Exporters and importers will have picked up from shipping companies that the international container liner lines are tightening up on requirements that shipping containers be secured with high-security seals.
This may not, however, know the background to this nor have a clear understanding of what steps they need to take, so the intent of this column is to shed some light on it.
What is happening is that several companies — among them OOCL and MSC — have sent notices to shippers telling them that if they are responsible for supplying and affixing high-security seals on their containers, they have to comply with a new standard called PAS ISO 17712:2013.
In MSC’s case, it has stated that all containers moving under one of its bills of lading must be sealed with a high-security bolt seal compliant with the standard as from July 1, 2014.
“MSC shall make MSC High-Security Bolt Seals available with all empty scalable containers released,” it said. “If clients choose to use their own seals, they must be compliant with ISO PAS 17712:2013. Any costs that may be incurred due to non-compliance will be passed on to the shipper.”
The reason this is happening is that the International Standard Organisation(ISO) has, since 2003, carried out periodic reviews of the minimum requirements for approved seals. The previous standard was set in 2010 and the new one, which was established in 2013, has become operative.
ISO 17712:2010 establishes uniform procedures for the classification and “acceptance of mechanical container seals. It provides a single source of information on seals that are deemed acceptable for securing containers in international commerce.
It also establishes that the purpose of mechanical seals is, as part of a security system, to determine whether a shipping container has been tampered. Seals that conform to ISO 17712:2010 are suitable for other applications such as railcars or truck trailers used in cross-border and domestic operations.
The new standard states that seals compliant with the previous standard will no longer be compliant with the new standard unless those seals are backed by an accredited third-party certificate.
This change concerns Clause 6, Evidence of Tampering, because tamper-related tests in the 2010 edition have been shown to be impractical.
The new edition addresses tampering via third-party process inspections as part of the manufacturer’s quality operational procedures. Internally-generated and managed tests of tamper evidence are acceptable as long as they are part of the manufacturer’s documented quality programme.
Manufacturers who wish to offer 17712-compliant seals must establish tamper-mitigation procedures for the design and manufacturing process, which will stand up to an audit check.
The onus is now on seal buyers to specify purchase of Clause 6-compliant seals. The US Department of Homeland Security has been pushing for international adoption of the standard, and other countries are following suit.
The focus on container security comes at a time when the Through Transport (TT) Club, which specialises in insurance for logistics operators, is warning of the dangers of container theft. The club has four underwriting centres in London, New Jersey, Hong Kong and Sydney and a network of claims offices in a further 16 countries.
It recently produced a StopLoss Bulletin on Container Loss, which said that while small-scale theft is hard to eradicate, the problem is more serious when thieves target containers in bulk.
In one recent case in Kuwait, a shipper, previously unknown to lines, requested the supply of boxes from a number of different carriers, backed by tentative bookings. In total over 200 TEUs were gathered.
After a period of time had passed and no fulls had been returned, or bookings formalised, one carrier became suspicious and tried to track down the shipper. He could not be found and neither could the shipping containers. The suspicion was they had been shipped to another country and sold for scrap.
The TT Club, working with its members and lawyers, is trying to recover the containers while at the same time asking the authorities to prevent yard operators from painting or selling on the boxes until the case is resolved.
With this example and others in mind, the TT Club has issued advice to lines, shippers and agents to help prevent such frauds. Among the suggested steps are to exercise an increased level of due diligence when dealing with a first-time shipper, or if you perceive a significant change in a customer’s operating patterns.
Be particularly vigilant where the request is for a significant number of units, or if a second batch of units is ordered before returning the first, or if the order is for a number of high-value units, specifically reefer or tank containers.
Another safeguard is to ask for financial security in the form of cash deposit or bank guarantee. The bonafide shipper may feel this is inconvenient and costly, but it is important to have safeguards that can be relied on rather than a letter of indemnity, or cheque that is likely to be worthless if it comes from a shipper who escapes.
The club’s final observation is that while lines give much attention to cargo management — seeking to ensure that cargo entered into the supply chain is correctly declared, packed and placarded — they need to give much greater attention to the control over their container stock. Tight customer checks are part of that discipline.