About: Macnels Macnels

Evergreen buys more containers, re-assigns fleet after profit spike

Evergreen Marine Corporation announced on 6 August that it will buy 10,000 containers from Dong Fang International Container (Hong Kong).

The Taiwanese shipping group has been expanding its fleet of containers amid the well-documented equipment crunch, which has contributed to rocketing freight rates.

Since March 2020, Evergreen and its container leasing and warehousing subsidiary, Evergreen International Storage & Transport Corporation have ordered at least 90,000 containers, including the latest commission.

In addition, in July, Evergreen ordered 6,000 new reefer containers from China’s Guangdong Fuwa Equipment Manufacturing

Evergreen’s announcement of the latest round of container orders coincided with the release of its 2021 first-half results, showing a US$3.2 billion net profit, a 29-fold increase from the US$105.48 million net profit in 1H 2020.

Tight shipping capacity and the resulting spike in freight rates have brought unprecedented profit levels to liner operators.

Evergreen also announced a shake-up in the registered ownership of some of its group-owned ships.

It will re-assign ownership of seven 1,600TEU ships that are currently registered to its Panama-incorporated subsidiary, Gaining Enterprises SA to a Hong Kong-incorporated subsidiary, Evergreen Marine (Hong Kong), for a sum of US$67.11 million.

In addition, a 7,000TEU ship that is registered to another Panama-incorporated subsidiary, Yamasa New Pulsar V SA, will be re-allotted to a Singapore-registered unit, Evergreen Marine (Asia) Pte Ltd.

The vessel names were not disclosed. Gaining Enterprises SA is the registered owner for 11 ships, while Yamasa New Pulsar V SA owns just one ship, the 7,024TEU Ever Summit.

Explaining the fleet re-assignment at a press conference, Evergreen president Eric Hsieh said, “This is to coordinate the company’s overall operations, while considering the market conditions, so as to improve our competitiveness, market share and efficiency.”

Source: Container News

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Freight rates continue global upward trend

Macnels Macnels

Freight News

Freight rates continue global upward trend

Freight rates continue to rise globally due to several factors, such as the container shortage and the economic pull of the United States, according to the Port Authority of Valencia (PAV).

In particular, the high demand for maritime transport in combination with the lack of empty containers, the shortage of capacity and equipment, the price of fuels, the problems of co-determination, the traffic increase and the congestion in several ports of the world, are the main factors for this continued increase in the freight rates.

In addition to the beyond factors common to all areas, the strong demand for manufactured goods from the US, made export traffic from the Port of Valencia to the US showing a strong upward trend, standing at levels well above those of the same period in 2019 and 2020.

Hence, the Valencia Containerised Freight Index (VCFI) for July has grown by 9.19%, making it the first year of growth in export freight from Valenciaport. VCFI for July stands at 3.427,43 points representing a spike of 242.74% since the beginning of the historical series in January 2018.

More specifically, the index is growing in all geographical areas except the Eastern Mediterranean (-1.94%), while the greatest increase takes place in export freight rates with several areas of the American continent, as all of them reach growth rates of more than 5%.

The highest increase is represented in Latin America Pacific (24.87%), followed by Central America and the Caribbean (14.54%) and the United States and Canada (7.48%).

The President of the Port Authority of Valencia (PAV), Aurelio Martínez explained that the lack of containers and congestion at the ports of Los Angeles and Long Beach caused difficulties for the thousands of exporting and importing companies that use the Valenciaport terminals every day.

“Demand is rising and so are containers, causing a shortage of empty containers, but the infrastructure remains the same. This means that ships have to wait up to three weeks to unload and the companies have to reverse these costs in the price of freight, which has risen considerably in recent months,” pointed out Martínez.

Furthermore, the forecasts of the president of the port authority indicate that the stabilisation will not arrive until the end of 2022.

Apart from the index of the Port of Valencia, two additional freight indexes have also shown this global trend in freight rate push-ups.

Shanghai Containerized Freight Index (SCFI) has been almost doubled since the start of the year, as it reached 2,870.34 points in the first week of 2021, and it ascended at 4,225.86 on 6 August.

At the same time, Ningbo Containerized Freight Index (NCFI) stands at 3,734.45 points according to the latest data by Ningbo Shipping Exchange, while it was 2,453.57 on the first week of the year.

Last but not least, Freightos Baltic Global Average Freight Rate Index (FBX) is a significant illustration of the consistent freight increase, as it has noted 19,237.18 points in the first days of August (2-5/8), compared to 2,764.19 – 2,984.92 points during the corresponding period of last year.

