In response to a series of incidents – and with the intention of protecting, restoring and ensuring safety in the local ecological environment – China enacted the Yangtze River Protection Law on 26 December 2020, which then came into force on 1 March 2021.

At nearly 3,000km in length, the primary waterway of the Yangtze River provides access to numerous ports in China including Taicang, Nantong, Jingjiang, Yangzhou, Nanjing and Wuhan.

The new river protection law states, at paragraph 2 of Article 51: 

“It shall be prohibited to transport acutely toxic chemicals by water and other dangerous chemicals of which the transportation by inland river is prohibited under the provisions issued by the state in the Yangtze River Basin” 

On 18 February 2021, the Shanghai Maritime Safety Administration (MSA) issued a notice on implementing this Yangtze River Protection Law along the Shanghai Section of the Yangtze River with effect from 1 March 2021.

This new law is applicable to export, import, transit and transfer shipments of the identified cargoes in the Yangtze River Basin and extends to include all types of ship, including container ships.

“This new law is applicable to export, import, transit and transfer shipments of the identified cargoes in the Yangtze River Basin and extends to include all types of ship, including container ships” 

Geographically, the Yangtze River Protection Law applies throughout the entire Yangtze River Basin, while the MSA Notice is only applicable to the Shanghai section of the river. Being at the mouth of the Yangtze River, part of the water area of Shanghai falls within the Yangtze River Basin.

The identified cargoes comprise: 

• Acutely toxic chemicals (those marked as having ‘acute toxicity’ in the remarks column of the Catalogue of Hazardous Chemicals (2015 Edition - English version). A Chinese text is also available.
• Other dangerous chemicals forbidden to be transported by inland river (those chemicals listed in the Catalogue of Prohibited Dangerous Chemicals by Inland River (2019 Edition) – only available in Chinese.

It is important to note – since TT commonly is more focused on intermodal transport – that the Catalogue of Prohibited Dangerous Chemicals distinguishes between cargoes that are prohibited regardless of packaging and those that may be transported in packaged form, in regulated packaging and packed in containers (including tank containers).

It is also relevant that the MSA will rely on CAS numbers for the identification of the prohibited commodities, which provides a globally recognised index of chemicals, but does not address the chemical hazards or harmonisation around packaging, marking and communicating etc. that is relied upon in transporting Dangerous Goods, being the Globally Harmonized System of Classification and Labelling of Chemicals (GHS).

Consequences

The law extends an existing prohibition of transportation of such cargoes on inland waterways in China to forbid ships from carrying highly toxic substances and other dangerous chemicals on the Yangtze River and provides a series of potential penalties for those who fail to observe the requirements. 

“The law… provides a series of potential penalties for those who fail to observe the requirements” 

Enforceable by the competent department of transportation or the MSA, Article 90 sets out legal liability and the wide-ranging associated penalties including:

• Order the offender to take corrective actions, confiscate its illegal income, impose a fine of not less than CNY200,000 (around USD30,700) but not more than CNY2,000,000 (roughly USD307,000) on the offender; 
• Impose a fine of not less than CNY50,000 (around USD7,700) but not more than CNY100,000 (about USD15,400) on each directly liable person in charge and other directly liable persons; 
• For serious violations, order the suspension of business for consolidation or suspend the relevant permit. 

The primary focus of the penalties would be the owner/charterer of the ship. However, if it is discovered that the shipper or cargo owner – beneficial cargo owner (BCO) – has mis-declared the cargo and the carrier has unwittingly transported it into the protected area, the maritime authorities will also seek to impose the available penalties on the BCO. As a result, in intermodal trades and particularly consolidated movements, freight forwarders and logistics operators may also be exposed.

Mitigating the risk exposure

Affected actors in the supply chain should familiarise themselves with this new law, its scope and the potential penalties for non-compliance. It would be prudent to take this opportunity to review existing processes and procedures around cargo control to ensure that they remain fit for purpose and effective in protecting your business.

While not exhaustive, you could consider:

• Collaborating with your customer(s) to identify whether the goods they intend to ship fall within the scope of those cargoes identified within the scope of the Yangtze River Protection Law;
• Performing due diligence on the customer and the cargo as declared, including additional screening measures for relevant cargo movements;
• Requesting the shipper to submit all cargo relevant data in order to verify information provided using independent resources;
• When the composition of the cargo is unclear, seeking advice from a competent chemical expert;
• Being cautious when accepting bookings from unknown or less sophisticated customers, for which additional vigilance would be recommended;
• Potentially obtaining a letter of indemnity issued or supported by a reliable party, which puts your counterparty on notice about the seriousness of the concerns.

-

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club