RAJEEV GANDHI COLLEGE OF MANAGEMENT STUDIES

GHANSOLI, NAVI MUMBAI-400701

A PROJECT REPORT ON:

“PROCESS ANALYSIS OF IMPORTS OF CONTAINERS IN
SHIPPING INDUSTRY”

SUBMITTED
FOR THE AWARD OF DEGREE OF
MASTER OF BUSINESS MANAGEMENT IN OPERATIONS
[2020-2021]

SUBMITTED BY:
AKASH BISWAJIT MALO
ROLL NO:
201921007

UNDER GUIDANCE OF
MS. PIYUSHA AMBRADKAR

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 MMS (Operations) – SEM:3
Batch: 2020- 2021

CERTIFICATE

This is to certify that Mr. Akash Biswajit Malo is a bonafide

student of this Institute. As a part of the University curriculum, the
student has undergone study of “Process Analysis Of Imports Of
Containers In Shipping Industry” in Rajeev Gandhi College of
Management Studies during the period from 2019 - 2021 in the
partial fulfilment of the requirement for the award of the Degree of

“Master’s in Management Studies (MMS).

Date: ………………

Place: ……………...

Signature Signature
Piyusha Ambradkar Dr.Anil Matkar

(Teacher Guide) (Director)

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 UNDERTAKING

I, Akash Biswajit Malo have completed the Summer Internship

Project titled “PROCESS ANALYSIS OF IMPORTS OF
CONTAINERS IN SHIPPING INDUSTRY” under the guidance of
Dr.Anil Matkar in the partial fulfilment of the requirement for the
award of degree of Master in Management Studies (MMS) of
Mumbai University. This is an original piece of work & I have
neither copied and nor submitted it earlier elsewhere.

Student’s Name & Signature

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 ACKNOWLEDGEMENT

I am thankful to RAJEEV GANDHI COLLEGE, for giving me

an opportunity to work on this project. I would like to thank our
Director, RGCMS, DR. ANIL MATKAR.

I would also like to thank our exam coordinator Prof. Farheen

Ahmad and my project guide Prof. Piyusha Ambradkar for
helping throughout the project. Without their support this project
would not have been a success.

A special thanks to my parents who provide me with the essential

materials and helped me to proceed with my project. Also, special
thanks to my friends who helped me. Without their support this
project would not have been possible.

Thank you,
Date:

Akash Biswajit Malo

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 INDEX

SR NO PARTICULAR

1 Introduction

2 Profile of Organisation

3 Objective of study

4 Scope of study

5 Limitations

6 Research Methodology

7 Data Analysis And Interpretation

8 Findings And Recommendations

9 Bibliography

10 Appendix

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CHAPTER 1: INTRODUCTION

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 What are Container Ships?

 Container ships are cargo ships that carry all of their load in truck-size
intermodal containers, in a technique called containerization. They are a
common means of commercial intermodal (involving two or more different
modes of transport in conveying goods) freight transport and now carry most
seagoing non-bulk cargo.
 As the name suggests, a vessel structured specifically to hold huge quantities
of cargo compacted in different types of containers is referred to as a
container vessel (ship). The process of sending cargo in special containers is
known as containerization.

Containers are used to transport objects from one place to another.  Unlike
conventional shipping, container shipping uses containers of various standard sizes—
20 foot (6.09 m), 40 foot (12.18 m), 45 foot (13.7 m), 48 foot (14.6 m), and 53 foot
(16.15 m)—to load, transport, and unload goods or objects. As a result, containers can
be moved by trains, ships and trucks.  Most commonly and important container sizes
are 20-foot and 40-foot lengths. The 20-foot container is generally referred to as a
Twenty-foot Equivalent Unit (TEU) and the 40-foot container is known as the Forty-
foot Equivalent Unit (FEU).

Containers are generally made up of aluminium and steel. The size and type built of
each container comply with specifications and regulations formulated by the
International Organization for Standardization (ISO).  

Shipping containers are of various types. The most important type of container is dry
cargo. Dry cargo containers are often referred to as special containers. These special
containers include open side, open end, open top, half-height, flat rack, refrigerated,
liquid bulk, and modular. These containers are built as a same exterior lengths and
widths as the standard dry cargo containers.  

In addition, open top containers are used for easy loading of cargo such as odd-sized
goods and machineries. Flat racks are used for vehicles, boats, machineries and
industrial equipment. Open side containers are used for transporting vegetables such

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as onions and potatoes. Tank containers are used to transport liquids such as
chemicals, wine, and vegetable oils.

Each container has its own unique unit number, often known as box number. Box
numbers are used by crew members, ship captains, coastguards, customs officers,
dock supervisors, and warehouse managers to identify the owner of a container and
who is using it to ship goods, and to track the container's location across the world.

The container sizes need to be standardized so that they can be stacked most
efficiently. It transport one on top of the other in trains, ships, trucks and cranes at the
ports can be specially fitted or built to a single size specification.  Container size
standardization is carried out by the ISO whose primary work is to set standard sizes
for all containers.

The most important step in container shipping is proper loading of containers in

trucks, ships, and trains. Several government associations such as the World Shipping
Council (WSC), together with the International Chamber of Shipping (ICS), published
the Transport of Containers by Sea - Industry Guidance for Shippers and Container
Stuffers. It provides specific guidelines to shipping companies to transport containers
in a safe and efficient way.

In terms of geography, North America dominates the global container shipping

market. This is due to improved transportation services in this region. The U.S.
represents the largest market for container shipping followed by Canada in North
America. In Europe, Germany, the U.K., Spain, Italy, and France hold the major share
of the container shipping market. Asia is expected to witness high growth rates in the
next five years, as many companies are constructing manufacturing facilities in this
region. The rising number of manufacturing units would result in significant rise in
demand for containers. Improving transportation services are boosting growth of the
container shipping market in this region. Japan, China, and India are expected to be
the fastest-growing container shipping markets in Asia. 

Increasing demand for transportation services is a key driver of the global container
shipping market. Rising number of factories and manufacturing units has fuelled
growth of the global container shipping market. In addition, several government
associations are also boosting growth of the global container shipping market by
providing specific guidelines to shipping companies.

