Shippers: How Much Is VGM Really Going To Cost You?

July 21, 2016

VGM Costs

The SOLAS VGM rule went into effect on the 1st of July and already the costs of moving containers are mounting. The risk of disrupting one’s supply chain and the cost associated can be significant. This is beyond just the cost of creating and sending a VGM certificate.

We discussed this problem with a few of our large global shippers.

From a business perspective we need to be confident that our containers are going to get onto the stowage plan and onto the vessel without incurring additional charges. But the lack of automation and speed in data exchange is already incurring costs. In theory, a VGM certificate needs to get to the carrier and the terminal operator before the container arrives at the gate.

There are a number of costs that are starting to surface as part of the process:

A number of terminal operators are looking to provide a service where the containers are weighed under the SOLAS rule.

Port of NY/NJ indicated it would charge shippers $69.10 per unit.

Port of Charleston said it would charge shippers $25 to weigh a container.

The Georgia port authority said it would not charge shippers.

Back in April 2016, the Port of Houston had quite a different approach, no VGM, no entry. The potential compounded effect here is what additional costs will be incurred for demurrage or storage while the Port waits to receive the VGM from the carrier, which in turn comes from the shipper or forwarder.

Even more recently, forwarders are starting to charge shippers significant fees for creating a VGM certificate. Some are outrageous.

Kuehne + Nagel said shippers that submit the VGM verifications via the forwarder’s portal will be charged $12.75 for each shipment, while submission by other means, such as in an e-mail, will accrue a $25 charge.

DB Schenker will charge a VGM processing fee of $25 per container for full-container load shipments and $15 per less-than-container load shipment.

It is obvious that when forwarders provide the service of creating and/or sending the VGM (VERMAS) to the carrier they are going to charge for it. However, the repurcussions of inaccurate weights still falls back on the shipper. The carriers and terminals do not have to verify that the VGM provided by the shipper is accurate. Random checks on containers will be performed by Maritime authorities in given jurisdictions. Those that fail to meet the guidelines will not be loaded, resulting in further complications to the entire supply chain.

Many of the Steamliners/carriers are struggling to cope with the demand of testing and validating VERMAS messages. In many cases they do not have the solutions or man power to make it happen efficiently and cost effectively. Old integration and supply chain execution systems are limiting many.

Imagine if you could send or receive a VERMAS message and have it validated for $0.07 and you could be up and running in hours or days. Where the carrier receives it directly and it can be provided directly to the terminal operator if needed also. That’s efficiency and customer service.

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