Chapter 5

CONTAINERISATION, UNITISATION AND

INTERMODALISM
5.1

INTRODUCTION
Today the greater part of all liner cargo is handled in containers but it was only rrr 1965 that
the first full container services, operated by purpose built ships, commenced trading. This
new method of operation replaced the cargo handling systems that had been in place for
some 3,000 years previously.

5.1.1

Growth in World Trade

There were a number of pressures that led to the research for new means of handling the
international movement of general cargo. Chief among these was the dramatic gmwth in
world trade in the years following the Second World War (1939 -1945). This trade grov.th was
the result of a number of factors.
Technological developments: The war had seen great advances in methods of mass
production manufacturing and innovation especially in the field of electrical and electronic
engineering. This led to sophisticated consumer goods becoming much cheaper in real
terms.
Consumer expectations: In the industrial developed countries part of the peace dividend
was expected to be great improvements in living standards and wages.
Independence: The many newly independent countries had high aspirations both for the
living standards of their people and for the development of their industries.
Newly developing countries: They were taking advantage of the improved industrial processes
and a cheaper labour force to create or strengthen their manufacturing and industrial
bases.
This was the beginning of what later was to come to be known as the globalisation of world
trade.

Vessel Operating Costs and Associated Economic Factors

The use of break-bulk cargo vessels and the associated slow port turn round had economic
implications that went beyond the delay to the vessels and the use of a large labour force
although these were very important. These and the following 'labour' factors still apply when
conventional vessels are used today.
Slow port turn creates several economic costs
The vessel is not earning, a ship earns when it is carrying cargo from one place to another
and port time is in itself unproductive. A vessel is an expensive asset to stand idle.
The berth is under utilised; the port is making the best use of its assets when cargo
is flowing across its quays quickly. Substantial transit shed space is needed. Slow
handling to and from road/rail vehicles creates inland congestion and poor utilisation of
vehicles.

Labour costs
Conventional cargo handling requires a very large labour force and conventional dock work
is hard manual labour. There may be labour scarcity at times of high employment, while
labour costs rise steadily as countries become more developed.
Unless the port operates to a very high level of berth occupancy, labour demand patterns
are very uncertain. Conventional cargo working is very vulnerable to delays due to adverse
weather.

5.2

UNITISATION
Throughout the 1950s and early 1960s a series of investigations and experiments took place
to determine how cargo might be more effectively handled in larger units and by mechanical
means.
Initially thoughts were concentrated on improving existing methods. Thls was done by
concentrating on palletisation. The ideal was to have every piece of cargo palletised before
the ship arrived for loading..This was to be achieved by persuading as many shippers as
possible to tender their cargo already on pallets or 'skids' (strips of timber under a crate or
case to allow lifting by fork-truck) the rest would be palletised by the line in their terminal. The
ships were either existing ships modified to allow fork-trucks to enter through hatches cut in
the sides of the hull or special newly designed ships with side hatches and multiple decks in
which fork-lift trucks would operate. Pallets would be placed into position with the minimum
of manual labour.
The argument seemed compelling. No change in the infrastructure, the same vehicles would
bring the cargo to the ship. No need.for elaborate shore or shipboard cranes, a simple ramp
to access the side hatches was all that was necessary. No new sophisticated ships, existing
ones could be modified or new ones built with only small design changes. On top of that the
terminals already used fork-trucks and the majority of shippers already palletised their cargo
for their own convenience.
Why then did this form of unitisation fail and containerisation succee9? The simple answer
was speed and labour costs. Palletisation raised productivity in the docks from 1. 7 tons per
man hour to 4.5 tons per man hour but containers raised it to 30 tons per man hour and
subsequetly very much higher.

5.3

CONTAINERISATION
The concept of stowing small items in a large re-useable 'container' dates back to the first
quarter of the 20th century when 'Lift vans' were used both in Europe and the USA for the
removal of household goods in a unit that could be carried on road or rail vehicles. It was
American operators led by Malcolm McLean, the creator of Sealand, and Matson Lin.es who,
in the early 1960s, developed the concept into the use of a standard size unit that could be
carried on a road trailer or in a ship. Surprisingly, it was the European lines that took the
lead in transferring the concept to mainstream deep sea trades and developing purpose built
container ships.

5.4

MULTI-MODAL TRANSPORT
The idea of containers was rapidly accepted, not only for the productivity benefits but the
Shippers and Consignees could see the advantages of greater protection for their cargo
and the door-to-door concept that arose from the containers ability to be carried by different
transport media, giving birth to the words 'lntermodalism' or later 'Multi-modalism'.
Because of the ease with which 10 or 20 tons in a sealed container was so easy and quick
to pick up and put down, the door-to-door concept soon took on a greater meaning. Once

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CONTAINEfilSATION, LJNJT:SATION AND fNTERMODALISM

the lifting equipment was installed, containers could be moved from one 'mode' of transport
to another with ease.
In an extreme case the empty container could be filled (stuffed) at the exporter's premises
and moved from there by truck to a rail terminal. Then it would be taken by train to the loading
port, then by straddle carrier from the dockside railhead to the ship. A feeder ship perhaps
would take it to a transhipment port to be loaded on the ocean carrier.
On arrival at the discharging port the whole procedure could happen in reverse so, theoretically,
nine separate 'modes' of transport could be used for a single consignment.
Within twenty years some form of containerisation was introduced into every major liner route
and within thirty years the containerisation of world Liner Trades was completed.

ECONOMY OF SCALE
.. As already considered, the larger the ship, the more cargo can be carried for virtually the
same number of crew, and the improved productivity of the motive power. (The engine of a
ship of 40,000 tonnes is not 4 times the power of a ship of 10,000 tonnes to give the same
speed, although much greater power is needed to achieve higher speeds)
Economies of scale stem from the improved ratio of enclosed space to the dimensions of the
steel hull. Consider the following comparisons:
Break-bulk

Container Ships

1960

1970

149 m
16,000

Length
DWCC
TEU
HP
Speed (knots)

227 m
29,000
1,500
20,000 SHP
19

8,000 BHP
16

2001

2006

318 m
82,000
6,000
75,000 SHP
25

347 m
120,000
10,000

25

WORLD CONTAINER GROWTH

The following table and graph shows the growth of the total number of containers in service
at five year intervals since 1970.
Year

1970

1975

1980

1985

1990

1995

2000

2005 est

,000 TEU

510

1482

3414

4000

4500

9250

14830

18000

20000

1970

1975

1980

1985
Year

1990

1995

2000

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1:::,1;; lU

1::,ou, UI c11ux.111tdlt:::ly

lVVU IIIIIIIUlt

TEU demonstrates how the concept expanded, and came to dominate Liner Trade cargo
-novements. The rate of increase slowed down during the next decade but there was a
further increase with the boom of the early 1990s, resulting in considerable over production
in the industry. It was not too long before that trend reversed again with the huge boom
in the Chinese economy. In the early years of the new millennium, container production
went sharply into overdrive again, although many of the new units entering service were
replacements for older stock. However, total stock continues a dramatic upward path.

