AN ANALYSIS ON CONTAINERIZED CARGO SERVICES AT

COIMBATORE CITY
Dr.M.Ashok Kummar, Professor, PG Department of Research & Commerce,
Narayana Guru College, K.G.Chavadi Coimbatore 641 105
E.mail.: mashk21@yahoo.co.in, Mobile No.: +98421 68002

Sree

M.Saravanan, Assistant Professor, PG Department of International Business,

Narayana Guru College, K.G.Chavadi Coimbatore 641 105
shravan.murugan@gmail.com, Mobile No.: + 99434 37749

Sree
E.mail.:

INTRODUCTION
Logistics Management has been identified as the primary challenge for organizations desiring to
exploit logistics capabilities to gain and maintain customer loyalty. The concept, based on total
cost analysis and total quality control, ties together all logistics activities and views the results as
a system that strives to minimize total distribution cost, while achieving desired customers levels
through providing satisfaction to customers and retaining customer loyalty. The fusion of
information logistics and transportation technologies provides rapid crisis response to track and
shift assets, even while en route and to deliver tailored logistics packages and sustainment
directly at the strategic, operational and tactical levels of operations.
In 1991, the Council of Logistics Management modified its 1976 definition of physical
distribution management by first changing the term to logistics and then changing the definition
as follows:
Logistics is the process of planning, implementing and controlling the efficient, effective flow
and storage of goods, services and related information from the point of origin to the point of
consumption for the purpose of conforming to customer requirements.

OBJECTIVE OF LOGISTICS
The objective of logistics is to minimize total cost. Given the customer service objective, where
total costs equal transportation costs, warehousing costs, order processing costs and information
costs. Marketing and logistics efforts are highly complementary. Product based decisions and
unitization concepts have to be supportive of each other. Channels of distribution will greatly
depend on the transportation and warehousing policies of the firm. Sales measures must be in
coordination with the level of logistical competency of the firms. Thus, if marketing and
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logistics managers begin to think strategically, the coordination built in will create a competitive
edge for the firm, over other competitors.

OBJECTIVES OF THE STUDY

1. To study the containerized cargo movement in Coimbatore city and to trace out the

composition and direction of containerized cargo from and to Coimbatore city.

2. To study the share of containerized goods in global trade.
3. To find out the problems faced by the agents in handling containerized cargo and

suggestions for the same.

IMPORTANCE OF THE STUDY

Containerization, which today comprises 85% of the general cargo market in the world, made its
beginning using a modified World War II T -2 tanker. It provides today the most cost effective
and efficient service and has constantly adapted itself to the needs of the shipping world. In
international trade, containerization is a term which is inevitable. It is true that developing
countries like India use more number of containers in the present context than in the past. The
most outstanding contribution of containerization is the suitability and capability of containers
for door to door transportation internationally. Containerization helps to increase many fold
productivity in cargo handling by involving labour. Moreover, when unit load is bigger, manual
operation is not possible where mechanical methods are introduced which involve capital
investments too.
Indias expenditure on logistics activities, equivalent to 13 percent of its GDP, is higher than that
of the developed nations. The key reason for this is the relatively higher level of inefficiencies in
the system, with lower average trucking speeds, higher turnaround time at ports and high cost of
administrative delays, to cite a few of the examples.

METHODOLOGY
The study was empirical in nature and was carried out to find the role of containerized cargo in
Coimbatore city. A standardized questionnaire method was administered in collecting data for the
above study purpose. The sampling frame for this study was agents acting as CUSTOMS
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HOUSE AGENTS. Convenience sampling technique was selected as a sample design. The study
was exclusively conducted in Coimbatore city to find out the problems faced by the agents in
handling containerized cargo. The study was conducted in Coimbatore City and the sample size
of the agents is limited to One Hundred and Fifty only.

