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CONTAINERISATION

1 Prof. Ashok Advani - Jaipuria Institute of Management, Noida

Definition

Containerization

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Prof. Ashok Advani - Jaipuria Institute of Management, Noida

Containerization - Definition

A container is a single, rigidly sealed, reusable metal box in which merchandise is shipped by vessel, truck

or rail.

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Freight Container

Containerization

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Containerization – Freight Container

• A freight container is an article of transport equipment with the following characteristics:

• Strong for repeated use

• Designed to facilitate carriage of goods by one or more modes of transport, without intermediate re-loading

• Fitted with devices for ready handling [transfer from one mode of transport to another]

• Designed for easy filling and emptying

• Has an internal volume of at least 1 cu. Meter [35.3 cu.ft.] or more

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History

Containerization

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History of Containerisation

Before 1956 cargo was loaded and unloaded to and from the hold of the ship using cranes and slings. This required costly manpower, was time consuming and sometimes resulted in damaged or lost cargo.

Malcom Purcell McLean may be considered the father of containerisation. In 1956, McLean developed the metal shipping container, which replaced the traditional break bulk method of handling dry goods and revolutionized the transport of goods and cargo worldwide. He later founded Sea-Land Service, Inc., one of the pioneers in the intermodal cargo transport business. McLean was named "Man of the Century" by the International Maritime Hall of Fame.

Prof. Ashok Advani - Jaipuria Institute of Management, Noida 7


History of Containerisation

80’s-90’s

• Few carriers, focused trades

• Regional players

• Smaller ships 2000 teu – 4000 teu

• Not service sensitive

• Hub and spoke model

• Transpacific, transatlantic trade dominant

• Average growth of 8.5% Y-o-Y

2000-2011

• Commoditization of container shipping

• Globalization of networks

• More direct products, fewer hubs

• Rate wars, with escalating oil prices

• Large tonnage -8000 TEU ships

• Service reliability

• Slow Steaming

• Rationalization of services

• Laying up of ships

• Far East, India focus

• Average growth of 6.6% Y-o-Y

2012 +

• Larger tonnage – 13000 TEU ships

• Expansion of the Panama canal by 2014 (revolutionize world trade further)

• Aggressive competition, plummeting rates,

• Laying up of ships

• Survival of fittest, with deep pockets

• Few causalities

• Higher demands from trade on reliability, frequency

• Consolidation of service, shipping lines

• South America and Africa focus


Container Vessel Evolution


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Containerization

• Malcolm Mclean – “Father of Containerisation”

• Conceived the idea of using the entire truck trailer to load onto & off the ship

• In 1956 Malcolm adopted a ship for carrying containers

• Established the multimodal transportation company called “Sea Land Inc.”

• 1961 – Regular container services commenced

[New York – Los Angeles – San Francisco]

• 1966 – Transatlantic container service commenced

[America – Europe – capacity 1000-1500 TEU’s – 20-30 knots]

• 1970’s – Panamax ships

[L - 289.5 Meters, Beam – 32.3 Meters, Capacity – 1500-3000 TEU’s]

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Containerization

• 1970’s – cellular container vessels

• 1980’s – Panamax ships – 4000 TEU’s

• 1990’s – Post Panamax ships – 4400 TEU’s

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Development

Containerization

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Containerization - Development

• Increasing drafts to 52 feet

• Vessel sizes - 8000 TEU’s

• Increase in container berths

• Installing suitable material handling equipment

• State-of-the art technology

• 2001 – 200 million TEU’s worldwide

• 2012 – 500 million TEU’s worldwide

Singapore – 307,27,702

Hong Kong – 244,04,000

USA – 429,02,041

UAE - 167,80,386

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Containerization – Traffic Handled

Container Handling – Major World Ports

Rank Port, Country Volume 2012 (Million TEUs)

Volume 2011 (Million TEUS)

1 Shanghai, China 32.53 31.74

2 Singapore,Singapore 31.65 29.94

3 Hong Kong, China 23.10 24.38

4 Shenzhen, China 22.94 22.57

5 Busan, South Korea 17.04 16.18

6 Ningbo-Zhoushan,

China 16.83 14.72

7 Guangzhou Harbor,

China 14.74 14.42

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Container Handling – Major World Ports

Rank Port, Country Volume 2012 (Million TEUs)

Volume 2011 (Million TEUS)

8 Qingdao, China 14.50 13.02

9 Jebel Ali, Dubai,

United Arab Emirates 13.30 13.00

10 Tianjin, China 12.30 11.59

11 Rotterdam, Netherlands

11.87 11.88

14 Hamburg, Germany 8.86 9.01

15 Antwerp, Belguim 8.64 8.66

33 Jawaharlal Nehru,

India 4.26 4.32

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TRAFFIC HANDLED AT MAJOR PORTS (LAST 7 YEARS)