5.7

CONTAINER DIMENSIONS

5.7.1

The ISO Standard Container

When the container concept was recognised, the Owners involved agreed that standard
dimensions were essential to make the intermodal facility practical.
The International Standards Organisation (ISO) quickly devised standard dimensions
which made containers interchangeable in national and international trade. Surprisingly they
decided to use feet(') and inches(") rather than the metric scale.
The end profile was originally set at 8 feet by 8 feet, with lengths of 10, 20, 30 and 40 feet. 2
x 20' or 1 x 40' container can usually be carried on one road trailer or 1 x 20' plus 1 x 40' on
a rail wagon. The 10' and 30' types have now been almost completely discarded.
ISO also produced an 8'6" high standard for 40' containers in 1973, and for 20' containers in
1976, and the 8' height is now obsolete.
The 'SuperCube'
High cube containers of greater than the standard height are also available, in restricted
numbers, for specific trades. These containers have the standard dimension of 40' long but
are 9'6" or, occasionally 1 O' in height. They are mainly used for the shipment of lightweight
goods such as empty cans for the food industry, or paper tissue products, where the extra
cubic capacity of the container can be utilised without compromising the gross weight.
There has always been a demand for 45' containers in USA markets but there is a rapidly
increasing market in the intra European trades to enable greater competition with 13.6 m
road trailers. Two 800 + TEU ships designed to carry 45' pallet wide containers have been1
introduced Jnto the North Sea routes in 2005. There is also a new demand for heavy weight
30' units. These ships are designed for containers which comply with the European Directive
relating to 45' units with 'reduced corners' which comes into force in 2007, other intra European
operators have followed suit.
Weights
The Container Safety Convention (CSC) lays down standards for construction arid the
maximum payload that containers can carry. The actual weight that a container is certified CM'
'plated' to carry will vary according to its construction, but the most common payload is now
30 tons for 20' and 34 tonnes for 40' containers. Containers must also be regularly inspected
to ensure that they retain their structural integrity.
However, the payload weight is restricted by the 'all up' or gross weight that can be carried under
the rules governing the inland transport in any particular country. In the case of road transport this
will include the weight of the carrying vehicle and, even within the European Union, this varies
between different countries although the highest figure available is 44 tonnes.

5.8

TYPES OF CONTAINER
Containers are constructed to suit most requirements. ISO have standard size/type codes
which assist in recognising units. The following types are in fairly general use:

84

CONTAINERISATION, u.'ITISr:;,, ..: .-;:c:::,_ s:

i)

Standard 'dry van' General Purpose (GP) Containers. 20 or 40 x 8 x 8'6".

Usually steel construction but some are aluminium or GRR Container doors at one
end only. ISO Code 22GO and 42GO.

ii)

High Cube Containers. 40' containers which are 9'6" high for the carriage of light
but bulky commodities. ISO Code 45GO

iii)

Bulk Containers. Usually 20' for the carriage of dry bulk cargoes, e.g. malted
barley for the beer trade. The container may have 'hatches' in the roof for top
loading. It may have an inner lining, usually made of plastic. ISO Code 22B0.

iv)

Open-top Containers for heavy, bulky or over height cargo. Both 20' and 40'
they can be loaded by crane from above or through doors if removal header bar
fitted. They are supplied with a tarpaulin 'tilt' cover. Some open top units have a
removeable steel roof - Hardtop containers. ISO Code 22U1 and 42U1.

v)

Half-height 20' open top containers. Used for heavy cargo where the deadweight
requires limited cubic capacity (low stowage factor). They can be stowed two high
in the same space as a standard height container.

vi)

Platforms for awkwardly shaped and/or heavy break-bulk cargo. 20' and 40'. These
units have no sides or top, just a base with lashing points and lifting lugs. ISO Code
29PO and 49PO

vii) Flat Racks are platforms with ends which enable the units to be stacked on top of
each other in the same way as GP units. These ends may be collapsible to enable
the units to locked together for ease of return when empty. ISO Code 22P3 and
42P3 and other codes for special types.

viii) Ventilated Containers for commodities such as coffee and cocoa beans. Usually
20'. ISO Code 22VO
ix)

Tank Containers for bulk liquids. 20/These are usually in the form of an oval tank'
supported in a skeletal rectangular frame. ISO Code 22TO. There are other codes
for pressure tested units. Tank containers can also be heated for the carriage of
certain liquid cargoes that need to be kept in fluid state for unloading, etc.

..

86

CoNT.\INEillSP,TION, LJNITISATION AND INTERMO::JAUSM

x)

Refrigerated (Reefer) containers. 20' and 40'. These are equipped with a

refrigerating unit which is plugged into an electrical supply on the ship or the
terminal, some have their own diesel generating set. Those with their own integral
refrigerating machinery are fully versatile and can move any distance by road or rail
after the sea passage. They are, however, much more costly to construct.
There are also high cube reefer containers.
ISO Code 22R1 and 42R1 with other codes for variant units.

xi)

Insulated Containers 20' and 40'. Another type of reefer container has no integral

refrigerating unit as it relies on cold air being blown through 'portholes' in the end
of the container from a central cold air ducted system in the vessel. Some insulated
containers are just that, insulated to reduce temperature variation but without
specific refrigeration. This type of operation is increasingly obsolete.
ISO Code 20HO and 42HO

