Containerization and Allied Business- FREIGHTING AND SIZE OF CONTAINER 2021 Anna University Regulation

1. UNIT 2
CONTAINERIZATION AND ALLIED
BUSINESS

2. CONTAINER SHIPPING BUSINESS
OVER VIEW OF INDUSTRY
India has 12 major and 205 notified minor and intermediate
ports. Under the National Perspective Plan for Sagarmala, six new mega
ports will be developed in the country. The Indian ports and shipping
industry play a vital role in sustaining growth in the country’s trade and
commerce. India is the sixteenth largest maritime country in the world with
a coastline of about 7,517 kms. The Indian Government plays an important
role in supporting the ports sector. It has allowed Foreign Direct
Investment (FDI) of up to 100 per cent under the automatic route for port
and harbour construction and maintenance projects. It has also facilitated
a 10-year tax holiday to enterprises that develop, maintain and operate
ports, inland waterways and inland ports.

3. MARKET SIZE
• In FY20, major ports in India handled 704.82 million tonnes (MT) of
cargo traffic, implying a CAGR of 2.74 per cent during FY16-FY20.
Cargo traffic at non-major ports reached 447.21 MT in FY20 (till
December 2019).
• The major ports had a capacity of 1,514.09 MT per annum (MTPA) in
FY19P. The Maritime Agenda 2010-20 has a 2020 target of 3,130 MT of
port capacity.
• The Government has taken several measures to improve operational
efficiency through mechanisation, deepening the draft and speedy
evacuations.
• CAGR-Compound Annual Growth Rate

4. GOVERNMENT INITIATIVES
• As of November 2019, projects worth Rs 13,308.41 crore (US$ 1.90 billion) were
awarded in the last three years on upgradation of the major ports.
• As per Union Budget 2020-21, the total allocation for the Ministry of Shipping stands
at Rs 1,800 crore (US$ 257.22 million).
• Major Port Authorities Bill 2020 was introduced in the Lok sabha, which intends to
provide regulation, operation and planning of major ports in India and to invest the
administration, control and management of such ports upon the Boards of Major
Port Authorities and for matters connected.
• Net profit at major ports increased from Rs 1,150 crore (US$ 178.4 million) in FY13 to
Rs 3,413 crore (US$ 529.6 million) in FY18, while operating margin increased from 23
per cent to 44 per cent.
• In May 2018, Ministry of Shipping allowed foreign flagged ships to carry containers
for transhipment.

5. ACHIEVEMENTS
• Turnaround time at major ports stood at 64.69 hours in FY20 (till
September 2019).
• Project UNNATI was started by the Government of India to identify
opportunities for improvement in the operations of major ports. Under
the project, 116 initiatives were identified, out of which 91 initiatives
were implemented as of November 2018.

6. ROAD AHEAD
• Under the Sagarmala Programme, Government has envisioned a total
of 189 projects for modernisation of ports involving an investment of
Rs 1.42 trillion (US$ 22 billion) by the year 2035.
• Ministry of Shipping has set a target capacity of over 3,130 MMT by
2020, which would be driven by participation from the private sector.
Non-major ports are expected to generate over 50 per cent of this
capacity.
• India’s cargo traffic handled by ports is expected to reach 1,695 million
metric tonnes by 2021-22 according to a report by the National
Transport Development Policy Committee.
• 1 MMT =1000 kg

9. HOW TO START A SHIPPING COMPANY
WITH CONTAINERS
The shipping industry presents numerous investment and
business opportunities for those willing to put in the time, research, effort
and capital to be successful in this sector. Shipping containers are used to
move large amounts of freight, and it is possible to start a shipping
company using containers through a variety of techniques.

10. ROLES WITHIN THE SHIPPING INDUSTRY
• Carrier: Doing the actual shipping work of transporting shipping containers
by air, sea, rail, and truck
• Freight forwarder: Responsible for getting freight from warehouse to dock
(and vice versa) and optimizing the logistics of where to ship from/to
• Shipping container leasing business: Owning the actual containers and
selling or leasing them to carriers and shipmasters
• Shipping broker: Connecting shipping container owners to carrier lines and
other contacts

11. WHAT IS A SHIPPING CONTAINER?
• The basic premise of a shipping container is that it can be loaded at a
warehouse, sealed and then shipped as a unit by air, sea, rail or truck
without needing to be opened until it reaches its destination.
• This allows for quick and easy loading, unloading and logistics.
• Shipping containers come in a number of sizes standardized by the
International Organization for Standards so that container shipping can
be seamless between any countries in the world. Standard sizes include
20-foot, 40-foot, 45-foot and 53-foot lengths as well as a 40-foot cube
model.