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CHAPTER 2: PROFILE OF THE ORGANIZATION

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A.P. Moller – Maersk A/S (Danish pronunciation: [ˈɛˀ ˈpʰe̝ ˀ mølɐˈmɛɐ̯sk]), also known
as simply Maersk, is a Danish integrated shipping company, active in ocean and
inland freight transportation and associated services, such as supply chain
management and port operation. Maersk has been the largest container ship and
supply vessel operator in the world since 1996. The company is based in Copenhagen,
Denmark, with subsidiaries and offices across 130 countries and around 80,220
employees in 2018.

It is a publicly-traded family business, as the company is controlled by the namesake

Moller family through holding companies. In September 2016, Maersk Group
announced that it was splitting into two separate divisions: Transport & Logistics, and
Energy. The company's 2018 annual revenue was US$39 billion (2019).

History of Maersk:-

Dampskibsselskabet Svendborg (Danish for '"Svendborg Steamship Company"') was

founded in Svendborg in April 1904 by Captain Peter Maersk Moller (1836–1927)
and his son Arnold Peter (A. P.) Moller (1876–1965). A. P. Moller had four children,
all by his first wife Chastine Estelle Roberta Mc-Kinney. Their second child was
(Arnold) Maersk Mc-Kinney Moller (1913–2012), who became a partner in 1939 and
head of the firm upon his father's death. In 1993, he was succeeded as CEO by Jess
Søderberg. He continued as chairman until December 2003, at which point he was 90
years of age and Michael Pram Rasmussen took over. Maersk Mc-Kinney Moller was
until his death one of the "managing owners" of the company and was chairman of
Odense Steel Shipyard until 2 May 2006.

In 2017, the company was one of the main victims of the NotPetya ransom malware
attack, which severely disrupted its operation for several months.

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Emblem:

P. M. Moller (1836–1927), who was a deeply

religious Christian, attached a blue banner with a
white seven pointed star on both sides of the black
chimney on the steamship Laura when his wife
recovered from illness. In a letter to his wife, P. M.
Moller explained in October 1886, "The little star on
the chimney is a memory of the night when I prayed
for you and asked for a sign: If a star would appear
in the gray and cloudy sky, it would mean that the Lord answers prayers." The same
star later became the emblem of the Maersk Group.

A.P. Moller–Maersk is structured into two main business segments: transport &
logistics and energy. These two branches include several subsidiaries such as
container shipping and related activities; APM Terminals; tankers, training, offshore
and other shipping activities; oil and gas activities; retail activity; and shipyards, other
industrial companies, interest in Danske Bank, etc.

"Container shipping and related activities" is the largest business area for A.P.
Moller–Maersk, providing almost half of the group's revenue in 2008. It comprises
worldwide container services, logistics and forwarding and terminal activities under
the brand names: Maersk Line, Safmarine, and Damco. Since 1996, Maersk has been
the largest container shipping company in the world.

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 HISTORY OF CONTAINERIZATION

Modern container shipping celebrated its 50th anniversary in 2006. Almost from the
first voyage, use of this method of transport for goods grew steadily and in just five
decades, containerships would carry about 60% of the value of goods shipped via sea.

The idea of using some type of shipping container was not completely novel. Boxes
similar to modern containers had been used for combined rail- and horse-drawn
transport in England as early as 1792. The US government used small standard-sized
containers during the Second World War, which proved a means of quickly and
efficiently unloading and distributing supplies. However, in 1955, Malcom P.
McLean, a trucking entrepreneur from North Carolina, USA, bought a steamship
company with the idea of transporting entire truck trailers with their cargo still inside.
He realized it would be much simpler and quicker to have one container that could be
lifted from a vehicle directly on to a ship without first having to unload its contents.

His ideas were based on the theory that efficiency could be vastly improved through a
system of "intermodalism", in which the same container, with the same cargo, can be
transported with minimum interruption via different transport modes during its
journey. Containers could be moved seamlessly between ships, trucks and trains. This
would simplify the whole logistical process and, eventually, implementing this idea
led to a revolution in cargo transportation and international trade over the next 50
years.

BEFORE CONTAINER SHIPPING

For many thousands of years, mankind has shipped goods across the oceans, from one
land to another. Think of the great seafaring peoples; the Phoenicians, Egyptians,
Greeks, Romans, Portuguese, Spanish, British and many more. Sailing the world
looking for new treasures, they brought home and traded food, jewels and materials
that their countrymen had never seen before. But the process was never easy. The
loading and unloading of individual goods in barrels, sacks and wooden crates from
land transport to ship and back again on arrival was slow and cumbersome.

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Nevertheless, this process, referred to as break-bulk shipping was the only known way
to transport goods via ship up until the second half of the 20th Century.

The loading and unloading of the ship was very labour intensive. A ship could easily
spend more time in port than at sea while dockworkers manhandled cargo into and out
of tight spaces below decks. There was also high risk of accident, loss and theft. There
were some basic systems in place to make the process more efficient, such as the use
of rope for bundling timber, sacks for carrying coffee beans, and pallets for stacking
and transporting bags or sacks. However, industrial and technological advances, such
as the spread of the railways in the 18th century, highlighted the inadequacies of the
cargo shipping system. The transfer of cargo from trains to ships and vice versa
became a real problem.

Before the container shipping industry emerged, boxes of various types and sizes had
often been used in transporting cargo simply because they were the logical way to
move things en masse from one location to another. However, despite these
developments, cargo handling was almost as labour-intensive after World War II as it
had been in the mid-1800s.

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 THE BIRTH OF INTERMODALISM

To realize intermodal cargo transport, all areas of the transport chain had to been
integrated. It was not simply a question of putting cargo in containers. The ships, port
terminals, trucks and trains had to been adapted to handle the containers.

The Containership: On 26 April 1956, Malcom McLean's converted World War II

tanker, the Ideal X, made its maiden voyage from Port Newark to Houston in the
USA. It had a reinforced deck carrying 58 metal container boxes as well as 15,000
tons of bulk petroleum. By the time the container ship docked at the Port of Houston
six days later the company was already taking orders to ship goods back to Port
Newark in containers. McLean's enterprise later became known as Sea-Land Services,
a company whose ships carried cargo-laden truck trailers between Northern and
Southern ports in the USA.

