Fitch warns weight regulations can raise US ports’ congestion

Fitch warns weight regulations can raise US ports’ congestion

Credit rating agency Fitch Ratings warned that the new container weighing regulations set to take effect on July 1, 2016 are generating uncertainty at US ports and can raise congestion.

The ratings agency claimed in a statement that Fitch-rated ports are lacking both the designated facilities for weighing containers and the systems for the verification of container weights.

According to Fitch, this deficiency could lead to an increase, from July this year, in the “already chronic congestion” at the ports that are slowed by issues in chassis management, increased cargo loads from bigger ships and insufficient inland and intermodal links.

The amendment to the International Convention for the Safety of Life at Sea (SOLAS), which was adopted by the International Maritime Organisation (IMO), will require packed shipping containers to have a verified gross mass (VGM) before being loaded on a ship.

Once the new amendment takes effect, carriers and terminals will have to receive the VGM in time to make stowage plans.

“While the shipper on the bill of lading will bear responsibility for verifying the weight, the apportionment of logistics and costs of verification among shippers, forwarders, terminals and carriers remains to be seen,” the ratings agency claimed.

According to Fitch, despite the specific nature of the documentation being unknown, forwarders and terminals prefer using electronic data interchange systems, which are at present widely used for the communication of bookings and shipping instructions in the US.

The ratings provider believes that “almost certainly” there will be containers arriving at US terminals still lacking the required verification when the new amendment goes into effect.

“This may lead to delays and increased congestion for facilities that are already strained by longer turn times and heightened volumes generated by ever larger container ships,” Fitch commented, “a slowdown seems likely in the early days of SOLAS enforcement as the broader supply chain learns how to manage compliance.”

The ratings agency said that is believes the risk the VGM mandate poses to Fitch-rated US ports will fall in the long term, adding that it expects total port throughput to increase this year as a result of industry consolidation favouring bigger vessels, and carriers implementing operational alliances with ports.

Several US ports, among which the Maher terminal at the Port of New York/New Jersey, have announced that they will require prior receipt of electronic documentation before letting containers through their gates, while the Port of Felixstowe, UK, has recently announced that it will offer a container weighing service.