LOGISTICS MANAGEMENT
Logistics Management
The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word, calculation, reason, speech, oration").
Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘Logistikas’ who were responsible for financial and supply distribution matters.
Logistics management
Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer & legal requirements. A professional working in the field of logistics management is called a logistician.
Business logistics
Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer and is the science of process and incorporates all industry sectors. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies.
In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption (see supply chain management). The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities. Logisticians combine a professional knowledge of each of these functions so that there is a coordination of resources in an organization. There are two fundamentally different forms of logistics. One optimizes a steady flow of material through a network of transport links and storage nodes. The other coordinates a sequence of resources to carry out some project.
Production logistics
The term is used for describing logistic processes within an industry. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right point in time.
The issue is not the transportation itself, but to streamline and control the flow through the value adding processes and eliminate non-value adding ones. Production logistics can be applied in existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency.
Production logistics is getting more and more important with the decreasing batch sizes. In many industries (e.g. mobile phone) batch size one is the short term aim. This way even a single customer demand can be fulfilled in an efficient way. Track and tracing, which is an essential part of production logistics - due to product safety and product reliability issues - is also gaining importance especially in the automotive and the medical industry.
Third-party logistics
Third-party logistics involves the utilization of external organizations to execute logistics activities that have traditionally been performed within an organization itself. According to this definition, third party logistics includes any form of outsourcing of logistics activities previously performed in-house. If, for example, a company with its own warehousing facilities decides to employ external transportation, this would be an example of third party logistics. Logistics is one of the emerging business area in many countries.
Warehouse management system and warehouse control system
Although there is some functionality overlap, the differences between warehouse management systems (WMS) and warehouse control systems (WCS) can be significant. To put it simply, the WMS plans a weekly activity forecast, based on such factors as statistics, trends, and so forth, whereas a WCS acts like a floor supervisor, working in real time to get the job done by the most effective means. For instance, a WMS can tell the system it’s going to need five of SKU A and five of SKU B, hours in advance, but by the time it acts, other considerations may have come into play or there could be a potential logjam on a conveyor. A WCS can prevent that problem by working in real time and adapting to the situation by making a ‘last-minute decision’ based on current activity and operational status. Working synergistically, WMS and WCS can resolve these issues and maximize efficiency for companies that rely on the effective operation of their warehouse or distribution center .
FCL / LCL SHIPMENTS
A full container load (FCL) is an ISO standard container that is loaded and unloaded under the risk and account of one shipper and only one consignee. In practice, it means that the whole container is intended for one consignee. FCL container shipment tends to have lower freight rates than an equivalent weight of cargo in bulk. FCL is intended to designate a container loaded to its allowable maximum weight or volume, but FCL in practice on ocean freight does not always mean a full payload or capacity - many companies will prefer to keep a 'mostly' full container as a single container load to simplify logistics and increase security compared to sharing a container with other goods.
Less-than-container load
Less-than-container load (LCL) is a shipment that is not large enough to fill a standard cargo container. The abbreviation LCL formerly applied to "less than (railway) car load" for quantities of material from different shippers or for delivery to different destinations carried in a single railway car for efficiency. LCL freight was often sorted and redistributed into different railway cars at intermediate railway terminals en route to the final destination.
LCL is "a quantity of cargo less than that required for the application of a carload rate. A quantity of cargo less than that which fills the visible or rated capacity of an inter-modal container."[citation needed] It can also be defined as "a consignment of cargo which is inefficient to fill a shipping container. It is grouped with other consignments for the same destination in a container at a container freight station
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TYPES OF VESSELS
CARRIAGE OF GOODS BY SEA
The Carriage of Goods by Sea Act (abbreviated "COGSA") is a United States statute governing the rights and responsibilities between shippers of cargo and ship operators regarding ocean shipments to and from the United States. It is the U.S. enactment of the International Convention Regarding Bills of Lading, commonly known as the "Hague Rules". It was found in Title 46 Appendix of the United States Code, starting at Section 1301, but has been moved to a note in 46 United States Code 30701.
The United States Congress, concerned that the Hague Rules did not offer shippers enough protection against damage to cargo by shipowners, amended the Hague Rules in a number of minor, but important, ways. It increased the amount that shipowners would have to pay cargo owners for damage in transit from GBP100 Extended up to 500 per package to US$500 per package or, for goods not shipped in packages, per customary freight unit. This "package limitation" has become one of the most contentious and litigious areas in the field of cargo damage, particularly as it relates to the transportation of goods by ocean shipping containers.
