CONTAINERISATION

IN TRADE LOGISTICS
 CHAPTER OBJECTIVES
• To explain the history of development of containers in
international trade logistics.
• To discuss the concept of container and evolutionary trends of
containerization in India.
• To explain the process of standardization of containers in
international trade logistics.
• To explain the advantages and disadvantages of
containerization in international trade logistics.
• To discuss the various types of containers used in
international trade logistics.
• To explain the pros and cons of hiring and owning the
containers for international logistics operations.
 CHAPTER OUTLINES
• Introduction
• Concept & Evolution of Containerization
• Standardization Of Containers
• Air Cargo Containerization
• Double-Stack Containerization In Trade Logistics
• Advantages Of Containerization
• Disadvantages Of Containerization
• Numbering & Marking Of Containers
• Classification Of Containers
• Stuffing Plan for Cargo Containers
• Owning, Hiring and Leasing of Cargo Containers
 INTRODUCTION
• Containerization is a revolution as it has transformed the contours of the global
logistics industry by consolidating the various types of cargo through
containers, thus, promoting increased world trade.
• The use of containers, in international trade logistics operations, has not only
facilitated, but has also revolutionized the carriage of goods among all
countries in general, and developed countries, in particular.
• In international logistics operations, containerization of trade refers to the
system of intermodal
• freight transport of containerized cargo from one country to another involving
one mode or more than one mode of transport.
• Containers are available in different sizes in order to facilitate the packing,
stowage, safety, physical protection, stevedoring, and material handling of
different types of cargo. The selection of containers also depends on the
suitability of the trade route.
• A container is a special box designed to carry freight in international trade
operations. It is strong, stackable, and allows horizontal or vertical transfers of
cargo for easy stuffing and destuffing of internationally traded cargo.
 Concept of Container
• The International Organization for Standardization
(ISO) defined a freight container as “Container is an
article or transport equipment,
– Of a permanent character and accordingly strong enough
to be suitable for repeated use,
– Specially designed to facilitate the carriage of goods by
one or more modes of transport, without intermediate
reloading,
– Fitted with devices permitting its ready handling,
particularly its transfer from one mode of transport to
another,
– So designed as to be easy to fill and empty:
– Having a definite internal volume as prescribed by ISO.
 Containerization Versus Packaging: What is Better
Factor Case for Container Case for Cargo Packing
Costs of Cost of material handling through container is less LCL cargo can be unitized or palletized as a
Handling than cargo packing in case of break bulk cargo. single unit thus there will lower freight
Containerized cargo also attracts lower freight and rates, reduced cargo handling and saving in
material handling rates due to lesser times of shipping cost in comparison to
handling of consolidated cargo. containerized cargo.

Safety to the Containerization is must for international Cargo such as machine, generators etc are
Cargo transportation as crates and packages can get strong enough to withstand the physical
damaged. Cargo packing is also exposed to hazards and can be palletized for
potentially high level of physical damages, pilferage international transportation without
and other losses in comparison to containers. containerization.

Environment Containers protect environment as cargo can be de- One can transport the cargo without
stuffed at destination and container can be reused containers in cases where there is no need
without posing any environmental hazards. of packing or it is reusable or recyclable.

Creation of Containers has to be handled at various stages of Packing material is required again and
Employment logistics operations such as loading, unloading, again for internationally traded goods as
stuffing & destuffing, re-working, distribution of original packing ends with the life of
cargo, redelivery or repositioning etc thus creating products. There is lot of job creation in case
jobs at all levels of handling in logistics operations. of cargo packing as well.

Temporary Containers are strong enough to act as temporary There is case of cargo packing for cargo
Storage storage facilities in international logistics. Container which is strong enough to withstand the
Facilities also protect the cargo from rain, winters, sunlight various physical hazards associated with
and also from any risks of theft or damage. international logistics and are not prone to
pilferage, thefts and other losses.
 World Container Port Throughput in Key
Economies 2008-2012 in TEU
YEAR 2008 2009 2010 2011 2012
Total Of World Container
Throughput 516255115 472273661 540816751 580022279 601772123