Other companies soon turned to this approach. Two years later, Matson Navigation
Company's ship Hawaiian Merchant began container shipping in the Pacific, carrying
20 containers from Alameda to Honolulu. In 1960, Matson Navigation Company
completed construction of the Hawaiian Citizen, the Pacific's first full container ship.
Meanwhile, the first ship specifically designed for transporting containers, Sea-Land's
Gateway City, made its maiden voyage on 4 October 1957 from Port Newark to
Miami, starting a regular journey between Port Newark, Miami, Houston and Tampa.
It required only two gangs of dockworkers to load and unload, and could move cargo
at the rate of 264 tons an hour. Shortly afterwards, the Santa Eliana, operated by

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Grace Line, became the first fully containerized ship to enter foreign trade when she
set sail for Venezuela in January 1960.

The Container: It was a logical next step that container sizes could be standardized
so that they could be most efficiently stacked and so that ships, trains, trucks and
cranes at the port could be specially fitted or built to a single size specification. This
standardization would eventually apply across the global industry.

As early as 1960, international groups already recognizing the potential of container

shipping began discussing what the standard container sizes should be. In 1961, the
International Organization for Standardization (ISO) set standard sizes. The two most
important, and most commonly used sizes even today, are the 20-foot and 40-foot
lengths. The 20-foot container, referred to as a Twenty-foot Equivalent Unit (TEU)
became the industry standard reference with cargo volume and vessel capacity now
measured in TEUs. The 40-foot length container - literally 2 TEUs - became known
as the Forty-foot Equivalent Unit (FEU) and is the most frequently used container
today. Lean more about containers.

INDUSTRY GLOBALIZATION

On 23 April 1966, ten years after the first converted container ship sailed, Sea-Land’s
Fairland sailed from Port Elizabeth in the USA to Rotterdam in the Netherlands with
236 containers. This was the first international voyage of a container ship.

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Meanwhile, during the rapid build-up to the Vietnam War, the US military was faced
with the logistical problem of getting supplies to troops. It had somehow to transport
mass supplies to a war zone in south-east Asia through a single under-developed port
on the Saigon River and a partially-functioning railway. The government turned to
container shipping as the most efficient option.

Container shipping began to prove its worth at an international level. From this point
on the industry began to grow to the point where it would quickly become the
backbone of global trade, even though few at the time would have made such bold
predictions.

1968 and 1969 were the Baby Boomer years for container shipping. In 1968 alone, 18
container vessels were built, ten of them with a capacity of 1,000 TEUs which was
large for the time. In 1969, 25 ships were built and the size of the largest ships
increased to approaching 2,000 TEU. In 1972, the first container ships with a capacity
of more than 3,000 TEU were completed by the Howaldtwerke Shipyard in Germany.

Now an entire industry had emerged, demanding unprecedented investment in vessels,

containers, terminals, offices and information technology to manage the complex
logistics. Throughout the 1970s and 1980s the container shipping industry grew
exponentially. There were now connections between Japan and the US west coast, and
Europe and the US east coast. The Europe–Asia route began to be serviced by
consortia (a group of carriers sharing space on ships) in the early 1970s as well as
some independent services. By the end of the decade, shipping between Europe,
South East and Eastern Asia, South Africa, Australia/New Zealand, North America
and South America were all largely containerized. In 1973, US, European and Asian
containership operators were carrying 4 million TEUs all over the world. By 1983,
this would rise to 12 million TEUs by which time containers had also arrived in the
Middle East, the Indian sub-Continent, and East and West Africa.

The present-day industry is truly global and touches all out lives in ways we cannot
imagine. The Economist recently declared that, "new research suggests that the
container has been more of a driver of globalisation than all trade agreements in the
past 50 years together."¹ Marc Levinson, a noted economist, suggests that the
container and container shipping are largely responsible for the growth of global

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trade. Read an excerpt from his book, The Box: How the Shipping Container Made
the World Smaller and the World Economy Bigger.

TYPES OF
CONTAINERS

 General Purpose Containers: A

general purpose container is also
known as a "dry container". These
shipping containers are fully
enclosed, protected from the
elements and weather proof, with a rigid roof, side walls and floor. Dry
containers are by far the most common type of container, and as such are used
to load most types of normal cargo. In addition, general purpose containers
can have adaptations such as liner bags or flexi-tanks for shipping certain
types of liquid bulk cargo or dry bulk cargo.

 Flat rack Containers: This

simple storage container has
collapsible sides that can be
folded to make a flat rack. The
end walls are stable enough to
allow cargo securing, so they are
ideal for shipping goods that are
oversized, such as heavy
machinery, vehicles on tracks, big
reels and construction materials. Some 40' flat rack shipping containers are
suitable to carry as much as 45 metric tons of cargo!

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 Open Top Containers: An open top
shipping container has a
convertible top that can be
completely removed. This is
suitable for cargo that is over-
height and cannot be easily
loaded through the door, such as
tall machinery or other heavy / bulky finished products whose handling and
loading can only be performed with a crane or rolling bridge. Open top
containers have lashing rings installed to the upper and lower side rails and
corner posts to secure cargo, and are available in 20’ and 40’.

 Double Door Containers: With

doors on both ends of the shipping
container, this container type is
also known as a "tunnel
container". Double door
containers are extremely helpful
for quickly loading and unloading
goods, and they make an even
wider room for goods such as
steel and iron. Both sets of doors have the same locking assembling and
weather tight seals to keep cargo protected from the elements.

 High Cube Containers: High

cube shipping containers are
similar in structure to general
purpose containers, but taller by
about 1 foot. These containers
come in sizes 40' and sometimes
45', and are used in cases where a
slightly bigger volume capacity is
required. Most high cube
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 containers have a recess in the floor at the front end to centre the container on
so-called gooseneck chassis, which allows it to lie lower and be of taller
construction.

 Open Side Containers: Open

side containers are very similar to
regular, general purpose shipping
containers, the only difference
being that the doors can open
completely on the side too. This
feature provides much wider
room and access, which makes
loading and unloading materials easy. Open side shipping containers generally
come in 20' and 40', and they provide adequate room for extra-large items that
can't fit through the regular doors.