Source: Container News

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Ningbo and Shanghai, the world’s two largest ports, experience unprecedented congestion

Macnels Macnels

Freight News

Ningbo and Shanghai, the world’s two largest ports, experience unprecedented congestion

The world’s two largest ports are experiencing unprecedented volumes of tankers, bulk carriers and containerships back up into the East China Sea as a combination of renewed Covid cases, fierce weather and strong US demand creates further supply chain havoc.

Ningbo-Zhoushan and Shanghai to the north handled 1.17bn and 510m tons in 2020, marking them out once again as the world’s top two ports. In container terms, they’re also on the podium – Shanghai ranked number one in the world with Ningbo-Zhoushan in third place.

The two ports were hit hard by a typhoon late last month and have seen productivity slow as new anti-Covid measures are being carried out at most Chinese quaysides in the wake of the sudden spread of the delta variant of Covid-19 over the past three weeks.

Copenhagen-based Sea-Intelligence has carried out a data-led inspection of container port congestion at 22 ports around the world. The results, published yesterday, show Shanghai and Ningbo recently coming under huge pressure from growing congestion (see inset graph).

Putting these figures in context, among the 22 ports surveyed, only Los Angeles, Long Beach, Oakland, Rotterdam, Antwerp and Vietnam had more severe congestion than China’s big two ports.

China ports congestion

“In terms of Ningbo and Shanghai, this might be an early warning of coming impact of more Covid restrictions in China, as the delta variant appears to continue to be present,” Sea-Intelligence noted in its most recent weekly report.

The huge volume of boxships at anchor at the two ports is carried in a map below created for Splash by Danish liner consultancy eeSea.

When a Covid-19 outbreak was detected at Yantian Port in late May, operations at the key southern Chinese export hub were slashed by 70% for most of June.

Since July 20, community-spread infections have been confirmed in roughly half of China’s provinces, sparking mass testing operations and localised lockdowns.

Newly reported positive Covid-19 cases in China have recently forced the country to re-introduce restrictions to curb the spread of the virus.

Most ports in the country are now requiring a nucleic acid test (NAT) for all crew, with vessels forced to remain at anchor until negative results are confirmed.

Many ports in the country are also requiring vessels to quarantine for 14-28 days if they previously berthed in India or performed a crew change within 14 days of arriving in China.

Lars Jensen, CEO of liner consultancy Vespucci Maritime, commented via LinkedIn last week, “Ever since the Yantian port partial close-down it has been clear that a risk for the container shipping sector would be the emergence of more Covid cases in other parts of China.”

On Monday, China reported 125 new Covid-19 cases, up from 96 a day earlier.

While Ningbo and Shanghai have the most amount of ships at anchor waiting for berth space, the global container port congestion looks increasingly worse as the below map compiled today by eeSea shows – the bubbles indicating ships backing up across five continents.

Source: splash247

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Macnels Macnels

Freight News

Freight Costs From China To Us Surges By 200%

The shipping rates of containers from China to the USA have been impacted severely as shipping costs from China shot up 200% from pre-pandemic levels.

The profits of various companies especially in sectors such as engineering, auto components, pharma and medical devices have been affected because of the increase in sea freight costs accompanied by shortages of containers. The cost of air shipment from China to the USA has also increased from 50-200%, making matters worse.

The container shortage has been attributed to China by industry experts as it has a dominant share in global trade and also in container-making. There have been 10-15 days delays because of congestion at the ports with unclear containers lying at the warehouses.

Another reason for slowed global container turnaround rates can be attributed to the outbreak of the Delta variant Covid-19 in many countries.

The ongoing Typhoons on various parts of Southern China is also a major reason behind the surge in prices affecting the world’s most important method for transporting everything from gym equipment and furniture to car parts and electronics.

The rates have been jacked up by the shipping companies by adding peak season charges and other additional charges, which varies depending on the shipping route and container sizes.

Even though the first quarter has been slow due to logistics’ bottlenecks, the Pharma exports which are valued at around $25 billion for 2021, have been growing around 14% year on year.

The surge in freight prices is the latest blow to the big companies which were already facing immense troubles since early 2020 after Covid 19 put brakes on global economies and triggered huge changes in the flow of goods and healthcare equipment around the world.

Reference: timesofindia.indiatimes.com

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Tax rates on supplies, raw materials and semi-finished products to be altered

Macnels Macnels

Freight News

Tax rates on supplies, raw materials and semi-finished products to be altered

The Ministry of Finance has proposed revising the tax rates on supplies, raw materials and semi-finished products in the Export Tariffs.

According to the Ministry of Finance, before Decree 57/2020 of the Government was issued, the Law on import tax and export tax only stipulated the Heading 211 including “Supplies and raw materials, semi-finished products” (referred to as goods) but did not stipulate the goods must have the aggregate value of natural resources and minerals plus energy costs accounting for at least 51% of their production cost and their HS codes and descriptions.

