Sunday, 11 November 2012

Cargo Containerisation – Integrating the World!!!

For the past thousands of years, people have been sea voyaging for human travel, trade across various countries /places or for cargo transportation during war times. Since sea travel was common and probably the only mode for long distance travel, there were various technological innovations to help build ships with larger cargo weight capacity coupled with higher speed. However, as Maritime History Professor Arthur Donovan indicated in one of his podcasts about poor turnaround times for ships. The ships spent almost 50% time at the ports to unload or load goods (labour intensive job) than actually sailing, thus leading to increased costs and higher lead times. The primary reason for increased time for loading / unloading cargo was due to break-bulk nature of cargo with varying pallet sizes, sacks, bags etc. Due to the labour intensive nature of the job, the dock workers actually manhandled the cargo and high percentages of cargo damages were the norm coupled with delays. There were some process improvements to increase efficiencies such as timber bundling, sacks foe coffee beans, pallets for stacking, however, the real problem was handling such cargo across various modes of transport such as rail and road.  
In 1795, Bejamin Outram opened the Little Eaton Gangway upon which coal was carried in wagons built at his Butterley Ironworks. The horse-drawn wheeled wagons on the Gangway took the form of containers, which, loaded with coal, could be transhipped from canal barges on the Derby Canal which Outram had also promoted. By the 1830s, railroads on several continents were carrying containers that could be transferred to other modes of transport. The Liverpool and Manchester Railway in the United Kingdom was one such. "Simple rectangular timber boxes, four to a wagon, they were used to convey coal from the Lancashire collieries to Liverpool, where they were transferred to horse drawn carts by crane."Originally used for moving coal on and off barges, "loose boxes" were used to containerize coal from the late 1780s, at places like the Bridgewater Canal. By the 1840s, iron boxes were in use as well as wooden ones. The early 1900s saw the adoption of closed container boxes designed for movement between road and rail. The US government used small standard-sized containers (steel boxes) during the Second World War, which proved an efficient means of unloading and distributing supplies. (Refer Wikipedia)

Malcolm McLean, a trucker by profession from North Carolina, struggled through the Great Depression years coupled with the war (1930’s & 40’s) and then started expanding post the war. He explored cheaper ways of cargo movement including moving the truck chassis itself on the railroad carrier; however it failed as the railroads considered trucking as its competition and almost killed this idea. Mclean then thought of an idea to move the boxes through sea as an alternative cheaper option. This gave birth to the modern idea of “containerisation”. In April 1956, he loaded the first ship with so called containers or steel boxes at Port Newark, and it carried 58 boxes to Houston, Texas, in a refitted tanker ship, the “SS Ideal X”. Those boxes were put ashore in a couple of hours, and further in a few more hours the boxes waiting to be shipped to New York were loaded on board and he turned that ship around within a day. This was a real significant development, as the ships would turnaround faster, sail most of the time and hence earn more coupled with lower cargo damages. It was a Kentucky distiller who was also handling imported spirits and he was simply struck by the fact that prior to containerization, his shipments of Scotch were often broken into— partially destroyed—and they could just salvage a percentage—not a high percentage—of the shipment, for sale. They had to patch up what they received. Then in 1956, the year in which Malcolm McLean sent his first container ships to Northern Europe, this man wrote to McLean and said, "Our first shipment sent in a container arrived in perfect shape, ready for sale." McLean had an eye on this market, because he had his container ships stop at a port in Scotland just to pick up Scotch whisky. It wasn't any large order there but that was much appreciated by the spirits distributors in America. (Refer – “The Box that changed the World” by Professor Arthur Donovan). Ship owners were more than a little skeptical about McLean's idea. This prompted him to become a ship-owner himself and he started his company Sea-Land Inc. At the end of the 1990s, McLean sold his company to the Maersk shipping company, but his company name lives on in the name Maersk Sealand.

Standardisation Efforts:
Corner Fittings
While the above development of containers did hold promise due to secure and dry storage conditions coupled with higher shelf life and lower damages, the entire system of ships and the ports including cargo handling mechanisms needed a change.  The use of containers spread rapidly but inconsistent sizes and corner fittings created major problems across the globe. Quoting Vincent Grey, the chairman of ISO TC104 during the early containerisation years:  "What emerged from the ISO Committee were Standard Container sizes that did not match either Sea-Land's or Matson's boxes. The corner fittings were different from theirs and so were the container ratings, the test methods, the marking system, the chassis securing method, and so forth. This was not a wilful effort to isolate the two pioneering companies but was the result of broadening the scope of operations within which the containers would have to survive. The emergence of an ISO Container depended on an amalgamation of service environments of a world-wide distribution system.” The International Organisation for Standardisation (ISO) recommended standards as follows: 
§  R-668 defined the terminology, dimensions and ratings  (January -1968)
§  R-790 defined the identification markings (July -1968)
§  R-1161 made recommendations about corner fittings - (January -1970) (refer corner fittings image)
§  R-1897 set out the minimum internal dimensions of general purpose freight containers (October-1970)