Australia 6102342 6200325 6668075 7011580 7182853

Brazil 7256291 6590363 8138608 8536262 8864368

China 115941970 108799933 130290443 143896697 155017351

Germany 17183042 13296300 14821766 17218711 16055578

India 7672457 8014487 9752908 9979223 9826248

Indonesia 7404831 7255004 8482635 8966145 9324791

Korea, Republic of 17417723 15699663 18542803 20833507 21453964

United Kingdom 8236522 7671299 8590282 8920679 9277506

United States 42411770 37353574 42337513 42999148 43098221

Busiest Container Traffic Ports in World and
India
Ran Name of Port Name of Country Volume 2012 (Million
k TEUs)

1 Shanghai China 32.53

2 Singapore Singapore 31.65
3 Hong Kong China 23.10
4 Shenzhen China 22.94
5 Busan South Korea 17.04
6 Ningbo-Zhoushan China 16.83
7 Guangzhou Harbour China 14.74
8 Qingdao China 14.50
9 Jebel Ali, Dubai UAE 13.30
10 Tianjin China 12.30
33 JNPT Mumbai India 4.32
Top Ten Container Operators in International
Trade Logistics
3000000
2536335
2500000
2121747
2000000

1500000 1342190

1000000
648157 645462 626106 607055 553232
472691 434337
500000
16.00% 13.30% 8.40% 4.10% 4.10% 3.90% 3.80% 3.50% 3.00% 2.70%
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Source: UNCTAD 2013

 Trends in Container Traffic at JNPT and at All
Major Ports of India
Trends in Container Traffic at JNPT and at All Major
30000 Ports of India
7713
25000
20000 2012-13
7707
2010-11
15000 4259
2008-09
10000 4332 6666
2005-06
3953
5000 4613
2667
0
JNPT Mumbai All Major Ports
STANDARDIZATION OF
CONTAINERS
 Phases of ISO Negotiations for
Standardization of Containers
Year of Phase Areas of Recommendation for
Discuss of Standardization
ions Discussi
ons
January R-668 Aimed at defining the terminology,
1968 dimensions and ratings of Containers

July R-790 Aimed at defining the identification

1968 markings of Containers

January R-1161 Aimed at making recommendations about

1970 corner fittings of Containers

October R-1897 Set out the minimum internal dimensions of

1970 general purpose freight containers
Standard Sizes of Containers Used in
International Logistics
Twenty Feet Equivalent Container 20 Feet (6.1 meters)

Forty Feet Equivalent Container 40 Feet (12.2 meters)

Forty Five Feet Equivalent Container 45 Feet (13.7 meters)

Forty Eight Feet Equivalent Container 48 Feet (14.6 meters)

Fifty Three Feet Equivalent Container 53 Feet (16.2 meters)

Fifty Eight Feet Equivalent Container 58 Feet (18.0 meters)

 Standard Size, Dimensions, Volume and Load
Capacity of Standard Containers
20 Feet Container 40 Feet Container
Metric Metric
External Length 6.058 M 12.192 M
Dimensions
Width 2.438 M 2.438 M
Height 2.591 M 2.591 M
Interior Length 5.758 M 12.032 M
Dimensions
Width 2.352 M 2.352 M
Height 2.385 M 2.385 M
Door Aperture Width 2.343 M 2.343 M
Height 2.280 M 2.280 M
Volume 33.1 M 67.5 M
Maximum Gross Mass 24,000 Kg 30,480 Kg
Empty Weight 2,200 Kg 3,800 Kg
Net Load 21,600 Kg 26,500 Kg
 Air Cargo Containerization

• Air Cargo Pallets

• Contoured Air Cargo Containers
• Lower Deck Containers
• Box-Type Containers
 Reasons for Increasing Use of Containers in
Air Transport

