Building India’s Marine Container Value Chain:

Container Standards, Logistics and Global Strategy Part 2 The study shows that all the containers will be going through a registry. The registry is adequately written on the side of the container as well as on the back of the container. The photographs that we have taken from the Baikampady region are attached to this. It is with a description and table that each container is identified. All the containers that are now manufactured in the world are called ISO containers, and the International Organization for Standardization is the issuer. The standards are available for between 50 francs and 70 francs, which are required to be paid for. Each container has long bolts and is capable of being handled well across all the regions of the world and at every port in the world. It is now common knowledge how containers can be stacked up to 5, 7, 8, or 9 high. I recommend that we invest in obtaining the standards, studying them in depth, and extrapolating that to the requirement of steel in connection with mild steel for nuts and bolts or stronger steel or equivalent. Empty containers will be described separately, and the positioning is that every available container, irrespective of size, should be capable of being assembled by Jindal/JSW from their own steel. The requirement would then be to have an ecological wooden bottom, which again is a possibility through strong marine plywood. Nowadays ECO containers are mentioned, which have traceability and are described as ECO containers. Then there are many containers like ventilated containers, open-top containers, and size-wise containers, but all have been standardised into 20-foot and 40-foot containers. Drawing enclosed, which is available from a diary or from the specifications. We can easily assemble a document called “Quality and Marine Containers” and work backwards on the question of least wastage and high sustainability. The finished price that would be invoiced will be based in Euros per container or Yen per container or Dollars per container or the lease cost. The total requirement of 3 million containers would take about 3 and a half years. Karnataka could therefore be the assembly hub for this, especially if there are deep differences in the pricing of Corten steel, which ideally there should not be. The pricing should be sufficient to be submitted to the Shipping Ministry, which is different from the Ministry of Ports. The discussion and dialogue with all the oligopolies will happen in Mangalore city if there is emphasis on the location aspect. Eventually, when the Hubli–Ankola line starts and deep bulk connections happen over the next 8 to 12 years, the possibilities of going to another 30 million tonnes of steel are very much on the anvil, not only in Karnataka but also in Orissa. The general presence should be in each port through its subsidiary so that it can do repositioning and positioning, but it would be more advantageous to be in inland ports which can be created. One such inland port can be in Bellary itself and in any part of northern Karnataka where land is not an issue. Therefore, the repositioning of containers for India as well as the world can become a noted fungible activity, for which we should create an intellectual position and prepare enough to say that Corten steel can be a viable throughput. To create competitive conditions, whether it is own production of the steel or whether it should be competitive enough that Corten steel can be ordered from China if it is cheaper and assembled in India, all options need to be considered. The Government of India is most likely to incentivise all aspects of container leasing through its flagship programme Sagarmala or equivalent. Jindal and JSW can then go into the supply chain for marine containers of 790 as well as 1170 small feeders.These can be assembled in Udupi district or in Mangalore district, South Karnataka district, or eventually in one berth or equivalent in Orissa, which can be a captive berth where shipbuilding can be organised for up to 450 small containers with the supply chain in India. Next to it can be the container repositioning system with stacking.Repositioning means bringing equilibrium between empty containers available for loading in a particular port, where they are immediately positioned to receive cargo. Here, a detailed study will be initiated in Mangalore on the question of how oligopolies handle containers, how lessors and lessees manage containers, and this can be in the form of crowdsourcing or specific-based studies. The Mangalore region has master mariners who are mostly not in containers, but one strategic aspect is that JSW can also own berths in Trincomalee dedicated to containers, with a backup area of 10,000 to 20,000, as Colombo has a history of congestion. The next positioning would be with the Willingdon Port and all the ports in India, where backup yards can be in the private sector or in the public sector, where empty containers can be positioned more efficiently with the use of Indian alacrity, mobility, or whatever it is called. The core position is that 3 million containers will create an automatic demand for 4.5 million tonnes over a 7-year period. The world equalisation plan or equilibrium plan can be brought into mind with the South-South dialogue, where feeder ships can quickly go from port to port based on leasing and ownership in Hambantota, which is the Sri Lankan port special economic zone, or Seychelles, which is now going to be India’s strategic location as an