Category Archives: Maritime Law

Global trade figures stood at USD 22 trillion in 2021. The slight lull in the pandemic situation since mid-2021 is seen as the major factor in this jump of 3 trillion, from the previous figure of USD 17 trillion in 2020. Along with global trade, the logistics industry and its ancillaries stand to benefit from this increase in business.

Transport plays a major role in achieving these phenomenal figures. The movement of goods across the world is carried out by the different modes of transport – land, sea, and air. Here, let us look at the characteristics of the two main modes of transport – sea and air, and the differences between them.

Sea freight is the shipping or transfer of goods between two locations by one or more ocean carriers. An estimated 80% of the global trade is accomplished using sea freight.

Airfreight, on the other hand, is the transfer of cargo by airplanes. Though on a global scale, it is much less in volumes compared with sea freight, air freight has its advantages.

Normally, one would choose the mode of transport based on the following factors:

• The type of goods to be transported – perishable goods such as food items, medicines, flowers, etc.
• Speed of delivery – when or how fast should it reach the customer?
• The volume of goods to be transported – bulk versus small
• Distance – between the port of origin and the port of discharge of goods
• Facilities and access – warehousing, yards, transport connectivity, etc.

As a rule of thumb, smaller volumes and high-value goods are transported by air while bulk goods are moved as sea freight.

Sea freight

Sea freight is the most common method of transporting goods between locations, especially in international trade. Goods are packed in intermodal containers for transporting thus by cargo carriers. It is a less-expensive option when compared to transporting cargo by cargo planes.

Sea freight is considered more suitable for the transport of bulk cargo. Manoeuvring large or abnormally-shaped cargoes is easier when a large space is available such as in container yards, on ship decks, and cargo holds.

International Maritime Dangerous Goods Code (IMDG Code)

Most cargo that is restricted by air freight such as compressed gases, flammable materials, and toxic or corrosive materials can be transported by sea under the IMDG Code.

The IMDG Code is the accepted international guideline for the transport of Hazardous Materials (HAZMAT) by sea and the prevention of any resultant marine pollution.

These days, very large ocean carriers that can carry several thousands of intermodal containers ply the seas. A typical cargo ship can carry between 15000 – 18000 cargo containers onboard (TEU or Twenty Equivalent Units). The largest of such vessels can carry about 24000 containers!

The Ever Ace built by the Samsung Heavy Industries, as well as the HMM Algeciras made by Daewoo Shipbuilding and Marine Engineering, are 400 meters in length, each. These behemoth carriers can reach cruising speeds of up to 22 knots while meeting all the requirements of eco-friendly transport, leaving less carbon footprint!

Intermodal Containers

Intermodal containers come in different sizes and types. The most common being 20’ and 40’ containers. They are available as dry general purpose (GP) containers or refrigerated containers. Typically, the latter type is fitted with generator sets (GENSET) that maintain a steady, set temperature within the container throughout its journey.

Goods can be sent using these containers as Full Container Loads (FCL) or as Less-than Container Loads (LCL). In most cases, sophisticated temperature and humidity tracking equipment relay real-time data to the operator, shipper, or the buyer of goods. Any aberrations from the normal settings are identified and rectified immediately, or actions are taken to minimize loss.

LCL shipments may or may not involve consolidation. Also known as groupage, consolidation refers to the shipping of several small consignments from different shippers to a common destination, by a single container.

Types of Sea freight

The main types of sea freight are:

• RORO (Roll-On Roll-Off)
• Bulk carriers
• VLCC, LNG, CNG carriers

RORO services consist of large ships used to transport automobiles in bulk. Using ramps, automobiles are driven and positioned securely in their respective slots inside the RORO vessel. Once the ship reaches its destination, the automobiles are driven out to their respective yards for storage and subsequent collection by the customer.

Bulk carriers are used to transport bulk cargo such as grains, ores, cement, etc. Such items are transported in the ship’s holds as loose cargo.

Very Large Crude Carriers (VLCC) are large to very large crude oil tankers. LNG and CNG carriers are ships used in the transport of bulk gases. These are used to transport gases like Liquefied Petroleum Gas (LPG), Liquified Natural Gas (LNG), or Compressed Natural Gas (CNG).

Now, let us look at some of the drawbacks of sea freight here:

• It is time-consuming
• Not always suitable for the shipping of small quantities of goods

Weather plays an important role in the speed of ships. Rough seas can slow down the progress of a vessel considerably. It is not mainly the passage over water that makes it slow, but there are several other factors that may add days to the total lead time of cargo.

