container shipping reached its landmark 50th anniversary in 2006. Since its inception, container shipping is now solely responsible for handling 60% of the global trade volume. High-capacity liner or container ships traverse fixed shipping routes at fixed schedules.
Shipping containers are sturdy metal boxes made as per rigorous ISO standards. This standardisation has made their transport by rail, road, and ship efficient as they easily fit onto different modes of transport.
Did you know? The largest container ships as of 2022 are equal in length to an Olympics standard 400m running track.
What Is Container Shipping?
We now understand that container shipping involves loading goods onto standardised containers for seamless overseas and inland transportation. Let us now look at the journey of a container filled with goods from one place to another.
Different Stages in Shipping a Container
Container shipping involves a laborious process and documentation to ship freight from one destination to the other. Let us break the cycle into simple stages:
- A client will place an order. The delivery process then involves both the manufacturer and a freight forwarder.
- Goods are loaded onto warehouse, factory, or farm containers. They have to be packaged and labelled as per international standards.
- The container is locked and sealed so the goods can remain secured inside the container.
- Then they are loaded onto trucks or trains, which carry them to a port storage facility or a container freight station.
- The containers are weighed and scanned at these facilities for contraband or illegal substances.
- The rest of the journey depends on whether they must be shipped inland or overseas.
Loading on a Ship
- In most cases, the freight forwarder will find the best route from point A to point B.
- Depending on the buyer's needs, this could be either the most economical or the fastest.
- Either way, the next step in the journey is loading the container onto a vessel that will carry it to the destination country.
Carriage of Goods at Sea
- Adhering to strict ETA or the estimated time of arrival requirements and schedules of the container shipping industry, ships carry these containers from one country to another.
- The master of the ship, along with the crew, is responsible for the safe carriage of all containers. They are highly trained professionals who comply with standards the International Maritime Organisation (IMO) sets.
Arrival at Destination and Unloading
- Upon receiving clearance from the Port and Customs authority, the ship docks at the port of the destination country.
- With the help of advanced machines called Gantry Cranes, Dockworkers unload ship cargo containers.
- They load these containers onto trucks lined alongside the ships on the jetty.
- Customs officials carefully analyse the documentation of each container before forwarding it to the container freight station.
- Special trailers or railways carry these containers to their final destination depending on the distance from the port.
- Once the containers reach the warehouse or factory designated by the freight forwarder; they are dissembled.
- Individual packages are prepared for delivery to the final destination decided by the buyer.
Types of Shipping Containers
Containers are the backbone of the entire container shipping industry. Hence, they are of robust build, made using industry-grade steel, and are both weathertight and watertight. Each shipping container has its unique identity, set as per ISO standards.
So, let us look at the different types of containers:
Standard Dry Storage Containers
These shipping container sizes are 20-footers and 40-footers. To simplify the counting of containers, a 20 ft container is known as a Twenty Foot Equivalent Unit (TEU). A liner's ship's container carrying capacity is measured in TEU. Today some ships have carriage capacities upwards of 20,000 TEU. Both 20ft and 40ft containers have the same height and width
High Cube Containers
These can only be 40ft or 45 ft in length. The main difference between them and standard containers is their height is more.
Flat Rack Containers
These containers have collapsible sides. This makes it easier to stow non-standard-height cargo like boats, tractors, etc. They can be of Top Open type or Side open type as well.
- These are containers that can carry cargo that needs refrigeration. They are fitted with a refrigeration system that derives power from the liner ship’s generators.
- They can carry anything from fruits, vegetables, juices, wines, pharmaceutical supplies, etc.
- They are always white for easy identification.
- They carry small quantities of liquid cargo like chemicals, powders, and gases.
- Their carriage has to be as per the International Maritime Dangerous Goods (IMDG) Code made by IMO.
What Are the Freight Options, INCOTERMS, and Documentation in Container Shipping?
Container freight is the amount of money charged for transporting the container. The freight depends on the amount of cargo the shipper wants inside the container for transportation. The type of freight rate also determines the shipping time of the consignment.
Let’s have a look at the two different types of container shipping freights.
Full Container Load (FCL) Container Shipping
- This means that your cargo occupies a full container load.
- FCL is used if your shipping load is more than 15 CBM in volume.
- For FCL, cargo must not exceed the maximum allowed weight of the container.
- The FCL container shipping freight rate is volatile.
- FCL freight rate is a fixed price and does not depend on the volume or weight of the cargo.
Less Than Container Load (LCL) Container Shipping
- This means that your cargo does not occupy the entire volume of the container.
- So, the remaining space in the container will be filled with other cargoes of different origins and destinations.
- LCL is used for shipments under 15 CBM in volume.
- LCL freight rates are more stable in comparison to FCL. However, LCL rates can be higher than FCL rates after a break-even point.
- LCL container shipping takes almost 4 days more than FCL on average. This is because it takes more time to assemble and disassemble the shipments.
INCOTERMS: Buyer and Seller Responsibilities in Container Shipping
- Container shipping International Commercial Terms (INCOTERMS) is a set of rules for international transit detailing responsibilities between suppliers and buyers. There are 11 Incoterms published by the International Chambers of Commerce (ICC). A 3-letter code represents each Incoterm.
- These changes came into effect on the 1st of January 2020 and are being used in 2022 as well.
- They will be in use until ICC publishes the next changes sometime in the future.
Main Documents Required for Container Shipping
According to Maersk, the biggest container shipping company in the world, there are about 2000 documents involved in shipping a single container.
Let us look at the two most important documents required for container shipping.
Bill of Lading
The Bill of Lading (B/L) is a commercial contract of carriage between the shipping line and the cargo owner. One copy is provided to the master of the ship to acknowledge the receipt of your cargo for shipment on board their vessels. The cargo is released at the destination port when the master provides this B/L to the cargo receiver. Customs do not clear any shipment without a B/L
It lists all of the details and information regarding the cargo shipment. This includes each box's weight, volume, and value and the overall cargo being shipped in one container.
Now we know about the basic framework of the container shipping industry. It is important to know about it because imports and exports have become a crucial part of the growth of every nation. Thanks to Malcolm McClean, the pioneer of containerisation, Container shipping is now the cheapest way of importing and exporting.
The industry forms a huge chunk of the global supply and logistics chain. It is also responsible for generating a large number of employment opportunities. Supported by a meticulous multi-modal inland transport system, container shipping keeps the global supply chain and logistics ticking.
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