13th International Conference on Business Management (ICBM- 2016)

Container Inventory Management: Factors influencing Container

Interchange

L. Edirisinghe J. Zhihong A. W. Wijeratne

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• INTRODUCTION– CIM solutions– Objectives of research

• LITERATURE REVIEW• METHODOLOGY• RESULTS AND DISCUSSIONS

Presentation schedule

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Container Inventory Management Methods

1. Balancing the supply and demand through reposition of excess containers to where those are deficit (a costly exercise)

2. Container leasing (on-hire)

3. Collapsible or foldable containers

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Objectives

1. To find the impact of operational; legal; marketing; confidentiality implications on container interchange

2. To study the perception about financial and non financial benefits

3. To investigate the carriers’ presumptions4. To understand the carriers’ reluctance to

associate with competitors

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The literature review

• Because of the trade and weight imbalance, transpacific carriers need to return substantial numbers of empty containers back to Asia (FMC, 2012)

• unmet demands within a given period due to insufficient empty containers will be lost (Dong, et al., 2013).

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The paradox(a) TA-16 Carrier Agreements Active in the US/North Europe Trade for 2006 through 2010

FMC Number Name Members1 11375 Trans-Atlantic Conference Agreement ACL, Maersk, MSC, NYK, OOCL2 11280 Star West Joint Service Agreement Albion, Overseas3 11854 Greensea Inc. Joint Service Agreement Green Chartering, 4 11982 Evergreen Line Joint Service Agreement Evergreen, Hatsu, Italia5 11602 The Grand Alliance Agreement II HL, NYK, OOCL6 11960 New World Alliance Agreement APL, Hyundai, MOL7 10955 ACL/H-L Reciprocal Space Charter and Sailing Agreement ACL, HL8 11415 MPA Space Charter and Sailing Agreement ACL, MSC9 11705 Grand Alliance-CP Ships Atlantic Agreement CP, HL, NYK, OOCL, PO10 11794 The COSCON/KL/YMUK/ Hanjin Worldwide Slot

Allocation and Sailing AgreementCosco, HJ, KL, YM

11 11867 Norasia/GSL Round The World Service AgreementCMA CGM/CSCL/ELJSA Cross Space Charter,

Gold, Norasia

12 11955 Sailing, and Cooperative Working Agreement China, CMA, Evergreen13 11912 Dole-HSud Space Charter and Sailing Agreement Dole, HSud14 11927 ITS/Hatsu Marine MUS Slot Charter Agreement Italia, Hatsu

(b) TP-16 Carrier Agreements In The Transpacific Trade For 2006 Through 2010Number Name Members

1 11602 The Grand Alliance II NYK, OOCL, HL 2 11435 APL/HLAG Space Charter Agreement APL, HL3 11794

COSCO/KL/YMUK/ HANJIN/Senator Worldwide SlotAllocation & Sailing Agreement

K-Line, Yang Ming, Hanjin, COSCO

4 11885

CMA CGM/MSC Reciprocal Space Charter, SailingAnd Cooperative Working Agreement

CMA CGM, MSC

5 11940 Cross Space Charter, Sailing And Cooperative Working Agreement

CMA CGM, Maruba, China Shipping

6 11948

CMA CGM/CSCL Cross Space Charter, Sailing And CWA-Central China/US West Coast, Yang Tse/ AAC2 Service

China Shipping, CMA CGM

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Source :(Mittal, 2008)

Current Practice in Global Container supply chain

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The Matrix of intra-port Collaboration

Edirisinghe, L., Zhihong, J., & Wijeratne, A. (2015). Evaluation Of Expected Payoff Through Container interchange between shipping lines: a solution to container inventory imbalance in Sri Lanka. Int. J. Logistics Systems and Management, 21(4), 503-533.

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The Matrix of inter-port Collaboration

Edirisinghe, L., Zhihong, J., & Wijeratne, A. (2015). Evaluation Of Expected Payoff Through Container interchange between shipping lines: a solution to container inventory imbalance in Sri Lanka. Int. J. Logistics Systems and Management, 21(4), 503-533.

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Methodology

Operational

Legal

Branding

Benefits

Feasibility

Confidential data

Competitors

Container interchange

Factors that influence carriers/ decision to interchange containers

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Results and discussions- 1• The right balance of ‘Container inventory at a

given location is a vital factor in liner shipping A Container inventory is a collection of containers

• The container carriers have been successfully exchanging the ships’ space (slots) for almost two decades now

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Results and discussions- 2

1. A strong relationship between the carrier’s resistances to container exchange and container tracking was evident

2. The relationship between container sharing and possible legal implications is also significant

3. potential negative impact on the brand nameThe perishability characteristic has a huge impact thus branding play a role

[1].

Factors that influence container interchange

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Results and discussions- 3

4. Carriers are reluctant to share containers as there is no mechanism to quantify financial and non financial benefits in advance

5. Myopic view in the industry about the reality of container sharing

Factors that influence container interchange

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(Key: shaded boxes with (-) in front of the number indicate deficit inventory while clear boxes denote excess inventories)

Total empty container reposition in the proposed “Interchange” scenario

Container Type& Size

Imbalance when Work alone

Imbalance when Collaborate

Reduction of empty reposition

Savings from VCP USD

Saving as % of reposition cost

20'GP 158221 156285 1936 672,953.60 1.2240'GP 10486 794 9692 5,506,025.20 92.4340'HC 44586 27842 16744 9,512,266.40 37.5545'HC 2155 101 2054 1,166,877.40 95.3120'&40'RF 5975 4791 1184 672,630.40 19.82Total (without OT/FR/FB) 221423 189813 31610 17,530,753.00 19.29

Benefits of exchange and savings for major types of containers- 2013 Port of Colombo

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Results and discussions- 4

6. No statistical significance between the container sharing and confidential data

7. No relationship between container exchange and the carriers’ dislike to associate with competitor lines.

Factors that do not influence container interchange

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Thank you