 Insulated Containers: Like the

ISO Reefer container, an insulated
or thermal container has a
regulated temperature control that
allows them to withstand a higher
temperature. They are equipped
with an electrical compliance
(mechanical compressor) to cool
or heat the air within the
container. Insulated containers are typically constructed of a vacuum flask,
similar to a "thermos" bottle. As such, they are most suitable for long distance
transportation of products such as foods, pharmaceuticals, organs, blood,
biological materials and chemicals.

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 ISO Reefer Containers: An
ISO shipping container is used
for the shipment of temperature
sensitive, perishable cargo such
as meats, fruits and vegetables.
This container type relies on
external power to keep the
temperature regulated. Reefers
generally come in 20’ and 40,
and are commonly made from a weathering steel known as 'Cor-ten' steel.

 Tank Container: Tank

containers, or tankers, are made
of strong steel or other anti-
corrosive materials for the
transportation and long-life
protection of liquid materials. A
tank container must be at least
80% full to prevent dangerous
surging of liquids in transit, but
it must also not be over 95% full or there would not be sufficient room for
thermal expansion.

 Swap Body Container: Swap

bodies are exchangeable
containers used for road and rail.
They are commonly used in
Europe. Swap bodies have a
convertible top, which makes
them suitable for shipping a range

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 of goods. Because swap bodies do not have upper corner fittings and are not
stackable, they are restricted to land-based transportation only

TOP CONTAINER SHIPPING COMPANIES

Market
Company Headquarters Ships
share

APM-Maersk Denmark 681 17.7%

Mediterranean Shipping Company Switzerland 574 16.0%

COSCO Group China 487 12.4%

CMA CGM Group France 533 11.4%

Hapag-Lloyd Germany 238 7.4%

ONE (Ocean Network Express) Japan 210 6.7%

Evergreen Marine Taiwan 197 5.4%

HMM (Hyundai Merchant Marine Co.

South Korea 69 2.7%
Ltd.)

Yang Ming Marine Transport Co. Taiwan 91 2.7%

PIL (Pacific International Lines) Singapore 108 1.4%

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 Container Shipping Process
Shipping internationally can be complicated and sometimes confusing. With many
obstacles to overcome and hoops to step through along the way, working with a
qualified freight forwarder is the best way to ensure the shipping process is as smooth
as possible.

The success of an international trade transaction depends on how one manages the
shipping process. In this blog, we will explain how the shipping process works from
start to finish, touching upon the following subjects:

 The main players in the shipping process and their roles :-

 A step-by-step guide to how the shipping process works

Main players in the shipping process

1. Importer: The importer is the buyer. He identifies the need for a product at a
specific location, searches for the best supplier globally, and places an order for
purchase. There are three types of importers:

 Actual user, who utilises the imported goods for himself. An actual user can
be industrial (uses the goods for manufacturing in his own industrial unit) or
non-industrial (utilises the goods for his own use in a commercial unit, lab,
research institute, university, hospital, etc.)

 Established importer, who, as the name suggests, is granted a quota to import a

product on the basis of past imports

 Registered exporter, who imports under the government’s export promotion

schemes.

2. Exporter: The exporter is the seller. He manufactures or procures the product

required by the buyer. The various types of exporters are:

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  Merchant exporter, who procures the product from the market or manufacturer
and exports it in his name

 Manufacturer exporter, who procures raw material, manufactures the goods

and exports the finished product

 Service exporter, who exports services (software, consultancy services, etc.)

 Third-party exporter, who exports goods and services on behalf of another

exporter (manufacturer exporter)

 Project exporter, who provides goods and services on contract (designing,

manufacturing, etc.) and earns foreign exchange

 Deemed exporter, who supplies goods that don’t leave the country and
receives payment in Indian currency. Such a transaction qualifies as an export
because the goods are meant for specific projects (UN agency projects, power
projects, nuclear projects, etc.)

3. Bank: Banks play multiple roles in international trade. They act as financiers,
providing loans and trade finance products such as Letters of Credit and Documentary
Collections. A Letter of Credit is a promise by a bank on behalf of the importer to pay
the exporter an agreed-upon sum. A Documentary Collection is when a bank takes

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charge of collecting the payment due to an exporter from the importer’s bank. In
addition, banks negotiate trade contracts and are custodians of goods and documents.
Documents are vital to the import-export business. To know about the key documents
required for a hassle-free shipping experience, read our other blog here.

4. Insurance Company: Shipping goods comes with risks, including but not limited
to lost or damaged cargo, delays and additional costs due to factors such as natural
disasters, human error, theft, piracy and more. Insurance companies help cover these
risks.

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5. Freight Forwarder: Freight is the cargo carried by ships and a freight forwarder is
an agent who, on behalf of the importer or exporter, coordinates with all the other
players (port and customs authorities, shipping company, etc) in the ocean freight
business. His responsibilities include negotiating for better routes and rates, handling
paperwork and other formalities, organising land transportation, being an advisor to
the importer/exporter, and much more.

6. Shipping Company: The Company that owns the carrier (ship) that transports the
goods from the port of loading to the port of destination.

7. Customs House Agent (CHA): A customs house agent assists exporters and
importers in getting clearance for the cargo from customs authorities.

8. Customs Authorities: In international trade, the customs authorities of at least two

countries – the country of export and country of import – are involved. They provide
clearance for goods to leave the country of export and to enter the country of import.

9. Port Authorities: Like customs authorities, the port authorities of at least two
countries are involved in the shipping process. In the exporting country, they provide
clearance for goods to be loaded on to the ship. In the importing country, they provide
clearance for goods to enter that country.

10. Intermodal Transport Providers: Rail and road transport providers facilitate the
movement of goods from the factory/warehouse to the port of loading and from the
port of destination to the final destination.

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 A step-by-step guide to how the shipping process works

Contrary to popular belief, the international shipping process does not start when a
product is loaded onto a ship. It starts much earlier, when an importer identifies the
need for that product and floats an enquiry to procure it. As such, the shipping process
covers the flow of goods and documents from the place of origin to the place of
destination. For the process to be completed successfully, the transfer of goods and
documents from one party to another must be highly synchronised.