5.9

OTHER 'CONTAINER' EXPRESSIONS

Container traffic, like most other trades, has 'jargon', terms whose full meaning is familiar
only to those involved in the day-to-day running of the business.
Many of the abbreviations have already been mentioned and LCL, FCL and TEU are the
most well known.
Some other expressions are peculiar to container use, such as:

l.;Ontamer Yara ( l,; Y J

This is a place where loaded containers are hand lee away from the tenmnal wta'ei
loaded or discharged. It may be at the port or inland. It <Nill be a poim where FCl
are interchanged between the carrier and merchant or where there is a change all
mode, e.g. from rail to road. It may or may not also be an !CD.
Inland Clearance Depot (ICD)
A depot, away from the port terminal, where containers and their contents may be
through Customs for Import or Export. Unfortunately the abbreviation ICD is often
indicate 'Inland Container Depot' instead of CY, this use should be avoided.
'Stuffing* or 'Vanning'
This is the term used to describe the loading of a container with goods. These WO'Jds
selected to avoid using the word 'loading' which is reserved for the act of placing the
on the ship.
Container Freight Station (CFS) or 'Stuffing Depot'
LCL cargo is delivered to a 'consolidator', which may be the carrying line or may be a
party operator. At the depot the individual LCL lots are loaded into containers. This depat.
be within the port area, but also inland:
(a) To take advantage of cheaper land rent
(b) To be nearer to centres of industry
(c) A prime reason when the industry was growing - to be able to use non-dock w
labour.
A CFS will usually also de-van import cargo, often also acting as an ICO.
'Stripping'
The emptying of a container, also called 'de-vanning' or unstuffing'.
'Sealed'
A container must be sealed by the shipper as a safeguard against pilferage or a seal
be attached by the Customs authorities when it is required for the container to move i
bond' from one customs area (e.g. a port) to another customs area (e.g. an ICD). In ei
case the intactness of the seal(s) on arrival are a reassurance that the goods have not b
tampered with. With increased security requirements on vessels and in port there is gro
international pressure for minimum standards of security seals to be applied to all units
associated records of seals being maintained.
'House-to-House'
The system of moving a container loaded at the shippers premises to be unlO'aded at th
ultimate receivers premises. A shipper using this service will be said to use a FCL, ev
though the container may not actually be full.
In addition to house-to-house there are facilities for:
Container Yard to Container Yard (CY to CY) and Quay to Quay {or Port to Po
movements.
'Groupage' or 'Consolidation' services
If a shipper does not have sufficient goods to warrant using his own container, or cann
fill a container, this shipper may utilise the system by sending his goods LCL possibly via
Freight Forwarder specialising in 'grouping' or 'consolidating' goods into containers.

88

CONTAINERISATION, UNITISATION ,\f-S .,:s ..,.r:C-S'.1

However, many major lines offer their own LCL service with the advantage that the
shipper gets a line's (actual carrier's) Bill of Lading rather than a forwarder's 'House Bill
of Lading.
'Box Rate'
This should not be confused with FAK (Freight All Kinds). A lump sum rate is charged per
container' which may be higher or lower dependent upon the commodity carried but will not
vary because of the weight or measurement of the cargo in the container.
FAK (Freight All Kinds)
The shippers argue that it makes no difference what is in an FCL, the cost of handling it is
the same for the carrying line. Therefore, a single rate of freight per box should be charged
for all kinds of cargo. Liner Operators would prefer variable freight rates dependent on what
the commodity will bear in relation to its value. This conflict in rate application is dealt with ;n
detail in the Chapter on freight rates.

5.10

CONTAINER INVENTORY
Container inventory is concerned with the provision of an adequate container fleet. An operator
will wish to have the 'optimum' fleet size for the business/trade in which he is engaged and
he will wish to provide this fleet at minimum cost.

5.10.1

Inventory Control
The Liner Operator will wish to minimise the cost of moving containers empty from one place
to another in order to supply the demand for containers for packing. The Operator will also
wish to ensure that the containers that he owns/controls are properly tracked so that he can
be satisfied that they are being profitably used in his service and have not been forgotten or
misappropriated.
The containers must be kept in good condition and repaired as necessary. When damage is
detected the responsible party is identified and held liable. A further requirement is to identify
those containers that should be written off or sold for scrap because the age and condition
make them no longer worth retaining in service.
In most countries there are also statutory requirements in respect of the regular inspection of
containers to ensure their standard of maintenance and fitness for use.
Given that the most Operators will have services spanning many locations and countries, it
will be necessary to determine the most appropriate management and control structure to
ensure that these objectives are achieved.
Even with only one type of container, the above tasks would be complex. However,
there are many varying types and sizes of container, for different purposes. Even
within a basic container type there will be differences arising when an Operator buys
from different manufacturers and, in the course of time, specifications are changed
and improved. Whether or not containers are plywood lined, numbers and locations of
lashing points, internal dimensions of door openings, these details may not in general
be significant but can be of particular importance to a customer who pack his cargo in a
specific way.
Routes and Locations
An Operator who only operates one trade route, serving two ports, would have a relatively
simple container control task. He would just need to secure an adequate supply of
container in two locations and to balance the flow of containers in the two opposite
directions.

However, in practice each trade route will serve a number of ports and each port may
well be served by a number of inland locations with container depots. Most Operators
will have more than one trade route, with the larger Operators having a whole network
of interconnecting services. As the number of locations served and the interconnecting
routes increase, so does the complexity of achieving the most cost effective solution to the
container supply problem.
Often, different container Operators, even if in competition with each other, will arrive at
interchange arrangements, so that can one can use the others' containers (with an appropriate
financial arrangement) rather than each operator incur empty movement costs.
,,,

There is an argument that overall costs could be reduced if there was a world-wide pool of
containers upon which any operator could draw as required, minimising the cost of provision
and reducing the number of unnecessary imbalance moves. The containers would need to
be built to a standard specification, without the colours or marks of ownership of an individual
operator. This is known as the 'Greybox' concept.
Against such a global concept are the problems of ownership of the containers and who
would ensure the overall efficient management of the world-wide supply. Container leasing
companies would argue that they fulfil such a role in the market place.
Determining the Fleet Size
A simple approach to determining the number of containers required to operate a particular
service is to consider that at any time each ship will require a 'set' of containers to fill it. Then
an estimate is needed of how many additional sets are required on land at any one time to
allow for the time taken to unpack containers after discharge, and the time required to pack
containers and transport them to the port before the arrival or a vessel.
However, this approach depends on using a particular ship schedule pattern, to establish
intervals between calls at a particular port, and probably some complex modelling to
determine the proportion of containers which can be loaded back on the next call, the nexlt
but one, etc. Distribution patterns for the numbers of containers to each port of call will also
be required, as will a method to break down the total number of containers by container
type.
An alternative approach, particularly suited to the control and monitoring of a trade which Js;
already being operated, is to consider the problem in two parts; the 'demand' for containers
and the -container 'velocity'.
The demand for containers is assessed by forecasting the volume of business to be moved
over a given period, say one year. Such an assessment should in any case be central to the
company's forward planning. Where a service covers a number of countries, the assessment
will at least have to be broken down into the type of container required.
It will also be necessary to determining the 'dominant direction' of the trade, since it will be
the volume in this direction which will determine the number of containers required.
The container velocity (or turnround time) is a measure of the time it takes a container in the
trade to perform a complete circuit. For example, in the trade from UK to Hong Kong, thii'
would be the number of days from being loaded in the UK to complete a trip to Hong Kont
to be loaded with return cargo, to be discharged in UK, and to be ready for commencing
second trip.

