65 Years of Containers - repost of "50 Years of Containers" from 2006

A simple idea that changed the world as reported here:

They are simple steel boxes, 20 or 40 feet long and 81/2 feet high, with a pair of doors at one end and a wooden floor - truck trailers without wheels. Who would have thought such an ordinary creation would change the world? The cargo container has done just that, transforming the global economy in ways comparable to the telephone and the jet plane by making the world a little smaller. By dramatically increasing the efficiency of, and reducing the cost of, cargo transportation, the container has expanded markets for both U.S. and international goods. Now, it's commonplace to find Japanese televisions, Chinese clothing, Swedish furniture and German beer on American store shelves. The box altered the future of nations when manufacturing operations, chasing lower labor costs, sprouted throughout Asia, particularly in China. *** Malcom McLean, the owner of a North Carolina trucking company, launched the world on the path toward containerization and ultimately globalized the global economy. He didn't invent cargo boxes, but he did refit the first ship to carry containers . A variety of interchangeable metal cargo boxes had been tinkered with by various companies - mainly railroads - since at least the late 19th century, according to Levinson, a former editor at The Economist magazine. McLean overcame the financial and regulatory hurdles that caused others to stumble in their attempts to establish a useful container service. He was determined to make containers succeed, believing that growing highway congestion, plus road taxes and tolls, threatened the future of his successful trucking business, according to "The Box That Changed the World," written by Arthur Donovan and Joseph Bonney. McLean bought a shipping line and grew it into what became known as Sea-Land Service, which now exists as parts of the Danish shipping giant Maersk Line and the smaller U.S. carrier Horizon Lines. *** With containers, cargo could be packed once at the factory and unloaded once at the final destination. Along the way, that box might be carried by trucks, trains or ships. With the more efficient containers, labor costs plummeted because fewer workers were needed on the docks, on ships, in warehouses and on the railroads. Theft and damage also declined because the cargo was securely locked in the box. The cost of shipping goods worldwide now accounts for 1 percent or less of retail prices, according to "The Box That Changed the World." For example, it costs roughly 34 cents to ship a pair of shoes that sells for $45 in an American store from an Asian factory. And it costs about $12.50 to import a television that costs $2,500.

UPDATE: Of course container allow for some interesting "cargo".

Friday Film: "Containerization Today" (1960s)

First use of containers in ocean shipping was in 1956 - 63 years ago.

It's hard to believe what a difference their use has made in transportation. Some background here.

Container ships keep growing in size, adding to the economies of scale of this manner of transporting goods - see World’s largest boxship featuring 24 rows across is delivered. See also here.

A Shippping Container Full of Explosives

I wonder if anyone will come forward and claim the contents of a shipping container of explosives now being held by the Italian police?:

Italian police have seized seven tons of the powerful RDX explosive which they found in a shipping container they believe were likely destined for a terrorist organization.

While the origin and destination of the contraband is still being investigated, police are convinced the huge amount of explosive was in transit, possibly from Iran to Syria.

Probably not.

Port Security: Indian Navy Head Worries About Containers

Reported here:

Indian Navy chief Admiral Sureesh Mehta Wednesday said terrorists may use shipping containers for the movement of nuclear weapons and called for augmented safety measures at ports.

"Container is the most likely means for the terrorist organisations for illegal transporting of nuclear weapons. Hence, the serious concerns about container security," Mehta told reporters at a seminar on "Port Sector - Developments and Security".

He said the country from where a container leaves should issue safety certificates.

"Countries should certify that whichever container leaves the port is safe," Mehta added.

The fear that terrorists would use the sea route to strike became fact on Nov 26 when 10 armed terrorists slunk into Mumbai on boats to begin three days of mayhem that killed some 170 people.

UPDATE: A connected article: India's largest port improving security:

We are working on an integrated security mechanism. As a part of this approach, we plan to install one scanner for cargo-scanning as well as having our own bomb detection and disposal unit here," said Jawaharlal Nehru Port Trust (JNPT) chairman SS Hussain.