1. Importer orders goods from supplier.

2. Pro forma invoice is provided (similar to a quote).
3. Purchase order is created.
4. Buyer hires a freight forwarder to handle the transport of the goods.
5. Freight forwarder confirms incoterms with the buyer and the supplier.
6. Buyer obtains letter of credit from the bank to pay for the goods.
7. The supplier’s bank approves the letter of credit.
8. Manufacturing of the good begins.
9. Supplier provides the buyer an order confirmation and a commercial invoice.
10. Freight forwarder contacts their overseas partner to arrange the movement of
the goods locally.
11. Agent contacts the supplier locally to arrange the movement of the freight.
12. Supplier provides all the documents necessary for exports which will be
handled on the buyer’s behalf by the freight forwarder.
13. With the documentation in order, the supplier books the shipment for export.
14. When a carrier arrives to pick up the goods at the supplier’s warehouse a bill
of lading is issued.
15. The buyer will be required to present the bill of lading in order to secure the
release of the shipment and claim ownership over the goods. The freight
forwarder can manage this process.
16. Goods are customs cleared and delivered to the agreed location of the buyer.
17. Suppliers complete the Export declaration.
18. Only then goods are placed in international transit.
19. Goods arrive in buyer’s country for import clearance.

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20. The cleared goods are finally delivered from the destination country port to the
buyer.

UNDERSTANDING THE PROCESS IN DETAIL

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Step 1:-

Importer requests
quotes and orders
goods

The first step in the

shipping process is when
an importer (also known
as the consignee) orders
goods from a supplier
(also known as the
consignor).

In a usual import, buyers

will generally ask
suppliers for a quote
when looking at goods to
purchase. The quote can
often be accompanied by,
or be in the form of, a
pro forma invoice. A pro
forma invoice is effectively an invoice that is used to provide an estimate and can be
subject to change. This differs from a commercial invoice which is a final and official
invoice used for customs clearance declarations.

Once the quote has been approved, the consignee will often create a purchase order. A
purchase order is simply a contract outlining the details of the order and cost of the
goods. Depending on the business, a comprehensive purchase order will also contain
projected shipping date, origin and destination addresses as well as the freight
dimensions.

(The above image is sample of Pro forma invoice)

Agreeing on shipping incoterms

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When a buyer issues a purchase order to a supplier, the contract should be governed
by one of the many incoterms. Prior to reading on, you should familiarise yourself
with the incoterms which were updated for 2020.

Incoterms are essentially the terms that allocate the costs and the risks between the
buyer and seller when shipping. Essentially, they determine who is responsible for
what whilst the goods are moving from Point A to Point B.

It is critical to select the set of Incoterms that are most appropriate for the transaction.
Failure to allocate the correct incoterm could cost a buyer much more money than
originally anticipated.

The incoterms will also determine which party needs to engage a freight forwarder for
the individual stages of the shipping process. For the purpose of this process
overview, we assume our importer has purchased the goods on EXW terms and will
be responsible for all stages of the shipping journey.

Whether you are just starting out or have been importing and exporting for a while,
incoterms can confuse the best of us. So what are incoterms and what do they actually
mean?

What Are Incoterms?

Incoterms are terms of trade that identify the division of costs and risks between the
buyer and seller when shipping internationally. They are often discussed when costs
are negotiated during the sales process. Make sure you know your incoterms to avoid
any hidden charges during the shipping process.

Incoterms is an acronym standing for international commercial terms.

“Incoterms®” is a trademark of International Chamber of Commerce, registered in
several countries.

The latest version of Incoterms®, which are the Incoterms® 2020, was released in
2019.

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Why are they so important?

Unlike national trade policies, Incoterms rules are universal, providing clarity and
predictability to business around the world. A requirement on every single
commercial invoice, they greatly reduce the risk of potentially costly
misunderstandings.

What Are The Different Types Of Incoterms?

The incoterms 2010 revisions have modified the 13 total rules in the 2000 version to
11 total rules in the 2010 version – which is still in effect as to 2019.

EXW (Ex Works)

The Ex Works incoterm provides the seller with the least obligation, in regards to
shipping costs and liabilities. The seller makes the goods available at chosen premises
and the buyer must organise all elements of shipping. This includes collection at
origin, freight, delivery, duties and GST. The risk transfers to the buyer when they
collect the goods from the named premises. The buyer takes on all costs until final
delivery.

FCA (Free Carrier)

For FCA shipments, the seller makes the goods available to a carrier stipulated by the
buyer. The buyer must also coordinate the export clearance. From here the risks and
costs are transferred to the buyer. This includes terminal and loading charges at the
port of origin. The buyer will also be responsible for all charges from freight to final
delivery and customs charges at the end destination.

FAS (Free Alongside Ship)

For FAS shipments the seller makes the goods available alongside the vessel at the
named port of shipment and coordinates the export clearance. The seller takes on all
origin charges including terminal charges but the buyer pays for loading onto the
vessel and all charges thereafter.

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FOB (Free On Board)

When shipping on FOB terms the seller is responsible for all origin charges. This
includes loading onto the named vessel. The risks and costs are then transferred to the
buyer. The buyer is then responsible for the freight, any insurance required and all
charges to final destination.

CPT (Carriage Paid To)

When shipping on CPT terms the seller is responsible for making the goods available
at a named place of destination. With these terms, the buyer is responsible for any
additional transportation, duties and taxes. The buyer is also responsible for any
insurance required during transit.

CFR (Cost and Freight)

The CFR incoterm means all charges, including freight up until the intended port of
destination, are born by the seller. However, as a buyer be cautious. The risk for the
buyer takes over when the goods are loaded on the vessel, so even though you are not
paying for the freight you may want to insure your shipment. All remaining charges at
the destination are then settled by the buyer.

CIP (Carriage & Insurance Paid To)

Similar to CPT terms the seller is responsible for making the goods available at a
named place of destination. The seller must also procure insurance to cover the goods
during transit to the named destination. The buyer is only responsible for any
additional transportation and duties and taxes upon arrival.

CIF (Cost, Insurance and Freight)

This term is the same as CFR only the seller is responsible for the goods and any
insurance up until the goods arrive at the intended destination port. Once the goods
arrive the buyer takes on all risks and final associated charges.

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DAT (Delivered at Terminal) – No longer in use

On DAT terms the seller ensures the goods are delivered to the destination terminal.
The seller is also liable for all costs and insurance up until this point. The buyer then
takes on responsibility for any clearance and final delivery charges.

