IMO, World Shipping Council