New Shipping Rules and Regulations to Prepare For in 2016

Nelson CabreraShipping Guide3 Comments

Panama Canal expansion project

Shipping and logistics is arguably one of the most detail-oriented industries in the world. The amount of rules, regulations, and laws you must follow to transport goods can seem endless. A single mistake (even one so seemingly insignificant as a hard-to-read number) can affect your supply chain and hold up your entire business.

While mistakes will inevitably happen, you can mitigate a lot of the problems in your shipping routine by keeping up with regulation changes within the industry. This is especially important now that 2016 is underway. This year, various trade and governmental organizations are releasing five major changes to the way the logistics industry operates.

Here are the updates you should educate yourself on to keep your shipping routine on track:

1. New Container Weight Mandate

There’s a lot of information on this new mandate, but what it boils down to is this: as of July 1, amendments made to the International Convention for the Safety of Life at Sea (SOLAS) by the International Maritime Organization’s (IMO) Maritime Safety Committee will require all shippers appearing on the bill of lading verify the gross container weight of their goods before shipping.

The amendments to SOLAS will help to reduce the amount of losses and general safety issues surrounding mis-declared cargo weight. According to Cox Wootton Lerner, shipping industry experts believe ⅔ of all cargo claims stem from mis-declaration and poor container packing techniques. Additionally, from 2006 to 2011, the logistics industry dealt with $12.8 million in losses because of cargo weight declaration issues.

The new container weight mandate doesn’t go into effect until July 1, but learning about the changes now means you can avoid problems down the road. Unfortunately, IMO hasn’t released enough information to make industry experts comfortable or even fully prepared, so it’s vital you keep reading up on the latest updates as they’re released. Start with this fairly thorough question-and-answer article on the new SOLAS rulings.

This new rule will not result in additional fees or penalties, but instead, your container can be left sitting on the loading dock. Carriers have stated, “they will refuse to load containers that aren’t certified.” An article by the Wall Street Journal has more information about the consequences associated with not following this requirement.

2. ACE Rollout

Before the end of 2016, U.S. Customs and Border Protection (CBP) is implementing a new paperwork filing system called the Automated Commercial Environment (ACE). According to the CBP’s official “ACEopedia” document, “ACE is the backbone of CBP trade processing and risk management activities and provides a single, centralized access point to connect CBP, Partner Government Agencies (PGA) and the trade community.”

What that means is this new system will be the only way for shippers to report imports and exports to the CBP and for the government to grant admissibility for such cargo. ACE will essentially streamline trade documentation filings and help the CBP more quickly determine if those filings comply with U.S. laws and regulations. In the long run, it should help everyone, but the transition process will definitely involve a learning curve.

The CBP made ACE mandatory starting May 2015 in terms of electronic manifest filing, but starting February 28, 2016, ACE will be the only way to submit electronic entry and entry summary filings. By October 1, the CBP will be solely reliant on ACE for all electronic portions of the cargo import and export process. The CBP has provided a good rundown of the mandatory ACE deadlines on its website to help you prepare for the upcoming changes in filing. And make sure to review the “ACEopedia,” as well.

3. Panama Canal Completion and Toll Increase

After years of construction and delays, the Panama Canal expansion project will finally be completed by May 2016. The expansion enables ships with nearly triple the capacity to pass through the waterway; currently, vessels of up to 5,000 TEUs can pass through, but the expansion will allow ships of up to 14,000 TEUs. Overall, the expansion will double the Canal’s capacity, resulting in not just major changes to the maritime industry as a whole, but also with the Canal’s economic dealings itself.

For starters, the Panama Canal Authority (PCA) has suggested a new toll policy which will affect container ships (these vessels were previously left out of the toll increases set forth in 2012 and 2014, according to the Journal of Commerce). PCA’s proposed toll increase, which will affect both the old locks and the new third one, will take into account the size, capacity, and frequency of vessels passing through the new Canal system. The Panama Canal toll increase will become effective starting April 2016.

Additionally, the PCA plans to implement a “customer loyalty program. This program would resemble the ones flyers experience through various airlines, just obviously at a much larger scale for shippers and their cargo. The loyalty program will reward the most frequent container shippers who reach a particular volume of 20-foot-equivalent units with premium prices. Obviously, if you’re a shipper planning to use the Canal on a regular basis throughout 2016, both the toll and loyalty program will affect your shipping routine.