DAP (Delivered At Place Unloaded)

The DAT term contained in Incoterms 2010 has changed to DPU in the Incoterms®
2020 edition.

Delivered at Place Unloaded (DPU) requires the seller to deliver the goods at the
disposal of the buyer after they’ve been unloaded from the arriving means of
transport. It is the only Incoterms rule that requires the seller to unload goods at the
place of destination and it can apply to any—and more than one—mode of transport.

DAP (Delivered At Place)

DAP means the shipment is delivered to a chosen location at the destination. The
seller is responsible for all charges up until the goods are delivered to the final
location. The buyer is responsible for unloading these goods and any duties and taxes
applicable.

DDP (Delivered Duty Paid)

DDP terms represent the least cost and risk for the buyer. The seller is responsible for
ensuring the goods are delivered to the final destination import cleared. This means
the seller takes on all costs and liability for the entire shipment. The buyer is only
responsible for unloading goods upon arrival.

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 UPDATED INCOTERMS 2020

Engaging a freight forwarder

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Once the purchase has been agreed and the incoterms selected (in this case EXW), the
importer can then arrange for a freight forwarder to manage the transportation of the
goods from Point A to Point B.

Obtaining a Letter of Credit

When an order is made, a common way to pay the supplier is to obtain a letter of
credit. Many buyers use this because it’s one of the most secure payment methods in
international shipping. It’s essentially a binding legal agreement issued by a financial
institution (such as a bank) guaranteeing payment for the goods.

A buyer will typically apply for a letter of credit with a bank, outlining everything in
their order. When the bank finalises the letter, they will submit it to the supplier’s
bank, who will then check it off to ensure the supplier agrees with the terms and
conditions before manufacturing of the goods commences.

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Issuing of Commercial Invoice

Following this, the supplier will provide the importer with an order confirmation and
a commercial invoice. This invoice is a key document, detailing the price and quantity
of the sold goods. It will also contain the incoterm used.

It is vital for an importer to keep the commercial invoice in a safe place, as it provides
evidence of proof of sale and is required for customs clearance purposes.

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Step 2:- Freight forwarder arranges export

If you are working with an independent forwarder, the agent you have been dealing
with will then contact their overseas partner to arrange collection of the goods.

The overseas representative will in turn contact the relevant supplier and arrange for
the export of the buyer’s goods. This will involve the preparation of several key
documents used in the international shipping process which are required for customs
purposes.

Documents that need to be prepared by the supplier

 A Packing List: a supplier will prepare a packing list which will be used by a
freight forwarder to highlight all the information regarding the freight being
transported. It will include information such as the contact details of the
exporter and the buyer and how the goods are packed.

 A Certificate of
Origin: a supplier
will also prepare
this certificate if
they are exporting

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 to a free-trade country. This will be used to certify the location in which the
goods were produced so that the buyer may benefit from local free trade
agreements and avoid duty payments.

 A Shipper’s Letter of Instruction (SLI): a supplier may be required to

prepare an SLI, to provide the local shipping agent with a written record of the
shipping information.

 A Manufacturer’s Declaration: This is typically a declaration created by a

manufacturer for customs purposes. It declares information such as whether or
not the goods are toxic or hazardous and also declares what materials the
goods contain; and

 Dangerous Goods Forms: If a supplier is shipping dangerous goods as

classified by the International Air Transport Association (IATA) or the
International Maritime Organisation (IMO), they will be required to fill out
and include relevant dangerous goods forms.

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Documents that need to be prepared by the buyer

Each country has different requirements for export customs clearance. However, in
order to prepare a shipment for export from Australia, generally the following
documents are required:

 An Export Declaration: When exporting from Australia, a supplier will

typically be required to make an export declaration if the goods exported are
over AUD$2,000 in value or if an export permit is required. Some goods are
exempt from this requirement such as pets, mail, domestic cargo, military
goods and personal effects; and

 A permit to export/import prohibited goods: If a supplier or a buyer is

importing or exporting prohibited goods, they may require a special type of
licence depending on what goods they decide to import or export.

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All of the above can be handled on your behalf by a licensed customs broker and
freight forwarder.

Step 3:- Booking of Freight

Once the required documentation is in order, the supplier must make a booking for the
export shipment.

It is critical for freight to be booked early to avoid disappointment, especially if the

goods are going to be transported in peak shipping season.

Step 4:- Goods to travel to international depot/port

Once the goods are packed and ready, they will be transported to a depot or port for
export. Depending on the shipping incoterms, this will either be arranged by the
supplier or by the consignee through their freight forwarder. Export clearance can
then commence.

The Bill of Lading

When a carrier arrives to pick up the goods, a bill of lading is issued (also known as a
waybill or an air waybill in the United States). A bill of lading confirms that the goods
were received by the carrier in an acceptable condition.

This is an extremely valuable document, as it acts as proof of legal title over goods.

Several bills of lading may be involved in a shipment. For instance, a supplier may
require an ‘inland’ bill of lading if goods are being moved from a warehouse to a

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seaport (for the goods to travel via international transit). A separate bill of lading may
then be issued by an ocean carrier to a supplier if the next leg of the journey is by sea.

The supplier will then need to provide the bill of lading to the consignee (i.e. the
buyer). The buyer will be required to present the bill of lading in order to secure the
release of the shipment and claim ownership over the goods. Again, this can all be
coordinated through a freight forwarding company.

Step 5:- Goods processed through export customs clearance and

placed in transit

Prior to departure, the goods will be processed through export customs clearance. This
is where all documentation is reviewed and checked by government agencies.

As mentioned above, suppliers will typically be required to complete an Export

Declaration.

If the export is cleared, those goods will then be placed in international transit (where,
as mentioned, a separate bill of lading may be issued).

There are several modes of transport a buyer can select to transport their freight when
shipping by sea, including:

 Full Container Load (FCL): this is where the shipment of one buyer takes up
a full container;

 Lesser Container Load (LCL): where a buyer’s goods don’t take up the
whole container (instead, the goods take up less of the container) and are
stored with other buyers’ goods;

 Reefer: A reefer is essentially a large fridge used to refrigerate goods while in

transit – reefers are normally used to transport goods like fruits, meat,
vegetables, dairy and fish;

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  Out of Gauge (OOG): also known as break bulk, these are loads that are
basically too big to fit into a container (and usually come with an extra
surcharge).