Political Issues:
The subject of container standardisation was first discussed at a UN/IMCO Conference in Geneva, 1972. In 1974, the UNCTAD formed an Ad Hoc Intergovernmental Group on Container Standards. It was to prepare a Convention on International Multimodal Transport. The report of the Ad Hoc group contained some very critical comments about ISO TC104's manner of operating. It objected to the larger dimensions, which were recurrently discussed at ISO meetings. The developing countries (Group of 77 or G-77) criticised the technical committee for failing to take their interests into account. They feared that larger containers would make earlier investments obsolete. Their criticism further pertained to problems of container handling in ports, to the special characteristics of the commodities exported by developing countries, to the infrastructural alterations which larger container dimensions required, and to procedural faux pas of TC104 (i.e. TC104 meetings were exclusively held in industrial countries and the experts, which drafted container standards, also came from these countries). The developing countries pleaded for universal adherence and application of ISO standards and objected to the voluntary nature of standardisation. Their idea was to have ISO standards universally adopted by making them part of the Convention on International Multimodal Transport. Defendants of the ISO system reiterated that standards are seldom universally applicable. The acceptance of ISO standards should be based on their technical merits and they should remain up to date. Each country should choose its own pace of change (Miyamoto, 1978).

Palletised Transport Vs Containers:
The Scandinavian countries pursued palletised transportation as against the containerisation. Olsen lines, a Norwegian Shipping Company defended the above with the following argument: “With the pallet as an integral part of the packing for internal transport within the factory, we have found it expedient to use it as the basis for the planning of our transport routines as well, instead of making it necessary to repack or to subject it to additional packing in the form of containers." Combination of pallet and containerisation resulted in wastage of space in the container and hence the idea failed.  
Current Container Standards:  
There are five common standard lengths, 20-ft (6.1 m), 40-ft (12.2 m), 45-ft (13.7 m), 48-ft (14.6 m), and 53-ft (16.2 m). United States domestic standard containers are generally 48 ft (15 m) and 53-ft (rail and truck). Container capacity is often expressed in twenty-foot equivalent units (TEU, or sometimes teu).
An equivalent unit is a measure of containerized cargo capacity equal to one standard 20 ft (length) × 8 ft (width) container. As this is an approximate measure, the height of the box is not considered, for instance the 9 ft 6 in (2.9 m) High cube and the 4-ft 3-in (1.3 m) half height 20 ft (6.1 m) containers are also called one TEU. Similarly, the 45-ft (13.7 m) containers are also commonly designated as two TEU, although they are 45 and not 40 feet (12 m) long. Two TEU are equivalent to one forty-foot equivalent unit (FEU).
The overwhelming need to have a standard size for containers, in order that they fit all ships, cranes, and trucks, and the length of time that the current container sizes have been in use, makes changing to an even metric size impractical.

Container Numbering, FCL, LCL:
Each container is allocated a reporting mark (ownership code) up to four characters long ending in the letter U, followed by a number up to 9 digits long.
A full container load (FCL) is an ISO standard container that is loaded and unloaded under the risk and account of one shipper and only one consignee. In practice, it means that the whole container is intended for one consignee. FCL container shipment tends to have lower freight rates than an equivalent weight of cargo in bulk. FCL is intended to designate a container loaded to its allowable maximum weight or volume, but FCL in practice on ocean freight does not always mean a full payload or capacity.
LCL is "a quantity of cargo less than that required for the application of a carload rate. A quantity of cargo less than that fills the visible or rated capacity of an inter-modal container." also can be defined as "a consignment of cargo which is inefficient to fill a shipping container. It is grouped with other consignments for the same destination in a container at a container freight station".
Types of Containers:
Various container types are available for different needs:
·         General purpose dry van for boxes, cartons, cases, sacks, bales, pallets, drums in standard, high or half height
·         High cube palletwide containers for europallet compatibility
·         Temperature controlled from −25 °C to +25 °C reefer
·         Open top bulktainers for bulk minerals, heavy machinery
·         Open side for loading oversize pallet
·         Flushfolding flat-rack containers for heavy and bulky semi-finished goods, out of gauge cargo
·         Platform or bolster for barrels and drums, crates, cable drums, out of gauge cargo, machinery, and processed timber
·         Ventilated containers for organic products requiring ventilation
·         Tank containers for bulk liquids and dangerous goods
·         Rolling floor for difficult to handle cargo
·         Gas bottle
·         Generator
·         Collapsible ISO container
·         Swapbody

Containerization issues:

1.    Increased Efficiency leading to potential job losses:
A 1998 study of post-containerization employment at United States ports found that container cargo could be moved nearly twenty times faster than pre-container break bulk. The new system of shipping also allowed for freight consolidating jobs to move from the waterfront to far inland somewhere, which also decreased the number of waterfront-jobs.

