Declaring Safety First

Declaring Safety First

It was a major breakthrough for container ship safety when ports this month joined with carriers in endorsing a global requirement that boxes be weighed before they are loaded.

Instances in which ships capsized, container stacks collapsed, boxes crashed to the wharf and forklifts tipped over generally are blamed on terminals and carriers that don’t know the true weight of their containers. That adds unnecessary risk to the lives of dockworkers whose jobs already are filled with danger.

The issue also presents big operational problems for carriers and shippers because containers may be rolled when loading is abruptly suspended because the ship unexpectedly reaches its maximum depth at the wharf, risking grounding in the channel.

Despite the historic consensus, engineered by Port of Los Angeles Executive Director Geraldine Knatz, it would be premature to declare victory. The agreement this month by the International Association of Ports and Harbors to join shipowner groups such as the World Shipping Council in calling for an amendment to the Safety of Life at Sea Convention addresses overweight containers, but also shines a spotlight on the broader, ongoing problem of declarations — what the shipper declares to be the contents of the container.

The Dec. 12, 2011, agreement will result in containers being weighed at ports, but doesn’t touch on the broader issue of discrepancies, whether intentional or not, between the cargo description on shipping documents and what’s actually inside the container. It’s a huge, unsolved challenge. A yearlong audit of containers, conducted by seven nations for the Intermational Maritime Organization in 2006, found 32 percent of more than 25,000 loaded containers opened held misdeclared contents and did not comply with regulations.

Let’s face it: Misrepresenting cargo is a game shippers have played throughout history. Misdeclaring cargo on shipping documents can secure a lower freight rate or insurance premium, or it could be part of a more sinister agenda to smuggle contraband.

Or, as carriers complain today, misdeclaration may simply be a matter of ignorance or expediency; because bills of lading must be filed prior to ship loading under post-September 11 security rules, shippers put down anything on the document in order to avoid a fine, even if the information is wrong. As one U.S. carrier executive told me recently, “People just don’t have time any more to pay attention. Not that they do it intentionally, they do it to comply.”

A practice as old as shipping, or at least trade regulation, won’t likely be solved through international agreement. “Cargoes were misdeclared for hundreds of years, but it wasn’t until the days of prohibition in the United States, when alcoholic beverages were being manifested as olives (in barrels) or other various innocuous commodities shipped in drums or barrels, that the public became aware of the practice,” James McNamara, former president of the National Cargo Bureau, wrote once in an article published by the Society for Maritime Arbitrators. “Then beginning in the 1960s, we heard about drug smugglers hiding their consignments in a whole array of innocent cargoes, diverting attention from their forbidden commodity.”

McNamara said the rise of non-vessel-operating common carriers added another dimension to the problem because, as middlemen, they are able to further obscure the identity of the shipper or the cargo.

“Containerized cargoes have always presented an easy opportunity for misdeclaring or smuggling cargoes into or out of a country as the contents are shipped in a sealed metal box,” he wrote.

Like misdeclared weights, inaccurate descriptions can have deadly consequences, McNamara said. “Many hazardous cargoes are not properly declared or properly described in accordance with IMO regulations. Within the past few years, there have been a number of incidents occurring on large container ships,” he wrote.

And in the wake of September 11, of course, the possibility that container vessels could transport weapons of mass destruction became a greater concern. Indeed, security regulations are having the most impact on addressing the larger issue of misdeclarations. “Governments around the world continue to focus on obtaining more complete knowledge of what is actually in cargo containers arriving in their countries,” the announcement of the overweight container agreement said.

The U.S. carrier executive I spoke with said intentional misdeclarations have declined: “We don’t have an issue as much as we used to in intentional misdeclared containers.”

He attributes this to U.S. security regulations, which have forced shippers to pay closer attention to details so as to not run afoul of regulations or face greater risk for inspection that triggers delays.

But this carrier, like others, sees the greatest near-term growth in trade coming from emerging economies. With enforcement looser and infrastructure lacking, it’s reasonable to believe the problem of misdeclaration won’t go away soon.

Peter Tirschwell is senior vice president for strategy at UBM Global Trade. Contact him at ptirschwell@joc.com, and follow him at twitter.com/PeterTirschwell.