SOLAS  New Container Weighing Requirements

Change is on the horizon in the shipping industry, and it is important to make sure you are staying informed. Effective July 1st, 2016, changes adopted by the International Maritime Organization (IMO) regarding verified container weights will become effective. These changes were first introduced at the 2014 Safety of Life at Sea (SOLAS) Convention, but it is now time for implementation. The full text of the applicable SOLAS regulations can be found here

These regulations initially came about as a result of safety issues within the shipping industry. There were problems regarding overweight/underweight containers, misreported freight, poor weight distribution within containers, and more: see “Safety and Shipping Review 2014“. Ideally these changes will help accomplish a reduction in loss of containers from vessels, increased assurance to all parties within the supply chain, and overall improved safety.  These new requirements will apply to all 171 IMO member countries, as well as the three associate members of this organization.

The responsibilities of the shipper (as designated by the bill of lading) under these new regulations are particularly important. The shipper will now be required to verify the gross mass of each container via a signed document; this document must be physically signed (stamps will be unacceptable), and the form must be submitted in time to be used by the master and terminal representatives in the ship’s stowage plan.  The shipper has the option of submitting the container weight via the shipping instructions to the line, or in a specific communication such as a weight certificate. Regardless of submission method, the weight included must be designated as the “verified gross mass” and authorized by the accompanying signature. The shipper is able to determine whether they would prefer to weigh the contents of the container prior to or after loading, but the critical designation is that estimated weights are not permitted. The equipment used to weigh contents must meet national certification requirements, and the party verifying container weight is not permitted to use weight provided by a previous party. Click here for the Implementing Guidelines issued by MSC

The execution of enforcement for this new requirement will be put on the shoulders of the carriers. Essentially, carriers are highly encouraged to refuse to load containers for which a signed weight verification is missing. Refusing to carry these containers will encourage shippers to abide by the new requirements set forth by SOLAS. As July is only a few months away, it is important for shippers to begin proactively planning how they will adjust their processes to abide by these new requirements.

 

If you are in need of additional resources or more information, please visit the following link: http://www.worldshipping.org/industry-issues/safety/faqs.

 

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A Proper Receipt Creates A Warehouse Lien

We are constantly being asked by NVOCCs, forwarders and warehousemen whether they have a legitimate lien on the cargo in their possession, such that that they can hold the freight until being paid.  The answers are not simple: you only have a lien on freight if it was  a)given to you by the cargo owner; or b) given to you by statute.  

Warehousemen have a statutory lien, which is generally the same throughout the country under the Uniform Commercial Code.  We will discuss Florida’s implementation of the UCC provision.  This is a simple outline of how to make certain that your warehouse receipt is compliant with Florida Statutes, and thus obtains for a warehouseman the full privileges the law can provide. Following the guidelines below should ensure that you obtain the full statutory warehouseman’s lien.

The general form that a warehouse receipt takes is in accordance with the following (Florida Statutes 677.202):

(1) A warehouse receipt need not be in any particular form.

(2) Unless a warehouse receipt embodies within its written or printed terms each of the following, the warehouseman is liable for damages caused by the omission to a person injured thereby (i.e., if you fail to include the following, you can be subject to loss of lien rights):

(a) The location of the warehouse where the goods are stored;

(b) The date of issue of the receipt;

(c) The consecutive number of the receipt;

(d) A statement whether the goods received will be delivered to the bearer, to a specified person, or to a specified person or his or her order;

(e) The rate of storage and handling charges, except that where goods are stored under a field warehousing arrangement a statement of that fact is sufficient on a nonnegotiable receipt;

(f) A description of the goods or of the packages containing them;

(g) The signature of the warehouseman, which may be made by his or her authorized agent;

(h) If the receipt is issued for goods of which the warehouseman is owner, either solely or jointly or in common with others, the fact of such ownership; and

(i) A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims a lien or security interest (Florida Statutes 677.209). If the precise amount of such advances made or of such liabilities incurred is, at the time of the issue of the receipt, unknown to the warehouseman or to his or her agent who issues it, a statement of the fact that advances have been made or liabilities incurred and the purpose thereof is sufficient.