2005-06 TO 2011-12

Mill. Tonnes

PORT 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

KOLKATA 10.80 12.60 13.74 12.43 13.05 12.54 12.23

HALDIA 42.33 42.46 43.59 41.79 33.38 35.01 31.01

PARADIP 33.11 38.52 42.44 46.41 57.01 56.03 54.25

VIZAG 55.80 56.39 64.60 63.91 65.50 68.04 67.42

ENNORE 9.17 10.71 11.56 11.50 10.70 11.01 14.96

CHENNAI 47.25 53.41 57.15 57.49 61.06 61.46 55.71

TUTICORIN 17.14 18.00 21.48 22.01 23.79 25.72 28.11

COCHIN 13.89 15.26 15.81 15.23 17.43 17.87 20.09

NMPT 34.45 32.04 36.02 36.69 35.53 31.55 32.94

MORMUGOA 31.69 34.24 35.13 41.68 48.85 50.02 39.00

MUMBAI 44.19 52.36 57.04 51.88 54.54 54.58 56.18

JNPT 37.83 44.82 55.84 57.29 60.76 64.31 65.75

KANDLA 45.91 52.98 64.92 72.23 79.50 81.88 82.50

TOTAL 423.56 463.78 519.31 530.53 561.09 570.03 560.15

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Containerization - Development

Toyota & Honda use containerization to develop just-in-time manufacturing. They manufacture the goods only as the customer needs them and then ship them in containers to reach the buyer at a specified time

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Containerization

What is Unitization ?

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Containerization - Unitization

Unitization is combining small units of load into a single large unit, by strapping or binding them

together

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Methods of Unitization

• Pallet

• Platform

• Wooden boxes or bags strapped to the pallet

• Handled by a hand truck or twin forks of forklift truck

• Containerization – most advanced form of unitization

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Containerization - Sizes

• 20, 40 and 45 feet long

• Load carrying capacity of a ship measured in terms of TEU’s it can carry

• A TEU represents a 20-feet equivalent unit of a container

• A FEU represents a 40-feet equivalent unit of a container

[1x40’ = 2x20’]

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Containerization - Types

Dry Storage Container – 20’, 40’ GP & 40’ HC

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Flat Rack Container – 40’

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Open Top Container – 20’ & 40’

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Reefer Container – 20’ & 40’

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Insulated or Thermal Container – 20’ & 40’

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Tank Container

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Car Carrier

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Special Purpose Container

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Swap Bodies

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Half Height Containers

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Containerization - Dimensions

Standard External Container Dimensions

20’ 40’

Container Length

20’ 40’

Container Width

8’ 8’

Container Height

Standard 8’6” 8’6”

High Cube 9’6” 9’6”

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Standard Internal Container Dimensions

20’ 40’

Inner Length 19’3” 39’4”

Inner Width 7’7” 7’7”

Inner Height

Standard 7’9” 7’9”

High Cube 8’9” 8’9”

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Standard Container Cubic Capacity

20’ 40’

Cubic Capacity

Standard 1160 cu. ft. 2360 cu. ft.

High Cube 1310 cu. ft. 2660 cu. ft.

Tare Weight 2.5 M.T. 4.5 M.T.

Gross Payload 24 – 30 M.T. 30 M.T.

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Containerization - Benefits

• Shipper

• Ship Owners

• Port Authorities

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Containerization – Benefits - Shipper

Reduction in Transportation Costs

• Containerized cargo economical than break-bulk cargo

• Attractive rates from S/Lines – Cost saving benefits to customers

• Global contracts – Multinationals use global volumes for price discounts

• Walmart

• Ikea

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Saving in Port Charges

• Containerized cargo economical to handle

• Economical as compared to break-bulk cargo

• Ease & speed of handling by overhead cranes & forklift trucks

Reduction in Warehousing & Inventory Costs

• Reduced time in warehouses

• Reduced time in transit

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Reduction in Packing Costs

• Container provides protective metallic cover to cargo

• Protects cargo from

• Pilferage

• Damage from water, oil etc

• Damage due handling

• Expensive packing material not required

Reduction in Insurance Premium

• Better protection given by containers

• Lesser chances of damage, pilferage, theft etc

• Lower insurance premiums passed on to customers – increases competitiveness

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Greater Convenience

• MTO assumes responsibility

• Risk coverage

• Better co-ordination

• Door to door delivery

Emergence of New Markets

• Cheaper Ocean Freights

• Reduction in transaction costs due EDI

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Benefits to Ship Owners – S/Lines

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Containerization – Benefits – Ship Owners

Reduction in Turn Around Time

• Faster handling

• Dedicated container terminals

• Lesser time in ports

• Saving in port charges

Increased Cargo Carrying Capacity

• Carrying more tonnage

• Higher operating speeds – faster round voyage time

• Reduced idle time in ports

• General cargo ships – 50% of voyage time in ports

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Global Contracts [Ship Owners/S. Lines – Shippers]

• S/Lines secure base cargoes

• Guaranteed large volumes

• Profitable voyages

• MNC’s – Global Contracts

• Proctor & Gamble

• General Motors

• Nestle

• Samsung

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Higher Profitability

• Cost modern container ship – exceeds USD 75 million

• High operating cost of container vessel – USD 50,000 per day

• Standing cost in port – USD 5,000-6,000 per day

Inland Operations

• Manufacturing bases moved to hinterlands

• Proximity of activities to manufacturing bases

• Undertaking movement of containers to inland locations

• Adds to revenue

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Benefits to Port Authorities

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Containerization – Benefits – Port Authorities

Reduced Port Congestion

• Faster unloading & handling of containers

• Faster “Turn around Time”

• Ports recognized as a major revenue source

• Infrastructure development

Time Saving

• Unique Serial Number

• Easy identification in container yards [EDI]

• Faster movement

• Vessel Load Plans [EDI]

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