HISTORY & GROWTH OF CONTAINERISATION

The system is a long established one and was carried out in primitive form in the North Atlantic
Coastal Track in the 1930s, when the vessels were called Van Ships. The concept gained
momentum in 1955, when an American named Malcolm McLean devised a new way to ship
goods. Lorry body was detached from the drivers cab and lifted on to the deck of the ship, thus
completely taking away the work of workers to handle the individual item inside the cargo
compartment. Malcolm McLeans first ship, an oil tanker called the Ideal X, made its initial
voyage from New York to Houston in 1956 with lorry bodies on its deck. Computerization plays
an important role in the operation, controlling the delivery and pick up of containers from the
truckers as well as the movement and positioning of all containers in the terminal.

CONTAINER TERMINOLOGY
Container as the meaning implies, is an equipment used to store and carry goods. In shipping, the
term was used to refer to any type of box used to carry cargo. Presently container is also known
as Box or Van in many countries, particularly in the U.S.A. Containers can be classified
according to (a) Raw Material (b) Size and (c) Usage.

CONTAINER MARKINGS
For identification, containers have markings showing Owner code, serial number, check digit,
country code, type code and maximum gross and tare weight. Each container has an
identification code or container number, a combination of the 4 letter characters that identify the
owner (the operator of container) and the 7 numeric characters that identify the container. The
container number can be found on the outer and inner side walls. The container number is
entered on the bill of lading to facilitate the identification and tracking of the container and the
cargo.

LEASING OF CONTAINERS
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Containers are taken on lease by carriers from container manufacturing companies or leasing
companies who own containers. There are four types of leasing arrangements. They are as
follows:
Trip lease ; Financial lease ; Master lease ; Long term lease

CONTAINER DIMENSIONS AND CAPACITY

Containers intended for intercontinental use have external nominal dimensions of:
Length 9.8125 ft (2.991 m) as 10 ft; 19.875 ft (6.058 m) as 20 ft; 29.9375 ft (9.125 m) as 30 ft
and 40 ft (12.192 m); Width 8 ft (2.438 m); Height 8.5 ft (2.591 m) and 9.5 ft (2.896 m).
The 20 ft (20) & 40 ft (40) containers are very popular in ocean freight. The demand for the
high cube container is increasing. The popular high cube container has a normal height of 9.5 ft
(9.5 or 9.6).

RESULTS AND DISCUSSION

Table No.1.1
Frequency of the total container traffic handled in international market &
Domestic market in the Southern Region (in TEUs)
Year

200102

200203

200304

200405

200506

200607

200708

200809

200910

201011

Internatio
nal

1278
68

1350
95

1709
41

1845
18

2192
26

2339
47

2641
10

2762
83

2134
50

2635
18

Domestic

6431
2

7031
6

7088
4

6402
5

6983
5

6952
1

7654
9

6952
2

7090
7

7101
4

Total

1927
80

2054
11

2418
25

2485
43

2890
61

3034
68

3406
59

3458
05

2843
57

3345
32

Source: www.concorindia.com
The above table shows that the total container traffic (fig.1) handled in the international market
and domestic market. The entry on expanding scale in international transport of goods represents
a major change in the traditional transport process and hence it is clearly concluded that there is
rapid usage of containers in the international market. The container traffic handled in the
domestic market is increasing year by year. This is due to outsourcing logistics activities to
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experienced logistics service providers which enable companies to get very efficient and
customized logistical support while themselves focusing on the core of organizational activities.

Table No.1.2
Table showing the share of containerized cargo in global trade, 1980 2010
(in million tones)

Year

1980

1985

1990

1995

2000

2005

2010

Containerized Cargo

510

530

680

730

790

860

940

Other General Cargo

410

390

400

330

270

290

250

Source: Intermodal shipping

Containerized cargo has experienced a remarkable growth both in absolute and relative terms.
Freight forwarders realized that significant improvements in cost, time and reliability could be
realized with containerization. This growth was further accelerated with the development of
inland freight transport systems which is again substantiated in Table 1.2.

