Tag / TEU

by Mike Poverello

Dumping Ships From East-West to North-South Trade Lanes Nearing ‘Saturation’

Trade Lanes (The Jouranal of Commerce)

Trade Lanes (The Jouranal of Commerce)

Ocean carriers’ tactic of shifting surplus capacity from east-west trades to north-south routes is nearing “saturation point,” according to Drewry Maritime Research.

The “endless” cascading of tonnage from the main haul trades to regional routes is now “seriously haemorrhaging” freight rates in north-south services, and the rate of decline in the second quarter suggests carriers are running out of options to soak up surplus capacity, the London-based consulting firm said.

All-in prices from Asia to Australia, West Africa, South Africa, India and both the east and west coasts of South America based on forwarder buy rates for spot cargo declined significantly during the second quarter. Rates from Asia to India and the west coast of South America rose in July, but Drewry said it “remains to be seen if the increases are sustainable, as there have been many false dawns in other trade lanes.”

The average all-in spot rate from Shanghai to Santos, Brazil, in July was down 51 percent from January, and was 19 percent and 32 percent lower on services to Durban, South Africa, and Melbourne, Australia, respectively.

“This adversarial situation helps to explain why ocean carriers appear to have returned to war with each other over market shares between Asia and Europe since August,” Drewry noted.

The “apparent” benefit of cascading is that average vessel utilization from Asia to the west coast of North America and Europe has usually remained above 85 percent since the second quarter, thus helping to support freight rates.

“It’s been a yo-yo ride nevertheless, but freight rates are still a lot higher than they were at the beginning of the year,” Drewry explained.

Fourteen new vessels averaging 12,713 20-foot-equivalent units were delivered into existing Asia-to-North Europe schedules in the second quarter, but the overall average capacity of all ships on the route increased by just 1.7 percent from the beginning of the year to 10,456 TEUs, as carriers cascaded surplus vessels to other routes.

Drewry said further restructuring on north-south routes via alliances and consortia appears inevitable, particularly as world fleet growth of just over 7 percent in 2014 is again expected to significantly exceed cargo growth. Source: The Journal of Commerce

by Mike Poverello

Container Weighing – industry solution on the horizon

Click Picture for full report at porttechnology.org [Port Technology International – Container weighing device]

The International Maritime Organization (IMO) is expected to make the weighing of sea containers mandatory. The purpose is to make the entire container supply chain safer. This regulation is expected to be issued through the International Convention for the Safety of Life at Sea (SOLAS Convention) as a result of a number of accidents involving container losses and container stack collapses. The existing SOLAS regulation already obliges shippers to declare the correct container weights, but this is not always done. The new regulation is likely to require specifically that the container is actually weighed or calculated by reference to the contents, packing and securing materials and the tare weight of the container itself. Importantly, however, the regulation is anticipated to forbid the loading of containers unless the verified gross mass is available to the terminal and the ship’s master.

Practically speaking this means that the shipping lines may require terminals to verify container weights prior to being loaded onto their ships. There will, however, be a cost to it which the shipping lines are likely to pass on to their shippers. But besides added safety, there is another important aspect: optimising ship stowage which should reduce fuel consumption for the shipping lines. A ship is more stable at sea and consumes less fuel when the center of gravity is low and if the cargo is optimally distributed. Therefore, it is in the interest of the shipping lines to know the exact weights. Arguably, there are multiple aspects which determine fuel consumption of a ship, and some may be more important than stowage, but this is nevertheless a factor.

Determining container weights and related costs

First of all, to weigh a container and to use the load information to update the stowage plan, containers need to be weighed preferably at the completion of packing. Clearly, weighing export containers needs to be done sufficiently in advance for the stowage plan to be optimised. If the actual weight is not determined at the completion of packing, the port is in a prime position to provide this service or, indeed, to verify the documented weight. For containers that arrive at the port by road, rail or river an obvious ‘check point’ is during the inward process. Weighing with the quay side crane is too late, since the container position on the ship is determined well before loading.

Weights of transshipped containers should be verified at the original port of loading, but there will always be situations where this has not been physically possible. In that event, it can be said with certainty that every container, whether exported or transshipped, will pass through the stacking yard. It is therefore argued that equipping the stacking cranes with weighing systems best caters for all circumstances. Operators in those countries that require imported containers to be weighed may consider weighing with quay side cranes as well.