12. TYPES OF FREIGHT FOR SHIPPING
CONTAINERS
• Cargo ships: These are the most common type of international freight.
These ocean-going ships, known as liners, travel set routes on fixed
schedules.
• Air freight: This method is faster but carries less freight per trip, making
this method more expensive and less environmentally friendly.
• Rail freight: Trains can move a lot of freight over land from a port to an
inland or cross-continental destination. If you set up a shipping
container business with a dock or warehouse.
• Truck freight: Trucks are a more flexible but very small-scale method to
transport freight over land.

13. BILLS OF LADING AND SHIPPING
• A second vital set of information is being familiar with bills of lading and
freight bills. A bill of lading is a legal document and is essentially
the shipping contract, while the freight bill is the invoice for the cost of
shipping goods. You will need to be aware of how the bill of lading must
be consigned and to whom as well as the details of issuing a house bill
of lading as opposed to a master bill of lading.

14. CONTD..
International Commercial Terms
• In addition, you will also need to familiarize yourself with the Incoterms,
or International Commercial Terms. These are predefined commercial
terms relating to international commercial law and are published by the
International Chamber of Commerce.
Maritime and Shipping Insurance
• Finally, you will need to know about maritime and shipping insurance,
how to operate your vessel around specific ports, what legislation
applies to onboard crew members, how to operate communication
equipment and how to handle dangerous goods.

15. SHIPPING INDUSTRY BUSINESS STRUCTURES
• Once you've familiarized yourself with shipping container standards and
logistics, you can follow the steps to actually set up a business. First,
decide what goods you want to handle. Then, define your
business's identity, including naming and branding that reflects the
type of shipping work you intend to do.
• Study the industry and the competition. Define the structure of your
business with the help of an attorney or financial adviser. The usual
choices are either a corporation or a limited liability company.

17. TOP 30 INTERNATIONAL SHIPPING
COMPANIES
• https://moverfocus.com/shipping-companies/

18. FCL AND LCL
Sea Cargo is one of the most sought after options of shipping
and has been around for centuries, with various trading routes that have
only improved in the modern world. Within the world of sea freight
for commercial cargo or personal effects, crates and container shipping is
used to safely transport goods on freight ships. When you take aluminium
or steel container shipping, FCL and LCL shipping are the choices when
sending shipments overseas.

19. FCL CONTAINER SHIPPING
• Full Container Load (FCL) is a container shipping option where a container is
exclusively used for a single shipment and the container is not shared with other
cargo shipments, and the costs are borne by one party. Even if the container isn’t
enough completely filled to the brim with cargo, the shipping party can choose to
still opt for it. There are many reasons why they would choose to send as FCL
shipments, such as;
• FCL shipping costs less than LCL. The cost of unit per freight is higher with LCL than
FCL, and importing fees need to be paid regardless of the size of your shipment or
choice of container shipment
• FCL shipments offer a faster lead time/delivery. As a FCL shipment include cargo that
is meant for a single party and not shared, even if it stops at various ports, they do
not need to be opened and reworked, and delays can be avoided.
• The freight forwarder will be able to bring a container to your desired address for
you to load the goods onto the container yourself

20. LCL SHIPPING
• Less than Container Load (LCL) is another shipping term when various
cargo shipments share the same container as well as the container
shipping costs. There are many reasons why LCL container shipping is
chosen, such as;
• LCL Shipping is usually chosen when the there aren’t enough goods to
fill up and entire container
• LCL shipping can allow you to lower your warehousing costs, that is, in
the event you are stocking a warehouse until you are able to
accommodate a FCL shipment, thus lowering your
warehousing/inventory costs

23. CONTD..
• Shipment volume
• Shipment volume refers to the capacity that the transported goods take
up. This is usually measured in cubic meters or cubic feet. It is, more
often than not, the deciding factor when choosing between LCL and FCL
shipments.
• LCL vs FCL: LCL shipments are usually the better option for low-volume
shipments of between 2 and 13m3. Merchandise of less than 2m3 may
also be shipped with LCL under certain circumstances.
• FCL shipments tend to be cheaper when the shipment uses more than
10 standard pallets or occupies more than 14m3.

24. CONTD..
• Cargo security
• It’s natural for all shippers to want their merchandise to be secure when
traversing the oceans. But not all shipments require the same level of
security.
• Certain shipments are more sensitive to changes and movements that
merchandise are often exposed and susceptible to during shipping.
• FCL vs LCL: An FCL shipment tends to be more secure because it has
exclusive rights to the entire container. That means that it is not in
contact with cargo from other shippers —as in the case of LCL
shipping— and isn’t at risk of damage or contamination from other
merchandise.