1
I

t.'

.'-

This can normally be measured statistically by recording the average number of days spa,
on the various elements of the journey:

under export load in UK

at sea UK- Hong Kong

90

CONT1Nrn1SJ>,TION, UNTISTION A.ND iNTERMODAl.'SM

under import load in Hong Kong

empty available in Hong Kong
under export load in Hong Kong
at sea Hong Kong-UK
under import load in UK
empty available in UK.

While the empty available times can be reduced by holding a smaller stock of containers, the
other times will be determined by the pattern of the service, and the geographical and other
operating features of the countries in which the containers are under load.
Where the movements of all containers are being recorded on a computer file, mean times
for these various activities will be easily extracted. The turntime for a deep sea trade. such
as UK-Hong Kong might be of the order of 100 days.
With a turntime of 100 days, a container would make 3.65 round trips per year. Combining
this data with the number of container moves to be made in the dominant direction in a
year, it is possible to calculate the theoretical number of containers required. Say, to cover
10,000 moves per year, with containers doing on average 3.65 round trips per year would
require
10,000 divided by 3.65 = 2,740 containers.
This does present a relatively simplistic picture as there will be other factors to consider, for
example:

is the business spread evenly over the year, or are there peaks and troughs to
consider?

to what extent does the calculation need to be varied to allow for empty imbalance
moves to match up areas of supply and demand?

what is the effect of extending the calculation to a number of different container

types?

to what extent should an allowance be made for 'safety stock' to ensure that
there are always containers available to meet customer demand, and to deal with
unforecast increases in business?

5.10.2

Owning Versus Leasing

Having determined the number of containers needed there is the choice of providing them by
buying them from a specialist manufacturer or leasing them from one of the many companies
whose business is to own containers to hire them to operators.
The merits of owning versus leasing containers are not substantially different from those of
other capital assets, but are set out in brief below:

5. 10.3

Owning
Advantages

This should prove cheaper in the long run, as it avoids the element of cost which pays
the leasing company's profits

containers can be built to the Operator's design and the Operator will also be able to
control the maintenance and repair specification

the Operator will have the containers in his colours/logo, which increases awareness of
the company.

Disadvantages

The purchase has to be financed, so ultimately the cost comparison will depend on the
Operator's ability to raise the necessary capital at a reasonable cost

a container has a life of about 12 years. If demand reduces, the Operator will have
surplus containers that may not be easy to dispose of. (Secondhand containers are
generally sold for use for storage or for scrap, and therefore do not attract a high value.)
Leased containers can, subject to the terms of the lease, be returned to the leasing,
company if surplus to requirements.

5.10.4

Leasing
Advantages

ft is easier to adjust the size of the fleet to cope with fluctuations in demand

the need for capital financing is avoided

it is possible to lease containers on terms which make maintenance and repair the
responsibility of the lessor, therefore avoiding overheads in this area (although at a
higher daily rental)

with certain types of leases (see below) it is possible to reduce imbalance costs by
taking on leased containers in one part of the world and returning them in another.

Disadvantages:

It is likely to be more expensive to lease.

Most operators will, in practice, both own and lease containers, although the relative
proportions will probably differ widely from Operator to Operator.
A relatively new Operator, perhaps with other heavy capital commitments, may well choose
to lease a high proportion, particularly if the business had not settled down to a regular
constant level of demand.
However, a well established Operator with a consistent demand level will probably own a
high proportion, although having say 10-20% of the fleet leased will enable him to reduce the
fleet size if demand takes an unexpected downturn. There is also a strong case for leasing
specialist containers for which demand may fluctuate more widely.

5.10.5

Container Leasing
Types of Leases
While many Operators will come to 'tailor-made' arrangements with leasing companies, there
are three broad types of leases:
1.

Long term leases

The Operator commits to lease a fixed number of containers for a fixed perio''tl of time
(anything from one year up to the life of the container). The longer the period of the lease,
the cheaper the rate is likely to be (since the leasing company has a larger amount of
guaranteed income the longer the period of the lease).
However, the longer the period of the lease, the less the Operator's flexibility to reduce
the fleet size by redelivering leased containers, since he is committed to pay for term
leased containers until the end of the term.
Some Operators secure term leases where the containers can be redelivered early
on payment of a penalty. Therefore, if the Operator is faced with an unexpected fall in
demand, he can assess if it is worth paying the penalty rather than continue to pay daily
hire for the remainder of the term for containers which are in fact not required.

2.

Short term (or 'trip') leases

92

CoNTAINERISTION. UNITIS1'T10t,: AN::> INTEAM0:)/,U$\'.

An alternative approach is to hire containers on an 'ad hoc' basis, as required, with no

commitment to utilise the container beyond its current trip. This ensures the maximum
flexibility to adjust fleet size to demand, and avoids having unutilised containers.
There is of course a risk that leasing companies will be unable to supply the particular
type of container needed at the location and time required.
Trip leasing tends to be extremely expensive, often more than double a long term lease
rate. This is because the leasing company incurs high overheads in maintaining stocks of
containers readily available for leasing, and in dealing with the costs and administration
associated with on and off-hiring containers. Moreover, it is high risk business for the
leasing company, since it is only likely to receive income from the container for a short
period of time, and will then have to seek another customer for the container, hence the
premium rate charged.
3.
..

Master leases
This type of lease combines a commitment to lease a fixed number of containers with
the 'service' element of leasing which Operators require to get the benefits of flexibility.
Briefly, the lessee guarantees to lease a fixed minimum number of containers for a
defined term (usually at least one year, possibly up to five).
However, the agreement has provisions for the lessee to take on hire additional
containers at defined locations, and to off-hire containers at listed locations (subject only
that the number of containers on hire at any one time must not fall below the defined
minimum).
The lessee pays a fixed daily rate for all containers on the lease. The rate is likely
to be somewhat more expensive than for an equivalent term lease. The same rate
will normally be payable for additional containers picked up under the lease and the
Operator is not subject to 'spot' rates when picking up additional containers to cover an
upsurge in business.
This type of lease therefore has (within limits) the ability for the Operator to adjust fleet
size. Additionally, with suitable pick-up and drop-off locations incorporated in the lease.
it may be possible to avoid moving empty containers from one point to another.
Ordinary master leasing has become less popular in recent years with the main liner
Operators, who tend to aim for private lease/contract deals that may or may not include
an element of master lease provisions.