Table No.1.3
Table showing the type of services rendered
Description

No of Agents

Containerized goods

146

97.3

Conventional goods

0.6

Containerized & Conventional goods

0.6

Break Bulk

0.6

All types of service

0.6

Source: Primary data

Table 1.3 shows that 97.3% of the agents carry containerized goods because there is no
intermediate handling at terminal transshipment and less packing is needed for containerized
shipments while 0.6% of the agents opt for all types of services like Group Age, General
Haulage, Shared Transport / Distribution and hence could be concluded that most of the agents
carry containerized goods. The reason behind the growth of containerized goods is that the usage
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of containers in international trade has increased rapidly and more significantly, the impressive
export performance in developing countries like India, China, Bangladesh, etc.

Table No.1.4
Table showing the mode of containerized movements
Description

LCL

FCL

Both

Others (Break Bulk)

No of Agents

139

4.6

92.6

0.8

Source: Primary data

It is clearly evident from the above table that 139 agents prefer both FCL and LCL mode of
containerized movement due to consolidation due to which it becomes easy for shippers /
consignees of small parcels and the rates are likely to remain more competitive when compared
with conventional tonnage. This is because majority of the exporters ship the goods according to
their convenience and requirements of their shipment of cargo.

Table No.1.5
Table showing the type of Industry concentrated on by the agents
Description

No of agents

Engineering

Textiles

135

90

Electronics

Chemicals

0.7

Others

1.3

Source: Primary data

It is understood that 135 (90%) of the agents are concentrating on textile products followed by
engineering goods. It is due to the system that supports the transport activities regarding the
mobility of the goods transported in the containers and Coimbatore is considered as a hub for
textile and textile related products. As rightly said Coimbatore is the Manchester of South India
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and nearby Tirupur is rightly known as the Garment City / Textile City. This is followed by
engineering goods.

Table No.1.6
Table showing the export destination
Description

No of Agents

Europe

131

87.3

USA

3.3

Far East

3.3

Middle East

2.8

Others

3.3

Source: Primary data

It is clear from the above table that 87.3% of the agents are dealing with the European continent
followed by USA and Far East Countries. This is because, after the abolition of quota
restrictions, exports to Europe and USA has increased more specifically from Coimbatore as
many exporters are keen in concentrating on these markets.

Table No 1.7
Table showing the opinion of agents about cost, safety & time involved
Parameters /
Attributes

Excellent Fair
(%)
(%)

Good
(%)

Cost

90.6

8.0

1.4

Safety

6.0

91.3

2.7

Time Involved

8.0

88.0

4.0

Source: Primary data

91.3% of the agents opinion was fair with regard to the safety while using the container. 6% of
the agents opinion was excellent with regard to the safety while using the container. It is also
inferred that 90.6% of the agents opinion is excellent about the cost while handling with the
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containers. In order to remain cost-competitive, contract manufacturers will be required to

provide integrated logistics solutions that will bolster the cost savings potential of the
outsourcing initiative. The increasing trend of outsourcing will, in turn, drive strong demand for
logistics solutions in the country. Most of the agents opinion is fair (88%) while using the
container with regard to time involved. A web system has been developed for data acquisition,
data storing, data processing and data retrieval in order to optimize business processes and also
to save time.

Table No.1.8
Table showing the preference of stuffing of goods & the problems while
stuffing the goods into the container
Description
Factory
Warehouse

Preference
No of Agents / (%)
6 (4%)
4 (2.7%)

ICD

138 (92%)

Port

2 (1.3%)

Description
Cargo damage

Problems
No of Agents / (%)
128 (85.3%)

Mishandling

4 (2.6%)

Packing breakage

4 (2.6%)

Damage while
loading and
unloading

12 (8%)

Others

2 (1.5%)

Source: Primary data

The above table clearly shows the preference of agents for stuffing of goods and also the
problems faced by the agents while stuffing the goods into the container. It is evident from the
above table that 92% of the agents prefer to stuff the goods in ICDs because ICDs carry out
several functions such as stuffing, de stuffing, locking, sealing, providing trailers, chassis,
railway flats, repair handling equipment, storage facilities for reefer, customs examinations and
processing of customs documents, issuance of combined transport documents by carriers. 85.3%
of the agents faced the problem of damage of cargo while stuffing the goods into the container
because not all merchandise can be conveniently containerized and also due to the bad
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maintenance of the containers while 8% of the agents faced the problem of damage while
loading and unloading the cargo.

