CONTAINERISATION

Containers - Their Classification, identification, advantages and disadvantages

FCL and LCL -Management of Container Service - Container Terminal and
Equipment - Containerisation in India.

CONTAINERS:
The container as the English meaning implies refers to its storage and carriage
capacity, i.e. it is an equipment used to store and carry goods. Hence in
shipping, which is a service of transportation of seaborne goods, container in
its early stages used to refer to any type of box used to carry cargo. Presently
also a container is known as "box" or "van" in many countries, particularly in
the U.S.A.
The International Organisation for Standardisation (ISO) defined a freight
container as : "An article of transport equipment, (a) of a permanent character
and accordingly strong enough to be suitable for repeated use; (b) specially
designed to facilitate the carriage of goods by one or more modes of transport,
without intermediate reloading; (c) fitted with devices permitting its ready
handling, particularly its transfer from one mode of transport to another; (d)
so designed as to be easy to fill and empty; (e) having an internal volume of 1
cu.m (35.3 cu.ft.) or more".
Further, the general purpose freight container is defined as follows:
"A freight container of rectangular shape, weatherproof, for transporting and
storing a number of unit loads, packages or bulk material; that confines and
protects the contents from loss or damage; that can be separated from the
means of transport, handled as a unit load and transhipped without
rehandling the contents.

CLASSIFICATION OF CONTAINERS:
A container can be classified in terms of the building or cladding materials, i.e.
what a container is made of. The maximum number of containers are made of
steel, aluminium or GRP. (Glass Fiber reinforced plywood). Almost 65% of the
entire container fleet presently consist of steel containers.

The main advantages of steel containers are :

i.
ii.

iii.

They are the cheapest.

They can be more easily repaired compared to aluminium or GRP
containers in view of availability of skilled labourers and equipments to
handle steel. In the USA the aluminium containers can be more easily
repaired compared to steel containers.
They can resist damage. While a damage can create a hole in an
aluminium container, it can cause only a dent in a steel container which
may not warrant an immediate repair.

The disadvantages of steel containers are:

i.
ii.
iii.

They can have an economic life of about 10 years, while aluminium or

GRP containers may last longer.
They will have more tare weight compared to other types of container,
thus will be able to carry less payload of cargo.
They suffer by being more prone to corrosion. But this can be overcome
by us of alloy steel instead of ordinary steel.

The other mode of classification of containers can be by their dimensions. The

ISO have worked a great deal on standardisation of container dimensions and
have come out with the recommendations as to the length of container being
multiple of 10ft. i.e., 10ft or 20ft. or 30ft. Presently, 20ft. containers are
predominantly used and around 65-70% of world fleet consist of 20ft.
containers. 20ft. containers are referred to as Twenty Feet Equivalent Unit or
TEU. This term is used all over the world to express the container fleet. If all
the containers are expressed in terms of TEU, it becomes easier for the
container terminal operators and ship-owners to estimate the space required
in a container terminal or inside the vessel to cater to the total number of
boxes expressed in terms of TEUs, being handled at a certain port or by a
carrier.
Most of the containers have a width of a 8ft. But in height containers vary
from 8ft. to 8 1/2ft. Presently about 75% of world box fleet have a height of 8
1/2ft. and about 20% have a height of 8ft. However, there is an increasing
tendency to use containers of 9ft. and 9 1/2ft.
The inside volume of a standard 20ft. X 8ft. X 8 1/2ft. container is about 30
cu.m.

Lastly, the containers can also be classified by their uses. Containers may be
broadly classified into three types by cargo to be stowed therein. They are:
i.

ii.

iii.

General cargo container is the most representative type for general

cargo that does not require temperature control; it occupies an
overwhelming percentage of the total number of containers and is called
Dry Cargo Container. It is generally of the closed van type with a door at
one end.
Thermal container is designed for cargo requiring refrigerated or
insulated storage, covered overall with material of low heat transfer such
as polystyrenefoam and is classified into three types:
a. Refrigerated (or Reefer) Container (for cooled foodstuffs, meat,
fish, vegetables, etc.)
b. Insulated container for fruit, vegetables, etc. Here dry ice is used
as a cooling medium.
c. Ventilated container allows for the passage of air by means of
apertures on sides or ends, for cargo that requires respiration such
as fruit or vegetable.
Special containers - Bulk container, Tank container, Open top container,
Side open container, Car container, Pen container of Livestock
container, etc. as refrigerated containers or REEFER containers.

