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There are several reasons:
- The rules deal only with obligations between the seller and the buyer. The International Maritime Organisation’s VGM rules deal with Safety of Life at Sea (SOLAS) matters outside of these obligations.
- VGM refers only to shipments in containers. That immediately eliminates VGM being relevant to the four “maritime” rules which are not for use with container shipments.
- VGM refers only to shipments in containers. None of the “any mode/s” rules deal specifically with shipments in containers, they are silent about the mode/s.
- VGM refers only to full containers being declared by the party submitting them to the vessel operator. That means if a house B/L is used for an FCL it will be the issuer of that HBL who is the declarant as the shipper on the master B/L. Similarly with LCL where the consolidator is the declarant.
- The declarant might be another party in a string sale.
I might have missed some more obscure reasons, but the above should suffice.
Reader’s comment:
Want to add something to this matter.
It is to be considered that for container shipments there always is a cost for VGM: the VGM declaration as such to the carrier by the booking party, possibly added with container weighing procedures in case the supplier is not able to render a proof of cargo weight as per the 2 methods.
The VGM declaration fee will be for account of seller or buyer depending on moment of cost transition as per each incoterm. So for EXW and FCA it will be for the buyer since the buyer’s rep in port of loading (booking party) will have to declare VGM to the carrier in order to get the container loaded.
Bob’s response:
In some countries there is no cost for declaring the VGM – the VGM can be determined by calculation or known weights rather than actual weighing, and where actually weighed that could be part of another necessary process such as bulk grains in a container.
In Australia for example the VGM is then declared as part of an on-line process for receival into the terminal with no extra cost. But broadly-speaking yes, for EXW and FCA any cost incurred subsequent to delivery is for the buyer.
Reader’s comment:
I have a question referring to the verified gross weight. under “SOLAS”, the shipper is responsible to provide the accurate VGM for containers. And this implies being able to use either methods 1 or 2.
What if the “EXW” seller is also the shipper, when it loads the goods on the buyer’s transport?
The ICC makes a reference to the VGM (Differences between Incoterms 2010 and 2020), but not much about responsibilities and obligations, so how relevant is it for the EXW Incoterms rule if misused by seller?
Reader’s comment:
Don’t want to play the big teacher here, but have to see that things are not mixed up. For ocean shipment the fact of seller being shipper in B/L is irrelevant to the fact of him loading the cargo or not. It depends on how B/L is issued as per buyers instructions (and personally I would not want to be mentioned in B/L as EXW/FCA/FOB seller since not in favor of being in contractual relationship to carrier).
The carrier will turn to booking party (representative of buyer in your EXW exemple) in case of problems with VGM, who will have to turn to EXW supplier if root cause lies with him.
Hope this helps you out. Shows also how far incoterm discussions can bring us in case of problems. As long as no problems, everything will find its way.
Bob’s response:
Yes, the reason that the Incoterms rules do not deal with VGM are various. For starters, in EXW the seller is not in any form or way the shipper on the B/L, that would be a complete misuse of the rule.
Want to find out more about Incoterms® Rules 2020?
We have summarised the 11 Incoterms which have recently been revised by the ICC Incoterms Drafting Committee for 2020.
View our Incoterms® Rules 2020 hub here with free guides, podcasts, videos and content!