For example, there might be delays in getting the goods transported from the shipper’s premises to the port by truck. Port congestion, labour issues at the ports of loading or discharge, incorrect customs paperwork, and breakdown of equipment are some of the other main reasons for delays.

An aircraft that flies 900 kilometres per hour will anytime be faster than a ship that sails at speeds of 35 – 40 kilometres per hour!

Small quantities of goods may be shipped by sea as LCL cargo. But here, the chances of it getting damaged among other larger consignments or instances of pilferage, are quite high, unless shipped through reputed consolidators.

LCL cargoes can also take a longer time for delivery as compared to full container loads. Hence, shippers normally prefer sending their smaller consignments by air or by land transport.

Air freight

Being a faster option, air freight comes at a higher price compared with sea freight. Air cargo is shipped either on normal passenger planes or through cargo aircraft dedicated to the movement of cargo. An air freight cargo usually reaches its destinations on the same day or the next, making it ideal for sending goods that have a limited shelf life such as food items, pharmaceutical drugs, etc.

Typically, high-value, small-volume goods are sent as air cargo. Air freight saves time and is considered more secure than sending by sea. This may be due to the fact that airports and their periphery are always well guarded against intruders, pilferage, and theft.

The time taken to clear air cargo for export or import is much less than it takes to send or receive goods by sea. Hence, the need to warehouse such goods is much less.

Types of Air Cargo

Air cargo is classified as general cargo and special cargo.

General air cargo does not require special conditions for its transport by aircraft, such as temperature and humidity-controlled containers, special packaging, etc. Examples are electronics, dry foods, and other general items.

Special air cargo, on the other hand, requires special conditions for their transport. Examples of special cargo are livestock, flowers, certain chemicals, and hazardous cargo. Special air cargo usually requires extra packaging, documentation, labelling, etc.

Delays in Airfreight

Airfreight is not without problems. Most delays in air freight happen during the transport of goods from their storage to the airport or vice versa, usually by transport trucks. Incorrect or incomplete documentation is also blamed for delays in the receipt of air freight cargo. Changes in flight schedules can lead to delays as well.

The transport of hazardous cargo by air can face several restrictions. These restrictions are meant for human as well as material safety. Delays as a result of such restrictions are one main reason why shippers prefer to send their consignment of hazardous cargo by sea.

Though, as we have seen earlier in this article that restrictions and regulations are in place for sea freight of hazardous cargo as well, it is simpler than the requirements for air freight.

Dangerous Goods Regulations (DGR)

The Dangerous Goods Regulations prescribed by the IATA (International Air Transport Association) is followed when sending hazardous cargo as air freight. The IATA DGR manuals with updated regulations and best practices are published annually to ensure the safe and efficient transfer of dangerous cargo by air.

The manual includes dangerous cargo classifications, packaging and packing instructions, documentation requirements, and dangerous cargo handling instructions among other details.

Source: Marine Insight

The General Department of Vietnam Customs has guided local customs departments on documents of certificate of origin form D (C/O form D) granted from May 1, 2022.

Accordingly, based on the results of the online meeting session of the Sub-Committee on ATIGA Rules of Origin (SCAROO) that took place on April 22, 2022 relating to the implementation of new OCP ATIGA for C/O form D granted from May 1, 2022, the General Department of Vietnam Customs has guided local customs departments on some issues regarding the C/O.

Regarding the formality of issued retroactively, if C/O form D is issued retroactively after the date of exportation, C/O must be ticked in box N.13 “Issued Retroactively”.

Removing the phrase “Preferential Treatment Given under ASEAN Industrial Cooperation Scheme” in box No.4 and removing the guidance on AICO at line 1 and line 2 on the back of C/O.

Amending line 12 at the back of C/O from “Original CO (form D)” to “Original Proof(s) of Origin”.

Amending box No.4 of C/O from “Signature of Authorised Signatory of the Importing Country” to “Signature of Authorised Signatory of the Customs Authority of the Importing Country”.

C/O form D is included one original and two copies, remove the regulation of “carbon copy” to approve C/O printed on A4 paper.

Source: CustomsNews

Most warehouses worldwide are built as ground-floor structures with several levels of storage racks within. They are designed in such a way that trucks and other vehicles can be loaded or unloaded without difficulty using Material Handling Equipment (MHE).

Such warehouses normally have floors at an elevation that facilitates the easy movement of warehouse MHE such as forklifts or pallet jacks in and out of the parked transport vehicles, at the same level.

Real estate value and transport facilities play an important role in the setting up of warehouses. They can be set up on a plot of land reasonably close to markets, depending on availability and cost.