Decree 57/2020 of the Government details seven items of which the total value of natural resources and minerals plus energy costs from 51% or more of the product cost or the minerals are processed to a certain extent (like clinker cement) in the Heading 211 subject to export tax rate of 5%.

This has led to the understanding that the above seven items, although their names are detailed, must calculate the rate of the value of natural resources and minerals plus energy costs in product cost to apply the export tax rate of 5% (if the rate is 51% and more) or 0% (if the rate is less than 51%). Through customs inspection, the seven items are all raw minerals of which the total value of natural resources minerals is more than 51% of product cost.

Therefore, to limit fraud in declaration and determination of the rate of natural resources and minerals of the product costs and minimise procedures for customs authorities and businesses in customs clearance, the Ministry of Finance has proposed the Government amend Clause 2, Article 2 of Decree 57/2020, specifying items which have detailed codes and descriptions in the Heading 211, will apply the corresponding export tax in this group without determination of the value of natural resources and minerals plus energy costs in total product cost.

This means amending Article 4 on the Export Tariff according to the list of taxable items. The Export Tariff is set according to the list of taxable items specified in Appendix I issued together with this decree including goods code, description of goods, export tax rate prescribed for each group of goods, and goods subject to export tax.

If export goods are not listed in the Export Tariff, the customs declarant will declare the goods code corresponding to the eight-digit code of such goods according to the Preferential Import Tariffs specified in Section I of Appendix II attached with this decree and is not required to declare tax rates on the export declaration.

For items of which codes have been detailed in eight-digit form and the description has been detailed in the Heading 211 of the Export Tariffs, the customs declarant will declare the tax rate corresponding to the code specified in the Heading 211 and will not be required to determine the total value of natural resources and minerals plus the cost of energy in the total production cost specified at Point c, Clause 1 of this article.

For items of which codes have not been detailed in eight-digit form and description has not been detailed in the Heading 211 of the Export Tariffs, the customs declarant will declare the export code corresponding to the eight-digit code of such goods according to the Preferential Import Tariffs specified in Section I, Appendix II attached to this decree and the export tax rate of 5% if the goods meet two following conditions:

First, they are supplies, materials and semi-finished commodities products out of the headings from 1 to 210 of the Export Tariffs.

Second, they are goods made directly from raw materials that are mainly natural resources or minerals and of which the aggregate value of such natural resources plus energy costs accounts for at least 51% of their production cost. The determination of the aggregate value of natural resources and minerals plus energy costs accounting for at least 51% of production cost shall be subject to regulations in the Government’s Decree No. 100/2016 and the Government’s Decree No. 146/2017.

Along with that, export goods under the exclusions specified in Clause 1, Article 1 of Decree No. 146/2017 are not in the Heading 211 of the Export Tariffs attached to this decree.

Source: Customs News

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Circular on procedures for border gate transfer for goods stuck at border gates amid pandemic

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Freight News

Circular on procedures for border gate transfer for goods stuck at border gates amid pandemic

The General Department of Customs is developing a draft circular on customs procedures; customs inspection and supervision of imported goods transferred from a border gate to another border gate for imported shipments stuck at border gates amid the pandemic.

On August 5, Deputy Director General of the General Department of Customs Mai Xuan Thanh chaired an online meeting to consult local customs units (HCM City, Binh Duong, Dong Nai, and Ba Ria – Vung Tau) and Saigon Newport Corporation on the draft contents.

Deputy General Director Mai Xuan Thanh said to solve the congestion of goods at Cat Lai port, the General Department of Customs has issued Official Letter 3847 to guide local customs units to work with Saigon Newport Corporation to carry out temporary customs procedures to deal with the congestion of goods at Cat Lai port.

However, under the direction of the leader of the Ministry of Finance, it is necessary to issue a circular on customs procedures; Customs inspection and supervision of imported goods transferred from a border gate to another border gate for imported shipments stuck at import border gates during the pandemic period.

At the meeting, representatives of the participating units gave opinions on the draft contents, including the time of sending send the goods transportation plan, documents and procedures; execution time; as well as responsibilities of the seaport operators and shipping lines.

The Deputy General Director requested after this meeting the units urgently finalise the draft circular and submit it to the Ministry of Finance for consultancy from relevant units for promulgation.

On the morning of August 5, Mai Xuan Thanh chaired an online meeting to execute Official Dispatch 3847 on temporary instructions for customs procedures and inspection and supervision to solve cargo congestion at Cat Lai port.

