How The Ocean Freight Industry Learns From The Past

How The Ocean Freight Industry Learns From The Past

Strict ocean freight carrier policies in effect today are born from monumental and sometimes dangerous mistakes from the past.

Verified Gross Mass Policy

A great example is the Verified Gross Mass (VGM) policy. Ocean freight carriers require all containers to have their weights verified prior to loading any vessel. This applies to all ports worldwide. Certain ports have their own policies stating they will not accept any containers without the VGM data. Shippers have two options. One, weigh the containers on their premises, prior to and after loading. Or two, have the loaded containers verified at a certified scale before returning to the terminal. This increases the costs of each additional container move, as well at time. The questions is, how did the ocean freight industry get to the point where strict policies are the norm? The answer lies in the old adage those who do not learn from history, are destined to repeat it.

How The Ocean Freight Industry Learned From The Past

Once upon a time, the rate for ocean freight commodities (lumber, metal scrap, waste paper, etc.) were rated by weight, usually metric tonne. There was little incentive to misidentify weights since carriers charged by what was loaded into the shipping container. To prevent shippers from loading one or two metric tonnes into a container and shipping a full box at a reduced rate, carriers charged a minimum tonnage on each box (i.e. 21 revenue tonnes). It did not take long for shippers to declare exactly 21 metric tonnes on all shipments irrespective of the real weight in the actual container. In the early 90s the inevitable happened in the port of Vancouver. A container of green lumber declared at 21 metric tonnes had the floor fall out when it was being loaded onto the ship.  Fortunately, no one was hurt, but the terminal shut down operations and refused to load the remainder of the ship until all weights were verified from each shipper. The ship cut and run without the rest of the load causing a stir among the ocean freight community.


The Short Term Solution

After the incident an investigation was held to determine how it could be prevented going forward. The carrier decided to arbitrarily stop offering rates by metric tonne and began pricing on a per container basis, thereby eliminating the incentive to cheat on weight. Other carriers followed suit and the problem was solved. At least that was the general opinion of the industry leaders at the time. Unfortunately, as time would tell, they made a poor decision. Due to the advances in container structure and the use of alloys, new and advanced containers allowed for greater weights in the same sized box. As a result, shippers pushed the limits and inevitably more boxes were involved in accidents. Some with catastrophic results.

Yesterday’s Mistakes Save Lives Today

In 2016, the International Marine Organization (IMO) amended the Safety of Life at Sea (SOLAS) rules to include stricter enforcement of VGM. This not only eliminated the risks of carrying overloaded containers, but it also set the bar higher creating standards and an overdue discipline that was greatly needed in the ocean freight industry. It is safe to say the mistakes of the past created a precedence for carriers to make the necessary changes to potentially save many lives today and in the future.

You Have A Helping Hand

If you need help moving freight by ocean, air, highway or rail, PCB Freight Management can help provide you with excellent service from our logistics experts. Contact us today for a quote on your next freight shipment.

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PCB Customs Brokers, PCB Freight Management

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