Container Leasing Companies

To provide the service of the type described for spot and Master leases, the leasing company
will need a network of local depots and offices. The larger companies therefore have the
advantage of being able to support a world-wide network giving a full range of coverage of
areas where the Operator may wish to pick-up and drop-off containers. Moreover, the larger
the leasing company's fleet of containers, the more likely it is that they will have a container
available at the right place and the time for the Operator.
However, container leasing is a service as well as a financial business. Many of the smaller
companies attract business by identifying a requirement in a limited segment of the market,
i.e. particular types of containers or a particular geographical area, and ensuring that their
customers' needs are met in that sector.
There have been indications that the role of leasing companies has been decreasing along
with the reduction in master leasing by major lines. However, an estimate by the trade
indicated that nearly half the world-wide fleet of units were still owned by leasing companies
at the beginning of 2006.

5.10.7

Meeting the Demand for Containers

The Liner Operator's major requirement is for empty containers to always be in the right place
at the right time to meet customer demand. There will be no advantage in having a stock olf
suitable empty containers in Hong Kong, if there are insufficient containers in Rotterdam ti[]
meet customer demand.
The problem in Physical Distribution Management (PDM) terms is, therefore, one of stock
control at a number of inter-related locations.
For a simple type of operation, there are relatively simple solutions. Taking the operation of
a ship between two ports only on a regular frequency, it would be possible to avoid running
out of containers at either end by applying a simple 'rule', that however, many containers are
discharged the same number (full or empty) must be loaded back onto the ship.
However, this will not necessarily ensure the most cost effective solution and, as soon as
the picture becomes complicated by additional ports, more ships and services, seasonal
fluctuations, etc., it is clear that more sophisticated methods are required.
The first requirement, as with any form of stock control, is to have a forward forecast of
supply and demand of units at each location. To this is added the need to retain a smalll
safety stock to ensure availability to meet customer demand, and to cope with short term
demand fluctuations. This forecast will identify potential surpluses and shortages that must
be balanced out if possible.
There are three basic ways to do this:
(a) Imbalance movement
The Operator positions empty containers from a location of surplus to one of deficit.
(b) Cabotage
The Operator finds another Operator who can utilise the container between the
surplus and deficit location. By giving this Operator the free use of the container
(for a limited period) the Operator avoids the cost of transporting the empty
container.
(c)

Leasing pick-up/drop-off
Subject of course to having suitable arrangement with leasing companies, containers
can be off-hired at surplus locations and picked up at deficit locations.

Of the above options, cabotage is the most attractive. Its success depends on finding
another operator with a requirement for containers between the two points in question. Such
arrangements are only likely to be possible in a limited number of instances.
The choice between repositioning empty containers and using leasing pick-up and drop-off
facilities will depend on a number of factors.
For locations in the same area it is likely that repositioning will be the cheapest solution. The
cost of road or rail haulage is likely to be less than the costs associated with picking-up and
dropping off containers, e.g. haulage to/from depot, lift costs at depot, repair charges on
redelivery.
When considering the feasibility of adjusting surpluses and deficits by leasing pick-ups/drop
offs, it is necessary to consider not only the above mentioned costs, but also the scale of
charges or credits imposed by the leasing company at that location. If the leasing company
gives a credit for a pick-up, which is likely if it has a surplus of containers in that area for
which it has difficulty in finding customers, conversely for credits on drop-offs, this can be a
very attractive proposition.

94

Cor,\INi':R1$ATION, UN1TIS\TION AND INTERMOD/\LISM

However, this presupposes that the Operator has a sufficient number of the containers of
the particular leasing company at the surplus location. This will not pose a problem if the
Operator's fleet is obtained 100% from the same leasing company. However if, as is more
likely, the fleet is partially owned, partially leased, and/or the leased containers are obtained
from several leasing companies, the Operator must consider if he has suitable containers to
effect the drop off.
Otherwise the consequence could be that the pick-up of containers at the deficit location will
take place, but no balancing drop-off, with a consequent increase in overall costs.
Where the surplus/deficit areas are at different parts of the world there will also need to be
space available on the ships to move the empty containers.
The Operator must decide how far in advance to plan empty container positioning. The
further in advance, the more uncertain are the demand forecasts; empty containers could
be moved to meet a demand which does not materialise. However, there must be lead to
avoid a stock deficit, a lead time of up to two months may be required (allowing not only
for the sea transit, but for inland movement, and time organising the necessary space on
a ship).
Therefore, while overall plans should be made as far forward as is feasible, empty containers
should not be moved until the last possible moment (within reason) in case an alternative,
lower cost, solution develops as the operational situation changes.
An alternative, particularly for an Operator with a small market share in trade, is actively to
seek business that will reduce the number of unprofitable (ie empty) container moves.
If the Operator has a permanent empty surplus in a particular port he may choose to restrict
his efforts for business to that port and instead pursue business to a destination that has a
shortage of containers. Naturally, very good internal control systems are needed if the efforts
of the company's sales teams are going to be geared to securing business which will reduce
overall costs, particularly as the situation can change rapidly.
This cargo selectivity policy cannot be pursued so easily by an Operator who is a member
of a shipping conference or consortium with an obligation to cover the overall requirements
of the trade.
However, a further way to reduce imbalance costs is to look for so called 'marginal cost'
business to fill empty containers. If there is a regular movement of empty containers from Port
A to Port B, it can be argued that, as the containers will have to move anyway, any revenue
is better than nothing. Therefore, extremely low freight rates can be offered to encourage
commodities to move that otherwise would not be shipped at all, or not in containers, because
of their low value.
This is a valid method of reducing costs/increasing profits, but does have its dangers. If for
example, the surplus of containers at Port A dries up, because of a change in the general
imbalance of trade, and the Operator has a commitment to carry the marginal' cargo, he may
well do so at a loss because of the cost of supplying additional containers.
1

Tracking the Container Fleet

It must be clear that the above methods of control and management of the fleet will not
work unless the Operator can maintain an accurate and up-to-date picture of his stock, split
according to the different container types, at all his locations.
The container stock represents a very substantial asset of the company, so it is important
that each individual container is tracked to ensure that it is not lost, or used (deliberately or
accidentally) by another Operator.