The dry cargo containers are by far the maximum in use. They are of different
types. A standard dry cargo container is a container of box type with a door at
one end. Sometimes containers are provided with side doors, i.e. the entire
side of the container can be opened for easier stuffing/destuffing. These types
of containers are useful when stuffing/ destuffing is to be done when container
is mounted on a wagon or trailor. There are various dry specials like open top
container, flat racks or flats, bulk container, garment containers, ventilated
containers, etc. The open container is one having no roof and usually provided
with a polythene lined tarpaulin to cover the container. The advantage of this
container is that heavy machineries, structurals, etc. can be easily hoisted by a
crane and put inside the container through its open roof.
Flat rack or flat container is a container having its base only. Usually a cargo of
odd size and weight is put on to this container and is lashed to it.
Bulk container is a container fitted with manholes to facilitate loading of bulk
cargo through gravity whereas garment container is a container fitted with
hangers which helps a garment dealer to stuff a large number of garments in
hangers inside the containers. The ventilated containers are containers having
some means of ventilation required for carriage of special cargo like tea,

coffee, etc. These cargoes are liable to sweat if carried in closed box type
containers.
Liquid containers are usually made of stainless steel and have manholes for
loading/ unloading liquid cargo whereas gas containers are special containers
used to carry gas.

IDENTIFICATION OF CONTAINERS:
For identification, containers have marking showing:
i.
ii.
iii.

Owner Code, Serial Number and Check Digit.

Country Code and type code.
Maximum, Gross and Tare Weight.

This is illustrated below:

Owner Code
Serial Number
Check Digit

ABZU
MAS
Gross
Tare

Country Code
Size Code
Type Code
001234

00000

kg

00000
0000
0000

Lb
KG
Lb

FXX

2030

ADVANTAGES OF CONTAINERISATION :
A. For ship-operators
i. Reduction in port time of ships.
ii. Improved working ratio of ships.
B. For ship-users (i.e. shippers/consignees)

i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.

Reduction in packaging cost (as example, goods can be placed in

containers packed in cartons instead of in cases);
Reduction of damage, pilferage and theft;
Reduction in marine insurance premium;
Greater protection of fragile and easily contaminable cargoes;
Reduction in inland transport costs;
Faster and reliable delivery;
Retention of original quality of goods;
Physical separation of 'dirty' cargoes;
Simplification of documentary procedures;
Less inventory costs as a result of less transit time; and
Stable inventory control made possible by stabilised ships
operaton schedule.

The most outstanding contribution of containerisation is the suitability and

capability of containers for door-to-door transportation internationally. This is
called 'Intermodal or Multimodal' transportation system, eg. from Delhi to
Zurich in Switzerland.

CONCEPTS OF FCL & LCL:

FCL means Full Container Load. Here the container consists of cargoes meant
for one party, i.e. consignee only. The cargo is stuffed at shipper's warehouse
and is destuffed at consignee's warehouse.
Here the responsibility of stuffing, stowing of cargo inside the container is of
the shipper. Stuffing charges are on account of the shipper and the destuffing
charges on account of the consignee.
LCL means Less Container Load. Here the container consists of cargoes meant
for different parties. The carrier collects cargoes from various shippers and
stuff all of them into a container at the pier. At destination, the carrier's agents
destuff the cargoes from the container and deliver the cargoes to respective
consignees.
FCL/LCL. - A shipment of goods which the merchant is responsible for
packing into the container and the carrier is responsible for unpacking the
container.
LCL/FCL. - A shipment of goods which the carrier is responsible for packing
into the container and the merchant is responsible for unpacking out of the
container.

LEASING OF CONTAINERS:
Containers are taken on lease by carriers from container manufacturing
companies. There are four types of leasing arrangements.
i.
ii.
iii.

iv.

Trip lease or short term lease: Here lease is taken for one voyage or one
trip.
Long Term Lease: Where containers are usually leased for 3 to 5 years.
Financial Lease: This is more of a hire-purchase or instalment-purchase
scheme rather than a lease, as in this case, at the end of the term for
which containers are taken on financial lease, the ownership of the
containers is transferred to the shipowners.
Master Lease: In this case one shipowner concludes a deal with a
container leasing company for a period of usually 1-2 years whereby he
guarantees that a minimum number of containers will alays be under his
lease from the leasing company and as against this guarantee, the
container leasing company also assure the ship-owner that a minimum
number of empties will be made available to the shipowners at the
various ports as agreed upon between the two contracting parties.