At the time of the passage of COGSA most cargo was shipped in boxes, crates, and bags. Shortly after its passage, cargo owners determined that cargo could be handled more efficiently if placed on pallets, a process that results in numerous boxes or bags of cargo being consolidated on a single pallet. Ship-owners, seeing an opportunity to reduce their liability for cargo damage, argued to the courts that the pallets were now "packages" and that they were entitled to limit their liability to $500 per pallet. Some courts agreed.
Later, ship owners began offering cargo owners the opportunity to ship their cargoes in large ocean shipping containers. The containers came in two sizes — 8 feet high x 8 feet wide x 20 feet long (2.4 m x 2.4 m x 6 m) or 8 x 8 x 40 feet long. The term "Twenty-foot equivalent unit" or TEU derived from this size - a TEU was a space aboard a ship that was 8 feet wide by 8 feet high by 20 feet long.
Ship-owners, again seeing an opportunity to limit their liability, began arguing that the containers were "packages" and that they could limit their liability to $500 per container, even though the contents of a container may be valued at over $500,000. Again, some courts agreed.
It is this imbalance, both in the relative bargaining power of cargo owners, and the superior bargaining power of ship-owners, and the imbalance between $500 per container and the true value of a shipment which has led to countless lawsuits and judicial opinions over the "package limitation" problem.
The rest of world, seeing this as an attempt by ship owners to free themselves from responsibility for protecting cargo, amended the Hague Rules in 1968 with the Visby Amendments which eliminated the "per package" limitation and substituted a limitation per kilogram. In so doing, litigation concerning limitations on liability became virtually non-existent outside of the United States. However, Congress failed to pass the Visby Amendments to the Hague Rules.
Many types of cargo are not shipped in packages such as automobiles, yachts, cranes, and heavy construction equipment. For those cargoes, Congress had intended the limitation on liability for shipowners to be $500 per 100 cubic feet (3.7 m3).
At the time of the passage of COGSA the customary freight unit for most cargo was the "revenue ton" - the number of long tons (2240 lbs, 1017 kg) or measurement tons (100 cubic feet) that would produce the most revenue for the shipowner. For example, a cargo of aluminum ingots, which were not packaged for shipment, would be heavy and dense, so the customary freight unit for aluminum ingots would be the long ton, a measurement of weight. By comparison, a shipment of canoes, which were not packaged for shipment, would be light but would take up a large volume, ensuring the customary freight unit would be the measurement ton of 100 cubic feet. If a canoe were 2 feet wide by 2 feet high by 10 feet long (0.6 m x 0.6 m x 3 m), its measurement would be 40 cubic feet (2 x 2 x 10) which would be one measurement ton (anything less than 100 would be 1 by default) and hence the limitation would be $500 per canoe.
The courts, possibly believing that Congress' approach was too cumbersome, jettisoned the word "customary" from the phrase "customary freight unit" and decided that whatever freight unit the shipowner applied would be the freight unit for determining the limitation on liability. Again, seeing an opportunity to limit their liability for cargo damage, shipowners began freighting all cargo by unit, rather than by units of weight or measurement. Consequently an automobile which might have a volume of 400 cubic feet (15 m3), or 4 measurement tons, which would previously entitle the carrier to a limitation of $2000, was now freighted as "one automobile" thereby reducing the ship-owners liability from $2000 per automobile to $500.
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Ocean Freight rates - Methods of Payments
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In practice, trade terms are written with either all upper case letters (e.g. FOB, CFR, CIF, and FAS) or all lower case letters (e.g. fob, cfr, cif, and fas). They may be written with periods (e.g. F.O.B. and c.i.f.).
In international trade, it would be best for exporters to refrain, wherever possible, from dealing in trade terms that would hold the seller responsible for the import customs clearance and/or payment of import customs duties and taxes and/or other costs and risks at the buyer's end, for example the trade terms DEQ (Delivered Ex Quay) and DDP (Delivered Duty Paid). Quite often, the charges and expenses at the buyer's end may cost more to the seller than anticipated. To overcome losses, hire a reliable customs broker or freight forwarder in the importing country to handle the import routines.