Tracking systems vary immensely according to the size of the fleet and the geographical
area over which they operate. It is possible to have a central system on which all container
movements are updated, which can be done most effectively with a data transmission
system so that individual locations can update the central file directly, and also draw data
from it.
However, this may become too unwieldy for the container fleet of a large Operator with
worldwide operations. It may be better for each area or geographic region to have a
management office that controls and tracks the stocks in its area. Records are exchanged
between areas when the container moves from one area to another. There will also need to
be central file, so that the Operator knows at any one time which area has responsibility for
a particular container. By running 'overdue' reports, it can track down containers that have
not been reported on for some time and interrogate the area concerned to ensure that the
container has not been misplaced.
The advent of readily available computer systems provides the facility for each location to
control its own container stock on computer, using networking features to enable data to be
interchanged and to facilitate the extraction of information for central control.

5.11

CONTAINER CONTROL
All liner Operators today carry some containers and for most this represents their main
business. The need for a department co-ordinating the lines equipment requirements
has already been mentioned but the detailed information needed for the overall
inventory control has to come from the area of activity. Agents for container services
will be expected to operate a container tracking and control system (SLGAA paragraph
3.34). Tracking is knowing where all containers in the agent's territory are and what
they are doing at any time. Control is the work of ensuring that proper instructions
are given to users and hauliers to ensure that containers are available when and
where required.
The agent's tracking and control systems will be expected to feed data into the Owner's total,
world-wide system. It is essential for the line to keep an accurate check on the whereabouts of
every container, a requirement made all the more difficult by the fact that they are distributed
all over the world.
Computerised data control has been used by Shipowners from the early days of
containerisation. All containers, apart from having the Owner's name painted on them, have
a unique serial number. The Operators give each container a 'status' depending on its current
use. The status will indicate to the controlling department exactly where and to what use the
container is being put at any given time. For example:

..

On quay inward, loaded/empty

On quay export, loaded/empty
Onboard, sea port to sea port
In transit, sea port to inland destination (full)
In transit destination to depot (empty)
Awaiting loading, at customer's factory
Awaiting loading, at ICD/CFS
and so on.

Containers are checked for physical condition at regular intervals unless they are reported
damaged in the interim. Inspections record the state of each container that is entered on the
computer record against each identifying number.

96

CONTA-NERISATION, UNtTISATtON AND INTEAMOD/\LISM

Containers are 'plated', that is they bear a metal plate on which is recorded their safe tested
carrying capacity in kilos and the date of the last safety inspection in accordance with the
1972 Convention for Safe Containers (CSC convention).

5.11.1

Missing Containers
Should a container not have its status altered for some considerable time, checks are carried
out and the agent or depot at the last known location of the container asked to verify the
status. Should this not be possible, then either the container has been stolen or moved on
without notification. If this latter is the case, it may then be necessary to ask all port and
inland agents to check for the missing box - no easy task.

5.11.2

Damage Repair
The cost of repairing damaged containers is assessed against their capital value, bearing in
mind that they are usually depreciated over 15 years. If the repair is to cost more than the
value of the box lt may not be done, although even this may depend on the availability of
substitute equipment.
Insurance cover will meet accidental damage repair, but the cost of damage caused by
third parties has to be recovered, which is not always easy. The principal problem is proving
at which point in the through transport movement the damage actually occurred and then
identifying the party actually responsible. Even if the interchange documents have been
properly completed, obtaining real evidence is very difficult.
Where lines operate containers under Master lease arrangements it is quite common to
arrange for the leasing company to take responsibility for damage to containers with the line
paying an additional premium on the container hire. This is a Damage Protection Policy
(DPP).

5.11.3

Container Loss
The incidence of loss of containers generally is in direct inverse proportion to the efficiency of
the control system operating. In the best cases the loss is very small and represents a small
fraction of the capital cost.
Containers that have been written-off do occasionally reappear, making accurate record
keeping difficult.

5.11.4

The Agent's Role in Container Control

The size of the Agent's territory and its throughput will determine the complexity of the
container control system needed. Most lines will require the Agents to maintain direct links to
the lines computer system.
Whatever the system, no computer can do the work of a human being in applying an intelligent
interest coupled with curiosity. At each stage of a container's movement (each change of
status), an Equipment Interchange Receipt (EIR} should be signed. Very often this duty
has to be delegated to a truck driver and some are more conscientious than others.

5.12
5.12.1

FCLs LCLs AND ICDs

Full Container Loads
The expression FCL (Full Container Load} means more than a simple statement that the
container is full (in fact it may only be partially filled). It essentially means that the shipper has
assumed the responsibility of packing the goods into the container then closing its doors and
attaching a seal. Except for the possibility of the Customs authorities wishing to inspect the
contents (in which case they reseal the container with their own seal) an FCL reaches the
consignee just as it left the Shipper's premises.

1 1 ,ut: : t: : er e n ce ro ' s h ipper' may be the actual exporter, or his Agent or a con sol idating
for.va rde r whose ' consignee' would be another forwa rder (in some form of partnership with
the one at th e loading end) whose job it would be to ensure each sepa rate consign ment
reached the right u ltimate consignee .

Th e pri ncipal legal impl ication in all this is that the Shi pper remains responsible fo r the man ner
of packing and for the contents of the container. The carrying line has no respon sibility for
the cond ition of the goods on their arriva l u n less the seal has been tampered with o r th e
container ha s been hand led with excessive roughness .
I n the early days of conta inerisation the re were ma ny problems with FCLs because Shippers
we re tending to load their goods into containers in the same way as if th ey were loading a
tru ck which was only going to travel by road or rai l . It took some time for them to real ise th at
the trem endous forces exerted by the move ment of the sea could be far more damag ing to
cargo in a conta iner than a nything they had experienced i n land transport. Over the years
th is problem has almost d isa ppeared . I n fa ct Shippers, by adapting their techniq ues and
th e shapes of their packag ing, a re ta king maximum advantage of the protection a container
affords and goods a re now travelling across th e world in no more than their point-of-sale
packaging.

