The Concept of Containerisation - Essay Example

Letter of transmittal July 4th 2011 (Lecturer’s name) (Institution’s name) Address Dear (Lecturer’s name) Enclosed is a copy of the report on containerisation as one of the requirements of this course. The report contains the summary of findings related to a number of issues pertaining to containerisation. It will help many business men and women, companies and authorities involved in handling of cargo containers in order to enhance and expand the use of containers for cargo transportation. I completed the project as per the required schedule and met all the objectives required in the project. Among the issues discussed in this report include the definition of containerisation. This is aimed at enhancing the understanding of the relevant stakeholder involved in handling of containers. The history of containerisation is also given in the report. The purpose of the history is to allow the readers to understand that containerisation is largely an old and important mode of cargo transport system that has been used for many years. The benefits as well as the drawbacks of containerisation are also given in the report. This serves as an eye opener on those wishing to use containers to transport goods so that they can weigh the advantages and the disadvantages. The effects of containerisation on liner conferences are also discussed in the report. This serves as an effective way of letting the readers judge the importance of containerisation in the contemporary business setting. If there arises any questions or need for clarifications related to this report, I will be available to respond. Sincerely, (Student’s name) Topic: Containerisation Student’s name Course name Lecturer’s name 4th July 2011 Executive Summary Containerisation is defined as a freight transport system which is largely based on shipping goods in containers. The origin of containerisation can be traced back in the 18th century particularly in the regions where coal was mined in England. Today, containerisation has revolutionised the manner in which handling of cargo is undertaken. Containerisation has significantly increased the flow of goods between nations of the world and thus containerisation has contributed towards the expansion of international trade. Although, containerisation has also been associated with negative activities such as smuggling of hard drugs such as cocaine it is true that containerisation has enhanced the growth of the world economy. However, the issue of container security remains a thorny issue which needs to be addressed urgently to reduce the number of containers being lost by traders during shipment or at the ports. Addressing such issue related to security would actually make containerisation an effective and efficient system of transporting cargo over long distances with maximum security. Table of Contents page 1.0 Introduction……………………………………………………………………..5 2.0 History…………………………………………………………………………...5 2.1 Origin……………………………………………………………………5 2.2 Standardisation of containers………………………………………….6 2.3 Specialised containers…………………………………………………..6 2.4 Purpose-Built vessels…………………………………………………..6-7 2.5 Today……………………………………………………………………7 3.0 Advantages and disadvantages of containerisation…………………………..7-8 4.0 Container security………………………………………………………..…….9 5.0 Article and Summary………………………………………………………….10-11 6.0 Effect on Liner conferences…………………………………………………...11 7.0 Conclusion……………………………………………………………………..12 8.0 Recommendations……………………………………………………………..12 9.0 References……………………………………………………………………..13-14 1.0 Appendices…………………………………………………………………….15 1.0 INTRODUCTION Containerisation is defined as a freight transport system which is largely based on shipping containers (Smith, 2006). The containers are made of agreed dimensions and standards for transporting cargo from one place to the other. Containers are meant particularly for transporting goods by rail, container ship and trucks over long distances (Sawyers, 2005). The concept of containerisation has widely increased international trade due to significant reduction in costs of transportation of bulky goods from one region to the other. The containerisation system was developed shortly after the Second World War due to the increased shortage of goods in different regions of the world which had been fuelled by the war. 2.0 HISTORY 2.1 Origin The origin of containerisation can be traced back in the 18th century particularly in the regions where coal was mined in England. Benjamin Outram was the first person to demonstrate the concept of containerisation after carrying coal in Butterley Ironworks wagons. The wagons were designed and built in container form and drawn by horses. Coal was loaded in the wagons and later shipped through the Derby Canal (Broeze, 2002). The Manchester and the Liverpool Railways located in the UK were the first railroads involved in transportation of goods in containers in the 1830s (Arthur & Joseph, 2006). From the use of wooden boxes as containers in the 1830s, the iron container boxes were invented in the 1840s. Closed containers were designed and adopted in early 1900s and they were specifically used to transport goods by rail and road. 2.2 Standardization of containers By 20th century several companies in the United Kingdom adopted the use of containers as one of the modes of transporting bulky and valuable goods. This meant that transportation of goods by containers needed to be standardised. Hence, the Railway Clearing House in the United Kingdom set the first measurements of a standard container at ten or five foot long (Marc, 2006). The container was to be non-stackable and wooden. These standards reflected a great success because companies in the UK designed and used such containers to transport goods to other world regions without difficulties. 2.3 Specialised containers The first specialised and standardised containers were used by the US Army by the end of the Second World War effectively unload and load transport ships. The containers were referred by the Army as “transporters” and they were mainly used to transport household goods meant for the officers in the battle fields. A container used by the US army measured 6.22 feet wide, 8.5 feet long and 6.83 feet high (Brian, 2006). It was designed and made of steel and had a capacity of more than 8500 pounds. The containers or “transporters” were largely used for transporting military equipment during the Korean War (Brian, 2006). This marked the use of the first steel containers which assured security of sensitive military gadgets and equipments to different regions of the world where the US was involved in the battles. 