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In a previous blog post ”What is Bulk Cargo”, we highlighted and detailed what pertain to sending cargo through this means. Essentially, it means that the cargo is transported in bulk and “loose” form, and that they are handled in special vessels and infrastructure. Another term that is often erroneously interchanged with “Bulk Cargo” is “Break Cargo”, and in this blog post, we look into its definition and how we differentiate between the two.

The main difference is derivative from the terms itself, where bulk is handled in loose form and break cargo is essentially broken down into units. The cargo is broken down in and carried in broken down from which are either bundled, strapped, palletised, or drummed. That is cargo is transported on the likes of shipping boxes or crates, bags, drums or barrels in unit form that are then either added on to pallets or skids. This is essentially done for non-general cargo, such as with steel rebar, cement and more.

Whilst the term break and bulk can’t be interchanged with each other, the use of “Break Bulk” can be used for “Break Cargo” as it bulk cargo that is broken down into several units. The ships utilised to carry such cargo are known as “Break Bulk”, and even terms such as General Cargo or Multi Purpose vessels have been used too.  These cargo-shipping vessels can then be categorised based on their sizes and types of infrastructure/facilities on board. These shipping vessels which come in different sizes between 2000DWT to 40000DWT include the likes of the below;

  • Single Decker
  • Tween Decker
  • Box Holds

The cargo in itself is loaded underneath the deck or even above deck of the shipping vessel, and there is no restriction that one cargo hold is restricted to one customer. Instead, various types of cargo can belong to various customers. With this type of cargo handling, you are offer two types of flavours known as geared (the vessel (has its own loading facilities) and gearless (the vessel does not have its own loading facilities). No special loading infrastructure such as dedicated berth or terminal is necessary when it comes Break Bulk Cargo loading.

The shipping rates for Bulk Break Cargo are handled based on the freight or revenue tonne. This means to say that either the shipper will be charged based on the higher values of either the volume (CBM) or the weight (MT) of the cargo in hand.

 

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Personal and commercial cargo differs in a variety a ways, especially in the quantities shipped and the way they are freighted. Personal cargo, due to often-small quantities, will be carried either over air cargo, or through container cargo. With commercial cargo and its high volumes, you are often required to use bulk or break cargo. However, often, many do not understand the difference between bulk and break cargo. In this blog post, we look at just that in hope of educating you on the dynamics of bulk commercial freight forwarders and how cargo is handled.

Many people tend to interchange the terms on a day-to-day basis; however, these shipping terms are distinctively different from each other based on the cargo’s nature and its size, the capacity of the vessel, as well as the type of trade, infrastructure, to name a few.

As the term implies, this type of cargo involves commercial dry cargo for trade that is handled in high volumes. Items handled through bulk cargo are handled in bulk form; they loaded straight into the hold the vessel. Common cargo carried over bulk carrier ships include the likes of grains, coal, and cement to name a few, and there are various types of bulk carrier vessels depending on the capacities required.

The maximum cargo a bulk cargo vessel can carry is 400, 000 DWT (deadweight tonnage). They include the likes of the following.

  • Very Large Carriers
    • Chinamax/Valemax – 400,000 DWT Plus
    • ULOC – 300,000 – 399, 999 DWT
    • VLOC – 200,000 – 299, 999 DWT
  • Capesize – 100,000 – 199, 999 DWT
  • Panamax – 60,000 – 99,999 DWT
  • Handysize
    • Supramax – 50,000 – 59,999 DWT
    • Handymax – 40,000 – 49,999 DWT
    • Handy – < 40,000 DWT

These bulk carriers often hold the same structural design, where you have several cargo holds divided between the length of the carrier, but only comes with a single deck where the various cargo will be loaded or carried accordingly using cranes and more.  The cargo holds may be used by one customer or several different customers.

Bulk cargo handling requires different infrastructure, and need to be loaded on dedicated terminals, and the type of vessels are essentially either gearless (vessels do not come with loading equipment) and geared (vessels come with own loading equipment). No cargo is carried on the deck of the vessels. Freight charges for bulk cargo are based on metric ton against the quantity of cargo loaded.

Image: ARL

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In our previous blog, we looked into how the Colombo Port is slated to become a key transhipment hub in Asia with its pending East Container Terminal developments and investment opportunities to global shipping players. The Colombo Port also has other plans to develop the Sri Lankan maritime industry, along with the West Container Terminal and not to mention the newly revived Colombo Port City project (which would also be revamped as the Colombo International Financial City). The MRMR Port in Hambantota has also received funding by the Chinese government to further develop the port operations and also to help tie in China’s One Belt, One Road initiative to garner global trade market share routes.

