TT Talk - Container building - caveat emptor* (part 2)

As container manufacture is apparently a boom industry in 2014, it is worthy of some risk analysis to consider whether or by what method those who are commissioning such construction can be confident that all their requirements are being met consistently throughout the production series. While it is difficult to gather empirical evidence, the importance of container integrity is clear.

Container inspections

During container manufacture there are two distinct inspection requirements, the first (statutory inspection) is carried out by classification societies on behalf of the Administration (country) that approved the design. This confirms that containers of the same design type series are manufactured to the approved design, and is required so the Safety Approval Plate, described in the International Convention for Safe Containers (CSC), may be affixed. The classification society inspectors should confirm that that the methods of construction and the materials used for the structural components are as specified, including welding beads and stitches.

The second type of inspection is that carried out on behalf of the buyer to ensure that the finished product is exactly as promised by the manufacturer. The buyer's inspectors will look at material specifications of non-critical / non-structural components, such as hinge pins and paint, and the finishing processes, including painting, flooring fitting and sealing, decal application and general appearance.

Inevitably, differing risk appetites will determine the inspection practices adopted by container owners. One approach is where the buyer expects the manufacturer to produce what has been ordered and that the resultant container conforms in full to the specification. This may well be accompanied by an acceptance inspection, where an inspector appointed by the buyer checks that the containers comply with the image requirements of the owner.

A second approach is to have the buyer's inspector involved in the entire manufacturing process, preventing errors and diversions from the specification and accepting no components, sub-assemblies or containers that do not fully conform to the specification. On the face of it, a buyer derives greater comfort from this approach. An easy solution to fulfil this more engaged approach would be to employ the same organisation that is already responsible for the statutory inspections, simply expanding their scope of activity to include additional inspection elements. Alternatively, the buyer could decide to employ their own inspectors to work alongside the class societies to check the manufacturing and finishing processes.

The value of independent assurance

Economics will play a part in the buyer's decision, but what risk factors should be considered? The majority of container manufacturers provide statutory inspections as part of their offering, using their own choice of classification society. At a factory where hundreds of containers can be produced per day, it could be anticipated that the classification society will be keen to retain that relationship, therefore there is a possibility that a conflict of interest arises. Such commercial pressures may bring a degree of uncertainty to the management of the manufacturing risk, as there is a possibility that the more narrowly scoped statutory inspections do not ensure that errors and deficiencies are detected and consequentially eliminated. This risk might be magnified when the classification society is providing both the statutory and buyer's inspection. As a result, some buyers choose to employ other inspectors, often from outside of the region where the manufacturing plant is situated, to avoid conflict.

The engagement of additional inspectors may appear to reduce or assume the responsibility of a manufacturer in relation to quality management. After all, the manufacturer has a central interest in delivering and enhancing customer satisfaction. As such, container manufacturers might be expected to analyse customer requirements, define processes that contribute to the consistent achievement of acceptable product and maintain control of such processes. Quality management thus provides confidence to the manufacturer and its customers that it is able to provide products that consistently fulfil requirements.

"Given the rugged environment in which containers are deployed and their decentralised dispersion, independent assurance of 'right first time' may be preferred"

Whatever quality management approach is adopted by a manufacturer, there are sufficient anecdotes (not to mention some resultant accidents) to cause container buyers to consider carefully the way in which to gain assurance that the delivered product (asset) meets not just the statutory requirements, but all details of the specification. Given the rugged environment in which containers are deployed and their decentralised dispersion, independent assurance of 'right first time' may be the preferred way to ensure that the asset performs as expected.

We gratefully acknowledge the assistance in the preparation of this article of Bill Brassington of ETS Consulting.

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.

Peregrine Storrs-Fox

Risk Management Director, TT Club

* Caveat Emptor
[Latin, Let the buyer beware.] A warning that notifies a buyer that the goods he or she is buying are "as is," or subject to all defects.

Staff Author

TT Club