2.    Terrorist & Smuggling Hazards:
Containers have been used to smuggle contraband. The vast majority of containers are never subjected to scrutiny due to the large number of containers in use. In recent years there have been increased concerns that containers might be used to transport terrorists or terrorist materials into a country undetected. The U.S. government has advanced the Container Security Initiative (CSI), intended to ensure that high-risk cargo is examined or scanned, preferably at the port of departure.
3.    Reuse / Recycling Empty containers
Containers are intended to be used constantly, being loaded with a new cargo for a new destination soon after being emptied of the previous cargo. This is not always possible, and in some cases the cost of transporting an empty container to a place where it can be used is considered to be higher than the worth of the used container. This can result in large areas in ports and warehouses being occupied by empty containers left abandoned. However, empty containers may also be recycled in the form of shipping container architecture, or the steel content salvaged.
4.    Loss at sea
Containers occasionally fall from the ships that carry them, usually during storms; it is estimated that over 10,000 containers are lost at sea each year. For instance, on November 30, 2006, a container washed ashore on the Outer Banks of North Carolina, along with thousands of bags of its cargo of tortilla chips. Containers lost at sea do not necessarily sink, but seldom float very high out of the water, making them a shipping hazard that is difficult to detect. Freight from lost containers has provided oceanographers with unexpected opportunities to track global ocean currents, notably a cargo of Friendly Floatees.

BBC Container Tracking Project

The Box or BBC Box (BIC code: NYKU8210506) is a single ISO intermodal container that started to be tracked by BBC News in September 2008. The intention was to track the container for a period of one year, in a project to study international trade and globalization. The Box was fitted with tracking equipment and it started off empty, travelling to its first destination under the BBC branding. The first cargo was a consignment of whisky from a Glasgow-based bottling plant to Shanghai, China. On arrival in Shanghai, the Box was met and reported on by British school pupils on a trip to China. The voyage of this container was as follows:
Route; 1: Port of Southampton→ 2:Greenock→ 3:Southampton→ 4:Port of Singapore→ 5:Port of Shanghai→ 6:Port of Los Angeles→ 7:Port of New Jersey→ 8:Santos, Brazil→ 9:Hong Kong→ 10:Port of Yokohama→ 11:Laem Chabang, Thailand→ 12:Southampton
1.    Empty Container - From Southampton Maritime, England to a "dry port" at Coatbridge, Scotland (by rail, behind Freightliner 66594 NYK Spirit of Kyoto) to Paisley, Scotland (by road)
2.    Chivas Regal Scotch Whisky – From Paisley via Greenock, Scotland (by road) via Port of Belfast, Northern Ireland, to Port of Southampton (on board Vega Stockholm) via Suez Canal and Gulf of Aden: reloaded at Port of Singapore, to Port of Shanghai China (on board Copenhagen Express)
3.    Tape Measures, Cosmetics, gardening products for “Big Lots” -  From Port of Shanghai via Japan and Pacific Ocean to Port of Los Angeles, United States (on board NYK Star Light) via New Jersey (by rail) to Pennsylvania (by road)
4.    Ink / Spearmint flavouring / additives / polyester fibre – From New York (on board Iwato IMO9106807) to Santos, Brazil (by sea).
5.    Monosodium glutamate and auto parts – From Santos via Cape of Good Hope and Singapore (on board Aquitania, IMO 9178288), reloaded at Port of Hongkong to Port of Yokohoma Japan (on board NYK Clara, IMO9355408)
6.    Various Consolidated cargo - From Yokohoma (on board Ratana Thida/230, IMO 9117129) to Laem Chabang, Thailand
7.    Tinned catfood – From Lat Krabang, Bangkok, Thailand to Southampton, UK.  

McLean’s "containerization” process of using large containers to hold goods on cargo ships allowed huge increases in port and ship productivity, helping to lower the cost of imported goods. The container transformed economic geography, devastating traditional ports such as New York and London and fuelling the growth of previously obscure ones, such as Oakland, California and Tanjung Pelepas, in Malaysia. By making shipping so cheap that industry could locate factories far from its customers, the container paved the way for Asia to become the world's workshop and brought consumers a previously unimaginable variety of low-cost products from around the world. With almost 90% of non break-bulk cargo being containerised coupled with the containerisation standards the integration of world through economic trade is fairly evident.  

References: Wikipedia, The Standardised Container – Gateway technologies in Cargo Transportation (TM Egyedi), “The Box that changed the World” by Professor Arthur Donovan)

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