With improvements and progress occurring in Colombo and Hambantota to grow capacity and volumes of TEUs to the various terminals, Trincomalee has been receiving due attention, as many believe that the natural harbour has been underutilised. The SLPA is in the midst of progressing with the re-development of the Port of Trincomalee is still being decided and consulted with ADB. Possible loose cargo and industrial zones will be setup, including refineries and an LNG (liquid natural gas), and not to mention a railway link for ease of cargo transportation. The development of the Trincomalee port would definitely provide an advantage to the Sri Lankan maritime industry. Being the second best natural  harbour in the world, and offers tenfold the capacity that the Colombo Port could offer, thus development to this untapped gem is imperative, especially in terms of bulk and break bulk cargo.

Whilst the Colombo Port’s ECT is calling for potential investors, and the Trincomalee port developments being devise, strategic business plans for the Sri Lankan maritime industry is potentially taking into consideration the Indian investments and interests that have been shown. As a partner in undertaking and moving cargo volumes with India, and not to the keen interest they have shown in other ports of the island of Sri Lanka whilst improving their own container ports within the sub-continent. One of the key reasons why However, that does not mean that Sri Lanka has overlooked other countries; instead it the Ministry of Ports and SLPA has made strategic business plans to encourage other countries to move through Sri Lankan ports. This would include the likes of offering rebates on stevedorage (unloading/loading of cargo) with the likes of Bangladesh, Myanmar and other countries east of India. Furthermore, with the likes of “multi country consolidation,” import/export industrial centre (entrepot), and bonded cargo handling, as per an interview carried out with the SLPA Chairman, can definitely aid in improving the Sri Lankan maritime industry.

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The island of Sri Lanka is currently home to seven ports with the Port of Colombo, Port of Hambantota, the Trincomalee Harbour and Oluvil Harbour being those utilised in majority. Since the end of the three-decade civil war in 2009, investments and aid have flowed in from throughout the globe to boost rehabilitation and development. The major ports have seen much improvement, with the Port of Hambantota (the MRMR Port) and the Oluvil Harbour being the most recent developments. There are many plans for Sri Lanka to become a key transhipment hub in Asia.

The Sri Lankan Ports Authority (SLPA) has shared its strategic plan to transform the Colombo harbour into a key transhipment hub in Asia and its steps on how they plan to do so. One such means is to improve the East Container Terminal (ECT) to facilitate and expand the deep-water operations at the Colombo Port. Currently, the Port of Colombo is home to several terminals, which are operated by various parties as follows;

 

  • East Container Terminal (ETC)
  • Jaya Container Terminal (JCT) – Owned and Operated by the SLPA
  • Queen Elizabeth Quay (QEQ) – Owned by SAGT (South Asian Gateway Terminal Ltd)/Operated by John Keells Holdings
  • South Container Terminal (SCT) – Owned and Operated by CICT (Colombo International Container Terminals Ltd)

The terminals are located as follows. Currently, the SLPA has constructed a quay wall that runs 600m as well as an 440m facility for berthing as a stepping stone to further develop the East Container Terminal (ECT). Due to lack of funding, the ECT has been put forward to financiers to design, build, finance, operate, and maintain a strategic container terminal in Colombo. The hope of the SLPA is that within the best suited candidate, the ECT will be able to provide competitive deep water berthing facilities (18-20m), and not to mention offer increased capacity at the Port of Colombo to 2.4mn TEU (twenty foot equivalent units). By propositioning investments in the ETC to the global market for investments, the investors are able to partake and increase in a share of the global transhipment market. Furthermore, Sri Lanka also hopes to improve the berth of the ECT (by 760m) and other terminals at the Port of Colombo to make it an attractive and key transhipment hub in Asia for global shipping lines whilst on international trade sea routes.

 

Currently, the JCT and SAGT offer a lesser draft thus are only able to offer services to feeder vessel, and larger vessels (ULVs) are directed to the CICT. Though the SLPA has shown in interest in owning/operating the ECT, it is still undecided by the Government of Sri Lanka, to offer it to private operators or to hand it over to SLPA, especially with China’s investments in the Colombo Port City.

 

Images: Echelon, SLPA/ADB

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India is one of the largest subcontinents in the world, with a diverse history that was influence by middle kingdoms and western countries. The Indian shipping industry blossomed under the rule of the British East India Company and later the British Empire. However, with its independence, the Republic of India has since grown exponentially in terms of economy becoming the 7th largest economy in the world by nominal GDP as well as the 3rd largest by purchasing power parity in the world as per the “World Economic Outlook Database” report issued by the International Monetary Fund in April 2017.