It reduces the It ensure

It minimizes Containerized cargo Containerized cargo is
multiple handling of most
the number allows the use of not exposed to
the cargo at air cargo efficient use
of individual mechanical handling weather, biological
terminals at the time of cubic
pieces of systems and equipment and chemicals losses,
of loading and capacity of
cargo by which prompt the theft, pilferage and
unloading and keeps the aircraft,
consolidatin loading and unloading handling damage
goods intact, free thus saving
g it with process thus reducing while in custody of
from handling in air cargo
containers. export cycle time. the air carrier.
hazards. freights.
Proposed Dedicated Freight Corridor for Double Stack
Container Train of India
Western Corridor: From Jawaharlal Nehru
Port (JNPT) in Mumbai to Tuglakabad and
Dadri near Delhi 1499 km. This phase is
largely funded by Japan International
Cooperation Agency. Western corridor will
be fully operational by 2018.
Eastern Corridor: From Ludhiana to Punjab
to Dankuni near Kolkata (1839 Kms). This
phase will be completed by funding from
World Bank, Government of India
Budgetary support and through public
private participation. Eastern Corridor will
be fully operational by 2019.
Advantages of Containers in Trade Logistics

• Increase in Logistical Efficiency

• Permits Door To Door Services
• Reduced Risks of Cargo Thefts, Pilferages and Damages
• Lower Packing Needs
• Quicker Transit Times
• Increasing Trade Volumes Generate Greater Economies of Scale
 Advantages of Containerization in Trade
Logistics
Permits Door To • Containers are Standard in Size (ISO Container) and can be used anywhere in the world at
Door Services different types of ships, trucks, barges and railway wagons.
• Containers can be used for all types of cargo i.e. raw materials such as coal & wheat,
Flexibility of manufactured goods such as industrial goods & frozen products, chemical and liquids such as
Usage oil, lubricant and editable oil and refrigerated cargo . Old & discarded containers can be used
for office space and temporary housing.
• Unique identification number of containers helps in easy management of transport in terms
Ease in Operations of unit identification, stuffing and destuffing at various stages of transhipment and logistics.

Increase in
Logistical • Containerization result in low transport costs almost 20 times less than bulk transport.
Efficiency

Quicker Transit • Trans-shipment operations for Containerized Cargo are minimal and rapid. Port turnaround
Times times is reduced and logistics operations become faster than regular freighter ships.

• Containers in itself are warehouse and facilitates simpler and less expensive packaging. It
Warehousing & also facilitates stacking of containers thus optimizing space capacity on ships, trains and
Temporary Storage ground.
• Contents of the container are unknown to various stakeholders in logistics chain and can
Increased Cargo only be opened at the origin or at place of destination. it reduce chanaces for spoilage, thefts
Security and other losses.
 Disadvantages of Containers

• Highly Capital Intensive

• Additional Fuel Costs
• Containers Associated Hazards
• Additional Cost on Reverse Logistics of Empty Containers
• Loss at Sea
• Unsuitability for Logistical Operations
 Numbering & Marking of Containers

• For example, Container no. is AACU3070079

whereby:
• AAC : 3 Alphabets are Owner’s Code
• U : 1 alphabet is the the type of
container
• 307007 : 6 digits are the serial no. of
container
• 9 :Last digit 9 is the check digit
 Classification of Containers

• Classification On The Basis Of Use Of Raw Material

• Classification On The Basis Of Size and Building Structure
• Classification of Containers On The Basis Of Their Use
– The General Cargo Container
– The Thermal Container
– Special Containers
• Classification On The Basis Of Cargo
 Various Types of Thermal Containers in Use in
Trade Logistics
Type of Cargo Suitability Features of Container
Thermal
Container
Refrigerated For cooled foodstuffs, Reefer container has insulated walls, doors, roof, and
(or Reefer) meat, ovum or ova, fish, floor which control the range of temperature loss or gain.
Container vegetables, fruits, Reefer container again may be of two types such as
human blood, medicines Controlled Atmosphere Reefer and Modified Atmosphere
and stem cells etc Reefer containers.

Insulated For fruit, vegetables etc Cooling is ensured in the Box with the dry ice which is
containers used as the cooling medium. Insulated containers do not
use any device for cooling purposes.
Ventilated Used for cargo such as Ventilated containers use to have small venting holes on
container fruits or vegetables both sides of containers which allows the passage of air.
which need ventilation Venting of air is necessary in long transit for
during transit in order commodities like tea, coffee, etc. such venting of air allow
to preserve the quality the cargo to lose moisture otherwise it may “sweat” if
of life. carried in closed box type containers and may lose the
taste as well as value.
 Various Sub Categories of Special
Containers
Bulk • Bulk containers are desinged mainly for transport and carriage of dry bulk
Container cargo like iron ore, other mineral, food grains, coal etc

• Ventilated containers have full length ventilation galleries and are used for
Ventilated cargo which require cosntant ventilation for maintenence of product quality
Container such as coffee.