Similarly, it would be best for importers not to deal in EXW (Ex Works), which would hold the buyer responsible for the export customs clearance, payment of export customs charges and taxes, and other costs and risks at the seller's end.
EXW {+ the named place}
Ex Works
Ex means from. Works means factory, mill or warehouse, which is the seller's premises. EXW applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks.
In practice, it is not uncommon that the seller loads the goods on truck or container at the seller's premises without charging loading fee.
In the quotation, indicate the named place (seller's premises) after the acronym EXW, for example EXW Kobe and EXW San Antonio.
The term EXW is commonly used between the manufacturer (seller) and export-trader (buyer), and the export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term Ex Factory, which means the same as Ex Works.
FCA {+ the named point of departure}
Free Carrier Sellers’ expense.
The delivery of goods on truck, rail car or container at the specified point (depot) of departure, which is usually the seller's premises, or a named railroad station or a named cargo terminal or into the custody of the carrier, at seller's expense. The point (depot) at origin may or may not be a customs clearance centre. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
The term FCA is also used in the RO/RO (roll on/roll off) services.
In the export quotation, indicate the point of departure (loading) after the acronym FCA, for example FCA Hong Kong and FCA Seattle.
Some manufacturers may use the former terms FOT (Free On Truck) and FOR (Free On Rail) in selling to export-traders.
FAS {+ the named port of origin}
Free Alongside Ship (both seller and buyers )
Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller's expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks.
In the export quotation, indicate the port of origin (loading) after the acronym FAS, for example FAS New York and FAS Bremen.
The FAS term is popular in the break-bulk shipments and with the importing countries using their own vessels.
FOB {+ the named port of origin}
Free On Board
The delivery of goods on board the vessel at the named port of origin (loading), at seller's expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
In the export quotation, indicate the port of origin (loading) after the acronym FOB, for example FOB Vancouver and FOB Shanghai.
Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight only. However, in practice, many importers and exporters still use the term FOB in the air freight.
In North America, the term FOB has other applications. Many buyers and sellers in Canada and the U.S.A. dealing on the open account and consignment basis are accustomed to using the shipping terms FOB Origin and FOB Destination.
FOB Origin means the buyer is responsible for the freight and other costs and risks. FOB Destination means the seller is responsible for the freight and other costs and risks until the goods are delivered to the buyer's premises, which may include the import customs clearance and payment of import customs duties and taxes at the buyer's country, depending on the agreement between the buyer and seller.
In international trade, avoid using the shipping terms FOB Origin and FOB Destination, which are not part of the INCOTERMS (International Commercial Terms).
CFR {+ the named port of destination}
Cost and Freight (sellers expense)
The delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was formerly written as C&F. Many importers and exporters worldwide still use the term C&F.
In the export quotation, indicate the port of destination (discharge) after the acronym CFR, for example CFR Karachi and CFR Alexandria.
Under the rules of the INCOTERMS 1990, the term Cost and Freight is used for ocean freight only. However, in practice, the term Cost and Freight (C&F) is still commonly used in the air freight.
CIF {+ the named port of destination}
Cost, Insurance and Freight (se)
The cargo insurance and delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the import customs clearance and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym CIF, for example CIF Pusan and CIF Singapore.
Under the rules of the INCOTERMS 1990, the term CIF is used for ocean freight only. However, in practice, many importers and exporters still use the term CIF in the air freight.
CPT {+ the named place of destination}
Carriage Paid To
The delivery of goods to the named place of destination (discharge) at seller's expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the place of destination (discharge) after the acronym CPT, for example CPT Los Angeles and CPT Osaka.
CIP {+ the named place of destination}
Carriage and Insurance Paid To
The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller's expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the place of destination (discharge) after the acronym CIP, for example CIP Paris and CIP Athens.
DAF {+ the named point at frontier}
Delivered At Frontier (specific point )
The delivery of goods to the specified point at the frontier at seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the point at frontier (discharge) after the acronym DAF, for example DAF Buffalo and DAF Welland.
DES {+ the named port of destination}
Delivered Ex Ship
The delivery of goods on board the vessel at the named port of destination (discharge), at seller's expense. Buyer assumes the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym DES, for example DES Helsinki and DES Stockholm.
DEQ {+ the named port of destination}
Delivered Ex Quay
The delivery of goods to the quay (the port) at destination at seller's expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym DEQ, for example DEQ Libreville and DEQ Maputo.
