How Can a Foldable Container Cut Down Costs of Empty Transport - Research Proposal Example

Repositioning of Empty Containers is a Highly Expensive Business – How can a Foldable Container Cut Down Costs of Empty Transport? Instructor’s Name Subject / Course Date Total Number of Words: 2,821 Title “Repositioning of Empty Containers is a Highly Expensive Business – How can a Foldable Container Cut Down the Costs of Empty Transport?” Introduction Back in the late 1960s, the introduction of the shipping container has caused great improvements in the transport of freight business (Notteboom, 2004). Because of the availability of shipping containers, the transport of cargo from one destination to another became much more simple and safer. Basically, the frequent use of shipping containers opened the gates to intermodal transport within a new dimension (Global Security, 2009). Today, the number of seaport container terminals and competition among these companies are continuously increasing (Steenken, Vob, & Stahlbock, 2005, p. 3) As part of a typical business practice, a cargo is being moved using a non-foldable steel container boxes coming from the place where goods are manufactured to the market whereby the products has been sold (Priyo, 2008). One of the distinct disadvantages of using the traditional shipping containers is highly associated with the high costs of repositioning the empty container boxes from one place to another. Since it is too costly on the part of the shipping and/or cargo company to reposition empty containers once the goods have been delivered to the point of destination (Wang & Wang, 2007; Konings, 2005), some of the cargo and shipping businesses had to rent out a space within the destination port area until such time that they are able to ship back the empty containers to the point of origin. Because of the presence of global competition within the trade and transport business and the high cost associated with the need to reposition the empty containers from one place to another, shipping companies are being challenged to innovate new strategies that could enable the company to maximize its annual profitability. In return, a shipping company are expected to increase its competitive edge over a similar company that offers the same type of service. The transportation of empty container boxes due to repositioning requirements within the logistic chain is very expensive. (Wang & Wang, 2007) In order to maximize the profitability of cargo businesses, there is a strong need to search for new and alternative ways to cut down the costs of transferring empty container boxes to an absolute minimum. In line with this matter, the proposed research study will conduct a primary and secondary research to examine and analyze the benefits and cost-efficiency of using foldable containers on behalf of the cargo businesses. Prior to the primary research, a literature will be gathered to determine the benefits and consequences of using foldable containers as compared with the use of traditional non-foldable containers. In the process of going through the discussion, general information regarding the empty container transport will be tackled in details to give the readers a background regarding the research topic. Research Questions and Objectives The research objectives of the study is to enable the researcher to undergo critical thinking while examining, balancing, and analyzing the economic benefits and consequences of using foldable containers as compared with the traditional non-foldable containers. By going through the research study, the researcher will be able to justify why shipping and cargo businesses should consider the need to shift from the use of the traditional non-foldable containers to foldable containers. The following research questions will be used in the study: What are the economic benefits and consequences associated with the use of traditional non-foldable and foldable containers? Up to what extent does the use of foldable containers reduce the costs of transferring empty container boxes? What are the personal point-of-views of the shipping lines with regards to the use of foldable containers? Between the use of SIO and Fallpac containers, which of the two foldable containers is more economical to use in terms of the time and manpower needed to fold, unfold, stack, and reposition the containers within the port areas? Why? Research Hypothesis The use of foldable containers is one of the best strategies that will enable the cargo business reduce the costs associated with the need to transfer empty container boxes from one destination to another. Aim of the Research The research study aims to explore the economic benefits and consequences of shifting from the use of the traditional non-foldable containers to foldable containers when the need to transfer empty container boxes arises. Rationale behind the Chosen Topic Globalization has increases the demand for transporting goods through the sea ports. Since there are a lot of cargo or freight businesses operating around the world, innovating new strategy is necessary to enable the company to maximize its profitability by reducing the overall operational costs. Considering the fact that repositioning of empty non-foldable container boxes is very expensive on the part of the shipping and/or cargo companies, determining the feasibility of using foldable container boxes is essential in terms of promising a huge reduction over the costs of transferring empty containers from one destination to another. By keeping the total operational cost down, shipping and/or cargo companies will be able to offer a more competitive shipment cost to the customers. Underlying Concepts or Themes As part of making the shipment of empty container boxes a lot easier, the use of foldable container boxes could significantly reduce the costs of repositioning empty container boxes up to several billions of dollars each year. Definition of Words Waterside Transhipment Process – “includes