Single-floor warehouses are still popular for these reasons though another type of warehouse – the multi-storey warehouse, is gradually catching up.

What is Multi-Storey Warehouse?

A multi-storey warehouse unlike a traditional warehouse consists of several floors above the ground floor serviced by ramps, freight lifts, or conveyor systems. Ramps allow small trucks to access the different floors for loading and unloading cargo. With access bays for loading and unloading of goods, each level can operate independently.

Multi-storey warehouses offer the perfect solution to space constraints and spiralling real-estate costs, especially in large cities. The vertical structure makes maximum use of floor space. Typically, each floor or storey will be about 10 meters high that may consist of several levels of racks or other arrangements for the storage of goods.

Most multi-storey warehouses are designed and constructed to suit specific customer requirements. Such vertical warehouses are more for meeting the demands of the urban market. E-commerce and its rapid growth are the primary reasons for the development of vertical logistics facilities in busy urban areas.

With rapid global industrialization, growth in trade, and the need to move finished as well as raw goods between locations, the demand for warehousing space has only increased. Today, customers demand same-day deliveries, and multi-storey warehouses located close to urban markets are considered the best way to achieve this objective, besides saving on transportation costs.

Benefits of Multi-storey Warehouses

Real Estate Cost

Since multi-storey warehouses are built vertically, there is less investment made on the actual land area. Besides the availability of real estate within cities and market centres, their high rates can deter most conventional logistics developers. Multi-storey warehouse developers have an edge here as their requirement of land is much less than what is required for single-floor, conventional warehouses.

Fast Delivery

Being closer to the markets means faster delivery to customers. Same-day deliveries can be achieved much more easily from multi-storey warehouses that are located close to markets. It is generally found that customers who are serviced from such multi-storey warehouses are more satisfied than those serviced from logistics facilities located in far-away suburban areas.

When customers are located in urban areas it makes sense to invest in a warehouse that is located closer to them.

Reduction in Traffic

Vertical warehouses can help reduce traffic considerably as they are located right near market centers. With efficient goods replenishment and delivery policies, the traffic between urban and suburban areas can be reduced.

It means fewer transport vehicles on these roads and therefore much less pollution. Costs associated with transport are also much less here.

Visibility and Advertising

Making use of opportunities to generate revenue is always on top of the list of organizations. Having a high-rise logistics facility in an urban area means more visibility.

At a time when prime advertising space is at a premium, strategically placed advertisements on multi-storey warehouses, that can be seen from far catches the attention of people more easily than those on floor level.

Some Drawbacks

Availability of Space

Finding the right place to construct a multi-storey warehouse can be a daunting task. With a higher density of population in urban areas and more buildings, it is difficult to find a space that can be leased or purchased for the purpose of warehousing. A suitable plot of land may be available, but then, rates can be prohibitively expensive.

Expensive to Set Up

Typically, constructing a vertical warehouse is costlier than building it horizontally. Several civic regulations have to be complied with during construction. Also, special materials have to be used in the construction for the strength of the vertical structure.

Overall, it means an increased cost of construction when compared with horizontal structures.

Civic Body Regulations

Civic regulations are usually stringent and can call for a significant increase in the cost of setting up a vertical warehouse and its ongoing maintenance. It mainly applies to fire-fighting equipment, its maintenance and other requirements, pollution control, water conservation, etc. It means that these costs will have to be passed on to the customer by way of increased rates.

Examples of Multi-storey Warehouses

IKEA has set up a multi-storey warehouse at Port de Gennevilliers near Paris. Besides using road transport, it transports merchandise to destinations in Paris and its suburbs by river freight over the river Seine.

Vertical warehouses of Amazon are currently work-in-progress across several US states. One of the biggest – a 5 storey warehouse, is in Clay, New York.

India’s merchandise imports for 2021-22 are valued at USD 610 billion while its exports stood at USD 40 billion. Such huge figures only underpin the need for more warehousing and logistics infrastructure. Where the population is concentrated in cities and real estate is at a premium, logistics developers need to think of investing in multi-storey warehouses.

Slow Progress

The snail’s pace of development of multi-storey warehouses may be attributed to the large investments required for the construction of such specialized infrastructure. Storage space is very limited in and near large cities. Finding the right location and the plot of land is a big challenge. The cost of real estate and infrastructure can be very steep in and around cities.