MANAGEMENT OF CONTAINER SERVICE BY

SHIPOWNERS/SHIP OPERATORS:
Ship - owners/operators enter into various arrangements to operate a
container service. This becomes necessary because of very huge financial
outlay required to acquire, maintain and operate container ships and service.
Shipowners/operators sometime form container consortium. In a fully
integrated container consortium, a separate legal or commercial entity is
formed by amalgamation of two or more individual shipowners who
contribute their effort, capital and market share in a container service in a
specified trade route. The partners usually supply and man their vessels to the
consortium on time charter basis. The number of vessels and their carrying
capacity to be provided by individual shipowner is usually determined on the
basis of the individual market share of the partners commanded prior to
formation of the consortium.
There can also be Slot Charter Arrangements. Here two or more shipowner
come into some slot charter arrangement and do not lose their legal or
economic entity. The partners usually run their own vessels and expenses for
the vessels are met by the partner to whom the vessel belongs.

The slot capacity of the vessel is divided amongst partners depending on their
previous market value. Towards each TEU or slot utilized by the other
partners, a fixed amount is paid to the ship-owner/partner. This amount is
revised regularly by joint discussions amongst the partners taking into
consideration the revised operating costs, box rate levels etc. Marketing in a
slot charter arrangement is usually done independently by each partners as
against the consortium where marketing is done jointly. The disadvantage of
slot charter arrangements is that the partners tend to compete more on the
land leg of transportation by quoting cheater inland haulage rates etc.
Shipowner sometime agree to have Joint Sailing Schedule. Joint Sailing
Schedule can be operated by two or more shipowner through mutual
agreement on joint schedule of vessels based on (a) Money pool where the
revenue is pooled and distributed among partners depending on carrying ratio
cost incurred and other factors (b) Joint ownership of vessels where
contribution from various partners are usually to the extent to their respective
quotas in carrying capacity (c) Independent or co-ordinated marketing set up.
While operating a container service, there are two major limitations: (i) Size of
the vessels, and (ii) Frequency. The size of the vessel will be determined by the
port limitations, i.e. the limitation of the ports where the vessels have to call as
regards the availability of required draught, quay length, equipments, storage
areas etc. The frequency of service required by the trade also limits the vessel's
size, e.g. if the sailing frequency is set too high, then cargo accumulation
during the short gap between two sailings may not warrant a vessel of bigger
size. If the sailing frequency is kept too low, then cargo may be lost to
competitors and it may even tarnish the image of the shipowner.
The frequency of service is more important presently as a large portion of
international trade is conducted through letters of credit, which stipulate a last
date of shipment and last date of negotiation of the document. In order to
overcome the difficulty of frequent sailings and also to some extent overcome
the problem of huge capital involved in containerisation, shipowners have
organised themselves by forming container consortia, slot charter
arrangements, joint sailing schedules, etc.
Feeder Service. Here the deep sea vessels or mother vessels, as they are called,
only call at a few limited ports and cargo is accumulated at these ports by
feeder service from other ports in the region. Feeder ships are small size
vessels of around 300/400 TEU's. Sometimes this method leads to a longer
transit time for the cargo reaching its ultimate destination. Presently most of
the container shipping companies operate through feeder ships, which

transfer the containers of deep sea or mother ships at specified ports.

Singapore, Colombo and Madras have been serving as feeder ports where
mother ships receive containers from feeder ships of the region.

CONTAINER TERMINAL AND EQUIPMENT:

A model container terminal may usually be divided into the following areas :
i.

ii.

iii.

The Ships Area : This comprises a quay line where the container vessels
are breathed. Usually the modern container terminals are provided with
gantries which are heavy cranes required to handle containers. There
gantries are generally mounted on rails and move to and from along the
entire length of the container vessels. The gantries are usually fitted with
automatic spreader for faster handling of container, which is not
possible if the individual containers are to be manually slung to the
gantries. The modern container terminals usually have gantries with
carrying capacity of 35-50 meters. The output of a gantry in a modern
terminal is estimated at 20/25 TEUs per hour.
Marshalling Yards: The rear portion of the ship's area is known as
marshalling yard and is used to prestack a limited number of export
containers as buffer stock for loading and also to prestack a limited
number of import containers after being discharged from vessels and
prior to their removal to container stacking yard.
Stacking Yard or Container Yard: This is the area where the import
containers are transferred from marshalling yard and stored until they
are taken to container freight station, Inland Container Depots,
Consignee's warehouses, etc. Similarly, this is the area where export
containers are brought from ship operators warehouse, ICD, CFS, etc.
prior to being moved to marshalling yard quay line for being loaded on
board a vessel. Container yard is also used to stack empties. Usually the
yard is divided into various subdivisions meant for stacking empties,
export containers, import containers and, quite often, a seperate yard is
provided for seperate shipowners.