the quayside operation or container transhipment and container movement to and from the wharf” (Steenken, Vob, & Stahlbock, 2005, p. 7). Review of Related Literature General Information Regarding the Empty Container Transport Around the world, the demand for sea freight containers has significantly increased since the era of globalization. Back in 1961, the first regular sea container service started coming from the US East Coast going to the points in Caribbean, Central, and South America (Steenken, Vob, & Stahlbock, 2005, p. 4). Eventually, there were a lot of ships made especially designed to carry bulky containers as the demand and production of heavy metal containers increases. Depending on the need of the customers, the sizes of container boxes varies. In general, the most commonly used container size is the twenty feet (20”) long followed by the 40” and 45” container which normally represent 2 twenty feel equivalent units (TEU) (Steenken, Vob, & Stahlbock, 2005, p. 4). Part of the container flows includes having the shipper load the container followed by transporting the container to the port. In case the container was not loaded onto a ship, the port terminal operator would position and store the container within the port area until such time that the container has been scheduled for loading onto a ship for carriage to its destination port (Maloni & Jackson, 2005). As soon as the goods were unloaded at the point of destination, the empty containers can be transported from port to port particularly from the port whereby the goods has been delivered back to the demander or the supplier of the goods being delivered (Wang & Wang, 2007). Regardless of the container size, the time wherein empty containers are being distributed from port to port varies depending on a lot of external and uncontrollable factors which includes the available seaport schedule for repositioning of empty containers, available ship that will transport the empty containers back to the point of origin, available equipment like cranes and stacking facilities at the seaport area, possible labour strike at the port area including the unforeseen changes in the weather condition among others (Gooley & Cooke, 2002). Basically, the longer the time ships and containers are being stranded within the port area could mean not only the lost of economic or business opportunity but also causes severe congestion within the port (Mongelluzzo, 2004). Over the years, the significant increase in the number of container shipments has contributed to the increase in the demand on seaport container terminals, logistics that handles the container shipments, management, and the development of technical equipments within the seaport area. As a result of the rapid volume growth, a lot of ports are facing internal problems causing delays in shipment because of the limited capacity of each port (Trunick, 2004; Fabey, 2000). Seaports are being challenged to compete not only for the ocean carrier patronage and short sea operators but also the land-based truck and railroad services. (Steenken, Vob, & Stahlbock, 2005, p. 5) Since a shorter time each empty container spent at the berth of the seaport area and/or the movement of empty containers to and from the wharf means a lesser costs of transhipment on the part of the customers; it becomes a challenge for them to be able to achieve a rapid turnover of containers back to the point of origin. As part of increasing the operational productivity of each shipping and cargo business, the efficiency of each port to reposition and ship back the empty containers to the point of origin is necessary. Comparison between the Benefits and Consequences of Using Foldable and Non-foldable Containers when Repositioning Empty Containers Shipping and cargo businesses have little power over the control of traffic within the port area. However, shippers and cargo companies have the capacity to minimize transportation delay by increasing its efficiency when filling the container. As a result, a shipping or cargo company can reduce the number of containers required for shipment thereby reducing the total shipment transportation costs (Pasinger, 2002; Bortfeldt & Gehring, 2001). For several years, the concept of using foldable containers has been considered as an alternative option to the use of non-foldable containers. There are two available foldable containers in the market known as: (1) Six-In-One container (SIO); and Fallpac container (Konings & Thijs, 2001). Originated in France, the SIO container is a dismantable and foldable 20 ft freight box (20 ft x 8 ft x 8 ft 8 inches container) with seven separate locking devices and has the capacity to carry a maximum gross weight of 20 tonnes. Manufactured by a Swedish company, Fallpac container is a 20 ft dry freight box which also offers dismounting and folding features and the capacity to hold a maximum weight of 4,000 kg or a little more than 24 tonnes. Given that Fallpac container has side and end doors, this type of containers are best used for side and/or end loading. (See Appendix I – Photo of SIO container on page 14; Appendix II – Photo of Fallpac Container on page 15) Among the similarities of using the fixed and foldable metal container boxes includes the design which enables the cargo and shipping companies to easily move and handle freights. Since these container boxes are designed using heavy metals, the goods being transported from the source to the point of destination is being protected against the weather and pilferage that could significantly damage the goods (Steenken, Vob, & Stahlbock, 2005, p. 3). Likewise, the use of either foldable and/or non-foldable container boxes has an advantage with regards to the simplification of scheduling and controlling the shipments of goods. As compared to the use of non-foldable containers, there are several disadvantages that shipping and/or cargo companies should consider. First, the use of foldable container requires additional exploitation and labour