Each floor has to be constructed taking into account the weight of the heavy cargo that has to be supported by it. Seismic activity of the region is another factor. It calls for special construction techniques and building materials to counter earthquakes and prevent or reduce damages and losses. Special steel supports and beams are required on each floor. The entire facility has to be covered by special fire-fighting equipment and alarm system.

Freight lifts, ramps, and elevators take up an average of 25% of the floor space. This leaves only 75% of the warehouse space for the storage of goods. Storage rates are usually high in such warehouses but they offer customers the convenience of market proximity.

As cities get more congested, governments are levying more taxes and introducing laws that encourage investors to develop away from crowded areas. Logistics developers have to consider all these factors before they invest in multi-storey warehouses near market centres.

Current Scenario

Today, a multi-storey warehouse is considered something of a novelty in most countries, though places like Hong Kong, Singapore, Japan, South Korea, and China have had such warehouses catering to their huge logistics requirements for the last several years. These countries with dense populations and limited land space have been the pioneers in developing multi-storey warehouses. Some multi-storey warehouses in Hong Kong are 12 to 20 floors tall!

The past few years have seen North America, Europe, and Australia taking baby steps at developing large multi-storey warehouses. A booming post-pandemic global trade is all the more reason for logistics developers to tap into the limited real estate resources for setting up such vertical warehouses.

Those who made use of the opportunities earlier on invested in prime logistics space with ease of access to ports and market centres. Others were left to develop their facilities in suburban areas. Multi-storey warehouses near market centres offer the unique opportunity to meet customer demands while increasing a company’s revenue.

Source: Marine Insight

The words dock and pier are often used interchangeably in common usage to portray the same meaning, however, in the maritime world, they are important structures that allow shipping, trade, and sea recreation.

This article will explore the difference between a dock and a pier, their uses and types.

Dock vs Pier- the difference

Dock and Pier are referred to as synonyms by American English speakers but it is not so regarding their British counterparts. The former see the dock and pier as a narrow, sometimes tapering and an elongated construction built at the coast that spreads out in the waters, some distance from the shore.

Conversely, the British make a careful distinction between the two terms. They define a dock as an enclosed region in water, separate from the open sea or ocean, that is used primarily for trade and shipping operations such as loading and unloading ships, carrying out repairs etc.

Secondly, piers are defined as an elongated structures jutting out from the shores to the waters. Piers are often a walking pavement or platforms supported by pillars, made usually of concrete or wood. The adequately spaced pillars allow the structure to stand firm against the water and tidal currents.

Uses of Docks

Docks have multiple purposes, the most important being mooring or berthing huge sea or ocean-going vessels and container ships. Since they are built in an enclosed water space, they provide a safe parking space for vessels. Docks are also used for maintenance, repair and even construction of ships.

Docks are an important maritime structure for loading or discharging cargo from ships. Since these operations take a few days, the vessel needs to be kept afloat at an adequate water level. The enclosed docks protect the ships from the water currents that may otherwise make loading and unloading a cumbersome activity.

Dock Construction

Docks can be constructed in two ways. First by making encircling wall-like structures in a sea or ocean, near the coastline. Secondly, by digging into dry land, bordering the shores, to carve out an enclosed water space, distinct from the open waters. Consequently, a dockyard is a structure comprising docks and other port equipment.

Docks are built on river ports or seaports and so both have different requirements and should be built accordingly. Different kinds of cargo are handled at inland and seaports. Also, the latter is a busy port in terms of the volume of traffic handled. All these factors have to be taken into account while constructing a dock at a river or a sea coast.

The entrance channel of the dock should be of adequate depth to allow easy movement of ships or container vessels into the docking space. Most times the entrance channel needs to be dredged regularly.

The dock should have a mechanism for replacing the old, stagnant water with fresh water. In the case of River ports or inland ports, old standing water is changed by constructing canals linked with nearby rivers or water bodies. However, it is easier for seaport docks as the water can be replaced with readily available seawater.

Secondly, the dock should be well-sheltered from winds and water currents. Some docks can be naturally sheltered, however, most have to be provided with artificial structures such as walls, lee breakwaters etc.

The construction of the dock should be such that it offers maximum berthing length. The dock should be straight and not circular or curved as it would be inconvenient for vessels to berth. A straight construction offers increased berthing space. Hence, the dock should avoid any bendings and consist of straight turns.

There are many different dock shapes such as:
Rectangular dock, (shaped like a rectangle it provides maximum space for berthing), diamond dock ( the long sides are expanded according to the dock’s capacity). The third is the Quay dock which comprises numerous protruding quays in the dock.

Types of Docks

Generally, docks are classified into two broad categories-
Wet Docks and Dry Docks.