What does it cost to weigh a container? Let’s base the calculation on the capacity of a quay side crane which can typically load 100,000 twenty-foot equivalent unit (TEU) per year. Let’s also assume there are three rubber-tyred gantry cranes (RTG) or rail-mounted gantry cranes (RMGs) required per quay side crane. Let’s further assume a weighing system costs US$20,000 per stacking crane and it is amortised over three years. The cost per year to weigh 100,000 TEU is therefore US$0,20 per TEU. In addition to the capital expenditure for the weighing equipment, the terminal will incur some integration costs plus ongoing maintenance and administration costs, so let’s double this amount to US$0,40 per TEU. Weighing by the stacking cranes during the handling of the containers is also more economical than weighing with weigh bridges which very often involve manual intervention, when trucks are carrying two 20 foot containers which need to be individually weighed. Weighing in the stacking yard is therefore the fastest, most economical and non-disruptive way to the operation. Some terminals have calculated that they could offer their weighing services for US$1 per TEU and earn a profit with it. Continue reading →

by Mike Poverello

Mega ships: positive asset or terminals’ worst nightmare?

triple-e-maersk-worlds-largest-shipA Financial Times article reported Maersk’s Triple E Class (18,000 TEU) to be 26 percent more cost efficient than the current E class (15,000 TEU). – Wright, R (2011), Financial Times. ‘Big Ships: Container lines reach for scale’. Recent research into supply chain costs indicates that this is not obvious for the entire supply chain – Streng, M. (2012). Slow steaming: an economic assessment of lowering sailing speeds on a supply chain level’, Master Thesis Urban, Port and Transport Economics, Erasmus University Rotterdam.

The capital cost per TEU moved has increased even considering the increase in slot size of newer larger vessels. Due to the increase in transportation duration, the capital costs and insurance of goods transported have gone up. Further cost increase could be accounted for in the increase in time to market. Fast moving goods (such as consumer electronics) that need longer to get from the world’s production centres to the markets is also a cost. Shipping lines are demanding ever shorter port stays in order to make the economies of scale work. The bigger the ship, the greater the cost of hours lost in port, and an increased port stay is a diseconomy of scale.  Port Technology have published the following article which should be useful for shippers, freight forwarders, port planners in better understanding the economics of international shipping and logistics – Mega ships: positive asset or terminals’ worst nightmare?.

Triple E Class Specifications - (AP Moeller/MAERSK Group)

Triple E Class Specifications – (AP Moeller/MAERSK Group) [Click to Enlarge]

by Mike Poverello

What are surfaces?

containerThis is the theme of peer review group –  Environment and Planning’s latest edition to its journal. Once I got past the verbage of seeming unconnected academic diatribe, I stumbled on a paragraph which provoked immediate interest, particularly given that I’m fanatical about multimodal transportation especially the ‘container’. It goes like this –

The question posed by this thematic issue is one with considerable intellectual heritage. Surfaces have held a long-standing fascination for science, social science, and humanities scholars, whether figured as material interfaces,(1) natural structures, aesthetic phenomena, geometric projections, or fetishistic distractions. Surfaces may be sculpted, calculated, smoothed, camouflaged, magnified, represented, sensed, or commodified. They may be revered for their beauty, clarity, texture, accessibility, and biodiversity, or criticised for their opacity, ugliness, or for obscuring ‘underlying’ relations and processes. Indeed, while certain disciplinary, philosophical, and scientific traditions are (or have been) concerned with understanding and apprehending surfaces, many scholars—most recently Divya Tolia-Kelly (2013)—emphasise the importance of getting beyond the surface, uncovering underlying meanings, motivations, power relations, ‘feelings’, and processes of production: pushing beyond boundaries, scratching beneath surfaces. The academic inquirer is urged to undertake sub-surface investigations, functioning as an explorer, fisherman, or miner who trawls, excavates, or pioneers new depths.

“So much of life occurs at the surface that, as students of the human scene, we are obliged to pay far more attention to its character (subtlety, variety, and density) than we have done. The scholar’s neglect and suspicion of surface phenomena is a consequence of a dichotomy in western thought between surface and depth, sensory appreciation and intellectual understanding, with bias against the first of the two terms.” Tuan (1989)

The six individual papers in this theme issue provide conceptually diverse and empirically specific responses to the central question posed: ‘What are surfaces?’