cost associated with folding and unfolding of the containers (Konings, 2005; Konings & Thijs, 2001). Since foldable containers comes with several parts, shipping companies that uses foldable containers are at risk of thefts that steal of container parts (Konings & Thijs, 2001). Since the number of foldable containers that are available in the market is limited, the market price per foldable container is approximately 3.5 more expensive than the price of non-foldable containers. (See Appendix III – Summary of Advantages and Disadvantages between the Use of Foldable and Non-foldable Containers on page 16) Research Methodology The methodology used in the primary research study will divided into two major parts: (1) research survey questionnaire; and (2) research interview. Aside from distributing the research questionnaires to major shipping companies like Mearsk/NYK-Line through post mail, the researcher will also utilize research survey questionnaire by distributing it to a total of ten randomly selected respondents who are currently working as engineer and/or supervisor of cargo and freight business within the port of Hamburg and port of Southampton. Aiming to determine the imbalance issues between the import/export businesses which had taken place within the two selected ports, qualitative questions will be used to enable the research respondents share their personal point-of-view regarding this matter. Likewise, the questionnaire will also be used as a way to identify and evaluate the possible impact of using foldable containers with regards to the economic advantages and efficiency of transporting empty foldable containers as compared to the non-foldable ones. (See Appendix IV – Research Survey Questionnaire on page 17) To increase the researcher’s understanding with regards to matters related to the proper handling and construction of foldable containers, a personal interview will be conducted with Prof. Anoop Chawla1 and Prof. Sudipto Mukherjee2 from the Indian Institute of Technology, Delhi – Department of Mechanical Engineering (Chawla, 2009; Mukherjee, 2009). Via electronic mail, the researcher will arrange and seek confirmation from these two individuals prior to sending them a copy of the structure interview questions. Depending on the agreement between the researcher and the two selected research interviewees, the personal interview can be done either through a long-distance call or through e-mail. (See Appendix V – Structured Research Interview Questions on page 18) Data Collection and Analysis of Research Methods Together with the gathered secondary research taken from the research survey and a couple of interviews, the researcher will analyze the gathered primary research data quantitatively and qualitatively. The quantitative information will be analyzed with simple statistical method using the excel software. Justification for the Choice of Methods Considering the fact that the technical expertise and personal experiences of competitive individuals who are currently working in shipping and/or cargo businesses including the team who are working behind the relocation or repositioning of empty containers within the port areas is necessary in terms of identifying and evaluating the economic advantages and efficiency of using and transporting empty foldable containers as compared with the non-foldable containers, the personal opinion of the randomly selected engineers and/or supervisor will be taken using research survey questionnaire. With regards to the personal interview, the engineering background and work experiences of Prof. Anoop Chawla and Prof. Sudipto Mukherjee with regards to the use of foldable containers were considered in the process of selecting them as two of the research interviewees. Ethical and Access Considerations Prior to the actual research survey, the researcher will personally approach and request the ten randomly selected respondents to participate in the research survey. In general, the research respondents have the right to participate or not to participate in the research study. Therefore, it is ethical to personally explain the main purpose of the study and seek their approval to participate in the research survey. Timescale of the Research Study Given that the researcher will have to personally get in touch with the major shipping lines and two selected research interviewees, a period of 4 weeks is required to complete the proposed research study. During the first three to four days, the researcher will develop the literature review together with the research questions that will be used for the research survey and personal interview with the two selected research interviewees. Right after developing the research questionnaires, the researcher will produce several copies which will be distributed to ten randomly selected engineers and supervisors who are directly responsible in the repositioning of the empty containers within the port of Hamburg and port of Southampton. Eventually, the researcher would locate the major shipping line companies through the use of search engines like Yahoo and Google to locate the postal address of each company. As soon as the researcher has gathered the list of contact person and address, the researcher would start mailing the research questionnaires. For the research interview, the researcher will start sending an e-mail to the two selected interviewees starting on the 5th day onwards. In case the target interviewee did not respond after 4 to 5 working days, the research would try to contact the person using the phone. Between the 13th to 15th day onwards, the researcher will have to visit the port of Hamburg and Southampton to conduct research survey. After the two day waiting period, the researcher would conduct a follow-up on major shipping lines and the two research interviewees between the 18th to 20th day. Between the 21th to 25th day, the researcher will start gathering the research questions followed by tallying and analyzing the research