2.4 Purpose-Built vessels Due to the increasing use of containers as the safest and most effective mode of transporting sensitive materials to different world regions, the first vessel purposely built o carry containers was designed and built in 1951 in Denmark (Ebeling, 2009). In the same period, ships were also used to carry containers between Alaska and Seattle in the United States. Clifford J. Rodgers was the first ship built in 1955 and used for transporting more than 600 containers (Ebeling, 2009). 2.5 Today More than 90% of cargo is transported through containers worldwide which mean that containerisation is the most popular mode of transporting bulky and sensitive goods in major parts of the world today. More than 30% of transhipments in containers occur in China today. It is estimated that more than 20 million containers were used for transportation purposes in more than 250 million trips in 2010 showing the rising popularity of containers as the safest and the effective mode of transporting goods in the modern global market. 3.0 ADVANTAGES AND DISADVANTAGES OF CONTAINERISATION The designing and the subsequent adoption of containers for transporting goods from one region to the other has brought numerous benefits to local and international businessmen and women around the world. First, containerisation has revolutionised the manner in which handling of cargo is undertaken (Frank, 2002). The standardisation of forms, shapes and sizes of the containers has contributed largely to the reduction of freight costs and charges. For example, unloading and loading of containers of uniform shape has reduced the time taken by the cargo ship from the time the ship docks at the port and the time the ship moves from the port. This has significantly increased the flow of goods between nations of the world and thus containerisation has contributed towards the expansion of international trade (Marc, 2006). Manufacturers of semi-trailer trucks have also benefited from containerisation because every semi-trailer truck must conform to the standards of the containers to enable the traders to transport cargo efficiently (Marc, 2006). Containerisation has also improved the security of the cargo. This is because containers are closed boxes which hide the content in the container. Any attempt to tamper with the contents in the container is obstructed by the fact that the doors of the container are sealed making it easier for owners of the goods to know whether their goods have been stolen in the process of transport or not (McGough et al., 2010). Containers have therefore enhanced security of goods transported for long distances even in the remotest parts of the world. Containers are also made of hard metal particularly steel which makes it difficult to break into the container thus making the container content safer. Even though, containerisation has been regarded as a beneficial mode of transporting goods, it has also been associated with a number of issues or disadvantages. First, containerisation has been associated with increased costs of fuel as well as reduction in transport capacity because the container itself must be also be loaded. The weight of the container itself adds to the transportation costs making it unattractive to small-scale traders. Containerisation has also been associated with smuggling of harmful substances such as hard drugs because the large number of containers in various ports making it difficult for thorough scrutiny of the contents of the containers (Rushton, Oxley & Croucher, 2004). Containerisation has also been referred to as a shipping hazard because containers fall from the ships into the waters in the oceans. When this containers fall into the shipping route they may result into the sinking of a ship resulting into numerous losses on the part of the traders and the shipping companies. 4.0 Container security One of the issues growing in importance worldwide is that of container security especially at the port. This means that the intrusion of containers by third parties has been on the rise resulting into numerous loses on the part of the traders (Murdoch, 2011). It also means that such levels of intrusion may also pose a great terrorist threat to the counties where the containers are destined for. The issue of container security has largely been attributed to the fact that some containers have been found to have been tampered with or opened by unknown parties before they reach their destinations (Murdoch, 2011). This is particularly the case at the ports where large numbers of containers are handled and sometimes some containers are lost at the ports. Authorities in Australia have explored a number of mechanisms meant to address the issue of container security. First, the CIDD device is one of the devices that has been applied by the authorities in Australia to detect any form of intrusion, tampering or opening of the container when in transit or when it reaches the port (Podsada, 2001). The authorities in Australia have used the CIDD device by mounting it in the interior side of the container (Podsada, 2001). The device contains sensors that detect and show when the container was opened or tampered with at the port and while on transit. In addition, authorities in Australia have also responded to the threat on container security by holding shippers responsible for any containers brought in Australia or those that leave ports in Australia. This is because shippers are regarded as the main link in the containerisation business since they are involved in container packing. This means that shippers can help to follow, establish and clear any sealing and stuffing protocols on all the containers. Holding the shippers responsible means that they are able to initiate an auditable path on every container that leaves the port or containers brought into the country. The authorities have also issued regulations on the manner in which the sealing of the containers should be done by categorically requiring all the containers to be sealed using mechanical seals and not electronic locks because such locks have not been adopted worldwide and therefore they are not standardised yet. Authorities in Australia have also addressed the issue of inland container transportation by increasing security in loading facilities, road stops and rail yards. Thorough checks on all workers involved in the handling of the containers at the terminals have also been enhanced by the authorities in Australia. 