The Indian Ocean covers approximately 20% of the water on the Earth and is one of the most travelled seas connecting the east to the west/middle west, and known as the “Mine of Gems”. The Arabian Sea makes up the smaller portion of waters that touches the coasts of western India, Somalia, Saudi Arabia (as well as Oman and Yemen), Pakistan, and Iran. The Bay of Bengal covers the southeast coast of India, as well as west of Sri Lanka, Bangladesh, Myanmar, and the Andaman and Nicobar Islands belonging to India.

The majority of trade that occurs with the subcontinents of India is through ocean/sea cargo. Where the Indian shipping industry is considered of being in ownership of the largest merchant shipping fleet and is home to 199 ports and approximately 7500k of coastline. As the 16th largest maritime country in the world, the India shipping industry is a popular stop in international trade routes, both over sea and road.

With the observed trend of the Indian shipping industry, the Ministry for Shipping, Road Transport, and Highways has decided to investment in infrastructure development to growing needs including the development of ten coastal economic regions as well as continue the Sagarmala project. Furthermore, the government of the Republic of India has set aside goals for the Indian shipping industry in its 12th Five Year Plan and not to mention the Maritime Agenda for the 2010 -2020 decade plan, thus much is expected to improve in terms of the Indian Ocean market share.

With China making plans on the global shipping industry with its One Belt, One Road initiative to connect the east to the west over road, sea, and air, India too is looking to measure to stay aligned with the developments and trends in the region. One of the key players in the market share of the India Ocean trade routes is Sri Lanka, with China investing in the developments of the Hambantota and Colombo Port project. The eastern port of Trincomalee has been offered for foreign investment participation by the Sri Lankan government, but a play has yet to be made from India.

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For centuries before the advent of modern trading practices, the island of Sri Lanka was a key player in ancient Silk Road sea cargo trade routes. However, with changes in the global shipping industry, the introduction of China’s One Belt and One Road initiative and new oil shipping routes, Sri Lankan ports have been highlighted as critical maritime hubs in Asia.

 

The Port of Colombo

The port of Colombo is one of the oldest trading ports in the island. However, primary trading was only moved here in the 18th century from the Port of Galle, following the construction of the breakwaters. Due to its strategic location on the path of international sea cargo trade routes, it’s one of the busiest ports in Asia, ranking in the top 35 ports in the world. Currently, there are further developments underway with foreign funding to develop the infrastructure to improve on this strategic port. The Port of Colombo operates 24/7.

The Port of Galle

The port of Galle has existed for a while with its discovery by the Portuguese in the 15th century. The Galle port was the primary port until the 18th century when the Colombo port was created with the aid of breakwaters. Currently, this port only offers mooring for two vessels alongside one another, but offers accommodation for yachts as well as offshore ship supply services.  This port operates 24/7 except on May 1st, but only offers daylight configuration. The Port of Galle was one of the most important ports of Sri Lanka during ancient sea cargo trade routes, and played an important part of sustaining the link between the east and the west.

The Port of Trincomalee

The port of Trincomalee is home to the world’s fifth largest natural harbour and during the centuries, many countries have fought for its ownership, with Portugal, Netherlands, Portugal, Great Britain, and France taking up arms to claim it. Whilst the Port of Trincomalee is more than ten times the size of the Colombo Port, its activities are restricted to that of bulk cark, industrial related activities, and daylight navigational services. It is a 24/7 operated port, as it is the home of the Sri Lankan Eastern Command Naval Base. Currently there are discussions underway offering India the opportunity to invest in the infrastructural development of the Trincomalee Port.

The Mahinda Rajapaksa Ruhunu Magampura Port of Hambantota

The newest port to be built in Sri Lanka, following the end of the war and built under the commission of then president Mahinda Rajapaksa, the Port of Magampura is the southernmost port in the Indian Ocean between Sri Lanka and Antarctica. Whilst this is the newest port to be opened in recent times (it was declared open on 2010), navigators from ancient Greece had documented this location as allowing safe anchorage. Currently, the port is situated at a major intersection of the international sea trading routes, thus it has been used for movement of bulk commercial cargo and industrial port related services. It has two lighthouses to guide vessels safely into the port.

Other Minor Ports of Sri Lanka

The other ports of Sri Lanka, apart from the major four discussed in detail include the following.