5.1 2.2

Quay -to-Quay or Door-to -Door

Wh ile the term FCL is clear, some other terms used in co n n ection with the through movement
a re ambiguous. M u ch has been said about the door-to-door (sometimes referred to as po int
to-point) facil ity offered by containers but it makes a d iffere nce both to cost and to liability
depend ing u pon who u ndertakes the movement from the shippers pre mises to the load i n g
port, and/or from the d ischarging port to the consign ees' premises. Be careful o f u s e of th e
term 'house-to-house', as while this is often used to indicate a 'door-to-door' contract, it is
a lso used i n th e USA trades to ind icate only FC L status with out reference to the contracted
terms of pre and on carriage . If provided by the Carrier this is called 'point-to-po i nt' .
If the contract is door-to-door (poi nt-to-point), it means the Li ne provides the inland tra nsport:
(eg truck and/or ra il) and becomes responsible as the Carri er as soon as the contai ner is
sea led and placed in th e custody of the carrying Line' s Ha ulier. The Carrier continues that
responsibility right u p to the moment the seal is broken at the Consignee' s premises. The
hand l i ng of th e inland movements is referred to as 'carrier haulage' .
Always remem beri ng that because it is a n FCL the Ca rrier's l iability is strictly limited so long
as the seal is intact.
Where th e contract is quay-to-quay (so meti m es referred to as port-to-port), the Shi pper
col lects an em pty container from one of the Carrier's depots, takes it to his premises, stuffs
it and then presents it to the conta iner ya rd at th e terminal where the ship is due to load . The
Carrier's responsibility d oes not, therefo re , sta rt u ntil the container is off the Shipper' s truck.
At discharging port the Carrier places the conta iner on the g round close to where the shi p is
discharged and the Consig nee has to co llect it from there. I n this case the inland movements
are by ' merch ant haulage' .
There a re va riations, one may have door-to-q uay, or q uay-to-door where the Carrier hau ls
at one end and the merchant at the other.
The re can be a further complication because some conta i ner lines allow a 'cha nge of place
of i nland destination' which allows th e Consignee to req u est the line to, say, deliver an FC L
container direct to his premises instead of simply to the co nta iner ya rd at the discharging
port. A charge is made for the add itional costs.

5. 1 2.3

Less than fu II Container Loads (LC L)

To all i nte nts and p u rposes, so fa r as the merchants (S hi ppers and Consignees) are
co nce rned, LCL ca rgo is the same as co nve ntional cargo; some conta iner Lines offer an

98

LCL service of their own, while others prefer to encourage NVOCs to consolidate such
cargo.
The procedure is almost the same, the main difference is that if the Line is offering the LCL
facility, the Shipper gets the Line's bill of lading, whereas if a NVOC is consolidating it will be
their 'House' Bill of Lading.
Many forwarders set themselves up as NVOCs also called NVOCCs - Non Vessel Operating
(Common or Container) Carriers. As such they accept the same liability as a carrier and will
issue a carrier's Bill of Lading. Such Bills of Lading are usually accepted under a Documentary
Credit in accordance with the banks Uniform Customs and Practice for Documentary
Credit s (UCPGOO) [see Chapter Seven and Appendix 12] as having the same security as a
Line's Bill of Lading.
The shipper of LCL cargo will present his goods to a designated depot (CFS) and will get a
simple receipt.
Because of the additional handling and the fact that there will be all sorts and shapes of cargo
in an LCL container, the Shipper will have to use more substantial packaging than might be
the case with FCL. However, experience has shown that the packaging of LCL cargo can still
be less than would have to be used for cargo being loaded direct into a break-bulk Liner's
hold.
The liability for LCL cargo is virtually the same as for break-bulk J:;argo. The Line (or the
consolidating Forwarder/NVOCC) carries responsibility for each package (within the
appropriate Hague or HagueNisby rules) and at discharging port has to take the goods out
of the container so that they may be individually handed over to the respective Consignees.
Once again there are variations on the theme. It is by no means unusual to have LCUFCL
consignments. A typical case would be a contractor constructing something in the country
of destination. Components may be drawn from several sub-contractors in the exporting
country but, of course, all go to the same Consignee. With LCL/FCL the Line bears the same
liability as for LCL/LCL because the stowing of the cargo in the container was done by the
carrying Line or its sub-contractors, not the actual Shipper.
FCL/LCL movements are more rare; one Shipper wishes to supply more than one Consignee.
In such a case the Shipper is responsible for stuffing the container and indemnifies the Line
if, when the container is opened at the discharging port, there are not the exact quantities for
each of the different consignees.

ICDS
The designation Inland Clearance Depot actually predates containerisation as facilities
existed in some landlocked countries to move cargo under the Customs seal of the importing
port up to the inland border where it would be cleared for importation. The system was
adopted by the UK at the beginning of the 'container revolution'.
Unlike many countries, the UK has a very large number of ports and industry has tended
to grow up around them. The ideal, with a container service, is to use only one port in each
country. To accommodate Shippers remote from the container ports the Lines arranged a
series of depots close to the traditional ports so that merchants could continue to deliver,
or collected their cargo in a familiar area. These depots had Custom's status to enable the
merchants to continue to make their Customs entries locally. ICDs handled both FCL and
LCL cargo. Subsequently the ICD concept has been widely adopted in other countries.
Regrettably, the expression ICD is often adopted for any depot used to assemble (or distribute)
cargo even though the original name implies that it is Inland and has a Custom Officer in
attendance to 'clear' the cargo.

Some trades prefer to use the expression Container Freight Station (CFS) to cover any
depot used for LCL cargo - inland or not, Customs served or not.
Many ICDs do, however, comply with the two criteria and the Customs services.have special
procedures to allow containers, un-inspected but suitably sealed, to travel from the port to
the ICD to be cleared through Customs by each of the individual importers with locally based
Customs Officers.
In the European Community a number of newer arrangements exist to facilitate the movement
of goods to and from merchants premises without Customs clearance which have largely
removed the need for ICD's.
Elsewhere ICDs still play a major role in removing cargo quickly from the port area to inland
locations for clearance. As with all container operations an ICD requires a great amount
of space; five hectares is not at all unusual. This was a particular problem in some less
developed countries where the port had been developed for conventional cargo, probably
much of it being dealt with via lighters at anchorages. Such ports had a cluster of industrial
and domestic development around them leaving little room for the tremendous spread of land
that containers demand. So ICDs had to be developed for quite different reasons from the
original UK purpose.
A typical ICD needs first of all adequate road and/or rail access in order to cope with trucks
delivering goods in and containers moving to and from the port. Then there needs to be
plenty of outside space to stack and manoeuvre the containers.
A large warehouse type of building is required in which to receive the individual items of LCL
cargo. Each destination will have to have a clearly demarcated area of the shed with plenty
of floor space so that the cargo can be spread out. In the case of imports it has to be easy to
find each consignment quickly when the Consignee arrives to claim it.
In the case of exports, the goods are sorted after delivery for correct stuffing into a container.
Stuffing a container needs much of the same art of stowage as has to be employed by the
Chief Officer in a conventional ship. To put flimsy light cargo at the bottom of a container then
load heavy pieces of machinery on top is a recipe for disaster. Earlier, mention was made of
the enormous forces exerted on a ship and its contents in any sort of heavy sea. Such forces
have to be born well in mind when stowing a wide variety of consignments into a container.
The same considerations must also be extended to the handling of hazardous cargoes.