For Craig Martin (2013) surfaces exist first as logistical accomplishments, and are to be understood as physical phenomena crucial to the reshaped global geographies of commercial hipping and freight transport. Martin’s concern is with the advent of an intermodal, logistical system based on the standardisation of heavy-duty, corrugated metal boxes; otherwise known as the shipping container. This object, in which so many ordinary spatial interdependencies are invested, is arguably as close to a universal, surficial fix as global powers have got. The containers’ vital statistics and carrying capacities scale up to a planetary surface where integration is paramount, between materialities (of land and sea), mobilities (nautical and terrestrial), and sovereignties (political and legal). By these means, the specificities of earthly surfaces have been transformed into a commerce-driven sameness of sorts.

So now I think….how long it will take me to save up £1000 to purchase a year’s subscription to this journal – perhaps just for this one article?

Source: Environment and Planning  

by Mike Poverello

Finding the best solution for 100% container weight verification

Bromma load verification sensing technology (www.bromma.com)

Bromma load verification sensing technology (www.bromma.com)

The International Association of Ports and Harbours (IAPH) has helped the container handling industry to put focused attention on the issue of container weight verification. The IAPH and the International Shipping Organization have called for near 100 per cent container weight verification as a standard industry ‘best practice’. IAPH has recognised the value of container weight verification for both safety and operational reasons. Accurate container weights can help guide critical plans regarding stowage, and verifiable load data also serves to ensure worker safety. Lifting containers within an acceptable weight range also prevents accelerated stress on the spreader, thus extending equipment life.

The issue that organisations such as IAPH and the World Shipping Council have raised is not merely an academic one, studies of container weight indicate that there is often significant variation between listed and actual container weight. The problem is a familiar one: not everyone tells the truth about their weight, as the consequences of inaccurate weight can include equipment damage in ports, injury to workers and collapsed container stacks, among others.

The question is ‘how’, not ‘should’?

The general consensus has grown that universal container weight verification is a worthy standard, the key question has quickly begun to shift from whether we should we have a universal requirement to how we can best implement this commitment. Along these lines three general approaches might be possible.

The container crane option

The first possible approach is to utilise container cranes to meet the weighing requirement. The advantage of weight verification by cranes is that weighing occurs during the normal course of handling operations. The disadvantage of a crane-based approach is that weighing accuracy is only approximately 90-95 per cent, and cranes cannot distinguish between the weights of two containers when lifting in twin-mode. Since many terminals load and unload container ships using twin-lift/twin-20 foot spreaders, the actual weight of each of these individual containers will remain in doubt if there is a reliance on container cranes to yield this data. Also, with the emergence of the mega-ship era, more and more terminals will be looking for productivity solutions that enable more containers to be handled in each lift cycle, and so twin-handling of 40 and 20 foot containers is likely to expand in the future, thus adding to the number of containers with an uncertain weight.

The weigh bridge option

A second option for terminals would be to meet the container weight requirement through the use of weigh bridges. Unfortunately, there are multiple weaknesses in this approach.Containers can be weighed from the weigh bridge, but driving every container onto a weigh bridge will obviously add another operational step, and slow productivity. It also requires, especially at larger and busier transhipment terminals, that considerable land and transit lanes be set aside for weighing activities. In addition, there are two weight variables on the weigh bridge – the variable weight of up to 300 litres of truck fuel and the weight of the driver. Further, as with a container crane, a weigh bridge cannot distinguish between the weights of two containers, and so the weight of each individual container will always be inexact. The only way to gain a precise weight is to weigh one container at a time, and to adjust for fuel weight and driver weight variables.

The spreader twist lock option

The third option is to ascertain container weight from the spreader twist locks. For container terminals, a spreader-based weighing approach has several key advantages. Firstly, weighing from the spreader twist locks yields much more accurate information, as container weight precision is greater than 99 per cent. Secondly, unlike weigh bridges or crane-based container weighing, spreaders weigh each container separately when operating in twin-lift mode. When a Bromma spreader lifts two 20 foot containers or two 40 foot containers at a time, the spreader can provide highly accurate data on the weight of each separate container, and without any of the variables (fuel, driver) associated with the weigh bridge approach.

In addition, with a spreader-based approach you weigh containers from the spreader twist locks without adding any extra operational steps or requiring any extra space or transit lanes. Terminals simply log container weights in the normal course of lifting operations – with a warning system alerting the terminal to overloaded and eccentric containers. Container weight verification during the normal course of terminal operations is a way to accomplish the weighing mission without impairing terminal productivity, and especially at busy transhipment terminals. To read the full report, Click Here!