Wet docks

As the name suggests, wet docks are ones in which the water is encircled by gates, so that ships can keep afloat when there is a low tide, in regions with varying tidal ranges. Wet docks aid in maintaining the level of water despite the rising and falling tides. These docks allow for smooth trading operations such as cargo handling, berthing, etc. They are also called harbour docks.

The earliest wet dock was constructed in 1703 on the Thames, known as the Howland Great Dock but it was devoid of the necessary port facilities. The first commercial wet dock known as the Old dock was constructed at Liverpool in 1715, comprising numerous warehouses and a capacity to accommodate about 90 to 100 seagoing vessels. Wet docks are crucial for carrying out international maritime trade and are important economic assets for the country.

Dry docks

A dry dock is also a similar structure with gates to control the water level, however, the enclosed water can be drained for examining vessels, carrying out ship repair, maintenance and construction.

The world’s earliest dry dock currently in use was built in 1495, at HMNB Portsmouth during the time of Henry VII of England.

There are 5 kinds of dry docks:

Graving dock– This is a kind of dry dock with a depressed compartment like structure, accompanied by enclosing walls and a paved floor. The open side of the compartment is incorporated with an opening gate which is the dock entrance.

Floating dry dock – It is a submersible construction that can move the vessel out of the water and keep it afloat due to its buoyant nature. This kind of dry dock is made of steel and has a hollow interior. It comprises two walls and an open-ended floor.

When a ship needs to be repaired, this dock can be submerged to an adequate water depth by releasing water into the inner compartments. Also known as ballasting, this process aids in safe berthing. After the vessel has berthed, the dock is lifted along with the vessel by drawing the water from the compartments using a powerful pump.

Marine railway dock– This type of dock comprises an inclined structure that extends from the coast into the water, having a cradle in which the ships are loaded and then hauled on a slip. It is useful to lift a ship out of water for repair purposes. The cradle of this dock is made of steel, movable on the inclined plane. It is supported by rollers, resting on tracks.

Lift dry dock – This type of dry dock is a movable structure that can be submerged and also raised from water using hydraulic power.

Ship lift dry dock – This dock allows the ships to be lifted out of the water using electric or hydraulic power. These docks are employed for dry docking the vessels and also putting them into the waters. This dock allows quick berthing and launching of multiple ships.

Uses of a Pier

Pier is a utilitarian construction with different functions. Maritime Piers are built for handling passenger vessels, and general cargo and also for berthing small boats and vessels. It also promotes fishing and seaside recreation.

Construction of Pier

A pier is a supporting structure in the case of buildings and bridges, however, in maritime terminology, it is a raised structure jutting out from the shore or coast into the water. It is not as elaborate as a dock but performs similar functions.

Piers can be constructed using different kinds of material. For instance, timber can be employed for constructing small, light-duty piers but it is not suitable for huge and busy facilities handling heavy cargo and people. Steel may be used for constructing piers but steel structures require maintenance and are a costly proposition. The most suitable material for constructing piers is concrete since it provides strength, and is fire-resistant and corrosion-free as well. Recently, corrosion-free and highly durable plastics are also being used in pier construction.

There are three kinds of piers based on the type of construction namely open, closed and floating piers.

Open piers consist of a deck that is supported by different kinds of piles and pillars depending on the pier’s usage. The platform is constructed after the supporting piles have been laid out. Piles are made of either steel or concrete or timber etc and the deck is usually of concrete. Open piers allow water movement beneath them and are not complex structures.

Closed piers are compact structures that restrict water flow beneath them. They comprise a long pavement made of concrete and cement, with a solid foundation. It is a much stronger construction compared to open piers, as it has an earth-filled foundation.

Floating piers have to be constructed carefully to avoid overburdening the structure. Since they float on water, they should be kept steady hence management of ballast and buoyancy of the structure is most important. Also, almost half of the structure is submerged in water which can provide an estimate of the required structural depth. These kinds of piers consist of numerous watertight compartments.

Types of Piers

Depending on their use piers can be divided into three types- working piers, pleasure piers and fishing piers.

Working piers handle passenger vessels and cargo from ocean-going vessels or small riverboats. One kind of a working pier is an elongated structure constructed at port facilities experiencing huge tidal ranges. Here the pier extends to a considerable length offshore to gain access to deep waters at the time of a low tide. Such piers usually handle specialised and not general cargo. For example, there are coal piers, grain piers, etc.

The world’s biggest working pier is in Progreso, Yucatan which extends about 5 miles into the Mexican gulf.