Shipping Industry Hits Skids

An investment adviser points out that the world-wide shipping industry is taking an economic pounding here:

If the end of 2008 is a predictor of business in 2009, the shipping industry is in for one heck of a nightmare. On June 5, 2008, it cost $233,988 per day to charter a Capsize tanker, the largest ocean-going cargo vessel available for shipping dry bulk commodities. Six months later that same tanker charters for $2,773 per day, down 98.8% in less than half-a-year. To put that in perspective, imagine paying $15.00 for a cab ride home and six months later the same cab driver charges you $0.18. This is a problem shipping companies will continue to face in the coming months as demand for these tankers has fallen off a cliff.

The effect of lower shipping costs has been dramatic, as set out here:

Ocean shipping costs have plunged to 22-year lows, skewing global grain-trading patterns to the point where hog farmers in the United States are importing wheat from Britain and Japan has shunned American corn in favor of supplies from Ukraine.

In some countries, it is now less costly to ship grain thousands of kilometers across the ocean rather than move supplies hundreds of kilometers by barge or railroad cars. But the phenomenon should be short-lived and the United States should remain the world's top exporter of corn, wheat and soybeans, according to specialists in the sector.

"It has opened up opportunities that perhaps wouldn't have been conceivable before and one-off trades may well happen, but it is not really changing the grain flows," said David Doyle, head of wheat at Openfield, a farmers' cooperative in England.

Ocean freight rates reached a record high in May and have since fallen more than 90 percent in a few months to as little as $10 a ton to most destinations.

"Ocean shipping costs are so low that it would be cheaper for south Indian buyers to import Russian wheat than move wheat from north India by train," said one European trader who was not authorized to speak to the news media.
***
"Ship owners are giving away bulk carriers at operating costs just to generate cash flow and to pay crews' wages," said another European trader who was also not authorized to speak to the news media. "This will expand the selling range of U.S., Argentine and Australian wheat in the Middle East market if they can compete against the Russians on prices."

The shipping container business is also way down, as reported here:

According to the Transpacific Stabilization Agreement, which represents 15 ocean carriers in the Pacific, Asia to U.S. container cargos dropped 6.9% in the first half of 2008 and could end the year down as much as 8% from last year.

And officials from TSA are not predicting a rebound in cargo demand until the second half of 2009. "Clearly we're in a slowdown right now, but just as clearly, the current freezing up of the global credit system is unsustainable," said TSA chairman Ronald Widdows in a statement. "We expect to see an orderly de-leveraging of the financial markets over the next year that will begin to restore confidence with year-on-year cargo demand growth resuming in late 2009."
***
And with demand down, ocean container shipping rates have so dramatically in the past quarter, some shipping lines are reportedly refusing what cargo there is because the going rates are below operating costs—meaning the carrier would lose money by taking the business in certain lanes. Reuters reports that A.P. Moller-Maersk's Maersk Line is removing 7,600 twenty-foot equivalent units (TEU) per week from its Asia-North Europe lanes because, "The current Asia-Europe market is characterized by unsustainable rate levels," according to Maersk officials.

The Maersk move came only days after Neptune Orient Lines said its container shipping business APL will reduce capacity in transpacific trade by around 20% and reduce capacity in Asia-Europe trade by around 25% by suspending certain service offerings.

UPDATE: JOC reports up to 200 container ships could be laid up here:

Over 200 container ships likely will be laid up in the New Year as charter ship owners and ocean carriers adjust to weakening cargo demand, plunging freight and vessel hire rates, and an influx of new ships onto key liner trade routes.

Some 165 container vessels totalling 430,000 TEUs capacity were idle just before Dec. 25, up from 300,000 TEUs two weeks earlier, according to the latest estimates from AXS Alphaliner, the Paris-based consultant.

This represents 3.5 percent of the world fleet in TEUs, equivalent in relative terms, to the laid-up figure during the lowest point of the 2002 slump, AXS says. The list of unemployed tonnage includes six ships of between 7,500 and 10,000 TEUs, and 19 between 5,000 and 7,500 TEUs.
***
Charter ship owners have taken the biggest hit from the market slump accounting for 105 of the 165 idled vessels, a figure that’s set to rise sharply in the coming weeks as scores of vessels are due to come off hire with little prospect of re-employment.

If it can find work, a 2,750-TEU sub-Panamax ship will earn around $10,500 a day compared with $19,500 in September and around $30,000 at the beginning of 2008.

Shipping Container Security: Resistance Movement

The politics of container security reported here:

Atlanta-based Home Depot and fellow "big box" chain stores have targeted donations to key lawmakers and stepped up lobbying efforts amid industry resistance to a law mandating 100 percent security scanning for imported cargo.