CONTAINERISATION IN INDIA:
The concept of containerisation was introduced in India in 1968 in a seminar
held in Mumbai. Since then the Indian shipowners and the trade started
considering its use. A working Committee report on the subject came out.
Sometime in early 1970s, the Shipping Corporation of India Limited acquired
its first semi-container ship with three holds designed to carry containers and

other two holds to carry general cargo. Other shipping companies like Scindias
and India Steamship followed suit. Later, India Steamship Company acquired
a small cellular container ship.
Hi-tech advancement of affording minimum packing to containerised cargo
with special applications / coatings to prevent moisture, deterioraion, damage,
etc., to cargo is available now to the Indian Exporter.
Jawaharlal Nehru Port Trust, Navi Mumbai, has introduced a system by which
inspection of containers is much faster than manual, thereby reducing
congestion.
The inherent advantages of moving cargo through containers (lesser wastage,
faster delivery), combined with increased capacities at ports is expected to
increase container penetration from current level of 16% to above 21% by 2012
(Goldmaz Sachs, May 08).
The US based USI's electronic cargo inspection system is introduced in key
ports.
Out of 46,222 ships, general cargo ships were 18,150; container ships were
3165.
DAs on Jan 06, over 18 million containers constantly criss cross the seven
seas. 2006 will see introduction of 800 TEU plus containers in world
shipping, to meet the growing needs.
While 70% of goods movement is containerised globally, its 30-35% in India.
Container cargo movement is undertaken by private parties also and they are
allowed to tranship export cargo to container cargo carrying export cargo to
ICD. This flexibility avoids transhipment. This is export facilitation measure.
Indian container trade moved up to 7.2 mln TEUs by 07 from the level of 2.47
mln TEUs in 2000.

CONCOR
CONCOR has as many as 31 terminals perform the combined role of domestic
as well as international terminals. CONCOR's customs bonded Inland
Container depots are dry ports in the hinterland, and serve the purpose of
bringing all port facilities including Customs clearance to the customer's

doorstep. The terminals are almost always linked by rail to the Indian Railway
network, unless their size or location dictates that they be linked by road.
CONCOR's terminals provide a spectrum of facilities in terms of warehousing,
container parking, repair facilities, and even office complexes. As CFS
operator, CONCOR adds value to the logistics chain by offering value added
services such as

Transit warehousing for import and export cargo

Bonded warehousing, enabling importers to store cargo and take partial
deliveries, thereby deferring duty payment.
Less than Container Load (LCL) consolidation, and reworking of LCL
cargo at nominated hubs
Air cargo clearance using bonded trucking

The key value we offer is the provision of a single-window facility coordinating with all the different agencies and services involved in the
containerized cargo trade, from Customs, Gateway Ports, and Railways, to
road hauliers, consolidators, Forwarders, Custom House Agents and shipping
lines.
IT forms the backbone of any service industry and improved levels of
efficiency can be done through working partnerships among all those involved
to improve logistics services through the use of information and network
technology.
CONCOR is using various online applications like Export/Import Terminal
Management System (ETMS), Oracle Financials-ERP, etc.
Facility for electronic filing (e-filing) of commercial documents of
CCLS(Container and Cargo Logistic System) has been provided to customers.
This facility enables customers like Shipping lines, Importers, Exporters and
CHA's to file the required documents online for process and take necessary
printouts of processed output through web from anywhere without physically
coming to ICD.
CONCOR has its own WebServer for providing web interface to the
commercial applications i.e. ETMS, CCLS, DTMS etc. The web interface
enables our customers to access information regarding their shipments by
means of the website.

An integrated track and trace system was also implemented on CONCOR

website for providing Container Tracking Details.
The inhernet advantages of moving cargo through containers (lesser wastage,
faster delivery), combined with increased capacities at ports is expected to
increase container penetration from the current level of 16% to above 21% by
2012 (Goldman Sachs, May 08).