Cycle of Container Shipping Activities

CONTAINER TERMINAL

Containers are the foundation for a 'unit load' concept and they came into the market in the 50’s for the safe transportation of commodities. There has been a significant spurt in worldwide container transportation in the current decade and this inturn resulted in development of seaport container terminals across the globe. Today the competition among the terminals are remarkably high and all of them are gearing up to meet the challenges of handling mega vessels upto 10,000 to 12,000 TEUs capacity and beyond.


What is in a terminal ?

1.  The Quay ( is a structure on the shore where ships can dock to load &

                      unload cargo. And this structure can have 1 or more berths (mooring

                      locations)

2. Yard ( Space to store the containers to be loaded / discharged on to/ from

              the ship)

3. Equipments ( both the quay side and yard equipments)

4. Labour ( the admin & field work force).

In other words a typical container terminal consist of a land area with good infrastructures ( road/gate/lights etc) and superstructures (gantry cranes/ yard equipments etc) to carry out the quayside and the yard operations.

Yard management

Terminal Equipments

Gantry Crane & Straddle Carrier

Selection of a container terminal

Below given are some vital elements which are considered by the shipping lines while selecting a container terminal to call their ships

- Geographical Location (Hub or not)

- Strategical Position ( Required deviations from international maritime
  routes)

- Economical conditions ( Size of the commercial market, costs, tariffs etc)

- Physical Elements ( Draft, Berth length , access to sea, stack capacity, no.of   

  gantry cranes, CFS etc)

- Political Environment ( labour unions, strikes, work timings, quality of work

   force)

- Environmental Conditions ( Monsoons/ Winter)

- Intermodal facilities (Rail / Road / Water connectivity)

Why is a ship called "SHE" ?

DANGEROUS GOODS

Dangerous Goods or Hazardous Materials are chemicals in Solid , Liquid or Gas form which can harm people , other living organisms , property or the environment .One of the sensitive issues faced by the transportation industry today is the safe transportation of the Dangerous Goods. Considering the risk associated with DG, safety precautions are to be applied during its storage, usage, transportation and disposal. Laws and regulations on the use and handling of hazardous materials may differ depending on the activity and status of the material.

INTERNATIONAL MARITIME ORGANISATION (IMO)

IMO is United Nation’s specialized agency which has developed international legislations dealing with two key issues for the maritime industry

(1) The safety of life at sea

(2) Prevention of pollution from ships

IMO has developed two international conventions two address these issues. They are

(1) The SOLAS Convention (covering safety of life at sea)

(2) The MARPOL Convention (covering pollution prevention)

To supplement the principles laid down in above two conventions IMO developed International Maritime Dangerous Goods Code (IMDG Code).IMDG Code contains detailed technical specification to enable safe handling and transportation of DG. The main objective of the IMDG code is to:

• Enhance the safe transport of dangerous goods

• Protect the marine environment

• Facilitate the free unrestricted movement of dangerous goods

Also IMDG code is a complete instruction manual for DG cargo Classification, documentation and packaging .The IMDG Code became mandatory for adoption by SOLAS signatory states from 1st January 2004 and is based on an internationally agreed system which:

• Groups dangerous goods together based on the hazards they present in transport (classification).

• Contains the dangerous goods in packaging/tanks which are of appropriate strength and which will prevent the goods escaping.

• Uses hazard warning labels and other identifying marks to identify dangerous goods in transport.

• Requires standard documentation to be provided when dangerous goods are being transported.

• Lays down principles for ensuring that dangerous goods which will react dangerously together are kept apart.

• Lays down principles for where to place dangerous goods on board ship to ensure safe transport.

• Provides emergency response advice for dangerous goods involved in a fire or spillage on board ship

The IMDG Code is updated every two years to take account of:

• New dangerous goods which have to be included.

• New technology and methods of working with or handling dangerous goods.

. Safety concerns which arise as a result of experience

Layout of IMDG code

• The Code comprises 7 parts.

• It is presented in two books; Volume 1 and Volume 2.

• It is necessary to use both books to obtain the required

information when shipping dangerous goods by sea.

• The Code also contains a Supplement.