4. Electronic Logging Device Rule

Moving the topic to land transportation for a moment, the Electronic Logging Device (ELD) rule is a new mandate by the Federal Motor Carrier Safety Administration (FMCSA) you want to start adopting in 2016. According to FMCSA, ELD is “intended to help create a safer work environment for drivers, and make it easier, faster to accurately track, manage, and share records of duty status (RODS) data.” Under ELD, truck lines will need to install an electronic device in all their trucks. These devices will integrate with the vehicles’ engines to track the exact amount of time a trucker has driven on each trip.

Since many truckers get paid per mile, there’s a tendency in the trucking industry for these drivers to want to put in as much mileage as possible so they can get a larger paycheck. Unfortunately, accidents can occur if a driver is too tired after many long hours on the road to pay attention to surroundings. In the long run, ELD will not only save overall trucking industry costs (from issues like claims), but will also decrease the amount of accidents and injuries that occur from trucks.

The ELD mandate doesn’t technically go into effect until December 18, 2017, so you can use all of 2016 to prepare your trucking line accordingly. However, it wouldn’t be wise to wait to get your drivers up-to-date on the new process or install the electronic tracking devices on your trucks all in 2017 alone. We suggest figuring out how many trucks you need to install an ELD on, choose a date you want to be done by, and calculate accordingly how many installations you need to do each day before that date.

5. WTO’s Tariff-Cutting Deal

In December 2015, 53 World Trade Organization (WTO) members representing information technology product exporters reached an agreement to end tariffs on over 200 products. A small list of these IT products includes GPS navigation systems, medical MRI machines, touch screens, and machine tools for manufacturing printed computer circuits. IT products included in the WTO pact are valued at more than $1.3 trillion per year, and they account for nearly 10% of the total global trade.

Thanks to the new WTO deal (the first of its kind since 1996), shippers of those IT products can expect around 65% of tariff lines to be eliminated by July 1, 2016. Obviously, the elimination of tariffs starting the summer of 2016 means big changes (mostly good!) for you if you’re an exporter of the included IT products. Not having to pay tariffs on over 200 IT products frees up space in shippers’ budgets, as they’ll be dealing with lower import prices.

And this benefit won’t just affect the exporters of those tech goods; all 162 WTO nations will have duty-free access to the markets of the 53 members who eliminated the tariffs. This means savings will be shared all around the world, and the IT sector will likely see job growth as it will see more demand for its soon-to-be non-tariffed goods. This is certainly a change to be happy about in 2016 which should aid your shipping routine overall.

The rest of 2016 will see plenty of changes to the shipping industry. New rulings like the container weight and ELD mandates are arriving to ensure better safety and fewer shipping problems, while changes like ACE, the Panama Canal toll/loyalty program, and the WTO tariff eliminations will affect the daily financial and procedural dealings of shipping companies as a whole. Keeping yourself up-to-date on all these new changes will ensure your shipping routine is as smooth as possible in 2016.

Which of these new changes will most affect your shipping routine this year? Are you worried about any one new rule in particular, and if so, why?

Nelson Cabrera
Nelson leads global business development efforts within ShipLilly and has been featured as a logistics expert in numerous publications, including SupplyChainBrain, The Bulletin Panama, Logistics Management, and the Miami Herald.

3 Comments on “New Shipping Rules and Regulations to Prepare For in 2016”

  1. Willin B A

    Item one will bring in additional costs globally for land transportation on either an Ex Works or FOB basis.

  2. Ric Carter

    I am curious if the ACE adoption will envelope existing program requirements such as AES, and/or possibly ISF filings as well. I would think that ACE would present a good opportunity to eliminate what looks to be some redundancy in these earlier reporting requirements.

    1. Nelson Cabrera

      Hi Ric-

      Thanks for your comment! According to U.S. Customs, “Export capabilities in ACE will incorporate those of the legacy Automated Export System (AES), while establishing a single automated processing platform for all export commodity, manifest, and licensing data.” They are also expanding single filing to include ISF data for ocean shipments.

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