TT Talk - Containers: trading risks
Visionary though he was, it is unlikely that Malcom Mclean could have foreseen the extraordinarily varied uses that containers increasingly have. Apart from being a core tool for trade, the ‘humble box’ has also now become something of an architectural icon, used in all sorts of places – from edgy pop-up bars to trendy shopping centres, from start-up business villages to practical new hotels, from short-term accommodation to luxury designer housing.
Trade for transport
Companies involved in container buying, selling for transport must comply with relevant regulations. Container safety is regulated by the International Maritime Organization (IMO) through the International Convention for Safe Containers, as amended (CSC). When containers are traded, the responsibility of meeting CSC regulations transfers from the seller to the buyer.
Since traded containers are almost invariably nearing the end of life, it is especially important to ensure they are in safe condition. CSC specifies the responsibilities of the different parties involved in the safe condition of containers, but also requires the administration of an approved periodic examination scheme by the country where the container owner is registered.
Recognising the need for clarity to help both the seller and the buyer of a traded container meet the regulations and carry out the required tasks correctly, the Container Traders & Innovators Association (CTIA) has recently published three useful guidelines, covering container ‘neutralisation’, re-marking and grading.
Neutralising Traded Containers
‘Neutralisation’ is the process of removing (or obliterating) markings that identify the name and other details relating to the seller of a container. The purpose is to relieve the seller (the container owner disposing of the unit) of potential exposures that might result from any former identification marking after the sale has been completed.
Containers are marked at the time of manufacture in accordance with ISO 6346 Freight Containers: Coding, Identification and Marking. In addition, a container might display logos, names and addresses.
Typically, the sales agreement should set out appropriate neutralisation terms and conditions. The CTIA’s new guidelines cover the recommended procedures to ensure correct ‘neutralisation’ of shipping containers, indicating the minimum markings to be removed in order to facilitate efficient re-marking. However, where a container is not to be re-marked and used for transport or any other use where regulatory marking provisions apply, additional (or all) markings may be removed.
Re-Marking Traded Containers for Shipper-Owned Container Operation
After it has been neutralised, a container may need to be ‘re-marked’. For example, where it is to be used as a ‘shipper-owned container’ (SOC) for further international transport, markings remain statutorily required, covering ratings, dimension and type codes. These are essential requirements of safe handling. A second CTIA guidance document sets out the correct process of reinstating the container markings, including the display of a valid CSC safety plate.
These guidelines apply to a container previously neutralised, but may also be helpful as a reference for verifying remaining markings. The guidelines are based on ‘General Purpose’ dry freight units, but may be adapted to other container types.
An SOC should display markings on the container in accordance with ISO 6346 and a data plate displaying regulatory requirements. Shipping lines may require specific procedures prior to acceptance of an SOC. A container displaying markings should match the markings displayed, such as compliance with ISO dimensions and ratings, and structurally fit for purpose in accordance with the owner’s CSC approved procedure.
Recommended Standardised Grading Terminology for Traded Containers
Those containers that are sold out of the shipping market can be used for a wide range of innovative applications, including static storage or modification into offices, retail units or housing.
Traders grade containers to indicate the purpose to which they might be suited. A third new publication from the CTIA has been developed to provide the industry with standardised grading terminology. The use of standardised terminology enables a trader to evaluate the container by its descriptive grading code and – subject to the terms of the contract between the parties – assess its suitability for a particular purpose.
These guidelines comprise a three-part alphabetical code, which grades the structural and aesthetic condition of a container relating to corrosion, accumulated acceptable damage and general appearance, both internal and external. The guidelines are, again, based on ‘General Purpose’ dry freight units, but may similarly be applied to other container types.
CTIA members may download these guidelines from the CTIA website. Companies wishing to receive a copy, should contact email@example.com.
Why the CTIA?
The CTIA was established in January 2017 to provide a service for industry professionals involved in buying, selling, trading or modifying shipping containers. It seeks to provide a platform to create industry guidelines and codes, together with a range of technical, marketing and industry data.
There is significant potential for the ‘secondary’ container market. While containers may continue to be used in international trade, for example for one-way project cargo shipments, others are used successfully for innovative non-transport purposes, such as storage, retail units or offices, and accommodation.
Such re-purposing is exciting and to be commended, but it is critical to ensure that what may to the casual eye be identical to freight containers used in international trade is identified in a way that prevents such use. Stakeholders need to be vigilant to ensure any new life cannot leave residual liabilities.
We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.
We look forward to hearing from you.
Risk Management Director, TT Club