Pleasure piers

Pleasure piers were constructed in Europe from the 19th century onwards to promote ocean and sea recreation. Constructed primarily to serve the leisure tours of the elite section of society, pleasure piers may be closed, semi-closed, roofed or open structures that offer safe berthing of cruise ships, yachts and pleasure crafts. The earliest were constructed of wood but later iron and now steel is also employed.

Fishing piers

They are primarily used for fishing and provide access to fishing grounds. These piers have special fishing rigs that offer direct access to deeper waters. Also, such piers promote the fisheries sector by boosting seafood supplies for inland trade and exports.

Source: Marine Insight

Ship management, as the name suggests, deals with the process of managing a ship. Ship management is done by independent companies which use ships of some other companies or independent owners. The ship management company manages ships for the owner and pays him the yearly amount which is settled between the owner and the ship management company.

Moreover, the owner of the ship signs a contract and leases the ship to the ship management company for a defined duration of time. The ship owner may continue with the same management company or can approach another company if the he is not satisfied with the performance of a particular ship management company. It is to note that the owner can lease the ship completely or he can render some of the services provided by the ship management companies.

What Things are Included in Ship Management?

Managing ships is not an easy task. Ship management includes several tasks which are to be carried out before, during and after the operation of the ship. The first and foremost thing that a ship management company needs to do is get the ship approved. There are many approvals that are to be taken from different classification societies. However, the company can operate different types of vessels or just concentrate on any one type. For e.g. MSC (Mediterranean Shipping Corporation) deals with only container vessels, whereas companies like V ships, Anglo-Eastern manages all types of ships.

Now, if a management company wants to enter into a new field by indulging itself in operating different types of vessels, but is operating the vessel type for the first time then approval for operation is given for six months and their performance is evaluated, which will decide any further play casino online approval.

Services that a Ship Management Company Provides

Following are the services that a ship management company is entitled to provide:

1) The ship management company should do the supervision of the maintenance of machinery on board the ship. The process should also include different surveys and repair work of the ship.

2) The ship management company should provide adequate crew for manning the ship.

3) The company should arrange for loading and unloading of the cargo.

4) The ship management company can hire the ship on behalf of the ship owner.

5) The company should negotiate the contracts for bunker and lube oil.

6) The ship management company pays the expenses on behalf of the owner.

7) The ship management company should make an arrangement for the entry of the ship in the P&I (Protection and Indemnity) association.

8) The company also deals with various claims related to insurance, salvage etc.

9) The ship management company should arrange for the insurance in relation to the ship.

10) The ship management company’s services also include arrangement for providing victualling and stores for the crew of the ship.

Source: Marine Insight

Water transport normally brings up images of ships and tankers navigating seas or oceans, bridging the gap between countries.

Typically, shipping is the movement of cargo or passengers across waterbodies though in modern usage it also covers the transport of cargo over land or air.

Shipping includes the transport of goods or passengers over waterways such as rivers or canals, lakes, and coastal routes.

Coastal shipping is confined to a country. It is a type of cabotage, where goods are transported from point A to point B along a country’s coast by small vessels. These small vessels are also known as coasters.

Most countries these days allow local as well as international shipping companies to operate on coastal routes.

Unlike overseas shipping where ships sail between ports located in different countries, coastal shipping covers only ports within a particular country. It caters to the domestic trade of that country only.

With larger and faster ships traversing the seas and oceans, coastal sailings have always taken a backseat. Besides, technologically advanced, faster, and economical trucking methods are preferred by companies for the short-haul of their cargo as well as long-distance cross-country hauls.

The exponential growth in the volume of cargo that is traded globally has added stress to the limited resources of land, water, and air transport. Most of the major ports and terminals are clogged with cargo traffic.

The highways and railways networks that feed these ports and terminals are congested to a point of unreliability. The trucks that are sent to collect containers or lesser cargo from ships do not receive them on time. Road congestions invariably lead to further delays. It has become common for cargo vessels to miss their ETA as well as ETD (Expected Time of Arrival/Departure).

Lack of infrastructure to handle the increased cargo traffic at the main ports compounds the matter further. Under these circumstances, as services became increasingly unpredictable and unreliable, organizations and businesses wanting to move their cargo are affected.

The volume of global traffic has increased to such an extent that freight security cannot be managed properly. Experts warn that this trend will only continue. Alternative methods to transport goods that are efficient as well as economical are needed to overcome this situation.

Coastal shipping is one answer to these problems. A look at the coastlines of the leading trading nations will give us a better perspective of the potential for coastal shipping. North America’s coastline is about 60,000 kilometres, while China has a coastline of 14,500 kilometres and India 7,500 kilometres.