 Flat Racks: As opposed to using standard shipping containers, buyers can

instead choose flat racks – these are great for goods that do not fit in normal
shipping containers (like break and OOG loads).

Step 6:- Goods arrive in buyer’s country for import clearance

Once a buyer’s goods arrive in the country of destination, the goods undergo an
import clearance. In Australia, all imported goods must be cleared through the border
by the Australian Border Force. There are several regulations you must follow
depending on the goods you are importing, whether they are motor vehicles, animals,
human remains or even intellectual property. Imported goods may be subject to
certain taxes, tariffs and/or charges. Depending on the commodity the goods may also
be subject to quarantine inspection on arrival. For example, if you are importing
plants, animals, certain minerals or human products such as human remains, the
Australian Department of Agriculture and Water Resources will inspect and/or treat
your goods for diseases and/or pests.

Step 7:- Goods are transported from the port to the buyer

Once the goods pass through customs and are good to go, they will then be delivered
to the buyer or agreed delivery point. Once, again, the incoterms on the shipment will
determine who arranges this.

Depending on the shipment type (air or sea freight, FCL or LCL) a range of transport
options will be available. This can
include delivering loose on a truck,
delivering a container with a side

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loader and dropping the goods on the ground, or delivering to a roller door for live
unload.

CHAPTER 3:- OBJECTIVES OF THE STUDY

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In general, research objectives describe what we expect to achieve by a project.

Research objectives are usually expressed in lay terms and are directed as much to the
client as to the researcher. Research objectives may be linked with a hypothesis or
used as a statement of purpose in a study that does not have a hypothesis.

Even if the nature of the research has not been clear to the layperson from the
hypotheses, s/he should be able to understand the research from the objectives.

Objectives can be general or specific. The general objective of your study states what
you expect to achieve in general terms. Specific objectives break down the general
objective into smaller, logically connected parts that systematically address the
various aspects of the problem. Your specific objectives should specify exactly what
you will do in each phase of your study, how, where, when and for what purpose.

In this work, we propose to study the following major objectives,

1. To understand the process of container shipping. (AtoZ)

2. To analyse the ins and outs of the complete cycle and try to identify and
remove the extra time which acts as a bottleneck and increases the process
time.

3. Main aim is to try to fasten the complete process by going a bit deep into its
structure and enhance customer experience by digitalizing things that would
bring positive impacting the process.

4. Look into opportunities to automate the process wherever possible.

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 CHAPTER 4: SCOPE OF THE STUDY

The scope of a study explains the extent to which the research area will be explored in
the work and specifies the parameters within the study will be operating. Basically,
this means that you will have to define what the study is going to cover and what it is
focusing on

 The scope of this research is to study the process to understand what all goes
in this simple yet complex structure.
 As the shipping process is almost common for all the big and small
companies, this research will be relevant for a long time.

CHAPTER 5: LIMITATIONS

The limitations of the study are those characteristics of design or methodology that
impacted or influenced the interpretation of the findings from your research. They are
the constraints on generalizability, applications to practice, and/or utility of findings
that are the result of the ways in which you initially chose to design the study or the
method used to establish internal and external validity or the result of unanticipated
challenges that emerged during the study.

The limitation for this Study:

• Limited access to data

• Time constraints

• Lack of previous research studies on the topic.

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CHAPTER 6: RESEARCH METHODOLOGY

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Research methodology is the path thought which researchers need to conduct their
research. It shows the path thought which these researchers formulate their problem
and objective and present their result from the data obtained during the study period.
The study used these mixed strategies because the data were obtained from all aspects
of the data sources during the study time. Therefore, the purpose of this methodology
is to satisfy the research plan and target devised by the researcher.

Type of research – Exploratory research

Source of data collection –

The data for this project is completely secondary source which is collected from:

 websites of top 10 shipping companies

 magazines and
 Journals.

Statistical Tools and Techniques –

Pie charts, bar graphs and SCAMPER analysis.

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CHAPTER 7: DATA ANALYSIS AND
INTERPRETATION

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DATA ANALYSIS AND INTERPRETATION

Data analysis and interpretation is the process of assigning meaning to the collected
information and determining the conclusions, significance and implications of the
findings. Analysis involves estimating the values of unknown parameters of the
population and testing of hypotheses for drawing inferences.

The analysis for this topic is done with the help of SCAMPER Method.

WHAT IS “SCAMPER” Method?

SCAMPER is an acronym formed from the abbreviation of: Substitute, Combine,

Adapt, Modify (Also magnify and minify), Put to another use , Eliminate, and
Reverse.

The SCAMPER method is very similar to Design Thinking in that both these concepts
aim to find solutions to problems. However, Design Thinking places the human factor
at the centre and its goal is to find creative ways to solve problems. The SCAMPER
technique is more focused on the process of finding unusual and creative solutions to
problems, but also to come up with innovative ideas, and the goal of improving a
product or service.

Creative thinking and problem-solving are essential parts of the design process to turn
ideas into innovation and break the barriers against creativity. One of the successful
methods used in creative thinking is the SCAMPER technique. While there are
different creative thinking and problem-solving techniques such as reversed
brainstorming, Hurson’s thinking model, the six hats of critical thinking and Lego
Serious Play, SCAMPER is considered one of the easiest and most direct methods.
The SCAMPER technique is based very simply on the idea that what is new is
actually a modification of existing old things around us.

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 SCAMPER
The seven SCAMPER techniques:-

SUBSTITUTE:

Find a part of your concept, product, service or process etc. that you could replace
with another to see whether it will result in improvements, such as efficiency gains.
This will help you test which alternative works better, like a trial and error process.
An example for a substitution would be an automobile manufacturer using different
composites for the frame to make vehicles lighter. Questions asked during this part
are:

 What part of the process can be substituted without affecting the whole
project?
 Who or what can be substituted without affecting the process?
 What part in the process can be replaced with better alternatives?
 Can the project time or place be replaced?

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COMBINE:

Most of the time you don’t have to come up with something entirely new, but the
solution(s) actually already exists. One idea might not work alone, but you could
combine several ideas, processes or products into one more efficient output. A great
example for a combination of two different products are cell phones with an
integrated camera. The combine technique discussion can include the following
questions:

 Can we merge two steps of the process?