island nation. Then we have Mauritius, which has the southern Asia-Pacific headquarters of CMA CGM. Again, Durban has an Indian emotional connect, where two dedicated backup areas can get generated as a hub for positioning. Namibia can have a good backup area for empties, as Namibia has desert land, and probably the port of Mtwara, where there is huge potential and where land is provided by the Tanzanian government, which is very interesting for the next phase. Again, backing up into the country of Zambia, which is a landlocked nation, and Mali and Zimbabwe, all the relevant ports can become recipients of feeder vessels up to 700 containers with Indian ownership in the context of Indian lessors. We would be providing enough material for about a report of 180 pages with 20 chapters, and we can stick to text, while 100% mechanical engineering content will be in annexures in another 180 pages, which will include designs for mechanical engineering, which are very simple in terms of opening and closing of port doors, gaskets, and total study of containers. Jindals can invest less than 60 lakhs in a small compound within Mangalore for connecting to the port side and studies, and about 25 hectares where Jindal can effectively begin a land port. The reason is that there is an innovation possible regarding containers: steel exports to landlocked countries, whether in any form, such as empty bars or plates, do not occupy the full volume. Therefore, as merchants, our thinking would be that food items can be boxed and put into the 40-foot containers, as the total weight and volume taken would not exceed the requirement.It is intriguing that the JSW dealer will also be owning the land port inside Zambia, for instance, and the food will be taken off based on its best-before period, while the steel would remain there. Therefore, the port of Mtwara would be regularly receiving one sailing of 1,400 containers which will contain 18 tonnes of steel, but it will also contain about 8 to 12 tonnes of rice, puffed rice, jaggery, sugar, or anything equivalent, including pharmaceuticals. All these would be standardised in terms of cartons which will be specified, and therefore Mangalore will very easily become the stopping point for aggregation and disaggregation at respective ports in Africa, with Jindal as a brand that will go into steel. Other subsidiaries will also be dealing with exportable surpluses of clothing and construction material like cement, which can move along with this as small cargo without prejudice to the steel, which is fungible. So this is called innovation, as the freight element in break bulk versus containers can then get established, and profit would also be in transportation. The term logistics nowadays is described as a total service function from door to door. So it makes sense for Indian expertise, especially North Indian expertise, as employment is an issue, that the dealerships located at destinations can be managed remotely with the use of natural intelligence and artificial intelligence. Locals will then get employed, which will be highly emotionally gratifying, and expansion in employment will be possible in about 110 nations, which India will then connect through ports of reckoning without congestion. Through such channels, good business can be created on a friendly basis with Maldives, Seychelles, and islands around the world, where even barge-mounted containers can get delivered, and India would become a maritime nation. With collaboration from countries like Austria, New Zealand, and Japan, for instance, the island of Okinawa can connect to Korea for Indian goods and services associated with the marine sector.Notes- Containers have a lifecycle. – Perishable. – They need servicing, which means backward integration into the Bellary region for high-quality repairs and maintenance, which can be done along railway tracks and where labour turnover is easier to establish. This concludes the two-part series on India’s Marine Container Value Chain
Posted by G Giridhar Prabhu

Building India’s Marine Container Value Chain:

Corten Steel, Manufacturing and Leasing Part 1 The value chain on containers and the metrics involved have to address a few questions. a. One, whether fabricating a container is better in domestic territory, specifically for Indian conditions. Across India, there would be a regular requirement for certified ISO marine containers, which can currently be estimated at around 300,000 brand-new units, fungible from any origin to any destination within India. b. Two, when marine containers are leased to the three biggest users of marine containers in the world, they are: – Maersk, headquartered in Denmark, now known globally as Maersk. This is a Denmark-based oligopoly. – The next is MSC, short for Mediterranean Shipping Company, headquartered in Switzerland and also one of the biggest and best-operated shipping lines. – The third is CMA CGM, which is also a family-based organisation and operates out of the port of Marseille in the south of France. – American President Lines, called APL, is based out of the USA and, ironically, is partially or fully owned by CMA CGM, even though “American” is attached to the name. These are European entities and have overtaken the American agenda in terms of owning and operating huge container ships, each time improving their operational abilities. They are now dominant from any port to any port, managing scale and size efficiently. On the eastern side, Japan hosts its own national shipping lines. There was a Korean entity which