Accordingly, imported goods stuck at Cat Lai port will be transported to other seaports in HCM City and inland ports or inland container depots in other provinces and cities for storage, including imported goods of enterprises in Dong Nai province will be transported to ICD Tan Cang – Long Binh or ICD Tan Cang Nhon Trach; imported goods of firms in Binh Duong province will be transported to ICD Tan Cang Song Than; and imported goods of businesses in the western provinces will be transported to Tan Cang Hiep Phuoc port.

Backlogged goods that have gone through the counting, classification and valuation according to Article 12 of Circular 203/2014 of the Ministry of Finance will be transported from Cat Lai port to Tan Cang Hiep Phuoc port.

The General Department of Customs asked Saigon Newport Corporation to notify customers who are import-export companies, shipping lines, shipping agents about the congestion at Cat Lai port so they can have a plan to unload their goods and store goods at Cai Mep port, and change the destination port from Cat Lai port to Cai Mep port.

At the same time, Saigon Newport Corporation is requested to contact with specialised inspection units at seaports to speed inspection progress and return specialised inspection results to reduce clearance time for imported goods and quickly release the goods from the port.

To solve cargo congestion at Cat Lai port, the Ministry of Finance also sent an official dispatch to the Ministry of Transport. In which, the Ministry of Transport is requested to direct the Vietnam Maritime Administration to direct the Port Authority to make a plan to regulate shipping lines/shipping agents, goods to Cat Lai port and other seaports in Vietnam to solve the cargo congestion at Cat Lai port.

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Cargo Surge Continues at Port of Long Beach

Macnels Macnels

Freight News

Cargo Surge Continues at Port of Long Beach

The Port of Long Beach had its best July on record last month as strong consumer demand continues to drive high volumes of cargo across its docks.

The port said Thursday that dockworkers and terminals moved 784,845 TEUs in July, a 4.2% increase from its record-setting July 2020 as the economy was bouncing back from COVID-19 economic impacts. July 2020 previously held the record for “best July”.

Imports last month grew 1.6% year-over-year to 382,940 TEUs, while exports decreased 20.7% to 109,951 TEUs. Empties moved out of Long Beach ballooned 22.8%, to 291,955 TEUs.

“Ships arrived last month to move these empty containers out of the harbor and clear valuable terminal space as we handle historic amounts of trade,” said Port of Long Beach Executive Director Mario Cordero. “These boxes are a valuable commodity in the overstressed global supply chain. Our loaded exports are likely to rebound this month.”

With July’s numbers, the Port of Long Beach has broken monthly cargo records in 12 of the last 13 months. Year-to-date through July, the Port of Long Beach has processed 5,538,673 TEUs, a 32.3% increase over the same period in 2020.

The global pandemic continues to impact trade volumes. An outbreak at the Port of Yantian in China delayed some vessels that called at the Port of Long Beach in July. It is likely that increasing COVID-19 cases in Vietnam will disrupt supplies in the months ahead as factories shut down to contain outbreaks of the virus, the Port of Long Beach said.

“Our dockworkers and industry partners have risked their health to keep the gears of our economy turning during this pandemic,” said Long Beach Harbor Commission President Steven Neal. “We thank them, and acknowledge their service as we continue a remarkable run of records at the Port of Long Beach.”

Source: gCaptain

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Priority berth for Chittagong-Colombo ships stops

Macnels Macnels

Freight News

Priority berth for Chittagong-Colombo ships stops

The Chittagong Port Authority has stopped providing priority berthing to Chittagong-Colombo vessels after export container backlog eased at off docks.

The shipping agents of Chittagong-Malaysia and Chittagong-Singapore routes also made the appeal to stop the priority berthing as their vessels were waiting long days to get berthing.

Now the vessels of Chittagong-Malaysia and Chittagong-Singapore routes are getting berthing in time, at best in three to four days after coming to outer anchorage, compared to six or seven days during the last two weeks or more.

The number of containers at port yards now started going down freeing space there thus vessels also not standing in jetties for five to six days to unload and load boxes rather now leaving within three days which is normal time consumption.

The number of export laden containers at off docks has also gone down to 5,573TEU on 5 August, from a record high of over 16,000TEU a few weeks back. The queue of trucks at the off docks gates also lessened significantly.

Mohammed Abdullah Jahir, COO of Saif Maritime said the situation improved as the National Board of Revenue (NBR) allowed shifting of all types of containers to the off docks and factories started transferring boxes.

“It helped to free space at port yards thus vessels now can easily unload boxes there. Therefore, the vessel stay time at jetties lessened to three days from nearly six days in late last month,” he noted.

On 5 August, only seven boxships were waiting at the outer anchorage of the port while 11 were unloading and loading boxes at the port jetties compared to queuing up of nearly two dozens vessels late last month.