Source: www.porttechnology.org

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by Mike Poverello

Pandora’s Box – Missiles in a shipping container

Artistic impression of the Club K Missile System

Artistic impression of the Club K Missile System

Critical Logistics, an informative blog, reported an interesting if not disturbing article on the development of a new weapon’s system which uses the ubiquity of shipping containers as it is housed in a 40-footer. It is known as the Club-K Container Missile System.

An article by concerned commentator, Lajos F. Szaszdi, (The Heritage Network) raises several valid concerns in his article “The Club-K: A Deadly “Pandora’s Box” of Cruise Missiles”, which are summarised in the following paragraphs.

[…] Fittingly, the marketing name given to the system is “Pandora’s Box.” The container-looking weapon system can be fired from a container ship, a train cart, or a container truck. By appearing externally as a simple container, the Club-K can be positioned covertly, ready to unleash a surprise attack, probably firing simultaneously from more than one container.

[…] Container ships carrying the Club-K system could be used to attack commercial shipping, particularly in choke points like the Straits of Hormuz and Malacca. These container ships would be acting like Germany’s auxiliary cruisers of the First and Second World Wars, which were armed merchant ships used for commerce raiding. Cargo ships armed with the Club-K could be equipped with Unmanned Aerial Vehicles to provide airborne Intelligence, Surveillance, Target Acquisition and Reconnaissance (ISTAR).

Even though use by Hezbollah is a possibility, the greatest potential threat could come from China, which reportedly was already interested in acquiring Club missiles for its submarines of the Type 041 Yuan class, the nuclear-powered Type 093 Shang class, and Russian-made Kilo class subs. China could load container ships with land-attack missiles, with E-Bombs for a surprise attack against Taiwan, and armed with nuclear warheads and E-Bombs to strike the port facilities used by the U.S. Navy in Singapore, the U.S. West Coast, the Panama Canal, etc. Chinese missiles could be launched from container trucks sent secretly to Mexico mixed with legitimate containers. India, another customer of the SS-N-27, could use the Club-K system against Pakistan or China as a first or second strike weapon. Iran could be another customer for the Club-K, once U.N. sanctions are lifted.

The Club-K is a highly destabilizing weapon system. Due to the nature of international trade, with millions of containers being shipped worldwide, transported by train and particularly by trucks, it would be very hard to detect, and an attack could happen at any time on any day without warning. The military and intelligence services of the U.S. and its allies must keep a close watch on this Pandora’s Box, to make sure it will never be opened in anger against them.

A promotional video of the system by (oddly named) manufacturer Concern Agat appears below. http://

For more details on the system visit their website – http://www.concern-agat.com/products/defense-products/81-concern-agat/189-club-k

by Mike Poverello

Thinking Inside the Box

The fluid transition from sea to land

The fluid transition from sea to land

Here’s an interesting view on containers, presented by Alex Colas from Birkbeck University, USA. Colas highlights that containers have been fundamental drivers of global processes and have had an unprecedented effect on logistics and labour organisations. Moreover Colas demonstrates that containers as well as being transformative objects in themselves, have also transformed the way in which circulatory barriers have been overcome through seamless transitions from water to land. Containers are a worthy protagonist of material analysis in international systems and there is much room in academic discourse for the full story of the container to unfold. Herewith the link to the article Thinking Inside the Box, available on the blog – Geopolitics & Security.

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by Mike Poverello

Maiden Voyage for 16,000 TEU French Giant

CMA CGM Marco Polo 16,000 TEU container ship

The world’s largest containership sailed on her maiden voyage with a first load of freight from Ningbo, China. The Marco Polo is at 16,000 TEU currently the biggest box carrier and is the first of a series of three similar dimension vessels that will all be named after great explorers. The delivery of the two next vessels is expected in 2013. This first voyage, w will be used partly to test the ship, the largest in service until Maersk’s 18,000teu Triple-E vessels start to be deployed next year.

Owned by French liner group CMA CGM she will be operated on the company’s French Asia Line service’s FAL 1 rotation where all the group’s largest vessels operate on a fixed-day, weekly connection between Central and South China, the main exporting zones of the country, and Northern Europe. The direct service to Southampton and to Hamburg offers European importers the fastest transit times of the market.