DDU {+ the named point of destination}
Delivered Duty Unpaid
The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer's premises, at seller's expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks.
In the export quotation, indicate the point of destination (discharge) after the acronym DDU, for example DDU La Paz and DDU Ndjamena.
DDP {+ the named point of destination}
Delivered Duty Paid
The seller is responsible for most of the expenses, which include the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or buyer's premises. The seller may opt not to insure the goods at his/her own risks.
In the export quotation, indicate the point of destination (discharge) after the acronym DDP, for example DDP Bujumbura and DDP Mbabane.
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FREIGHT FORWARDERS AND THEIR ROLES IN SHIPPING & LOGISTICS
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A freight forwarder, forwarder, or forwarding agent is a person or company that organizes shipments for individuals or other companies and may also act as NVOCCS. A forwarder is often not active as a carrier and acts only as an agent, in other words as a third-party (non-asset-based) logistics provider that dispatches shipments via asset-based carriers and that books or otherwise arranges space for these shipments. Carrier types include ships, airplanes, trucks, and railroads.
Freight forwarders typically arrange cargo movement to an international destination. Also referred to as international freight forwarders, they have the expertise that allows them to prepare and process the documentation and perform related activities pertaining to international shipments. Some of the typical information reviewed by a freight forwarder is the commercial invoice, shipper's export declaration, bill of lading and other documents required by the carrier or country of export, import, or transshipment. Much of this information is now processed in a paperless environment.
The FIATA short-hand description of the freight forwarder as the 'Architect of Transport' illustrates clearly the commercial position of the forwarder relative to his client. In Europe there are forwarders that specialise in 'niche' areas such as railfreight and collection and deliveries around a large port. The latter are called Hafen (port) Spediteure (Port Forwarders). A forwarder in some countries may sometimes deal only with domestic traffic and never handle international traffic.
Freight forwarder roles in different countries
Australia
In Australia most licensed Customs Clearance Agents (now more commonly referred to as Customs Brokers), operate under a freight forwarder.
Bangladesh
In order to start as a freight forwarder a person needs a government license.
Ireland
Even in smaller markets, such as Ireland, the role of freight forwarders is strategically important. International merchandise trade is worth €148 billion to the Irish economy[4]. 82% of manufactured products are exported, further highlighting the importance of the freight forwarders to a nations' economy. Associations like the Irish International Freight Association and FIATA help maintain the professionalism of this industry through educational and representative roles. The FIATA Diploma in Freight Forwarding is an example of how this can be achieved.
Nigeria
Freight-forwarding in Nigeria has been in place since the exporting of groundnut as a cash crop since 1914, though not initially as freight forwarding but as the means of transportation of both goods and services from one country to another. Following the methodology of their British forebears, agents were used to facilitate the transport of goods and services.
UK
In the U.K., freight forwarders are not licensed, but many are members of the British International Freight Association (BIFA). Freight forwarders in the UK consolidate various goods from different consignors into one full load for road transport to Europe, which is often known as groupage. Some freight forwarders offer additional related services like export packing.
USA
In the U.S., companies that handle international ocean freight must be licensed by the Federal Maritime Commission as Ocean Transportation Intermediaries. An Ocean Transportation Intermediary is either an ocean freight forwarder or a non-vessel operating common carrier (NVOCC). An ocean freight forwarder is an individual or company in the United States that dispatches shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers. Ocean freight forwarders also prepare and process the documentation and perform related activities pertaining to those shipments. An NVOCC is a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bills of lading or equivalent document, but does not operate the vessels by which ocean transportation is provided. Companies may obtain both licenses and may act in both capacities even on the same shipment. The U.S. legal distinction between the two is that a freight forwarder acts as the agent of a principal (typically a shipper or consignee or carrier) and the NVOCC is a transportation company (carrier) that is physically responsible for the carriage of goods and acts as its own principal. Companies acting strictly as an Ocean Freight Forwarder typically do not issue their own contract of carriage (bill of lading) and as agent are generally not liable for physical loss or damage to cargo except in cases of errors in judgment or paperwork or fiduciary responsibility. NVOCC's act as ocean freight carrier and issue their own bill of lading and are legally responsible for physical loss or damage in accordance with the terms and conditions of their bill of lading and tariff. Similar to other countries, freight forwarders that handle international air freight will frequently be accredited with the International Air Transport Association (IATA) as a cargo agent however they must obtain an Indirect Air Carrier (IAC) certification from the Department of Homeland Security (DHS).