25. CONTD..
• Shipment cost
• Shipment cost is one of the major factors to consider when deciding on
whether to ship FCL or LCL. While there are certain guidelines you can
follow, there may be a gray area in which the FCL vs LCL decision is
blurred.
• LCL vs FCL: The general rule of thumb is to go with LCL when shipping
low-volume shipments (between 2 and 13m3) and FCL for higher-volume
shipments (13m3 and above), even though you may not completely fill
the container.
• This guideline is, however, by no means set in stone. Un

26. CONTD..
• Urgency of shipment
• It’s important to plan a shipment in advance, but things may not always
fall in place and circumstances may not permit it. When deciding
between FCL and LCL, rates aside, another factor to consider is how
urgently your cargo needs to get to destination.
• FCL vs LCL: Shipping FCL is usually the better option for urgent
shipments or for shipments that need to arrive before a fixed date. LCL is
better suited for shipments with flexible dates.

27. SIZE CATEGORIES
• Container ships are distinguished into 7 major size categories: small feeder, feeder,
feedermax, Panamax, Post-Panamax, New Panamax and ultra-large. As of December
2012, there were 161 container ships in the VLCS class (Very Large Container Ships,
more than 10,000 TEU), and 51 ports in the world can accommodate them.
• The size of a Panamax vessel is limited by the original Panama canal's lock chambers,
which can accommodate ships with a beam of up to 32.31 m, a length overall of up
to 294.13 m, and a draft of up to 12.04 m.The Post-Panamax category has historically
been used to describe ships with a moulded breadth over 32.31 m, however
the Panama Canal expansion project has caused some changes in terminology.
The New Panamax category is based on the maximum vessel-size that is able to
transit a new third set of locks, which opened in June 2016.The third set of locks were
built to accommodate a container ship with a length overall of 366 metres (1,201 ft),
a maximum width of 49 metres (161 ft), and tropical fresh-water draft of 15.2 metres
(50 ft). Such a vessel, called New Panamax class, is wide enough to carry 19 rows of
containers, can have a total capacity of approximately 12,000 TEU and is comparable
in size to a capesize bulk carrier or a Suezmax tanker.

28. FLEET CHARACTERISTICS
• As of 2010, container ships made up 13.3% of the world's fleet in terms of deadweight
tonnage.The world's total of container ship deadweight tonnage has increased from 11
million DWT in 1980 to 169.0 million DWT in 2010.The combined deadweight tonnage of
container ships and general cargo ships, which also often carry containers, represents 21.8%
of the world's fleet.
• As of 2009, the average age of container ships worldwide was 10.6 years, making them the
youngest general vessel type, followed by bulk carriers at 16.6 years, oil tankers at 17 years,
general cargo ships at 24.6 years, and others at 25.3 years.
• Most of the world's carrying capacity in fully cellular container ships is in the liner service,
where ships trade on scheduled routes. As of January 2010, the top 20 liner companies
controlled 67.5% of the world's fully cellular container capacity, with 2,673 vessels of an
average capacity of 3,774 TEU.The remaining 6,862 fully cellular ships have an average
capacity of 709 TEU each.
• The vast majority of the capacity of fully cellular container ships used in the liner trade is
owned by German shipowners, with approximately 75% owned by Hamburg brokers.It is a
common practice for the large container lines to supplement their own ships with chartered-
in ships, for example in 2009, 48.9% of the tonnage of the top 20 liner companies was
chartered-in in this manner.[

29. LOSSES AND SAFETY PROBLEMS
• It has been estimated that container ships lose between 2,000 and
10,000 containers at sea each year,costing $370 million.A more recent survey
for the six years 2008 through 2013 estimates average losses of individual
containers overboard at 546 per year, and average total losses including
catastrophic events such as vessel sinkings or groundings at 1,679 per year
Most go overboard on the open sea during storms but there are some
examples of whole ships being lost with their cargo.When containers are
dropped, they immediately become an environmental threat – termed
"marine debris".Once in the ocean, they fill with water and sink if the
contents cannot hold air. Rough waters smash the container, sinking it
quickly
• The threat of piracy can cost a container shipping company as much as $100
million per year due to longer routes and higher speed, particularly near East
Africa.

30. WHAT IS CONSOLIDATION OF CARGO?
• Consolidator is a person or company who consolidates different
consignments for different importers in to one consignment who
delivers each cargo each consignee as per the agreed terms and
conditions.