Coastal Vessels

Coasters are ships of small size and have shallow hulls. Most of them have drafts between 3 to 6 meters from the keel and they are designed to carry loads of weight between 1,000 to 15,000 deadweight tons (DWT). Depending on the depth of the coastal waters and the marine life found in them, different countries and areas have different load and draft restrictions that are set by the related government authorities.

These restrictions are set based on ecological factors. Coastal vessels, worldwide, are designed and operated in such a way that it does not, at any point in time, hit the bottom of the seabed or upset the marine ecosystem.

Since coastal vessels are mainly used for cargo movement, they are normally composed of cargo holds and stowage areas. Usually, the cargo holds in such vessels are without partitions, but with the necessary infrastructure to hold the cargo in place. It is designed thus so that there is more cargo space in the ship.

Crew quarters are minimal, to accommodate the few crew members required to sail the vessel and handle the loading and unloading of cargo at ports.

Typically, such vessels are manufactured at small docks.

Government Role in Developing Coastal Shipping
Many governments encourage the growth of coastal shipping. It plays a very important role in the development of foreign trade of that country. Coastal shipping feeds exports and imports by moving cargo from the smaller ports of the country to its major ones or vice-versa. Many countries have lifted several earlier restrictions aimed at protecting the local or national shipping industry.

Now, restrictions on foreign companies operating coastal shipping routes have been eased or completely lifted by many countries. Similarly, control on recruitment of the crew operating coastal vessels was also relaxed.

The synergy between coastal services and the land transport system is crucial for the development of coastal shipping. One important thing to keep in mind here is that delivery from the supplier to the shipper and from the shipping company to a customer or buyer will, in a majority of cases, be by road.

Complementary services and infrastructure such as roads, road and rail transport, labor, etc. have to be developed to keep pace with the development of coastal shipping services.

Local ports can provide the facilities for receiving coastal vessels and hence they need to be developed and maintained by the authorities.

Besides reducing congestion at major ports, local ports provide regular berthing to such smaller vessels. This, in turn, aids in the industrial development of that area. Local ports that are underutilized can thus be developed for handling coaster traffic.

Some Drawbacks
Some detractors of coastal shipping cite the following drawbacks for this method of transport:

• High costs of operation and maintenance
• Lack of sailing coasters to meet the market demand
• Labor unions at ports that hamper smooth cargo operations
• Container imbalance at ports
• Time-consuming procedures
• Smaller ships cannot access large ports easily
• Let us look at some of these situations that may be created by coastal shipping.

Container imbalance is a situation when too many empty containers accumulate in certain ports and shipping companies are unable to collect them and send them to ports that need them. It is a shortage of containers in certain ports while some others have an excess of empties.

Major seaports are usually busy with international traffic and vessels doing the coastal string may find it difficult to get berthing slots in such big ports.

When compared with transporting goods by road, transport by coasters may be time-consuming for the smaller volume cargo. Cargo handling doubles in the case of shipping by coastal services.

Advantages of Coastal Shipping

One big plus of coastal shipping is that it reduces congestion on the roads as well as at major ports.

Coasters are less polluting and consume much less fuel when compared with certain other forms of transport. There is no waiting in traffic jams and idling motors, spewing tons of pollutants into the atmosphere.

Smaller vessels can be loaded or offloaded quickly at the local ports, saving time for the shipper, customer, as well as shipping company. This can help businesses to send or receive their consignments quickly.

The turnaround time of smaller vessels is much less at local ports bringing down the costs of shipping companies considerably.

Factors such as these have prompted the governments of those countries with enough coastline to develop their local port facilities for receiving coastal vessels. Many governments provide incentives to coastal vessel operators as well as industries for utilizing coastal shipping.

Source: Marine Insight

The logistics industry consists of several key players who ensure the smooth flow of raw materials, components, and finished goods.

Manufacturing plants take raw materials or components from suppliers. Such plants then move the finished products to distributors or the retail market for sale to the end-user.

Facilitating this move are the transporters, the forwarding and clearing agents, and various other players such as banks and government agencies.

To place things into perspective, let us take a look at some figures from the World Trade Organization (WTO).

US dollar 17.6 trillion worth of merchandise was traded in 2020. This is approximately 1.4 trillion less than the figures of 2019! The scale of logistics that would have gone into moving this merchandise between buyer and seller is only to be imagined!

