Container Inventory Management Tool

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An Index to Evaluate Carriers’
Competence in Container Inventory
Management
Lalith Edirisinghe
TrackD1
MARITIMETRANSPORT

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Contents
1. Introduction to Container Shipping
2. Costs of Container Handling
3. Container Inventory Management
(CIM)
4. Competence in CIM
5. Carrier Competence Index

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Container Shipping
1. In container shipping Ship space (slot) has no value if containers are not available
2. Slots and containers are complimentary service components except that the container
is tangible and the slot is not
3. Containers are governed by ISO (the International Standards Organization) and the CSC
(the Container Safety Convention)
4. ISO defined a container as an ‘article of transport equipment’
5. Useful life of about 10 to 15 years
6. Manufacturing cost of standard 20’ container $2,000 & 40’is $3,000

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Global Container Inventory
32.9 million TEU in 2012
(last update in 2017)
Estimated 42 million
(21,028,152 x 2 as at 2017)
5,992 active ships
21,028,152 TEU
(last update July 2017)

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Global Container Types

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Cost associated with Containers (as a % of
total cost)
The burning
need of
competency in
CIM
57 % of domestic
exports in Sr Lanka are
empty containers

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Container Statistics in Sri Lanka

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6 R Container Demand and Supply
Matrix
1. Quantity
2. Size
3. Type
4. Quality
5. Location
6. Time

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Carriers’ Competence in CIM
1. It is imperative that Container controllers develop
competence in striking the right balance between
Exporters’ demand and Carriers’ ability to supply
2. Competence in CIM relies on efficient and effective
handling of key determinants of managing the
inventory

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Key Determinants of Container
Inventory Management
(Edirisinghe, Zhihong, & Wijeratne, 2017)

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Assessing Carriers’ Competence in
CIM
The researchers have followed the same methodology in the
construction of Multidimensional Poverty Index (MPI) by Sabina Alkire
and Maria Emma Santos
(1) Choosing the unit of analysis
(2) Choosing the dimensions and strategies
(3) Choosing the strategies’ deprivation cut-offs
(4) Choosing the strategies’ weights
(5) Choosing the scarcity of strategies’ cut-off; and
(6) computing the country’s multidimensional CIM index

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Carrier Competence Index
The paper proposes that the
country’s multidimensional
CIM index (MCI) = S × A
where, S is the carrier-count
ratio and A is the intensity of
scarcity of effective and
efficient CIM strategies in the
country
Strategy Indicator (jk) Dimension
(D)
average
( )
Share of
dimension
( )
Proportion to
the weight of
D ( )
Reduce import freight 2.514 0.479 0.182
Reduce export freight 2.736 0.521 0.198
Freight 5.250 0.376
Service Agreements 2.670 0.517 0.191
Synchronized budget 2.490 0.483 0.179
Forecasting 5.160 0.370
Agile inventory 2.190 0.617 0.154
Exporters’ priority 1.360 0.383 0.096
Flexibility 3.550 0.254

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Carrier-count ratio in Sri Lanka is 0.875
Intensity of scarcity of CIM strategies in Sri Lanka is 0.670
Therefore, in complying with the MPI computation
methodology of Alkire & Santos, (2011) multidimensional CIM
index of Sri Lanka is 0.586
Sri Lanka’s Carrier Competence Index

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Interpretation of Research Results
1. Carriers’ competence marginally acceptable level ( >0.500)
2. It suggests that an strategic approach is required to improve CIM in
Sri Lanka
3. 87.5% of carriers are not deprived of CIM strategies according to
the carrier- count ratio analysis which is a plus factor
4. Carriers are equipped with at least either
1. all the indicators of single dimension or
2. A combination across dimensions such as Freight Drop-Imports, SVC
Agreements, and Priority-Export etc.

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Conclusions
1. Substantial empty container reposition in Sri Lanka may be caused
by lower competence level
2. Improved CIM is highly recommended though competence building
3. Although the empty container reposition cost is technically born by
carriers it is ultimately added to the freight
4. This additional transportation cost leads to higher prices of
consumer goods
5. Finally it poses a recurrent financial burden to the public
6. Therefore, competence in CIM is not only a concern for carriers or
their customers: but it has an indirect impact on the economy

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ReferencesAlkire, S., & Santos, M. E. (2011, 10). The Multidimensional Poverty Index (MPI). Retrieved 07 18, 2015, from http://www.ophi.org.uk/wp-
content/uploads/MPI_TrainingMaterial_23Nov2011.pdf
Edirisinghe, L., & Zhihong, J. (2016). The Benefits of Container Exchange between Carriers: A Case Study. Moratuwa: Sri Lanka Society for
Transport and Logistics.
Edirisinghe, L., & Zhihong, J. (2016). Virtual Container Pool: Solution to Container Inventory Imbalance. Logistics Conference 2016 Journal, 179-
204.
Edirisinghe, L., Jin, Z., & Wijeratne, A. (2016(b)). Container Inventory Management: Factors influencing Container Interchange. 13th
International Conference on Business Management (pp. 652-668). Sri Jayawardanepura: University of Sri Jayawardanepura.
Edirisinghe, L., Zhihong, J., & Wijeratne, A. (2015). Evaluation Of Expected Payoff Through Container interchange between shipping lines: a
solution to container inventory imbalance in Sri Lanka. Int. J. Logistics Systems and Management, 21(4), 503-533.
Edirisinghe, L., Zhihong, J., & Wijeratne, A. (2016). Container Inventory Management: Factors influencing Container Interchange. 13th
International Conference on Business Management (pp. 652-668). Sri Jayawardanepura: University of Sri Jayawardanepura.
Edirisinghe, L., Zhihong, J., & Wijeratne, A. (2016(a)). The Global Impact of Container Inventory Imbalance and the Factors that Influence
Container Inventory Management Strategies. 13th International Conference on Business Management (pp. 593-621). Sri Jayawardanepura:
University of Sri Jayawardanepura.
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industry.” The International Journal of Logistics Management (Emerald Group Publishing Limited) 20, no. 3 (2009): 425-447.
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Thank you