FAL1 is part of a global network of 8 CMA CGM services connecting Asia to Europe Atlantic, which the company claims to be the most thorough offer on the market, and which is based on 29 vessels of 11,400 to 16,000 TEUs. Nicolas Sartini, CMA CGM Group Senior Vice President Asia-Europe Lines, said of the latest offering:

“It is with great pride that the CMA CGM Group launches this new vessel, which is the largest in the world. It shows the expertise of the Group’s teams, who are able to handle not only the very technical piloting of the ship but also its commercial operations. Our entire network of 400 agencies all around the world is active to ensure the successful launching of this ship.

“The CMA CGM Marco Polo is going to join the FAL service, the backbone of the Group’s network of lines. This launching reinforces the Group’s strategy, which began 20 years ago, with the opening of its own offices in China, and continues today with 34 services going from China to Europe, to North and South America, to Australia and Africa, i.e. one departure every 5 hours. To this must also be added the 20 weekly services of our subsidiary Cheng Lie Navigation, the Intra-Asia specialist.”

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by Mike Poverello

Importers and Exporters may see doubled freight rates by 2015

Get ready for a crazy roller coaster ride…As is already well known, the current situation in the shipping world is that there is a large lack of demand against the current overall supply of container space. Today, the current fleet capacity is around 15.5 million TEUs. Since 2005, the total capacity has roughly doubled – literally.

Because of the imbalance of supply/demand, carriers are losing blood and even declaring a negative balance sheet for end of 2012. This situation pushes them to the dilemma of getting bigger or getting smaller. Getting bigger means buying new, larger ships. These ships allow carriers to improve their cost effectiveness, work with smaller crews and lower their capital costs. On the other hand, some carriers are getting smaller; serving more niche markets where larger vessels will not call since that will reduce the efficiency of the vessel. You can imagine that a 15,000 TEU ship will not make 3 ports in the same country – if that country is not China.

These are the things we see and hear everyday. However a more important game is being played behind the scenes which has a crucial effect on the whole industry. According to Bloomberg; DNB ASA, the world’s largest arranger of shipping loans, expects the shipping industry to have a funding gap of $100 billion by 2015, as European banks are reducing their support to maritime transport. Even if US and Asian banks have an increased interest on maritime loans; EU banks account for 90% of the global ship lending. Considering net shipping loan losses at Nordea Bank AB (NDA), the world’s No. 4 shipping lender, tripled to 135 million euros ($179 million) last year because of “weak market conditions” and “a general decline in vessel values”, everyone will be thinking twice before granting a loan. In addition to that, since there will be less vessel orders with reduced prices, it will be forcing some yards to close in the following 12 to 18 months.

How is this going to affect exporters/importers? That’s our major question of course. Considering several factors; the EU Crisis, US getting out of recession, Arab spring is over; it will take another couple of years to get on track for sure. According to HSBC Global Connections, despite the current climate, the overall trend for international trade is positive with growth acceleration sooner than expected from 2014, than 2015. Over the next 5 years an annualized growth rate of %3.78 is forecasted for international trade. The main countries that will be carrying the growth are China and India, and China is expected to have an annualized growth of 6.60% in imports and 6.61% on exports; while India is expected to have 6.81% growth in imports and 7.60% in their exports from 2012 to 2016.

Now, according to 2010 stats, worldwide container traffic reached 560 million TEUs – an all-time high. China & Hong Kong Ports handle close to 169 milllion TEUs, 18% of this traffic. We need to keep in mind though, this is not only China exports/imports but also transshipped cargo that goes via those ports to other Asian nations.

With that in mind, if we take the growth rate with an average 6% for that region and multiply this with 169 million, we come up with a possible increase of 30 million TEUs annually and 500,000 TEUs weekly basis increase only in the region that handles %18 of global trade.Now, lets go back to the supply side. The major banks will be reducing loans, there will be less ship orders and there will be less ship yards to build new ships. How is this going to affect the years 2014-15 and later?

Can Fidan believes very tough years will come for exporters/importers in the sense of shipping costs and finding available space. Prepare to see more of the complaints from exporters not being able to find space and getting asked to pay very high freight charges like we were seeing in 2010. However, this time the difference will be, there won’t be any idle vessels sitting in Singapore or any new ordered vessels to come in and let everyone breath. Considering today, this sounds improbable… Well? the facts are out there and they show that the roller coaster ride we are on will just get crazier. Source: Can Fidan, MTS Logistics