History of freight forwarding
The original function of the forwarder was to arrange for the carriage of his customers' goods by contracting with various carriers. His responsibilities included advice on all documentation and customs requirements in the country of destination. His correspondent agent overseas looked after his customers' and kept him informed about matters that would affect movement of goods.
In modern times the forwarder still carries out those same responsibilities for his client. He still operates either with a corresponding agent overseas or with his own company branch-office. In a single transaction, it can happen that the forwarder may be acting as a carrier (principal) or as an agent for his customer or both.[5]
Document transfer fee/Document handover fee
International Freight Forwarders and NVOCCs and customs brokers often charge a fee for transferring documents to another transportation company at destination. This fee is a part of the ocean freight charges, being paid by the importer at the port of discharge in the incoterm FOB (Free On Board) and by the exporter at the origin in the incoterms CFR (Cost and Freight), CIF (Cost, Insurance and Freight) there are many other incoterms, those are the most common. This fee is separate from documentation fees charged by steamship carriers and NVOCCs as part of the freight charges on a bill of lading and is separate from other fees for document preparation or for release of cargo. Some companies may call this an admin fee, doc fee, doc transfer or other name but it exists in some form in most destinations around the world and is well known to most importers and exporters. Steamship carriers do not have this fee.
Typical day for a freight forwarder
A typical day for a freight forwarder would primarily consist of talking with clients and warehouse around the world. Taking this information and passing it along to the appropriate party whether that be an SSL (Steamship Line), United States Customs or the customer themselves. Along with making sure that the freight the client is importing or exporting gains entry into the country a freight forwarder must(most of the time) arrange for said freight to be picked up and delivered to the final consignee's place of business. This requires contacting trucking companies, rail lines and even sometimes exporting the goods to a different country for final delivery. A lot of this is now done over the Internet and phones. A typical freight forwarder will spend most of the day at a desk in front of a computer.
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MAJOR PORTS IN INDIA
India has a coastline spanning 7516.6 kilometres, forming one of the biggest peninsulas in the world. According to the Ministry of Shipping, around 95 per cent of India's trading by volume and 70 per cent by value is done through maritime transport. It is serviced by 13 major ports (11 Government-owned and one private) and 187 notified minor and intermediate ports.Port Blair which was notified as major port in 2010 was removed of its status recently.The total 200 major and non-major ports are present in the following States:- Maharashtra (53); Gujarat (40); Tamil Nadu (15); Karnataka (10) and others (82).[1]
Government of India plans to modernise these ports and has approved a project called Sagarmala.[2] The ports and shipping industry in India play a vital role in sustaining growth in the country's trade and commerce. The Indian Government has allowed Foreign Direct Investment (FDI) of up to 100 per cent under the automatic route for port and harbour construction and maintenance projects. The government has also initiated National Maritime Development Programme (NMDP), an initiative to develop the maritime sector with a planned outlay of US$11.8 billion.
Unitization and Containerization
Ships, as we know can carry large volumes of cargo. In the earlier days, the goods would be packed into small boxes and these were then manually loaded by individuals who would climb the ship’s ladder (gangway), offloading them into the holds. These goods were stacked manually and the entire operation would take days depending upon size of the ship. With the advent of mechanical means such as cranes and derricks, heavier loads could be easily hoisted from jetty to the ship’s hold. However, the packages were still smaller in size and cranes couldn’t be used to their full capacity. A substantial cost of shipping went into paying the dock workers for loading and unloading of the cargo. A few docks decided to put cranes and mechanical means to greater effect and for that they needed the packages to be much larger and at the same time to have the same yardstick in size. This was the beginning of Unitization. The idea caught on as other docks saw it’s potential and began implementing it in their own ports.
Today, the size of ships and the variety of cargo handled has gone up so much, that to be able to handle such large volumes efficiently, the cargo needs to be kept in a methodical and well planned manner. Unitization comes to our aid in such situations. Unitization is essentially grouped or bundled cargo, wrapped into packages and loaded onto or inside a bigger unit. These bigger units can then be handled by machines such as forklifts and cranes. Because of the bigger size, the number of individual units to be loaded on the ships reduces; saving time and effort, increasing efficiency and lowering the chances of late deliveries. A new method called pre-slinging came into existence to transfer cargoes like large pipes and steel cables. The entire cargo is shipped, along with slings as slung from the port of origin. At the port of delivery, the cargo can be directly offloaded without the hassle of lifting it manually to get the sling pass underneath. The focus of unitization was standardization of the shipment as it would make the work of mechanical machinery more efficient and frugal.