Half- • Half-height open top container are suitable for carriage of heavy density
Height cargoes such as steel coil, pipes, tubes and strips, zinc bars etc.
Open Top

Tank • Tank containers are generally used for carriage of a chemicals and liquids
Container such as oil & lubricants and ediable oils.

Open • Open sided container are designed mainly to accommodate specific type of
Sided cargo like plywood, perishable commodities and livestock.
Container
Various Sub Categories of Container on the
Basis of Nature of Cargo
• Flat container are also known as "flat rack" and are the one with flat base only. They are
Flat used for cumbersome, multi-dimensional and odd sized cargo and weight is put on to
Container these types of containers and lashed with sling & straps with the container

Bulk • Bulk containers are the one which are fitted with manholes so as to facilitate the loading
Container of bulk cargo through gravity.

Garment • These are also known as Hanger’s containers and are fitted with hangers which help in
Container stuffing a large number of garments in hangers into the containers.

Liquid • Liquid containers are generally made of stainless steel so as to provide protection to
Container liquids from accidents etc and have manholes for loading and unloading of liquid cargo.

• Gas containers are similar to liquid containers and are made of thick stainless steel. They
Gas have required mechnical equipments, fixtures and fittings for pumping in and emptying
Container the liquid gas into/from the containers.

Bin • Bin containers do not have doors and are prominently used for heavy dense cargoes such
Containers as nut & bolts, harware and other industrail inputs.
 Precautions in Packing of Containers

Before the Packing of Containers After the Packing of Containers

• Shipper should ensure that there are no holes or cracks • Shipper should ensure that a copy of the packing list
in the walls and roofs and doors can be easily is fixed at an easily visible position inside the
operated. container.
• Shipper should ensure that locking system of • Shipper should ensure that quarantine regulations are
container doors and its handles are properly complied with in case the goods are shipped in
functioning. wooden packaging to Australia or New Zealand or a
• Shipper should check that there are no placards/labels country having similar quarantine regulations. A copy
left in container or pasted on its walls from the of the quarantine certificate issued by the appropriate
previous cargo and container is waterproof. agriculture authority must be pasted inside the
• Shipper should check that container is free from container along with packing list.
humidity; completely dry from inside and is neatly • Shipper should ensure that the door handles of the
clean, free of dust and cargo residue. container are secured properly by seals so as to reduce
• Shipper should ensure that container is odourless in the risk of theft and pilferage during transportation.
the case of odour sensitive goods. • Shipper should ensure that the tarpaulins and the
ropes are correctly fixed in case of open top
containers.
• Shipper should check that all locking system work
properly for lashing of containers.
Owning, Leasing and Hiring of Cargo
Containers

• Trip Lease
• Long Term Lease
• Financial Lease
• Master Lease
Common Terms Used in Hiring & Leasing of
Containers
• FIOS: Free in/out (loading/discharging is at consigner's cost),
• FIFO: Free in/Free out
Container • FILO: Free in/Liner out (loading is at consigner's cost, discharging is at liner cost)
Delivery Terms • LIFO: Liner in/Free out (loading is at liner cost, discharging is at consigner's cost),
• LILO: Liner in/Liner out (loading and discharging is at liner cost). Surcharges may vary
from port to port and accordingly to be added.

• CAF: Currency Adjustment Factor is a fee applied to the shipping costs to compensate
for exchange rate fluctuations.
Containers • BAF: Bunker Adjustment Factor refers to floating part of sea freight charges which
Surcharges represents additions due to oil prices
Terms • GRI: General Rate Increase. Used to describe an across-the-board tariff rate increase
implemented by conference members and applied to base rates.
• ISPS: International Ships and Port Security System

• Wharf-age: It is port duty/charges.

• CUC: Chassis Using Charge is a duty for using chassis
Other • Documentation Fee: is a duty for executing documents, etc.
Charges/Duty/ • FICY: Free in/Container yard (loading is at consigner's cost, delivering is provided to
Fee
container yard),
• LI-Door: Liner in / Door loading is at liner cost, delivering is provided to client's door.