Classification Of DG

DG are classified according to their specific properties ( explosives, corrosive, flammable , radioactive, oxidizing, toxic etc.) and hazards it may cause. Nine (9) classes have been established internationally by a UN committee to ensure that all modes of transport (road,rail ,air and sea) classify DG in the same way.

The 9 classes are:

Class 1 Explosives

Class 2 Gases

Class 3 Flammable liquids

Class 4 Flammable solids

Class 5 Oxidizing substances and organic peroxides

Class 6 Toxic and infectious substances

Class 7 Radioactive material

Class 8 Corrosive substances

Class 9 Miscellaneous dangerous substances and articles

The purpose of the classification is

- To distinguish between goods which are considered to be dangerous for transport and those which are not

- To identify the dangers which are presented by DGs in handling and transport

- The type of packaging to be used

- What type of DGs can be transported and stored together

- Where the goods can be stored within the port and on the ship

- To ensure that correct measures are taken in case of mishaps

Packing And Labeling the DG Product

Packing of DG product is another area of importance. IMDG code has given clear guidance / instructions on the tests to be conducted on DG products to decide the kind of packaging to be used. There are 3 packing groups PG1 , PG II , PG III .

Correct labeling of the product and placarding the container with accurate information is also very important. This helps to identify and segregate the DG products. Also enables quick reaction to dangers and mishaps.

The external packing and the vehicle in which the goods are transported must have the appropriate diamond shaped label (placard) fixed to them. This helps a great extent to overcome the language barriers.

UN Number and Proper Shipping Name. (PSN)

The DG products are uniquely identified by 2 piece of information within the 9 classes

1. Four digit number known as UN Number

2. Proper Shipping name or PSN.

Impact of E-commerce on Ecosystem.

The Information technology provides a new platform for the trade activities and is growing fast. One of the benefits of IT is its power to link the whole globe. This has changed today’s business environment dramatically. Internet has become a global market which could penetrate in to various geographic markets successfully. In this system the business organizations no longer need to provide a luxury office space instead through a virtual environment can trade goods and services without an intermediate link.

It is also known to everyone that e-commerce doesn’t emit any pollutants and uses low energy and natural resources. The internet replaces buildings into websites and warehouses to supply chain software.

What is e-commerce ?

Electronic commerce or e-commerce is generally considered to be the sales aspect of e-business. In other words ,buying and selling of products and services over the internet or other electronic networks is called e-commerce. It promises to make buying and selling fast, efficient , transparent and cheap . Various e-business models in use are as under.

B2B (Business-to-Business) -Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers.

B2C (Business-to-Consumer)- Businesses selling to the general public typically through catalogs utilizing shopping cart software.

C2B(Consumer-to-Business)- A consumer posts his project with a set budget online and interested companies review the consumer's requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project.

C2C (Consumer-to-Consumer) -There are many sites offering free classifieds, auctions, and forums where individuals can buy and sell . e-Bay's auction service is a great example of where person-to-person transactions take place every day since 1995.

Environmental impact of e-commerce.

E-Commerce has both positive and negative impact on ecosystem. The effect of e-commerce on environment reflects on three aspects - Energy, Resources and Pollution.

Energy

It is commonly believed that e-commerce industry demand lower energy compared to the traditional industry. This is because of the reduced use of warehouses, showrooms and factories. However the computers and other communication equipments required for the electronic industry consumes a lot of electricity which inturn increase the requirement of electricity generating units. These units are one of the major causes of environment pollution in many countries.

Resources

As e-industry reduces the requirement of showrooms and warehouses, the consumption of natural resources like land , wood, cement, steel and iron etc. are less. And e-commerce said to have reduced the usage of petrol by promoting the teleshopping and telecommunication. However, the globalization and e-village concept made it easy to purchase goods from faraway places which increase shipping in general. Even though the teleshopping involves the transportation of physical items in some way or the other , it has considerably reduced the customers visit to stores using their own vehicles and inturn reduce the toxic green gas emissions.

Though the advancement of e-industry was expected to reduce the usage of paper , the overall effect is the reverse. The usage of paper has been increasing along with the e-industry . Various studies point out that the paper usage in the developed countries were much lower before the e-commerce era.