 Can we apply two processes at the same time?
 Can our company combine resources with another partner in the market?
 Can we mix two or more components together?

ADAPT:

As mentioned above, you probably already have the right solution to your problem,
you just don’t know it yet. Sometimes an idea that worked to solve one problem,
could also be used to solve a different problem. An example for the successful
adaption to a new situation is Netflix. The company started out in 1999 as a DVD rent
service, but unlike Blockbuster they quickly realized that the future belongs to online
streaming and changed their business model. Netflix is now a serious competitor to
traditional TV networks, while Blockbuster went out of business in 2013. The adapt
technique brainstorming session can include the following questions:

 What would we need to change to reach better results?

 How can we improve the existing process?
 How can we adjust the existing product?
 How can we make the process more flexible?

MODIFY:

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Modify an aspect of your situation or problem, for example by magnifying, i.e.
exaggerating, them and see whether it gives you a new insight or whether it adds any
value. This will help you identify which part of your process or concept is the most
significant. An example for magnifying an aspect would be an organization deciding
to expand the production of one product and focusing on that product. The questions
asked under this rubric include:

 How will modifying the process improve results?

 What if we had a double consumer base?
 If the market was different, what would the process look like?
 Can we change the process to work more efficiently?

PUT TO ANOTHER USE:

This is very similar to “Adapt”, it’s about putting an existing idea or concept to
another use, i.e. using it differently than it was originally intended to. An example
would be using ocean waste to produce shoes or products that were invented for a
whole different use than they are being used now. The questions in this technique can
include the following:

 What other parts in the company can use the product?

 What are the benefits for the product if used elsewhere?
 What if we target another market segmentation for the current product?
 Can we add a specific step into the process to replace another?

ELIMINATE:

The elimination might sound familiar to those that know about Lean or Six Sigma.
It’s about eliminating inefficient processes (‘waste’) with the goal of streamlining
them. An example for eliminating is Apple’s decision to not include an optical
CD/DVD drive in their MacBook Air to make them thinner and lighter. Questions
related to this part includes:

 What would happened if we removed this part?

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  How can we achieve the same output without specific part of the project?
 Do we need this specific part?
 What would we do if we had to work with half the resources?

REVERSE:

Reverse the orientation or direction of a process or product, do things the other way
around, completely against its original purpose. Sometimes when you reverse the way
a product is used, it will help you see things from a different perspective. For
example, an organization that has always used the top-down approach when making
decisions, might find that they could improve their decision making processes by
adopting a bottom-up approach. The questions in this part include:

 What would happened if we reverse the process?

 How can we rearrange the current status for better output?
 What if we consider it backwards?
 Can we interchange elements?

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CHAPTER 8: FINDINGS AND RECOMMENDATIONS

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For this shipping process, have used the M-P-E of SCAMPER method

That is:-

M- Modify

P- Put to other use

E- Eliminate

First beginning with eliminating the booking process. This means booking the
container with the shipping company. Traditionally it is done by the merchant or the
Freight Forwarder by personally contacting the shipping company.

There is a huge chance of not getting the space in the vessel container as per the date
which the merchant or FF requires. Even if the customer is willing to pay high to load
his goods, it will not be possible. This is because most of the containers are booked in
advance by big companies. This creates a scarcity of containers for small businesses
and they are unable to ship their goods as per their required time.

By eliminating this manual traditional process, we can modify this by creating an

online portal for booking containers which will provide surety to customers of:-

 Guaranteed loading
 Fixed price at booking
 Easy online booking
 Inland & ocean in one booking

This will create customer satisfaction as well will built a long term relation between
company and customer.

The profit for company in this modification:

 The space left in vessel in which the big customers fail to load their shipment
can be covered up by these small booking of small businesses.
 Number of customers will increase adding profit to the company.

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Put to other use:

An average life cycle of any container is maximum up to 10-12 years. After that it is
of no use for container shipping companies. Instead of scrapping it, companies can
reuse it as the container are very strong and long lasting, and create various useful
things which can be sold at a very good price.

Things that can be made by containers:

 Theatres and bistros

 Food vans

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 Workshops

 Emergency hospitals

 Portable toilets

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 Disaster shelters

 Indoor gardens

 Garages and car parks

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 Schools

 Restaurants

 Stores

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 Art Gallery

 Café

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 CHAPTER 9: BIBLIOGRAPHY

 http://www.worldshipping.org/about-the-industry/containers
 https://www.txintlfreight.com/faq-article/what-is-container-shipping/
 https://www.persistencemarketresearch.com/market-research/container-
shipping-market.asp
 https://www.bison-jacks.com/why-bison/blog/11-most-common-types-of-
containers/
 https://www.icecargo.com.au/shipping-process-2/
 https://www.cogoport.com/blogs/export-process-from-india
 https://www.inloox.com/company/blog/articles/innovation-better-problem-
solving-with-the-scamper-method/#:~:text=SCAMPER%20is%20actually
%20an%20acronym,find%20solutions%20to%20your%20problems.
 https://www.designorate.com/a-guide-to-the-scamper-technique-for-creative-
thinking/

CHAPTER 10. APPENDIX

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An appendix is supplementary material usually attached at the end of a
piece of writing before your Works Cited. The appendices must be
extracts from the Process Journal. All extracts should contain the date
they were added to the journal. It may be material such as surveys, letters,
graphs, and charts.

 Twenty-foot Equivalent Unit (TEU)

 Forty-foot Equivalent Unit (FEU).
 International Organization for Standardization (ISO).
 World Shipping Council (WSC)
 International Chamber of Shipping (ICS),
 Customs House Agent (CHA)
 EXW (Ex Works)
 FCA (Free Carrier)
 FAS (Free Alongside Ship)
 FOB (Free On Board)
 CPT (Carriage Paid To)
 CFR (Cost and Freight)
 CIP (Carriage & Insurance Paid To)
 CIF (Cost, Insurance and Freight)
 DAT (Delivered at Terminal)
 DAP (Delivered At Place Unloaded)
 Delivered at Place Unloaded (DPU)
 DAP (Delivered At Place)
 DDP (Delivered Duty Paid)

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