The new measure - recommended by the commission that examined the Sept. 11, 2001, attacks - requires that every cargo container be scanned for radiation or nuclear hazards before being shipped to the United States.

Business groups, who argue that importers are doing enough to improve cargo security already, are seeking to delay its implementation, which is slated for July of 2012.

"It is not a smart way to conduct cargo security" by checking every container, said Jason Conley, homeland security policy chief for the U.S. Chamber of Commerce. Foreign seaports would have to buy costly scanning equipment and America's trading partners could retaliate against U.S. exports, he said.

At the retail giants, including Wal-Mart, Target, Home Depot, Best Buy and Circuit City, corporate political action committees have focused campaign dollars on Republican members of the Senate Homeland Security Committee, a study of campaign filings by Congressional Quarterly found.

Of the top five Senate recipients of these funds, Sens. Susan Collins of Maine, Norm Coleman of Minnesota, and John Sununu of New Hampshire are all GOP members of the homeland security panel, which could play a crucial role as retailers seek a potential two-year extension of the cargo-scanning deadline.

Maritime security authority Stephen Flynn said he has watched the "energetic" delay tactics with concern.

"The status quo is not sustainable," Flynn said of the current system, under which only a tiny percentage of cargo-that which has been identified as high risk-is scanned for hazards.

No system is fail-safe, said Flynn, a former Coast Guard officer and a member of the Council on Foreign Relations. But he warned that an explosion of a single radiation device in a cargo container would freeze trade worldwide indefinitely unless shippers had a 100 percent scanning system to restore public confidence.

Although industry critics point out that scanning technology is imperfect and prone to false alarms, Flynn said that sending cargo boxes through a portal that combined both radiation detection and image scanning would give inspectors instant and reliable information about suspicious materials. He said the cost would be about $20 per container, which he called reasonable since a typical Wal-Mart container has about $60,000 in merchandise.

The Retail Industry Leaders Association, the trade group for the "big-box" chains, attempted to defeat the 100 percent scanning proposal last year. Spokesman Brian Dodge said that was only one of many issues-including product safety, crime, and tax issues-that have prompted his group to grow and have an expanded presence on Capitol Hill.

Shipping company concerns discussed here. Need for "tamper-proof" containers here, which references a threat scenario:

In a recent piece in Seapower magazine by David W. Munns here. Mr. Munns posits a scenario in which containers passing through Pakistan have had their contents stolen by thieves who un-weld the seams of the metal containers, take the products from inside the container and then re-weld the seams, apparently without breaking the seals on the boxes.

The cost savings of cargo theft reduction ought to help some shippers feel better about an improved container...though it seems to me that a combination of more secure containers, other forms of electronic security and a good random container container checking policy would serve as well as 100% scanning.

American Thinker does container shipping

Thomas Lifson of American Thinker finds the places near San Francisco where a large number of those Christmas presents got delivered in Where the Sightseeing Bus Won't Take You. Hint: Think Oakland...

A little container history.

Shipping company concerns over cargo security measures

Shipping company concerns over excessive cargo security measures expressed here:

The fear that terrorists might smuggle a nuclear weapon into the United States hidden inside a shipping container has led to "ill-conceived" security measures that fail to grasp the way transportation systems worldwide are interconnected, a senior shipping industry executive said earlier this week.

"This highly efficient supply chain network-of-networks is critically dependent on a transport system that is in perpetual motion," said Stephen Carmel, senior vice president of maritime services at Maersk Line Ltd., a Norfolk, Va.-based transportation services firm. "A stoppage anywhere will propagate effects through the system and quickly become a stoppage everywhere."
***
He highlighted the "100 percent scanning requirement" of a recently enacted bill to implement unfilled recommendations of the 9/11 Commission. The White House initially opposed the scanning provision, but President Bush still signed the bill last month. The law requires all U.S.-bound shipping containers to be scanned by radiation detection equipment at foreign ports by 2012.

Critics contend that technology to scan the more than 11 million shipping containers that arrive at U.S. seaports every year is not available. They also say the requirement would result in costly bottlenecks and would unduly burden some nations with ports too small to install the scanners.

"It's a concern because we haven't seen the details," Carmel said. "Done wrong, it would be catastrophic." Any maritime or homeland security strategy that puts a "chink in the supply chain" will do more harm than good, he said.