Pollusion

The growth of Information Technology resulted in increased usage of computer and other electronic equipments . The production of computer components like semiconductors, micro-chips, batteries etc causes significant green gas emission which adversely affect the ecosystem .

Also e-waste is one of the major concerns of the developed countries today as recycling of the scraped electronic instruments produces toxic gases and other harmful substances which cause serious damage to the ecosystem.

Conclusion

E-commerce is a two- edged sword , it has its own share of advantages and risks. The commonly recognized advantages are the reduced usage of resources , energy and less transportation. The major risk is the pollution and increased usage of paper which has a serious implication on the ecosystem.

It is a good sign that most of the companies are taking these issues seriously and promoting environment saving activities. Awareness campaigns are conducted for employees which is expected to reduce the energy and other resource usage.

Is Cabotage law relaxation for Vallarpadam International Transhipment Terminal is required ?

In most of the countries Cabotage law restricts movement of coastal cargo by their own flag vessels. In India too Merchant shipping Act does not permit foreign bottom to carry cargo between the Indian ports . However , permission is granted to foreign flag vessels to ply between Indian ports , incase Indian flag ships are not available. This law said to have given a certain level of stability to Indian bottoms.

Cabotage law is provisioned in section 407 part XIV of Merchant Shipping Act,1958 . According to this law, only Indian flag vessels can carry cargo originating in one Indian port to be another Indian port. In view of commissioning of VICTT in Aug/Sept, MoS is reported to have taken a decision in principle to relax cabotage law atleast for a year or so with respect to transshipment cargo passing through VICTT.

The Indian National Ship Owners’ association strongly oppose this move arguing that relaxing the cabotage law will not give a level playing ground for Indian bottoms. According to them this move will adversely affect the growth of Indian coastal shipping. They also argue that the foreign liners have only short term interest and the Indian shipping companies are equipped enough to cater to the expected increase in demand for more feeders .

However , the statistics released by DG Shipping in 2009 shows that the total number of vessels registered under Indian flag is only 664 and out of which dedicated cargo carriers(tankers + bulk + break bulk + Ro-Ro+silo+ container carriers) are very small. Most of the coastal container ships which is plying between Cochin and other Indian ports are very old and they are not in good condition. The ground reality is that the dedicated coastal shipping lines are unable to provide sufficient ships at present to cater to the limited transshipment requirements at RGCT Cochin.

Cochin Port Trust and other supporters of VICTT argues that the containers originating in other Indian ports destined to overseas ports, and containers originating abroad and destined to other Indian ports, which are getting transshipped at VICTT , should not be treated as coastal cargo, within the meaning of Cabotage law. VICTT is located within a Special Economic Zone and customs clearance will not happen there. Customs clearance formalities will have to be completed only at the respective origin / destination ports only.

Moreover, VICTT will have to compete with neighboring ,well established ,International transshipment terminals like Colombo, Singapore , Port Kelang , Jebel Ali etc. It is estimated that about 1.2 million Indian cargo is getting transshipped at Colombo and If these containers are transshipped at VICTT there would be substantial savings in the cost as well as transit time .
From Colombo all liners are free to take cargo to any Indian ports without any difficulty. Though ,CoPT and DPW offered a very competitive tariff to liners calling VICTT, which is at par with Colombo , the hub port also require sufficient feeder services to pool cargo from other Indian ports/ overseas and to deliver the cargo to final destinations. Which , under the present conditions, I feel, Indian feeder operators do not have the capacity to provide required services and the foreign lines, mother and feeder vessels, should be allowed to carry cargo between the Indian ports.

If the primary objective of the MoS is to promote coastal traffic and in turn to promote VICTT , the law should be relaxed for transshipment containers. Also understand that the 10th five year plan recommend relaxation of cabotage law to promote gateway ports and to prevent transshipment at Colombo. It is expected that the presence of foreign liners will bring new technologies , efficiency and cost reduction, which is a major constraint for the growth of coastal shipping.