  • Oluvil – One of the smallest ports of Sri Lanka, it is located in the east and currently used for fisheries and commercial activities, having opened in 2013.
  • Kankesanthurai – The northern-most Port of Kankesanthurai is currently administrated and maintained by the Sri Lankan Navy forces. The port, that is the closest to India was closed during the civil war. However, since the end of the war, India and Sri Lanka has begun clearing the Palk Strait and the port to revive it for future use in new sea trade routes being developed to lessen transit times.
  • Point Pedro – The northeastern port of Point Pedro is currently managed by Sri Lanka Army forces. However, with new sea trade routes being developed, the likes of Kankesanthurai and Point Pedro being utilised further will be possible, and thus will require further infrastructural developments.

Image Credit: Statfor

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India has long been a major contender in the Indian Ocean trade routes, both past and present. With the increasing demand for shipping services to India or from India to various global destinations, the ports of India have been in the limelight. When concerning ports of India, and maritime news from the subcontinent, its home to a 13 major port and 200 minor ports that contributes to the logistics industry in India.

The global shipping industry plays a vital role in India’s commerce and trade, and thus, the government has recently made plans to improve the infrastructure and developments of its ports, including a project “Sagar Mala” in an attempt to modernize the Ports of India. With close to 600 million of tonnes handled by major ports, the Indian government has also initiated the Natiports of Indiaonal Maritime Development Programme (NMDP) to further the maritime industry of India. With China, attempting to influence maritime trade routes within the profitable Indian Ocean, India has also been attempting to garner projects to secure their economic advancement.

China has most recently offered aid  to the like of Sri Lanka to advance their infrastructural developments, the most prominent being the MRMR (Magam Ruhunupura Mahinda Rajapaksa) Port of Hambantota. This port, which is situated at the southern-most point of Sri Lanka, is the last area of land of the Indian Ocean before reaching Antarctica. Thus, it has gained much popularity as a stop for refilling fuel, crew changes, and cargo handling. The fact that this port is connected to the improved road developments has made it a convenient stop for shipping companies before continuing on their trade routes. Other ports that China has developed with the flush of capital include those in neighbouring Pakistan and Bangladesh. With Sri Lanka being slated as having profitable geo-strategic positioned ports, with China holding much stake in them, the Sri Lankan government has propositioned the port of Trincomalee as a means of cooling the waters between the trio (that is, India, China and Sri Lanka). If India were to take on the Trincomalee Port project, India would be able to balance the scales on their favour to balance the power play on the Indian Ocean coverage of trading routes, especially with the modern day Silk Route by the Chinese making a play on area.

Thus with developments happening concerning the ports of India, and maritime news in the Asian shipping markets, it’s advisable to keep an eye on the horizon to ensure profitability in the future.

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Sri Lanka is home to a variety of ports along the island’s coast. With the island strategically placed, it’s an integral part of the trade routes, especially when concerning refuelling, crew changes and so forth. The major commercial ports of Sri Lanka include the likes of the Colombo Port, the Hambantota MRMR Port, and the Trincomalee Port to name a few. However, with the changes in the Sri Lankan container shipping market, keeping an eye on the news and the horizons is always recommended as good business practices.

The existing business models utilised within the global container shipping market and the mega-ships that operate within the industry have been missing their mark in terms of fulfilling the requirements of the carriers or the customers in question. With the ever-increasing distance between the carriers’s provision of quality services and the expectations of the customers requiring such services, the Global Shippers Forum (GSF) has addressed the need for change. The changes will also affect the Sri Lankan container shipping market, as the new market structure will potentially change the norms as we now know.

The GSF Report, “The Implications of Mega-Ships and Alliances for Competition and Total Supply Chain Efficiency: An Economic Perspective” factors in the global container shipping industry, and analyses the competition policy between major shipping carriers as well as how consolidation (through mergers/acquisitions vertically) impacts the industry, including the Sri Lankan container shipping market. With these changes, it is also important that the competition policies and regulations also be updated to ensure a fair yet improved market structure to operate in. Whilst previous assessments have rendered that agreements for sharing vessels and alliances being formed in vertical integration is good for competition, the new market structure will remove parameters previously used for competition such as sail frequency, ship capacity, and ports of call. Many have questioned whether working with independent shippers would be better than dealing with allied shipping corporations.

Mr. Welsh, the Secretary General of the GSF, has stated the following in relation to the GSF report;

“Certain shippers believe that a degree of vertical integration between shippers and shipping companies is a potential method to increase the alignment of incentives between shippers and shipping lines. The nature of such integration, and the extent to which it might alleviate the problems felt by shippers, would of course need to be explored. Given the complexity of the issue, and the need for balanced consideration across the container shipping supply chain, there is strong merit in there being an active ongoing debate on the implications of mega-ships and alliances which GSF is keen to foster with the container shipping industry and other stakeholders.”