findings. Between the 28th to 30th day, the researcher will finalize the paper. (See Appendix VI – Time Table on page 19) Appendix I – Photo of SIO Container Source: Konings & Thijs, 2001 Figure II – Photo of Fallpac Container Source: Konings & Thijs, 2001 Appendix III – Summary of Advantages and Disadvantages between the Use of Foldable and Non-foldable Containers Foldable Container Non-foldable Container Advantages Capacity of maximum 20 tonnes. (Konings & Thijs, 2001) Protect goods from weather and pilferage. Improve and simplify scheduling and controlling of shipments. Reduces transportation cost, transhipment and storage costs associated with repositioning empty containers. (Konings, 2005) Capacity of maximum 24 tonnes. (Konings & Thijs, 2001) Protect goods from weather and pilferage. Improve and simplify scheduling and controlling of shipments. Three-and-a-half times less expensive than foldable containers. (Konings & Thijs, 2001) SIO Container Fallpac Container Disadvantages Requires three-person team and forklift to dismantle and unfold. (Konings & Thijs, 2001) Takes 15 minutes to dismantle and fold containers. Requires assembly jig to simplify and speed up mounting and dismounting process. High cost of SIO containers due to low available supply. Requires two-person team and forklift to dismantle and unfold. Takes 10 minutes to dismantle and fold containers. The cost of transporting empty container is more expensive than foldable containers. Appendix IV – Research Survey Questionnaire Sex: male ___ female ___ Age: < 18 y/o ___; 19 – 25 y/o ___; 26 – 30 y/o ___; 31 – 35 y/o; 36 – 40 y/o ___; 41 – 45 y/o ___; 46 – 50 y/o ___; 51 y/o and above ___ Profession: Engineer ___; Supervisor ___; Others ___ Please specify _______________ 1. Are you familiar with the differences between Foldable and Non-foldable Containers?  A. Yes B. No 2. Are you familiar with SIO Container and Fallpac Container?  ( ) A. Yes B. No Note: If yes, please proceed to the following questions. 3. Between Foldable and Non-foldable containers, which of the two do you think is more economical to use? Why? A. Foldable Containers B. Non-foldable Containers ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 4. Between SIO and Fallpac Containers, which of the two do you think is more economical to use in terms of time and manpower used in folding, unfolding, stacking, and repositioning the containers within the port areas? Why? A. SIO Container   B. Fallpac Container  ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 5. What are your comments and suggestions on how shipping lines could minimize the high cost associated with repositioning the empty containers? ____________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ *** Thank You! *** Appendix V – Structured Research Interview Questions 1. Good morning/afternoon sir. Kindly provide me a brief information regarding the differences between the use of the foldable and non-foldable containers? 2. Repositioning the empty containers within the port areas can be very expensive on the part of the shipping / cargo companies. Considering that foldable containers is 3.5 more expensive than the market price of non- foldable containers including the fact that the use of foldable containers would require additional time and manpower to assemble and dismantle the containers, would you still consider the use of the foldable containers as more economical as compared with the use of non-foldable containers? Why? 3. Are you familiar with the differences between the SIO and Fallpac containers? If yes, which of the two types of foldable containers do you think is more economical to use in terms of the time and manpower used in folding, unfolding, stacking, and repositioning the containers within the port areas? Why? 4. Since foldable containers come with detachable pieces of metals, what are your suggestions on how shipping lines could protect themselves against thefts? 5. Thank you for your time to participate in the research study. Appendix VI – Time Table Develop literature review & develop research questionnaires Produce several copies of the research questionnaire Locate the address & contact person of major shipping lines Mail the research questionnaires E-mail the two selected interviewees Visit the port of Hamburg and Southampton & conduct research survey Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Waiting time for respondents to mail or fax back the research questionnaire Follow-up the research questionnaire by calling the major shipping lines Follow-up on the two research interviewees Start gathering the research questionnaires Tally and analyze research findings Finalize the paper Day 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 References: Bortfeldt, A., & Gehring, H. (2001). A Hybrid Genetic Algorithm for the Container Loading Problem. European Journal of Operational Research , Vol. 131, No. 1, pp. 143 - 161. Chawla, A. (2009). 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Transportation Journal , Vol. 44, No. 2, pp. 16 - 36. Mongelluzzo, B. (2004). La Congestion Expected to Continue. Journal of Commerce Online Edition . Mukherjee, S. (2009). Hindustan Studies & Services Limited. Retrieved April 20, 2009, from Dr. Sudipto Mukherjee: http://www.hindustanstudies.com/sudipto.html Notteboom, T. E. (2004). Container Shipping And Ports: An Overview. Review of Network Economics , Vol. 3, No. 2, pp. 86 - 106. Pasinger, D. (2002). Heuristics for the Container Loading Problem. European Journal of Operational Research , Vol. 141, No. 2, pp. 382 - 392. Priyo, K. (2008, September 1). LOG. Retrieved April 20, 2009, from Maximising Space: http://log.ae/2008/09/01/maximising-space/ Steenken, D., Vob, S., & Stahlbock, R. (2005). Container terminal operation and operations research - a classification and literature review. In Hans-Otto G. & Kap H-K. (eds) "Container terminals and automated trasport systems". New York: Springer. Trunick, P. (2004). 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