Tougher US rules signal further debate on cargo transponders
8 October 2007
The debate over whether ship containers should be fitted with transponders (devices which allow owners and insurers to pinpoint their whereabouts) throughout a journey has intensified following new proposals from the US.
As part of the 9/11 Commission Recommendations Act, the US wants to force all containers to be scanned for nuclear materials at the last port of call before reaching the US, prompting unrest from the shipping firms and port authorities around the world. However the proposals have hastened the debate over the use of transponders.
The issue of ‘misdirected cargo’ (containers loaded onto the wrong vessels) has been a matter of some concern for shipping firms and insurers over the past decade.
The loss of the Hyundai Fortune in March last year highlighted the issue of just how much knowledge the shippers had of which containers were on a particular vessel.
A recent total loss close to the Panama Canal found that the substance being transported in some of the containers was not what had been declared on the manifest, but was in fact a far more volatile derivative of the substance that had played a part in the explosion causing the loss.
The threat of terrorism, and the threat that containers could be used by terrorists to move weapons around the world, has seen a hard line taken by the US but there has also been genuine concerns among international shipping firms and owners.
Given those concerns, the use of transponders has been a topic of conversation and while it would be welcomed by underwriters it is a decision for the container and goods owners as marine manager of the Lloyd’s Market Association, Neil Smith, explained.
“There has been a great deal of discussion over the misdirection of containers and the use of facilities which will enable the owners to better track their containers,” he added. “This is not a new debate in some ways, the London Joint Cargo Committee was approached a decade ago by one of the scientists that we work alongside who had come up with a device which could be placed inside the container.”
The device is removed at the end of a journey and any damage or loss can be electronically interrogated, giving details of temperature and moisture levels and any undue occurrence, which would aid the investigation into how the goods were impaired.
However, Smith said such devices are not easily accessible for all insurers.
“These items were quite cheap to produce at around £5 per unit but in the competitive world of container shipments, it would add a great deal of cost to the bottom line and we as insurers cannot force policyholders to spend their money.
“It is a case of competitive advantage. If an insurer insists on transponders but another does not then there was every likelihood the policyholder will go for the cheaper option.”
However he added the increased pressure from global governments could provide a renewed impetus.
“I think that the increased security measures following 9/11 particularly on goods entering the US may have an effect,” explained Smith. “There is now a greater emphasis on the tracking of goods and containers which are bound for the US and this may well have an impact on what the cargo market has to do to meet the demands of the international governmental agencies in the future.”
Last updated on 11 Oct 2007