5.0 Article and summary The article was posted in 2004 by the US department of state. The article addresses the issue of container security by agitating for an integrated approach as the main solution to the issue of container security. Inland container security is largely addressed in the article requiring all the players in the industry such as shipping industries, the transport authorities and the governments to work together to reduce any form of container theft or the use of containers as the strategic terrorist points. In order to address the issue of container security effectively the article which as drafted by the Organization for Economic Cooperation and Development (OECD) revealed that the security of the containers must be enhanced in the whole of transport chain which means that a fully integrated framework must be designed that will achieve a common goal of container security everywhere in the world. Inland security of containers is pointed out as the main challenge in the transport chain. In this regard, increasing security at the loading facilities, rail yards and road stops are some of the measures perceived as integral in enhancing the security of containers. Additionally, in order to minimize risks of containers being tampered with or opened in transit or at the ports, the use of mechanized locks as opposed to electronic locks is addressed in the article as the safest mode of sealing the containers. In order to reduce the risks of terrorist attacks, governments must provide the necessary security personnel at the container terminals to ensure that no terrorist activities such as shipping of weapons of mass destruction take place at the ports or loading facilities. The article also addresses a number of ways in which containers can be used by terrorist to carry out their terrorist activities such as hijacking the containers and tampering with the contents. 6.0 Effect on Liner conferences Liner conferences are agreements entered into between two companies involved in the shipping business. The agreement requires the shipping companies to provide passenger service or cargo services on scheduled periods under common terms, uniform rates and in a particular route. It is not true that containerisation has reduced the importance of liner conferences because the use of containers in the transport of goods is largely in standardised form in terms of shape and size which means that liner conferences are enhanced more through the use of containers because the parties involved can easily fix a uniform rate for particular shapes or sizes of containers (Ripley, 1993). Containerisation has also enhanced the scheduling of cargo services because the loading and off-loading durations are clear and can easily be determined by the parties involved in liner conferences (Ripley, 1993). This means that the recipient of the cargo can easily approximate the number of days the containers carrying his/hr cargo will arrive at the preferred destinations from the time goods are packed in the container to the time the goods are unpacked from the container. Thus, containerisation has enhanced scheduling periods which means that liner conferences are now more important through the use of containers than before. Liner conferences are only possible when the security of the cargo transported is assured. Containerisation has enabled the achievement of required container security because the containers are sealed using mechanical locks which make it impossible for third parties to tamper or open the containers (Ripley, 1993). Hence, it is evident that containerisation has not reduced the importance of liner conferences but it has instead increased its importance. 7.0 Conclusion Containerisation is one of the systems of freight transportation which begun in the 18th century where wooden boxes were largely used transport valuable goods for long distances. Today, containerisation has gained importance in the world trade and thus it has contributed largely to the expansion of international trade and the global economy. It is estimated that more than 20 million containers are shipped to different destinations worldwide resulting into increased trade activities. However, the issue of container security is one of the issues that has gained importance in the recent past due to the increased cases of terrorist attacks in major parts of the world as well as increased cases of container theft. 8.0 Recommendations The use of containers is a safe and effective mode of cargo transportation. Containerisation has also the capacity of transporting goods over long distances by ensuring maximum security for the contents in the containers. Containerisation is therefore an effective mode of transporting goods and more companies have adopted the use of containers for cargo transportation. 10.0 REFERENCES Arthur, D., & Joseph B. (2006). The Box that changed the world: Fifty years of container Shipping- an illustrated history. Commonwealth Business Media. Article on Container security. Available from http://www.iwar.org.uk/news-archive/2004/06-02.htm Brian J. (2006). Box boats: How container ships changed the world. Fordham University Press. Broeze, F. (2002). "The globalisation of the oceans: Containerisation from the 1950s to the Present". International Journal of Maritime History (Canada: International Maritime Economic History Association) 15: 439–440. Ebeling, C. (2009). "Evolution of a box". Invention and technology 23 (4): 8–9. Frank, B. (2002). The Globalisation of the oceans. International Maritime Economic History Association. Containerisation from the 1950s to the Present. Marc, L. (2006). The box: How the shipping container made the world smaller and the world economy bigger. New York: Princeton Univ. Press. p 1. McGough, R. et al. (2010). The Box that changed Britain. [documentary]. BBC. Murdoch, M. (2011). A master guide to container securing Llyods register & Standard P&I Club. Accessed: 26 February 2011. Podsada, J. (2001). 'Lost sea cargo: Beach bounty or junk?’ National Geographic News. Ripley, D. (1993). The little Eaton Gangway and Derby Canal, Second ed. Oakwood: Oakwood Press Rushton, A., Oxley, J., Croucher, P. (2004). The handbook of logistics and distribution management. Kogan Page: London. Sawyers, P. (2005). Intermodal shipping container small steel buildings. p. 116. Smith, J. (2006). Shipping containers as building components. NA, Brighton University (UK), School of the Built Environment, p. 158. 10.0 APPENDICES Article on Container security. Available from http://www.iwar.org.uk/news-archive/2004/06-02.htm Read More