Today's global economy and business practices such as just-in-time delivery demand a hyper-efficient system to transport both final products and intermediate parts, the shipping executive said. He characterized the supply chain as a web of interlocking conveyor belts that has no tolerance for stoppages, and warned that industry and jobs would flee the United States for less regulated locations if burdensome security measures hobble the transportation system.

Carmel said the current system is so efficient that it costs less to ship a container from Hong Kong to Los Angeles than it does to truck the container the last 100 miles to its final destination in the United States. Tolerance in the delivery time of that container from Hong Kong to Los Angeles is measured in hours, he said.

He said that nearly every maritime strategy he has seen describes shipping lanes as under threat and in need of protection to ensure the unimpeded flow of goods. "I do not see a threat," he said. He dismissed the menace of piracy as a coastal waterways affliction that does not affect ocean-going supertankers and container ships.

Quick look at cargo container security issues

Found as 100% Screening and Other Cargo Insecurities:

Those who operate ships recognize the dangers of shipping un-inspected cargo, though not as intensely as some prefer. The growing concern over the likelihood of a catastrophic act of maritime and other transport-system terrorism has led to measures for increasing physical security.

Among such measures, one could cite the strict enforcement of the International Code for Security of Ships and of Port Facilities (ISPS) Code, which was adopted in December 2002 and went into effect globally in July 2004. The code, which was introduced by the International Maritime Organization in the aftermath of the September 11, 2001, terrorist attacks in the United States, attempts toward a similar strict enforcement of the Container Security Initiative.

Beyond ships and ports, the danger of importing nuclear bombs and other weapons (not to mention terrorists, themselves) in containers may have increased with the U.S. government having opened the borders and highways to Mexican truckers working for 100 companies, according to a 20-plus-year truck driver at FamilySecurityMatters.com.

Which points back to the need for "tamper proof" containers discussed in an earlier post here.

More secure containers?

In 1997, according to this, theft of cargo at ports was a problem - a sizable problem:

Security of cargo is a major concern of port authorities. Thefts and smuggling of cargo, and stowaways, are occurrences that port authorities need to combat in order to ensure the quality of their services. The costs incurred by port users because
of these activities are very high, as shown by various recent analyses. For instance, in the United States, it is estimated that the annual cost of cargo theft and pilferage varies from US$ 3 to 10 billion a year.

While a $7 billion dollar range seems rather large to me, even the small number is a big number.

In a recent piece in Seapower magazine by David W. Munns here. Mr. Munns posits a scenario in which containers passing through Pakistan have had their contents stolen by thieves who un-weld the seams of the metal containers, take the products from inside the container and then re-weld the seams, apparently without breaking the seals on the boxes. Mr. Munns notes that the Department of Homeland Security has been seeking new ideas for container security and tis pushing a "Advanced Container Security Device (ACSD)" system.

One approach seems to be to change the standard metal shipping container to one made of strong composite material and embed sensors in the entire exterior which would provide detection capability of container stowaways, radiation and other information that may indicate problems.

More information on the ACSD program here, here, the DHS solicitation here, the L-3 Communications "approach":

The next generation of maritime cargo security from L-3 is designed to foil any conceivable attempt to hide stowaways, threat substances, and other contraband in sealed cargo containers.

ACSD will feature advanced state-of-the-art sensors that automatically detect live animals and people, as well as minute amounts of threat substances, that no other sealed cargo screening technology of its kind can reliably detect.

The revolutionary ACSD will continually screen the contents of sealed cargo containers for explosives and biological, chemical, and nuclear threat substances.
ACSD will track the entire sequence of a sealed cargo container’s journey, from the moment it arrives at the point of departure to release at its final destination. Designed to automatically identify tampering at any point in the container’s passage, ACSD will detect breaches wherever they occur: on the container’s sides, roof, or bottom.

More here:

As part of the CSI, DHS has also developed a technology research program called the Advanced Container Security Device. It is intended to meet the Department’s requirement for detecting and alerting shippers to compromised container security either from a terrorist or through cargo theft.

The technology will include sensors, locks and communications tracking devices that may become standard equipment on new containers, or retrofitted to containers already in the supply chain. The target price for this device is $50 per ocean voyage.