5.12.5

Legal and Insurance Implications in the Container Trade

Containerisation has had a significant effect upon traditional concepts of carriage by sea.
With conventional 'break-bulk' cargo, it was always clearly understood that cargo did not
pass into the legal custody of the Shipowner until it 'crossed the ship's rail' at loading port and
it passed out of that custody at the same point upon discharge.

..

In most ports, there are transit sheds into which such conventional general cargo is placed.
Such sheds are usually operated by the Terminal Operators or Dock Authority who legally
act as servants of the merchant up to or from the ship's rail. Even when the transit sheds are
operated by the actual Liner Owner, that portion of the operation is not part of the contract of
carriage covered by the Bill of Lading.
When a 'through' Bill of Lading is signed (e.g. when the goods first travel in a coaster for
later transhipment into the ocean carrier) the Line only acts as an agent for those sectors of
the carriage which take place in vehicles or in other Owners' ships.
Containerised goods are invariably carried under a Combined Transport Bill of Lading_
The significant difference being that the carrier under the contract evidenced by such a Bill
of Lading accepts responsibility as a principal for the whole of the carriage for which it is
responsible.

100

That contract of carriage could well commence from the Exporter's own premises with the
Line providing the road vehicle to transport the goods to the ship, referred to as carrier's
haulage' or "line haulage". When the Exporter provides the truck and delivers the container
to the docks ("merchant's haulage") the goods pass into the custody of the line in the
Container Yard adjacent to the loading berth which is some distance (and time) from the
ship's rail.
At this stage the Shipper can be given a Bill of Lading stating that the Carrier has received
the goods for shipment at whichever point is appropriate, Shippers premises, CY or Port.
The printed Combined Transport Bill of Lading is invariably worded as a 'received for
shipment' Bill of Lading. In order to comply with most contracts of sale and/or Let1ers
of Credit it will need to have a separate endorsement stating that the goods have been
'Shipped on Board' followed by the date of loading and the Line's (or its Agent's)
signature.
It was stated earlier that the carrying Line accepts liability as soon as the goods pass into
its custody but remember that for the sea passage there is a limit to the Carrier's liability set
out in the Hague or HagueNisby rules. (These are dealt with in depth in Chapter Seven.)
Those rules, however, do not cover transportation overland so how does the Carrier limit his
liability? There are other international conventions to solve the problem.
There is the "Convention relative au contrat de transport international des Marchandises par
vois de Route" (Convention relating to contracts for international tansport of goods by road)
referred to as CMR.
Within Europe, most railways are signatories to the CIM convention, its full name being
"Convention International concernant le transport des Marchandises par chemin de fer ...
(International convention concerning transport of goods by rail.) The CIM Convention is part
of a wider convention, COTIF, which also covers passengers.)
So the carrier under a combined transport Bill of Lading takes care to include in its conditions
of carriage the fact that if loss or damage takes place on road or rail then the limitation of
liability appropriate to the convention concerned will apply. If it is impossible to be certain
where the loss or damage occurred then it is assumed to have happened at sea so that the
Hague or HagueNisby rules will apply. (These and other rules mentioned below appear
in Appendices 2 to 4).
Another problem in the area of liability has arisen from the ratification of the UNCTAD
'Hamburg Rules', which replace the Hague Rules, in those countries which have adopted
this convention. Hague Rules apply only in the country of export of the cargo, whereas
Hamburg Rules apply to cargo exported or imported. This leads to a conflict in the liability
regimes because the limits and application of liability is different in the two conventions. This
is also dealt with in greater depth in Chapter Six.
The problem for the Shipper (or, more correctly his insurers) is that each of the conventions
mentioned has different terms, conditions and limits of compensation. Attempts to produce a
single convention to cover all modes of transport to which a container may be subject have
been made.
ICC Rules for a Combined Transport Document
Some years ago, an attempt was made to draft a convention to cover loss or damage
to goods carried under a Combined Transport Document. Known as the "Tokyo Rules",
it failed to secure support. The International Chamber of Commerce took up the draft
and made it commercially more attractive. This is published as the "ICC Rules for a
Combined Transport Document" and has found wide acceptance. Most large operators
apply terms and conditions which are based on the ICC Rules, if not precisely complying
with them.

UN\,, 11-\U IVll'WlV \..UIIVl:!llllUrJ

The United Nations Conference on Trade and Development (UNCTAD) was di:ssatisfied with
this situation and decided to intervene with an international convention to govern Combined
Transport. This was finally adopted at an international conference in Geneva in May 1980
as the "United Nations Convention on International Multi-modal Transport of Goods" (or
"UNCTAD MMO Convention" as it is more commonly known). It requires ratification by 30
countries and is still a long way from ratification.
UNCTAD/ICC Rules for Multi-modal Transport Documents
UNCTAD therefore sought the Cooperation of the ICC to review and update the ICC Rules
for a Combined Transport Document. The working party constituted to review the Rules was
given a clear brief to base its draft on the Hague Visby Rules. However Article 4 Rule 2 is
removed and replaced by Article 5 of the Hamburg Rules. Accordingly there are few Carriers
prepared to adopt these voluntary Rules instead of the present ICC Rules.
A new Convention?
There are serious concerns among governments and legal practitioners that the original
Hague Rules' concept of common and standard international rules and limitations relating to
liability for carriage of goods by sea has been lost. We have mentioned some of the factors
above; in addition there are many national enactments and statutes which bear on the carriers
liability. In 2000 The Comite Maritime International (CMI) a body of international maritime
lawyers, with the support of UNCTAD and OECD examined this subject; by 2002 they had
produced a final draft of a proposed convention to replace all the existing conventions and
rules for port-to-port and combined transport where the main leg is by sea. Since then there
has been further work on the draft and by 2006 the number of outstanding issues was very
limited. If these can be resolved the proposed convention could then be presented to an
Intergovernmental Conference which would be one of the first steps towards ratification.

5.13

SELF-ASSESSMENT AND TEST QUESTIONS

Attempt the following and check your answers from the text:
1.

What were the main vessel operating and economic factors leading to containerisation?

2.

What are the basic dimensions of an ISO container?

3.

What single most compelling reason caused 'palletisation' to lose the battle against
'containerisation?

4.

What is the difference between a 'Box Rate' and 'FAK?

5.

What is the difference between a CFS and a CY?

6.

What operations take place at an ICD?

7.

Who supplies the road transport for a house-to-house movement?

8.

Which conventions may determine the limitation of liability when noone knows where
the damage took place?

Having completed Chapter Five attempt the following and submit your essay to your Tutor:
Select four different container types, describe their principle features using diagrams where
appropriate. For each container type identify three different commodities and explain why
they are suitable for carriage in that unit.

102