Though it is argued that the relaxation would hurt the growth of Indian tonnage, in long run ,by creating demand for the coastal shipping, it would be beneficial. The law can be reintroduced once VICTT is up and running and there is sustained growth for coastal cargo.

INDIAN COASTAL SHIPPING

1. Current status of Coastal Shipping in India

Economic reforms in India have triggered a high rate of economic growth in the country and this in turn has led to an increase in transport demand. This demand is being met mainly by the rail and road transport systems. About 60-65% of the freight traffic is carried by road , 30-35% is by rail and only about 7% by coastal shipping.

Though coastal vessel number and tonnage increased from 244 / .60mgt in 2003 to 662/1.0 mgt in 2009, actual number of cargo carrying fleet is very small. The major percentage of fleet is comprises of passenger – cum – cargo vessels, passenger vessels, dredgers etc. The increase of growth in coastal shipping in India is much lower compared to China, USA and Europe.

In China the inland water / coastal freight transport grew from 350 billion tons-km in 1989 to 1112 billion tons-km in 2005. Through carefully managed public policy, Europe has achieved transporting over 40% of its domestic freight by water. By investing in port infrastructure, promoting coastal shipping operations, and streamlining customs processes, the European Union is planning to move even substantially more freight by sea.(Source- “Towards A Future Maritime Policy for the Union: A European Vision for Cleaner Seas and Clearer Oceans,” International Chamber of Shipping and International Shipping Federation, Preliminary Comments on EC ‘Green Paper,” June 2007.) Coastal shipping contributed substantially to the success of Americans in building the world’s largest economy. Unlike the above mentioned countries, we do not have Ro-Ro or Lo-Lo services which can carry trucks from one port to another to reduce the cost of double handling.

2. Current Status of Coastal cargo movement

The commodities carried by coastal shipping are mainly bulk and break bulk cargo. Available studies and reports show that the cargo mix has not undergone any significant changes over the years. Major commodities carried by coastal ships are crude oil, POL products, thermal coal, iron ore & pellets and cement & clinkers. Most of the bulk cargo movement taking place presently is captive to specific industry requirements. Broad level traffic estimates show that the coastal traffic handled would reach 222 million tons per year by 2011-12 from 108 MTPA in 2001-02.(source TCS 2003) .

The cargo movement pattern and magnitude is mostly dependent on the production/availability, consumption/demand and the distance separating production centres from points of destination.TCS has made projections of coastal movement of commodities and the summary is as under .


The above given cargo projections are in respect of the commodities traditionally moved through coastal shipping and does not seem to include commodities like cars , electronic goods and other high value low volume items. These findings, therefore are to be treated as indicative only.
Due to the concessional rates made applicable by railways for commodities like food grains ,at present coastal shipping is not viable for such commodities and will not attract new commodities / customers unless measures are taken to promote coastal shipping. Selected minor ports should be developed so as to identify specific origin –destinations on which identified cargo could be moved at lower coast through coastal shipping . Selection of minor ports have to be a step in the right direction as the production and the consumption centers will fall closer to ports thereby reducing the road haulage to the minimum in addition to saving considerably on port handling cost as major ports have established labour unions and costly infrastructure which would result in higher port handling , storage costs.

3. Factors affecting the growth of coastal shipping in India

The main reasons for coastal shipping being low are the double handling cost, higher charter hire and the poor facilities available at the ports. Lack of active policy measures to promote coastal shipping and low investment in this area against road and rail transport also are reasons for the slow growth . Most of the production and consumption centers are land locked and hence the road transport with door to door facility gained more acceptance over rail and coastal transport.

Based on the studies conducted by various committees in the past , the other important factors that have caused slow growth of coastal shipping are

· Cumbersome and lengthy customs procedure
· Cabotage law based restrictions
· Non availability of concessional finance for the acquisition of coastal vessels
· High import duties on bunker oil and spares
· High manning scales which increase operational costs
· Stringent specifications relating to construction of vessels leading to higher capital costs
· Incidence of corporate for coastal as against tonnage tax for ocean going vessel and
· personal income tax which discourages quality officers from continuity on India coastal vessels.
· Lack of separate berthing facilities at Major ports and inadequate cargo handling facilities at the minor ports