Muntasir Rubayat, head of operations at GBX Logistics, said vessels plying in Chittagong-Malaysia and Chittagong-Singapore routes had been suffering immense berthing delay as Chittagong-Colombo vessels were getting priority berthing.

“As the provision of priority berthing is now over, the vessels waiting time has become normal,” he said, adding the average waiting time now stands at three days which is very normal for this port.

Meantime, on 3 August, the Bangladesh Garment Manufacturers and Exporters Association (BMGEA) in a letter to the Buyers’ Forum appealed not to nominate a few selective shipping companies for carrying their export cargoes.

“Instead, they should nominate as many forwarders as possible, when the forwarders would have the liberty to choose the best possible shipping route, or shipping line to deliver the shipment on time,” BMGEA president, Faruque Hassan wrote in the letter.

“We earnestly request you to review this issue and either lift the exclusive nominations or add additional nominated MLO’s,” he urged the buyers to avoid complexities in the future.

Source: Container News

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Macnels Macnels

Maritime Law

LCL Shipping – Everything You Wanted to Know

When one thinks of shipping cargo by sea it immediately brings up pictures of gigantic freight cranes lifting containers onto giant freight carriers, that traverse the seas connecting different ports of the world. An estimated 85% of global trade is carried out by sea freight.

Large container ships, some that can accommodate as much as 23000 TEUs (twenty-foot equivalent units or 20’ containers) help to move this large volume of cargo around the world.

Remember the MV Ever Given that got stuck in the Suez Canal? It has a length of about 400 meters with a whopping cargo-carrying capacity of more than 20000 containers!

With some exceptions such as certain Out of Gauge (OOG) cargo etc., if all the cargo that is shipped in the world is by containers, how does one ship cargo that comes to less than a container load (LCL)?

A general answer to this would be – by container, once again!

However, these less than container loads are consolidated with other similar LCLs and packed inside a container to form a full container load or FCL, and that is how we see the container-laden vessels going about!

Groupage is the activity whereby the groupage operator consolidates several LCL cargo for shipment as full container loads.

Upon reaching the destination port, these LCL cargoes are unloaded and segregated by the operator for delivery to their different customers or a single customer after completion of the port and customs formalities. This process is also known as Consolidation.

Documents Required for Shipping LCL

Are the documents required for shipping LCL different from what is required for an FCL? The answer is No. Almost all the documents that are required to ship cargo as FCL are required for LCLs too. In general, they are:

Bill of ladingCommercial invoicePacking listCertificate of OriginDangerous cargo certificate (if required)Insurance certificate

Packing Requirements for LCL shipments

Less than container load shipments need extra care while packing and labeling. This is because they are transported with several other small shipments. It may also involve multiple handling. Unless the packing is durable there are chances of damage to LCL cargo.

Normally, cartons made of corrugated cardboard are used to pack the cargo. Depending on its nature, shockproof packaging materials such as packaging cushions, bubble films, etc. are also used while packing to keep the cargo safe.

Such packed cartons are normally stacked on wooden pallets following the shipper’s instruction on the HI/TI. We will look at HI/TI later on in this article.

Pallets

Pallets are usually made of wood. Plastics or recycled materials are also used these days for the manufacture of pallets. It is a small platform on which goods can be stacked neatly. This is then shrink-wrapped (using a plastic stretch film) making it more secure for transport. Other than helping to hold the cartons together, shrink wrapping helps to protect these goods from any accidental spillage of liquids or moisture.

Warehouse and logistics MHEs (Material Handling Equipment) such as forklifts or pallet jacks can easily lift and place, or remove such pallets from their storage racks or intermodal freight containers.

Pallets make packing, handling, and transport of small cargo more orderly and secure.

The two common pallet models used are the Standard wooden pallets and the Euro pallets. While the standard wooden pallet measures 48” X 40” the Euro pallet has a dimension of 47.24” X 39.37”. There are several other pallets of different sizes available in the market. However, the ISO (International Standards Organization) has limited the different sizes to 6 to avoid confusion and ambiguity.

A standard pallet can hold about 1000 kilograms (1 ton) or 1.8 cubic meters (CBM) approximately.

Wooden pallets need to be heat-treated or fumigated at regular intervals to prevent pests and disease-causing organisms from being transmitted through them.

What is HI/TI?

HI/TI is a common reference in logistics when it comes to configuring pallets. In some places, it is known as TI/HI.

HI/TI or TI/HI is the number of cartons that can be layered and stacked safely on a pallet. HI is the number of layers of cartons on a pallet while TI is the number of cartons on each layer. HI is the height of the pallet in tiers or layers and TI is the number of cartons per tier or layer.