went bankrupt, but ultimately the bankruptcy was adjusted in world interest, and they either merged or were completely taken over, though this process took time. Japan has a reputation for having its own line-up, but it is again confronted with cost issues. Research and study on Japan’s container lines will also have to contend with the fact that they would be very interested in operating out of Sri Lanka, which may be better than operating out of places such as Krishnapatnam or Bangalore, and they would be interested if Indians collaborated. There are independent lenders, each of whom operates out of an island jurisdiction, maybe Hong Kong, Singapore, or any free trade zone, which gives them operational flexibility without sacrificing competitiveness in leasing. Each company has a policy to own containers of its own, which they order from China according to ISO specifications. They prefer to lease rather than buy, because even if they are cash-rich, leasing gives them ease of operation as well as ease of ownership. Eventually, they can sign off containers once they have gone through their life cycle. It is not known to me what the exact life cycle is within this oligopoly, after which tenders are called and old containers are sold off. This typically happens from Hong Kong, Singapore, or similar locations. In India, the value chain for Corten steel depends on a major steelmaker like JSW Steel having the ability to manufacture Corten steel exactly to the required specifications. The reason why Corten steel is important is that containers are exposed to rough seas and salt air and are therefore prone to rust easily. Hence, ordinary steel sheets are unsuitable. The steel must therefore be specially coated or evolved with material suitable for long-term marine exposure. This leads to the second and third questions: whether special economic zones, such as in Mangalore, or a dedicated 25-hectare sector-specific special economic zone for assembly and services, can be created next to the JSW plant in Bellary or near any plant producing the required sheets. These sheets can then be transported over short rail distances, after which fabrication of marine containers can take place. The entire setup would need to be equal to or better than what is currently being done in China, connected directly to a railhead. Any company can then take the following steps: a) Fabricate or independently order 50,000 wagons suited only for containers. For this, the wheel sets would have to be specially prepared. JSW or Jindal can manufacture the long rails that would go into third-line and fourth-line loops. b) Indian Railways permits operations on privately owned flat wagons. Flat wagons are easier to manufacture and can provide a rate of return of approximately 8% to 8.25%. Therefore, 100% of the value of this asset can potentially be structured as bonds, graded and rated so that they can be picked up by mutual funds, debt funds, and even national pension schemes approved by private pension funds. These instruments can also be traded internationally, with portfolio investments invited in any currency, including the Japanese yen. c) In Mangalore, there are two specific areas where collaborations can happen between at least nine high-net-worth private individuals, who can then be allotted these containers as partial or total investments. This would allow them to claim depreciation while also earning returns higher than the standard rate of return, which will be discussed further in the business plan. d) In the Mangalore SEZ, approximately 120 acres are currently available. In my opinion, not more than two hectares would be sufficient for managing positioning or repositioning because of the services element that comes within a special economic zone. Preferably, this should become a subsidiary of either Jindal or JSW and should only perform leasing functions, while ownership can remain with multiple stakeholders. e) There is also land, approximately 40 acres or possibly less, owned by the Agarwals of the Emami Group, which they have already paid for and are prepared to surrender. Therefore, the Jindals can take over the entire 40 acres, though due diligence would be required to determine whether a railway track can be connected up to the point linking with the Konkan Railway or Southern Railway networks connecting to Tokur. This would involve a stretch of a few kilometres, approximately two to five kilometres. f) That portion of the land, approximately one to two kilometres in length, can serve as a railhead inside the compound of the special economic zone. A compound wall would need to be constructed, creating a sector-specific SEZ, which should be relatively easy to obtain through the Board of Approvals under the Ministry of Commerce and in the national interest. g) The fabrication process can then operate on a 16-hour shift basis, from 7 a.m. to 9 p.m., considering Bangalore operational standards, for six days a week. Intelligent systems can ensure that once fabricated parts enter the system, they remain securely available for inspection. h) Inspection must comply with ISO standards and can be carried out by at least ten agencies in India, including entities such as Bureau Veritas, DNV, or other Denmark- or Netherlands-based certifying agencies physically present at the plant. Next in the Series: The next article examines ISO container standards, repositioning strategies, inland ports, global logistics networks, and India’s opportunity to become a major marine container hub.
Posted by G Giridhar Prabhu