TT Talk - ‘Caveat emptor’: does an increase in container production
Bill Brassington of ETS Consulting comments on the World Cargo News report in November 2010 that 'Dry freight box manufacturers bounce back'.
In 2007 new production of dry freight containers had reached nearly 3.8 million TEU with the world container fleet jumping nearly 3 million TEU from 2007 to 2008. As the prospects of the global recession started to affect fleet operators, production in 2008 dropped to just under 2.8 million TEU and the total world fleet contracted by 500,000 TEU by mid 2009. During that year standard dry box production fell to a mere 200,000 TEU, as owners substantially reduced their fleet size, but is expected to reach 2,240,000 TEU in 2010. What does this sudden increase in production mean to the container in use?
Leasing company technical managers report that factories are struggling to recruit sufficient workers to staff the production lines fully. Furthermore staff turnover appears to be incredibly high, with less than half those starting still employed the following week. High staff turnover and workers without experience can cause the factory management severe problems when manning work stations that involve structurally critical processes, such as corner post assemblies. Poor workmanship at these work stations can increase the risk of a serious failure to the container.
The technical managers have advised that over 1,000 containers were rejected during 2010, some of which were due to structural deficiencies. Disturbingly, it would seem that all of the rejected containers were almost always sold immediately after they were rejected thus releasing potentially unsafe containers into the market.
For some time there have been worries about the quality of containers being produced in China and feedback from the technical managers has highlighted two concerns. Firstly they are not certain that containers are being built to the standard for which their type approval was approved, and secondly that containers are being built to pass the ISO test rather than survive in the 'real world'. Both of these factors provide the operator and user with a false sense of security. Thus, while the incidence of defect related accidents is currently negligible, the risk of operational problems arising is material.
For example, one leasing company reports that they built 1,500 containers; the first few were built and had a mass close to the declared tare. However later containers had a tare mass considerably lower. This could easily be a result of thinner steel being used or far less zinc being applied. Whether these containers were unsafe, or just liable to premature corrosion, is not known, but the potential for failure where thinner grades of steel have been substituted will increase.
Two opposing forces affect container production: factories attempt to slow down the output rate to keep the prices high, but struggle to meet the increasing demands of their customers without resorting to a second shift. Technical managers often slow the line down in an attempt to improve quality but while factories are maximising their output, then there is a greater risk of poor production. While most of the major container buyers inspect their containers during production and as they come off the line, so that quality issues can be identified and rectified, there are some owners that do not carry out inspections until acceptance and consequently the risk of poor workmanship is increased as the defect is literally painted over.
Is there a risk? If the following conditions persist, there will be containers in operation that have an increased risk of failure:
- factories attempting to keep their costs as low as possible, including employment of workers who have little or no previous experience or engineering expertise
- short-term workforce trained ’on the job’ and
- sale of rejected containers with structural defects.
When considering these risks with the increased demand for containers by shippers as international trade picks up, two additional factors must be considered. Container owners and operators may release containers for use that are on the margins of safety just to satisfy demand, and the shippers themselves may be tempted to increase the cargo shipped per container, potentially overloading the rated maximum gross. These additional factors, when combined with poor workmanship at the time of manufacture, increase the potential for a serious failure during transport.
The Club would advise buyers of containers to implement a rigorous independent inspection programme covering the entire construction process, such as could be provided by one of the Club's approved surveyors
TT Talk - Edition 138 (Chinese) (183 KB)