-For the purposes of this section, you will want to include a statement saying that you retain a lien on all goods stored by you for the bailor (customer), regardless of whether or not they are those goods listed on this particular warehouse receipt.

In addition to the above listed provisions, it is advisable that you include a provision that advises your customers that they have the option to purchase additional insurance or to obtain insurance through a provider of their own choice.   Note that nothing in the above addresses limitation of liability, an entirely different topic.

For more information on this topic please contact our offices at 800-583-0250.

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Goodbye COGSA, Hello Rotterdam Rules

By passing the Carriage of Goods by Sea Act of 1936 (COGSA), the United States adopted as domestic legislation the Hague Rules, which govern liability for loss in ocean carriage. At that time, ocean cargo was transported largely by barrel and crate, and bills of lading covered cargo from port to port. Today, cargo is containerized and may travel long distances by rail or truck before or after ocean transport on through bills of lading. Despite the advent of multimodal transportation, COGSA, and the domestic law of most nations, has remained largely unchanged and grounded in the transportation realities of more than a half century ago.

The United Nations sought to bring transportation law into the modern era by promulgating the Rotterdam Rules. The Rotterdam Rules are an international convention that was adopted by the United Nations General Assembly on September 23, 2009. Twenty-one countries, including the United States, have signed the Rotterdam Rules, although the United States and many other countries have yet to ratify them. If and when they go into effect following ratification by 20 countries, the new Rules would replace the substance of COGSA as U.S. law as well as other countries’ Hague Visby-based legislation.

If the Rotterdam Rules go into effect, how will the law change? Below, we discuss several substantive changes concerning the rules’ broader scope, period of responsibility and limitation of liability.

The Rotterdam Rules’ scope of application is broader than COGSA in that the Rules would cover carriage of goods where no bill of lading or electronic record has been issued. COGSA, on the other hand, applies only to documents of title. The Rotterdam Rules mirror COGSA in that they would apply to all shipments to or from the United States.

COGSA applies from “rail to rail,” which means from the time of vessel loading to the time of discharge. Because modern multimodal shipping is door-to-door, the Rotterdam Rules would make the carrier responsible for goods from the time it receives them for carriage, and end the period of responsibility only when the goods are delivered. Thus, the period of a carrier’s responsibility would be broader under the Rotterdam Rules than COGSA.

The Rotterdam Rules would additionally modify COGSA’s package liability limitation of $500, instead imposing a limitation based upon a “unit of account” per package that would be tied to the Special Drawing Right of the International Monetary Fund. This converts to approximately $1,400 per package. While raising the liability figure, the Rotterdam Rules would at the same time make it more difficult for a claimant to avoid its limiting effect, meaning that the package limitation would be unenforceable only when the loss at issue was caused by a personal act or omission that was done with the intent to cause such loss, or done recklessly and with knowledge that such loss would probably result. In other words, unless a cargo claimant can show that a loss was caused by a carrier’s bad intent or by a carrier’s reckless actions, the limitation provision would be effective. The Rotterdam Rules would extend its limitation of liability to all “maritime performing parties,” which would include terminal operators and stevedores. Inland carriers, however, would not be automatically protected under the Rotterdam Rules, and they would remain subject to legislation covering inland transport, such as the Carmack Amendment.

Substantively, many of the changes that would be brought about by the Rotterdam Rules are minor departures from COGSA. Accordingly, federal courts can be expected to look to existing case law interpreting COGSA in applying the Rotterdam Rules, were they to become the law of the land. Forwarders have spoken out against the Rotterdam Rules because, in their view, the regime is too complex. This is true, but it is also true that multimodal transportation has become increasingly complex since the era when COGSA was enacted, and the Rotterdam Rules are an admirable, multilateral proposal meant to bring transportation law up to date.

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