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India spans over 3 million square kilometres, with a population of over 1 billion people. When you take the size of the subcontinent and the lack of proper infrastructure, there has been much talk about logistical issues in India. These include issues concerning complicate taxation laws, congested airports, and not to mention road networks that need much development. Despite these issues, Transco Cargo with our parent company Transco International strive to offer the best shipping services to India from Australia. If you are keen on understanding the process of sending freight to India, you will find the article quite useful. Furthermore, the Indian government has taken notice of the infrastructure issues concerning the Indian logistics industry.

The National Highways Development Program is keen on revitalising the expressways, railways, airports, and seaports to further connectivity from the various regional hubs. As India holds memberships with various regional and bilateral trade agreements, these infrastructure improvements to the logistics industry will help further strengthen global ties and sending freight to India. They include the likes of the following.

  • WTO (World Trade Organisation)
  • WCO (World Customs Organisation)
  • Organisation for the Prohibition of Chemical Weapons
  • Montreal Protocols
  • Wassanaar Agreement (Export Controls for Conventional Arms and Dual-Use Goods and Technologies)
  • Convention on International Trade in Endangered Species of Wild Flora and Fauna
  • Organisation for Economic Co-operation and Development

There are two types of clearances when exporting or importing to India, which are Courier (OBC) or Express Mode of Entry, and Cargo or Formal Entry. Thus, when you are sending freight to India, you need to keep them in mind for classification purposes. Courier (OBC)/Express Mode of Entry essentially refers to non-commercial cargo or packages. These usually include the likes of small gifts, documents and samples, but can be restrictive in terms of the regulations associated with it. However, it’s considerably faster to utilise this type f clearance when sending freight to India than the Cargo/Formal Entry option. The latter refers to freight cargo shipments that are commercial. India has several clearance locations (16) throughout its subcontinent. These clearing locations through India in alphabetical order include Ahmedabad, Coimbatore, Jaipur, Mumbai, Bangalore, Goa, Kolkata, New Delhi, Chennai, Hyderabad, Ludhiana, Pune, Cochin, Indore, Moradabad, and Varanasi.

When sending freight to India (that is exporting from Australia), you will require to have the following shipping documents sorted; Commercial Invoice, Certificate of Origin, Packing List, Shipper’s Export Declaration (SED), Bill of Entry.  Similarly, when importing to Australia from India, you would require similar shipping documentations with the exception that the Shipper’s Export Declaration (SED)and Bill of Entry are not required. Instead, you will need the likes of Shipper’s Letter of Instruction (SLI), Seller’s Declaration Form (SDF), Guaranteed Remittance Form (GR) or Exchange Control Declaration (ECD).

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We are already nearing the end of the first quarter of 2017. With it in mind, we look at the projects that the government is involved with, as well as how these affect the Sri Lankan maritime industry. It is safe to say that key players in the global logistics arena will also affect the way Sri Lanka and its neighbouring India and other countries in maritime cargo routes will interact.

The Colombo Port City has been a much debated and discussed project with politics and concerning changing government. The project is funded by China who had offered Sri Lanka capital during the war efforts, and thereafter heavily invested in post-war infrastructure projects such as the Hambantota Port, and now the Colombo Port City.

Many environmentalists have also raised concerns due to the dredging of sea sand from the bottom of the ocean, and how it affect0073 marine life. However, upon conducting several environment investigations (namely these reports included the likes of EIA (Environmental Impact Assessments) and SEIA (Supplementary EIA). Once investigations have been carried out, there are presented to an expert committee at the Coast Conservation Department, which has in fact given the all clear to proceed with the project. However, the Port City is being rebranded as the Colombo International Financial City (CIFC). The CIFC project (formerly Colombo Port City) holds one of the biggest portions of the pie that makes up the future of the Sri Lankan maritime industry as well as the growth of the economy. The basis that the project will succeed has been based on case studies of other countries that have carried out reclaimed land projects such as Dubai and Doha.

With China looking to export its excess capital,   one of the most notable projects in the global maritime industry would be “One Belt One Road,” the 21st century maritime silk route strategy. Aligning the future of the Sri Lankan maritime industry with the Maritime Silk Road (MSR) is may be increasingly profitable to the Sri Lankan economy with Chinese investments.

In addition, with the Trump administration looking to Indian interests, this could prove favourable to Sri Lanka in the long run. Furthermore, the Sri Lankan government has made necessary adjustments to the 2017 Budget, with reductions of expenditure however, high taxes may cause a dip in consumption, as well as high interests and corporate tax too may cause ripples in the investments arena. With these in mind, we recommend keeping a keen eye on the horizon for the future of the Sri Lankan maritime industry.

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