Some of the benefits of unitization are as follows:
- The efficiency of cargo handling increases as heavier units can combine many smaller packages into one large package.
- The safety of cargo increases as cranes are used to lift the load vertically upwards using slings. The slings can be made strong enough to withstand loads several times more than the load being lifted. Previously the cargo had to be carried manually by individuals or lifted up using pulley and rope; many a times this resulted in cargo getting damaged.
- The labor required is reduced drastically, thus resulting in cost saving.
- The loading and unloading time reduces. Ships, trucks, railway wagons have to wait idle for lesser duration. The time spent by ships at ports is reduced to a great extent, making voyages shorter.
The disadvantage is that many unskilled and semi-skilled labors lose their job. The working environment changes and earlier employees and their work become vague.
The most common form of unitization is palletization. The forklifts and cranes are designed to handle certain dimensions of package. The pallet is made to this dimension and acts as a platform for cartons and boxes to be stacked on top of it. The entire pallet then becomes a single unit with the cargo secured tightly onto the pallet base. The materials for pallets can be hard wood, soft wood, steel, plastic and even fiber board depending on the voyage, type of safety required and reusability.
A Four-way Pallet (lifting can be done from all 4 sides)
Since the use of pallets is so handy, they are used all over the world. Hence, pallets also have regulations that set the standards for its size, durability and load carrying capacity. Below is the ISO Standards (ISO 6780) for pallet dimensions.
| Dimensions (mm) | Dimensions (inches) |
Region |
| 1200 x 1000 | 47.24 x 39.37 | Europe, Asia |
| 1200 x 800 | 47.24 x 31.50 | Europe |
| 1219 x 1016 | 48.00 x 40.00 | North America |
| 1140 x 1140 | 44.88 x 44.88 | Australia |
| 1100 x 1100 | 43.30 x 43.30 | Asia |
| 1067 x 1067 | 42.00 x 42.00 | North America, Europe, Asia |
The next big step in unitization was containerization. It all began as noble idea of a US based businessman Malcolm Mclean, who modified a Second World War tanker vessel to carry boxes known as containers. The vessel was named Maxton and began sailing in the year 1956. The cargo would be loaded into these boxes, which were capable of being placed directly onto the trucks. This saved a lot of time compared to break-bulk carriers. The ship was modified to carry 60 such boxes as deck cargo. By 1970s, container shipping started getting a boost from Europe and Japan, and the rest of the world soon followed suit.
Containerization brought about a paradigm shift in shipping logistics. There are two standard lengths of containers largely used worldwide. The 20 feet and 40 feet containers also called TEUs (Twenty-foot Equivalent Units) and FEUs (Forty-foot Equivalent Units) respectively. These containers referred to as freight or shipping containers are intermodal in nature, i.e., they can be transported via rail, truck and ships with equal ease. The reason why we are saying that containers have brought such a paradigm shift is because of the fact that, the actual handling of the cargo is negligible. It is the container that is being handled in all the transportation including trucks, trains, cranes specially designed to load them on the ship, and the entire ship itself. The whole process of packing and unpacking the product is carried out by the manufacturer or shipper at their premises or at container freight stations (CFS), leaving ship and port authorities to manage other important parts of the job.
Salient features of containerization are as follows:
- The cargo remains safe inside a metal case and additional packaging is not required as opposed to palletizing.
- Faster turnaround time for ships due to mechanization of container handling. The ships leave the ports within hours of arrival which was not possible in the non-container era.
- A single ship can carry thousands of such freight containers thus benefitting from economies of scale.
- The harbors became more advanced in handling of such containers lending to their overall development.
There are several varieties of freight containers to choose from depending upon the type of cargo, loading and unloading methods used. These are dry storage, flat rack, open top, open side storage, double door, refrigerated or reefers, insulated or thermal, tanks (for liquid cargo), cargo storage roll, half height, car carrier, intermediate bulk shift and special or customized containers. As long as the dimensions of containers remain true to the standards set by ISO, they can be made in any shape and used for whichever application