Table No.1.9
Table showing the type of containers used by the agents
Description

No of Agents

General Purpose only

138

92

General Purpose & Flat Container

3.3

General Purpose & Thermal Container

Break Bulk

0.7

Source: Primary data

The above table clearly shows the type of containers used by the agents in Coimbatore city. It is
concluded that most of the agents (92%) use only general purpose container while 4% of the
agents use general purpose and thermal container (which requires insulated storage) in
Coimbatore city.

Table No.1.10
Table showing the size of the container preferred by the agents
Description

No of Agents

TEUs

50

33.3

FEUs

10

6.6

Both

45

30

Based on requirement

40

26.6

Break Bulk

3.5

Source: Primary data

The above table clearly shows the size of container preferred by the agents. It is concluded that
33.3% of agents prefer TEUs, 30% of agents prefer both TEUs and FEUs and 26.6% of agents
prefer containers based on the requirement. This is because cost of obtaining TEUs (fig.2) is
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much cheaper than FEUs and all attributes help in reaching the cargo in much quicker time to the
receiver, thus improving the bottom line of all the players in the supply chain.

FINDINGS
It is a known fact that Coimbatore stands as the Manchester of India and Tirupur being the Knit
wear City is also popularly known as Mini Japan which is rich in garment industry having a wide
range of both small and medium scale industries. (As on 2009, USD 2,92,29,01,070 worth of
exports of apparels were made by India to America) where not only the small scale industries
but with infrastructural products and engineering goods. It is observed from the study that 56%
of the agents are having a credit of servicing the clients for the past 5 years. Less cost of
operation, perils of sea, multimodal transportation, inappropriate handling of the cargo, natural
calamities and world wide maritime threats are the major reasons which have given a face lift to
this Logistics Industry (84%). It is understood that intermediate handling such as loading and
unloading of cargo (fig.3) is not possible and the study shows that the maximum number of
agents (92.6%) prefer both LCL and FCL mode of using containerized cargo. 90% of the agents
are specialized in handling textile products followed by engineering products which makes it
evident that still Coimbatore ranks first in exporting business.
87.3% of agents are concentrating on European markets followed by USA and Far East.
Liberalisation and the consequent opening up of the domestic economy necessitated a higher
order of economic management. 90.6% of the agents felt good with regard to cost of using the
container. In addition, the evolving business landscape and increasing competition across
industries, is creating the need for more efficient and reliable logistics services than what exist
today. After the terrorist attack on the World Trade Centre (Twin Tower) in America in 2001, the
US government posed severe restrictions to increase the security of its country. By this, the usage
of the containerized cargo has been increasing. 91.3% of the agents have given excellent feed
back with regard to safety measures while using the container. The facility is helpful to the
exporters as they can export the goods from the nearest point of their factory or premises which
reduces the unnecessary transportation cost, labor and saves time. It is found that the EDI is at a
inceptional stage where poor human resource and semi skilled labour. This has been exposed in
the study where 96% of the agents were not comfortable with the functioning of the EDI and
hence, the Government of India and the Port Trust of India should take necessary efforts in this
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regard. 92% agents prefer ICD for stuffing the goods. Easy accessibility to the complex, less
procedural formalities and easy handling of goods, availability of containers were the foremost
reasons where ICDs were preferred. 92% of the agents use only general purpose containers.
(fig.4). Players now have the opportunity to leverage economies of scale, complemented with
better infrastructure, to provide integrated logistics solutions which are cost effective and hence
33% of the agents prefer TEUs with regard to size of the container.