It also shows the total number of cartons on a pallet. Let us take a simple example here:

HI (number of layers or tiers on a pallet): 8

TI (number of cartons in a layer or tier): 10

Total number or cartons on the pallet: 8 X 10 = 80

The HI/TI is critical for the stability of the pallet. This should be followed correctly while building a pallet load.

Labeling LCL Cargo

Another most important requirement is labeling. Labels with clear handling instructions and the address of the consignee ensure that the cargo reaches the correct address safely and is not mixed up with others.

Instructions help the loading and unloading staff to handle the LCL accordingly. Certain goods may require to be kept the ‘right side up’ always.

Fragile goods will have strict stacking limitations and instructions. Such cargo has to be always kept on top of other more-heavier cargo. The right instructions help to prevent damage during transport and handling.

Labels should be affixed on the cargo before shrink wrapping so that the shrink-wrap acts as additional protection for the labels from peeling or getting damaged.

Container Freight Stations

This is where your LCL cargo is taken to once it is picked up from your warehouse by the groupage operator or freight forwarder. Sometimes, depending on the shipping agreement between the buyer and seller, LCL cargo is packed and delivered to the CFS by the shipper (seller).

Container Freight Stations (CFS) are warehouses or yards where cargo from several different shippers is consolidated or deconsolidated. It can be considered as a staging area just before loading the cargo on board a vessel, as in the case of exports, or delivery to the customer, as in imports.

Container Freight Stations handle both full containers as well as LCL shipments. LCL shipments that are consolidated are for export while LCL cargoes that are received (imported) are segregated and prepared for delivery to their customers. Customs clearance and other procedures normally take place inside the CFS that are owned by the shipping line or by the terminal.

Container Freight Stations are normally located inside the port terminal area or close to it. The general services provided by CFS are drayage, movement of containers, stuffing and de-stuffing, storage, stacking, etc. Fees for these services are charged based on cargo volumes.

LCL shipping is cost-effective and can be tweaked according to the shipping needs of an organization. As soon as the goods are ready it is good to go.

However, some points that one should bear in mind while shipping LCL are as follows:

The shipper cannot decide the other goods with which their LCL cargo should be transported. The LCL cargo operator will want to fill a container to its optimum capacity at the earliest and get it shipped. They may not exercise caution while grouping the different goods and as such, there is always the danger of incompatible goods being put in the same container.

An example for this would be when a certain strongly scented product is loaded along with food items in a container. A strong smell inside the enclosed space of a container would easily get on to the food items making them inedible.

Also, any delay on account of a single LCL shipment inside the container, such as due to wrong customs documentation, etc., will delay the rest of the cargo inside the container.

Source: Marine Insight

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Guide To Types of Warehouses for Shipping

Macnels Macnels

Maritime Law

Guide To Types of Warehouses for Shipping

Importance Of Warehouses
Goods in the process of shipping need safe and secure storage to protect them from the elements of nature, damage and destruction due to careless handling, pilferage, etc.

In business, goods require storage as they wait for the customer. Warehouses are buildings and related infrastructure that are used for the storage of goods.

Warehouses have the facilities for receiving goods, stacking or storing them safely, and picking these goods when it is time to ship them to a customer or a new location.

These activities have to be carried out while ensuring the safety and security of personnel handling the goods at the warehouse, as well as the goods.

Modern warehouses have come a long way from traditional goods sheds or goods yards.

A goods shed is a building without any storage infrastructure that is used for the stacking of goods. Usually, such buildings have no proper safety or security features. A goods yard is an open but usually enclosed compound where goods are kept.

Most modern warehouses are engineering marvels. They have the latest storage and handling equipment and inventory management technologies.

While optimizing storage space, these latest features ensure accurate stock-keeping and picking of goods.

When the world is more conscious about the quality of products, food safety, etc. security and hygiene of the stored products are given utmost importance in such warehouses.

Important Features of Modern Warehouse
Let us take a look at some of the important features of a modern warehouse.

Availability of Appropriate Storage
Most modern warehouses have an ambient, chill, and frozen storage facilities to cater to the different requirements of the market. It is common to have a customer with the requirement for these three types of warehousing under one roof.

Accessibility to Markets and Ports
Most successful warehouses have proximity to ports. It makes transportation of goods easy – for imports as well as exports.

Safety and Security
For the safety and security of personnel as well as the goods stored within, warehouses these days, have well-trained security staff, CCTV, motion sensors, temperature sensors in storage areas, fire-fighting equipment, etc. They meet all the safety and security standards prescribed by the relevant authorities.

Efficient and well-trained staff
Well-trained and efficient staff help run a warehouse smoothly through proper planning and execution of operations.