Officials are looking for a device that will monitor the integrity of a container on all six sides, tracking information about where the container has been, and sensor monitoring of the container contents. The device should also be able to store shipping data that could be fed to Customs and Border Protection’s cargo-data targeting system. This software would identify if the container has an intrusion and set off an alarm both locally and remotely - to the shipper or Customs.

And a patent to deal with the problem here.

It may be late, but at least people are working on the problem.

Shippers' concerns over U.S. cargo security

Reported as Shippers braced for pain as US tightens security:

Jebel Ali, the world's eighth-busiest container port, is one of scores of ports worldwide participating in a five-year-old US initiative to examine suspicious cargo before it is loaded on to US-bound vessels. The shed is home to an x-ray machine that US Customs agents use to look inside containers for suspicious material.

The proposed legislation would, over time, require all cargo coming into the US to be scanned in the country from which it is shipped. Whether this is feasible for even the advanced scanning equipment at ports such as Jebel Ali is debatable. Since the US last year imported 18.4m, 20ft-equivalent units of containers and the busiest ports such as Shanghai handled millions of those, the US's already accident-prone system for handling imports could break under the strain.

"It just introduces another complexity into the physical process of moving goods," says Mark Page, research director at the London-based Drewry Shipping Consultants.

Lobbyists for the shipping industry and import-dependent sectors are disappointed by the proposed legislation because they believe the Safe Ports Act passed by Congress last year did most of what is currently practicable to reduce the terrorist risk from cargo imports.

That act followed the principle of previous cargo security legislation since the September 11.2001 terrorist attacks in the US by concentrating on screening goods that appeared suspicious because of their origin, anomalies in documentation or intelligence about possible plots. Containers are currently scanned at Jebel Ali if they meet those criteria.

One of the principal measures under the Safe Ports Act was a new Secure Freight Initiative, which installed US customs facilities at some of the most sensitive ports worldwide to step up screening of containers before their loading on to vessels.

However, ever since the 9/11 attacks, hawks on the subject have been pushing for the scanning of every container entering the US, to try to eliminate risk entirely.

Actually, it is not the "hawks" that push for every container to be inspected.

Maritime Security: All cargo containers that enter US to be scanned

Found as All cargo containers that enter US to be scanned:

Virtually all cargo containers entering US ports will be scanned by radiation detecting equipment by the end of the year, Homeland Security Secretary Michael Chertoff said on Friday. However, more advanced equipment is needed to help speed the process and spot a potential nuclear device or dirty bomb, he said during a visit to the twin ports of Los Angeles and Long Beach.

The agency also expects to scan 'virtually 100 per cent' of all containers that enter through border points, he said. 'Countering the threat of nuclear terrorism and weapons of mass destruction is really the most important priority,' Mr Chertoff said. 'We need to make the investments now to be able to counter the threat as time passes.' It was his third visit to the giant port complex, the gateway for more than 40 per cent of all cargo container traffic entering the United States. A system is already in place at the giant complex to scan all of its incoming cargo, officials said.

Mr Chertoff said that his agency has been adding radiation portal monitors at major seaports and facilities and now has more than 1,000 of the devices in use. Trucks carrying containers unloaded from ships pass through the detectors. If the machine find signs of radiation, the container gets another scan and possibly an inspection by hand-held devices to help identify how much and what kind of radiation is present.

UPDATE: Mr. Chertoff had more to say:

Flanked by lawmakers and law enforcement authorities at a fire station at the Port of Los Angeles, Homeland Security Secretary Michael Chertoff on Friday unveiled a new strategy for the rapid resumption of trade after a terrorist attack at a major U.S. port.

As the U.S. Coast Guard gunboat Halibut idled a few yards offshore, Chertoff said the plan was "about making sure we spend as little time as possible paralyzed by an attack."

The 130-page Department of Homeland Security's new Strategy to Enhance International Supply Chain Security provides protocols for damage assessments of international supply lines. It also describes what kind of cargo and vessels should receive top priority based on public health, national security and economic needs.

The plan aims to streamline the maze of jurisdictions through which commerce moves, devise a chain of command and return into service key terminals, bridges, roads, rail lines and pipelines. The aim is to quickly restore the flow of commodities and goods, such as crude oil, clothing, car parts and medical supplies if a terrorist attack were to occur at a major port.

Planning is good, so long as you remember that "no plan ever survived contact with the enemy" and build in some flexibility...