The Hindu Business Line : Keeping track of the boxes

Having realised that strict equipment control in the container business can yield significant gains, the state-owned Shipping Corporation of India (SCI) has sharpened its focus on this aspect of its operations. The specially-formed Equipment Control Cell (EPC) of SCI, which has put in place an elaborate inventory control mechanism, has made significant contributions to the company's bottomline.

SCI's objectives

The principal objectives of this cell include arranging containers economically as per trade requirement, tracking and monitoring all containers to ensure that the boxes do not idle, balancing the inventory and monitoring detention.

SCI's containerised trade is now being met with lease and owned inventory. Besides 19,000 leased TEUs, the company owns 6,000 TEUs, constituting 39,000 TEUs and 1,050 FEUs. Companies such as Triton Container International Ltd, Caru Containers, Transamerica Container Corp and Textainer have master lease agreements with SCI.

Out of the average container inventory of 24,000 TEUs, reports are that about 9,650 TEUs — which is about 38 per cent of the inventory — are idling. The reasons for excess inventory have been traced to the lack of proper monitoring of containers in `overdue status' and import-export imbalance.

In fact, the averaging idling in the last one year at SCI has been 38 per cent — about 13 per cent more than the acceptable level. "There are about 350 TEUs that are stuck under import load worldwide, with an adverse financial implication of $700 per day," an official pointed out.

SCI studies have shown that the company could collectively reduce idling inventory cost by about $2.4 million per annum (that is, 3,246 TEUs x $2 x $365), by closely monitoring the inventory and taking prompt action on long standing empty and laden containers.

Empty repositioning

One of the factors that leads to this loss is empty re-positioning, as this entailed handling charges payable to the depot, haultage, port and transhipment charges. The cost of empty re-positioning (ship to depo and vice-versa) was seen to touch $100 per TEU at JNPT, $140 per TEU at Colombo, $70 per TEU at Singapore and $200 in the US.

With the annual repair and maintenance expenses being $1.15 million (about 39 cent per TEU per day), SCI has put in place an effective mechanism to have a check on this. The company usually undertakes repair of damaged containers in India, as the cost of repair in the UK or the US is significantly higher. It has cautioned its agents that SCI continues to pay the lease and ground rents for damaged containers also.

"Barring a few heavily damaged containers, majority of the boxes can be repaired in a few hours and we have instructed out agents that if the repairs are of minor nature, they can go ahead with the repairs without waiting for written authorisation, depending on the urgency of the situation," the official said.

Detention charges

SCI is also keen that detention charges are collected as per the rules, as it has been recognised as a source of revenue, contributing to reducing incidentals. It has asked all its agents to ensure that permission is given to the yard or the consignee only after collection of dues, if any. Detention charges have thus increased from $4 million in 1999-2000 to over $6 million in 2004-05.

SCI offers three consortium services — the India-Europe service, Indfex 1 and Indfex II services — covering the UK, India to Fast East and India to China sectors. Its revenue in the European service sector fell from $5.07 million in 2003-04 to about $3.60 million this fiscal, while that through its Indfex I service — covering Colombo, Shanghai, Busan and Singapore — increased from $6.25 million in 2004-05 to $8.27 million in the first nine months this fiscal.

Its earnings on the Indfex II service also improved after the transhipment base from Singapore to Hong Kong on the west-bound leg was shifted.

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