Latest storage and handling equipment
Modern technology plays an important role in the success of any warehousing and logistics operation. Equipment, machinery, and software used should be upgraded periodically to meet the demands of the market while making it easy for the user to handle.

Cross-docking facilities
One important feature that most customers look out for in warehouses is the facility to cross-dock.

What is cross-docking?

When goods are received and picked immediately for dispatch and delivery without storing them inside the warehouse, it is called cross-docking. This saves time, storage space, and cost.

Warehouse Management System (WMS)
A Warehouse Management System (WMS) software optimizes storage and the receipt-stacking-picking procedures. It is a system of optimized inventory management.

Enterprise Resource Planning (ERP)
ERP software encompasses inventory management, principal and customer relationship management, as well as accounting. This all-in-one software integrates the functions of a warehouse or even the whole business.

Emergency backup
Facilities for backup in the event of power failures, machinery and equipment breakdown, and other unforeseen calamities should be in place.

Some modern warehouses even have agreements partnering with other warehouses to provide on a reciprocal basis, storage and other facilities in the event of a breakdown.

Large business houses may own warehouses. Those with no warehouse facilities have the option to go to public or private warehouses for their storage needs.

A broad classification based on ownership and running of warehouses includes public, private, and cooperative warehouses.

Types of Warehouses

Public Warehouses
Public warehouses are government-run but available to both the public and private sector businesses. They might not be state-of-art or technologically in front, but they serve the purpose of storage of goods at affordable rates.

Most such public warehouses are located in easily accessible areas that are close to markets as well as seaports or airports.

Private Warehouses
Private warehouses are run by private organizations. Some of them may be for the exclusive storage of goods of the owning company while others are available for the storage of goods to the public.

Other than accessibility, being technologically forward is their strong point. These days most private warehouses have moved from just being storage locations to logistics service providers.

Other than providing storage space for the goods of their customers, they help with planning, implementation, and execution of the customer’s transportation needs, ordering, picking of goods, and purchase requirements. In other words, it means all the inbound and outbound activities of the customer.

The terms ‘inbound and outbound’ broadly translate to purchases from principals and sales to customers. Modern logistics companies usually meet all the requirements of their customers.

They may offer warehouse management systems (WMS) for accurate inventory management and enterprise resource planning (ERP) for automation of all logistics-related activities including accounting and customer relationship management (CRM). In certain cases, the ERP includes WMS.

Cooperative Warehouses
Farmers, orchard and vineyard owners, aqua-culturists, etc. usually form cooperatives. These cooperatives may own warehouses that provide the appropriate storage space to their members at subsidized rates.

Depending on the availability of space, cooperative warehouses may also let it out to outside parties at a slightly higher rate.

A further categorization of warehouses based on utilities provided would include bonded warehouses, consolidation warehouses, smart warehouses, etc.

Bonded or Duty-Free Warehouses
Bonded warehouses are customs-approved warehouses that allow businesses to store their imported goods before payment of customs duties and taxes.

Good can be stored in bonded warehouses for an extended period until it has to be taken outside for sale or use after payment of customs duties and taxes.

The goods that are stored in bonded warehouses are classified as ‘duty-free’. Once customs duties and taxes are paid on the goods that are taken out, they are called ‘duty-paid’ goods.

Storing goods in a bonded warehouse does away with the need for immediate payment of customs duties and taxes upon receiving the goods.

It helps the working capital of a business as goods are cleared directly to the bonded warehouse without payment of customs duty and taxes.

This is beneficial to businesses that import high-value goods with a high rate of customs duty.

Customs duty is paid only when goods are cleared. Goods stored in bonded warehouses can be reexported easily. It also facilitates quality checks, sorting, packaging, or processing of such goods while in the bonded storage.

Consolidation Warehouses
When several cargo batches of small volumes from customers, meant for the same destination are combined and shipped, it is called consolidation. Such goods are collected, segregated, and sent by sea freight, usually as full container loads (FCL).

Consolidations help when the volume of cargo to be shipped is small. Consolidators collect cargo from the different customers, consolidate these quantities from their consolidation warehouse to full or near-full container loads for shipment. This helps to bring down the freight cost. This is also called groupage cargo.

Smart Warehouses
Smart warehouses use the latest in technology for receiving, storing, and picking of goods. Smart warehouses may also make use of drones or robots for picking, packaging, and stacking goods.

Enterprise resource planning (ERP) and warehouse management system (WMS) helps to ensure minimum human intervention in matters relating to finance, customer relations and the accuracy of stocks.

Such warehouses are found very useful for the storage of high-value electronic parts, pharmaceutical drugs, etc.