Modern days logistics operations generally consist of the following departments:

• Purchasing
• Transport and customs clearing
• Storage and inventory handling (warehousing)
• Distribution and reverse logistics
• Information and quality systems

This forms the supply chain that is the backbone of most businesses in the world. Overall, it is critical to balance inventory and customer demands.

Earlier, most organizations viewed each of these activities as stand-alone operations. Procurement, manufacturing, transport, customs clearance, storage, processing, and forwarding departments worked as silos.

Quite often, several disconnects between the functioning of the separate departments led to chaos and breakdown of operations. There was economic loss as well as loss in time efficiency.

Soon enough, with burgeoning world trade and innovations in the methods of doing business, this scenario changed. Developments on the technical and software fronts helped bring about cooperation between departments.

Integrated logistics management was a direct outcome in which all the logistics departments that earlier operated as silos were brought together as a seamless function. It helped stakeholders achieve efficiencies in time as well as cost. Logistics infrastructure and personnel could be put to optimum use.

Integrated logistics management systems worked as the catalyst to achieve efficiencies in logistics operations and maximize the profits of organizations.

An integrated logistics supplier is in charge of the entire supply chain for its customer.

Integrated logistics management brings together the different internal functions of the organization, aligns, and melds them with those of its suppliers and other service providers such as a transporter or a clearing and forwarding agent.

Coordination is key to integrated logistics management. It brings together the various departments within an organization, their processes, and resources. Though they continue to function as separate operations, these departments are aligned for smooth operation as a single, flexible, large unit. There is better collaboration between departments and more visibility of data.

The COVID-19 pandemic has only reinforced the need for organizations to be able to quickly scale down their business or scale it up as required by the market.

Organizations that have integrated logistics management systems are better equipped to meet such contingencies as their various departments operate with maximum collaboration and are in a better position to anticipate fluctuating demands.

Most logistics organizations have adopted the integrated logistics management model to optimize their operations, eliminate wastes, speed up customer response time, and maximize profits.

The Main Objectives of Integrated Logistics Management

What are the main objectives of integrated logistics management? While organizations may adopt this model to achieve several objectives, the main ones may be listed as follows:

• Increased efficiencies in operations
• Increased efficiency in inventory management
• Increased customer fulfilment
• Reduction in operational costs
• Maximization of profit

Increased Efficiencies in Operations

Operational efficiencies of logistics organizations are optimized when the different departments within them share their performance data on a real-time basis.

Assets can be utilized in the best possible manner, without having to invest in additional capital. Integration of the different activities performed by logistics departments offers visibility of the operation as a whole to the key players as well as the management of the organization.

Processes can be streamlined to suit the operations better and decision-making is made easier based on solid facts and figures. Complex problems can be sorted out through integration and collaboration between departments.

Increased Efficiency in Inventory Management

Inventory management is another area that stands to benefit by bringing the different operations together. The processes of purchase ordering, transport, clearance, inbound delivery, storage, outbound delivery to customers, and reverse logistics are all interrelated and can be integrated to manage an organization’s inventory and inventory handling better.

Real-time information helps an organization’s management to take well-balanced and timely decisions and to implement them. Optimizing the warehouse layout based on anticipated receipts and delivery patterns and deciding on the best picking strategies is an example of what can be achieved through integrated logistics management.

This can, in turn, help the organization’s customers reduce their investment in infrastructure and maintenance thereby resulting in increased cost savings.

Increased Customer Fulfillment

Typically, customer fulfillment results from meeting the expectations of the customer. Anticipating the customer’s requirements in terms of purchase from the supplier, transport, customs clearance and storage, delivery, equipment, and reverse logistics is key to customer fulfillment.

Accurate and real-time data helps customers in planning. It helps them anticipate demands and see the purchasing patterns of their customers. Modern integrated logistics management systems can provide customers access to this reliable and real-time data.

Reduction in Operational Costs and Maximization of Profit

Streamlined processes on account of the integration of operations result in savings on labor, equipment, storage space, reduction of waste, and most importantly, customer satisfaction. These efficiencies translate into savings.

The net result may be summed up as increased profit margins to the organization on account of the reduced operational costs and increased customer satisfaction.

The customer also benefits by way of not having to invest in large infrastructure to handle their inventory. Reduced operational costs of a logistics organization are often passed on to their customers by way of reduced rates.

Leading logistics companies make use of integrated management systems to augment their experience and quality of services. Customers thus get the benefit of professional, end-to-end logistics to meet their goals.

Integrated logistics management systems bring about transparency in doing business, clear visibility of data, and ease of communicating between professional logistics service providers and their customers.

Source: Marine Insight