SUGGESTIONS
The infrastructural bottlenecks should be resolved and use of state of the art technology should
be facilitated. It is suggested that appropriate packing is necessary in order to ensure safety of the
goods.
The role of computers play an important role and the overall performance using computers need
to be developed. The freight rates must be made comparatively less in order to ensure more
movement of containers. Planning in advance will be the best way for easy accessibility of
containers. EDI operations in ICDs are still in the nascent stage and hence the authorities should
focus on implementing the EDI facility in ports, ICDs, CONCORs, CFS, etc., which will
drastically reduce the turnaround time.
The transportation trailers must be made available to ensure containerized cargo movement. For
easy tracking of container, elements like hardware, telecommunication network and
communication software and transfer software need to be improved for the EDI process.
Container market needs to be strengthened which will lead to development of the Indian Market
worldwide.

CONCLUSION
The study emphasizes the importance of distributing merchandize in a unitized form. Container
serves to prevent or reduce damages and risk and encourages trade development and provides
quicker payment of export invoices. The most outstanding contribution of containerization is the
suitability and capability of containers for door to door transportation internationally. The
problems faced by the agents were analyzed and suggestions were made to overcome the same.
Finally containerization is a system and it will show benefits only when it is properly
administered.
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FUTURE SCOPE OF THE STUDY

Currently, the annual logistics cost of the world is about USD 3.5 trillion. For any country, the
annual logistics cost varies between 9% and 20% of the GDP. The annual logistics cost in India
was 14% of the GDP in 2010, which translates into USD 140 billion, assuming the GDP of India
to be slightly over USD 1 trillion. Out of this USD 130 billion logistics cost, almost 99% is
accounted for by the unorganized sector (such as owners of less than 5 trucks, affiliated to a
broker or a transport company, small warehouse operators, customs brokers, freight forwarders
etc.,) and slightly more than 1% i.e., approximately USD 1.5 billion, is contributed by the
organized sector. Besides the core transportation and warehousing services, the business of
logistics is evolving to encompass services that either enhance the effectiveness of existing
transportation and warehousing services or cater to associated value chain elements. All such
services that do not directly involve transportation and warehousing have been classified as value
added and emerging services such as express services, track & trace facility, cold chain services
etc.,
So, one can see that the logistics industry in India is in a nascent stage. Hence, there is immense
potential for the growth of containerization in the world in general and so research can be carried
out on logistics outsourcing and third party logistics providers, as they may enable exporters and
importers to get efficient and customized logistical support.

GLOSSARY

ICD Inland Container Depot

TEUs Twenty Feet Equivalent Units

FEUs Forty feet Equivalent Units

LCL Less than container load

FCL Full container load

EDI Electronic Data Interchange

CONCOR Container Corporation of India

CFS Container Freight Station

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BIBLIOGRAPHY
BOOKS
Dr. Krishnaveni Muthiah, Logistics Management & World Seaborne Trade, Mumbai:
Himalaya Publishing House, 2006
Dr. C.R.Kothari, Research Methodology Methods & Techniques (Second edition), New
Delhi : Wishwa Prakashan, 2002
Donald J. Bowersox & David J. Closs, Logistics Management, Tata McGraw - Hill
Publication; pp 3 to pp 20, 2007
Vinod V. Sople, Logistics Management, Pearson Publication; pp 2 to pp 13, 2007
Dr. K.V. Hariharan Containerization and Multimodal transport.
Indian Logistics Industry (2008) published by Cushman & Wakefield
S.K.Bhattacharya, Logistics Management Definition, dimension and Functional
Applications, New Delhi: S.Chand Publications, 2010
Logistics
Management
Dr.G.Chandrasekaran

in

Global

Marketing

(2010)

published

by

WEBSITES FOR REFERENCE

www.google.com
www.logisticsmanagement.com
www.concorindia.com
www.researchindia.com
www.questia.com

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fig.1

fig.2

14

fig.3

Fig.4

15