Warehouse Management System (WMS)
Warehouse Management System (WMS) records the receipt, storage location, picking, and dispatch of goods from the warehouse.

It optimizes storage space by suggesting the storage location based on FIFO, FEFO, or LIFO rules of picking goods. WMS provides real-time data to the user.

First-In First-Out (FIFO)
First-In First-Out (FIFO) is the principle of picking goods based on the receipt of goods. Those goods which were received first are the ones to be picked for dispatch.

First-Expiry First-Out is (FEFO)
In First-Expiry First-Out (FEFO), the stock with the earliest expiry date (or Best-Before Date) will be picked first. Both FIFO and FEFO help in maintaining stock freshness at the same time avoiding aged stocks sitting in the warehouse.

Last-In First-Out (LIFO)
Last-In First-Out (LIFO) requires the last item received to be picked first for dispatch. An order from a preferred customer is an example.

These picking rules are based on customer requirements. WMS helps with periodic inventory counts that are required to ensure that stocks are maintained accurately.

Enterprise Resource Planning (ERP)
Enterprise Resource Planning (ERP) includes inventory management, principal and customer relationship management, and accounting. Data from WMS is used in ERP to create accurate business forecasts.

ERP is used in purchase ordering and accounting. It, therefore, integrates all these functions and the organization does not have to invest in multiple software to handle them.

Temperature-controlled Warehouses
As consumer demands increase, they are also more aware of the need to get safe, clean, and hygienic products for the money they spend, especially when it comes to food items, pharmaceuticals, etc. Storage of goods under the correct temperature in hygienic conditions extends its shelf life.

Warehousing technology has kept pace with this demand by having temperature-controlled warehouses to meet the different requirements of storage of different types of items.

Depending on the type of goods stored, warehouses can broadly be classified as ambient, chill, or frozen.

Ambient Warehousing
Also called dry warehousing or warehousing at room-temperature, goods are stored in a dry, clean, and well-ventilated storage area at temperatures between 14° C and 24° C (57.2° F and 75.2° F).

Certain types of food items, vegetables, fruits, canned food items, electronics, etc. require storage at ambient temperatures. The temperature may vary slightly according to the type of item being stored.

Chill Warehousing
Chill warehouses are used for the storage of certain types of vegetables, fruits, dairy produce, meat, seafood, etc. Temperatures between 7° C and 14° C (44.6° F and 57.2° F) are maintained in such warehouses.

Frozen Warehousing
Frozen food, meat, seafood, and some types of pharmaceutical drugs require storage under frozen conditions. Frozen food usually needs to be stored at a constant temperature of -18° C (-0.4° F) or less. When the temperature rises above this, it affects the quality of such items resulting in spoilage.

Types of Warehouse Racking
Pallets are the flat wooden or plastic structures on which boxes or goods are kept in a warehouse. Pallets usually come in a standard size of 48 inches X 40 inches though pallets of other sizes are also available in the market.

Racking is the multi-level metal framework within a warehouse that holds several pallets.

An efficient racking system optimizes warehouse space making retrieval of inventory, product flow (FIFO, FEFO, LIFO, etc.), and accessibility of pallets easier.

MHE’s (Material Handling Equipment) such as forklifts, automatic pallet jacks, etc. should be able to put the pallets and remove them from the racks easily. Some of the different types of warehouse racking are as follows:

Selective Racking
Consisting of upright frames, horizontal beams, braces, supports, and footplates, selective racking is the most commonly found type of racking in warehouses.

Pallets can easily be put-away and removed from these types of racks as every pallet faces the aisle in front that can be used by forklifts or pallet jacks.

Selective racks are the easiest to assemble and disassemble, using bolts. However, in selective racking, warehouse space is not utilized to the optimum because of the space taken up by several aisles.

Mobile Racks
Mobile racks are selective racks but with a wheeled-base. These racks can be moved along the tracks that are embedded on the warehouse floor.

Ideal for storing goods in bulk that do not require to be moved frequently, mobile racks provide the maximum space utilization within a warehouse.

Cantilever Racks
Cantilever racks consist of several upright single beams, each with arms that extend outward for carrying the load. It is especially convenient for the storage of long and unwieldy goods such as steel pipes, timber, metal trusses, etc. With a minimum number of parts, this type of racking is very easy to set up.

There are several other methods of setting up racks inside a warehouse. Each method is chosen to suit specific products that have specific storage requirements.

Modern warehouses that meet the above customer requirements will always be in demand. Setting up a warehouse requires a lot of planning, keeping growth in mind.

Choosing the right type of warehouse depends on a company’s warehousing requirements, budget, and other such business factors.

Source: Marine Insight

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