31. EXAMPLE
• You (exporter) situated in Colombo, Sri Lanka have a shipment to be exported to your overseas
buyer in Antwerp by sea – say about 4cbm of 1200kgs. As per your costing shipping in a full
container load is not worth as the total quantity and volume is too less to load in to a container. This
is called LCL shipment, means Less Container Cargo shipment. Here, you contact a freight forwarder
or consolidator to accept your shipments to move to final destination at Antwerp. The freight
forwarder accepts your cargo. The said freight forwarder accepts the LCL cargo from other exporters
also to make his container full. Other exporters’ goods to other destinations also may have in the
container. So your cargo with other exporters’ cargo is loaded in to a container and moves to the
transshipment port. The freight forwarder (carrier of your cargo) will have their associates working in
the said transshipment port say – Cochin, India. There may have cargo arrived from other ports at
Cochin port to be moved to Antwerp also. They de-stuff the cargo at Cochin port and, and arrange
to load all cargo to Antwerp in one container. Here, in Cochin transshipment port, there may have
other cargo arrived from various locations to ship to other destinations also – say to Dubai, Hong
Kong, Cape Town etc. So all cargo meant for Dubai which have been arrived from other locations to
Cochin loaded in to one container and move to Dubai, The LCL goods arrived from various locations
meant for Hong Kong are loaded in to one container and arrange to move to Hong Kong, The cargo
to be shipped out to Cape Town is loaded to one container. All the said procedures are with the
necessary permissions and under the supervision of customs officials of respective country. This
process of clubbing shipments together is called ‘consolidation of cargo’.

32. LCL CONSOLIDATION
• The process of LCL consolidation involves the movement of less than
container load cargo from an Inland Container Deport to a nominated 'hub'
terminal under customs seal, usually in a domestic container of some sort. At
the nominated hub terminal, the sealed containers are opened and the cargo
re-worked on a destination wise basis without having to be subjected to re-
examination by customs. Indian Customs permitted the reworking of LCL
boxes in certain nominated 'hub terminals' mostly located at port cities in
the year 2000.
• This has already led to a tremendous increase in the business of LCL
consolidation in the country. Export LCL consolidation of different ICDs'
custom cleared cargo, often along with locally cleared LCL cargo makes for
must faster clearance of cargo, and reduces the end to end transit times
between the originating points and destinations of the cargo being moved

33. CONTD..
• Reduced transit times of LCL hub movements have provided opportunity to
shippers to move their LCL consignments faster, at extremely cost effective
LCL sea tariffs. Due to the reworking of such cargo at nominated hub points
within India, direct destination sailings to USA, Europe, Africa, Gulf etc.,
become available via the Mumbai/Chennai transshipment HUBs. This also
reduces the sea transits for LCL movements, which otherwise have to face a
more expensive transshipment at locations like Singapore or Colombo.
• CONCOR currently provides LCL consolidation services from various
locations such as Agra, Moradabad, Kanpur, Dhandari Kalan (Ludhiana),
Whitefield (Bangalore), Tondiarpet (Chennai), Sanathnagar (Secundrabad),
Khoidiyar (Ahmedabad), Nagpur, Aurangabad, Dronagiri (DRT) and
Pithampur (Indore).
• LCL movement from Terminals to Port is taking place both by Rail as well as
by Road. At present, Dronagiri Node is the major consolidation hub for LCL
cargo.

34. CONCOR - THE MULTIMODAL LOGISTICS
PROFESSIONALS
• Malcolm McLean's idea of containerization changed the basics of cargo transport by
standardizing the dimensions of the container and simultaneously improving the
productivity of ports by mechanizing handling of container-carrying 'cellular' ships and
reducing their handling to a few hours only. Unitisation helped elimination of multiple
handling of cargo and made transfers quick, cheap and easy. As containerization came
to stand for 'cargo care', it grew by leaps and bounds the world over.
• Indian Railway's strategic initiative to containerize cargo transport put India on the
multi-modal map for the first time in 1966. Given the continental distances in
India (almost 3000 km from North to South and East to West), rail transport could be
the cheaper option for all cargo over medium and long distances, especially if the cost
of inter-modal transfers could be reduced. Containerized multi-modal door-to-door
transport provided the ideal solution to this problem. It was this idea that saw the
Indian Railways entering the market for moving door-to-door domestic cargo in
special DSO containers starting in 1966.

35. CONTD..
• Though the first ISO marine container had been handled in India at
Cochin as early as 1973, it was in 1981 that the first ISO container was
moved inland by the Indian Railways to India's first Inland Container
Depot (ICD) at Bangaluru, also managed by the Indian Railways.
• Expansion of the network to 7 ICDs by 1988 saw increase in the handling
of containers, and along the way, a strong view had emerged that there
was a need to set up a separate pro-active organization for promoting
and managing the growth of containerization in India.