UNITIZATION AND CONTAIIIERIZATION 0F BRAZILIAN
EXPORTS OF INDUSTRIAL LIQUIDS

Thesis for the Degree of M. S.
MICHIGAN STATE UNIVERSITY
ERNESTO F. PICHLER
1975

III; IILIIILIII I I III I III um I

 

This is to certify that the

thesis entitled

UNITIZATION AND CONTAINERIZATION 0F
BRAZILIAN EXPORTS OF INDUSTRIAL LIQUIDS

presented by

ERNESTO F. Pl CHLER

has been accepted towards fulfillment
of the requirements for

M.S. PACKAGING

degree in

 

 

Dr. Gunilla G.T. Jonson

 

Major professor

Februar 25, I976
Date y

 

0—7639

M “'31)

~ W‘ “Mam

 

 

ABSTRACT

UNITIZATION AND CONTAINERIZATION OF BRAZILIAN
EXPORTS OF INDUSTRIAL LIQUIDS

BY

Ernesto F. Pichler

The Optimization of costs of packing and trans-
portation lead to the unitization and containerization of
the Brazilian exports of liquids in drums or tanks. The
following alternatives are presented: palletization of
drums, containerization of drums in general cargo con-
tainers, drums in open containers, industrial tanks in
open containers, flexible rubber tanks in general cargo
containers, and intermodal tank containers. A model for
analysis and comparison of the alternatives is outlined
focusing on the requirements of the products, conditions
for containerization, and a cost analysis.

The rules of the Freight Conferences are analyzed.
An advantage is found for containerization depending on
the Freight Conference and on the efficiency of utiliza-
tion of equipment. Intermodal tanks offer the greater
advantage, but general cargo containers with drums may
have certain advantages when used with high efficiency.
If efficiency is not possible in terms of intensity and
continuity of utilization of containers, palletized drums

are advisable.

UNITIZATION AND CONTAINERIZATION OF BRAZILIAN

EXPORTS OF INDUSTRIAL LIQUIDS

BY

Ernesto F. Pichler

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER OF SCIENCE

School of Packaging

1975

ACKNOWLEDGMENTS

My program for a master's degree at Michigan State
University would be impossible without the support of
Instituto de Pesquisas Tecnologicas (Technological
Research Institute) of S. Paulo, Brazil, where I work as
a member of the Packaging Engineering and Materials Group.

I wish also to express my appreciation to Mr.
Sergei Guins who, as advisor of IPT, suggested and
oriented that program. He also gave me valuable help in
the develOpment of this study, supplying information on

costs and reviewing the manuscript.

ii

TABLE OF CONTENTS

Page

LIST OF FIGURES O C O O I O C O O O O 0 iii

Chapter
I. INTRODUCTION . . . . . . . . . . . l
1.1 Purpose of the Study . . . . . . 4
1.2 Limits of the Study . . . . . . . 4
1.3 Drums with Dry Products . . . . . 4
1.4 Definitions . . . . . . . . . 5
2. TECHNICAL DESCRIPTION OF THE ALTERNATIVES . 6
2.1 Palletized Drums . . . . . . . . 6
2.2 Drums in Container . . . . . . . 10
2.3 Drums on Flat . . . . . . . . . 17
2.4 Industrial Tanks on Flat . . . . . 20
2.5 Flexible Tank in Container . . . . 21
2.6 Intermodal Tank . . . . . . . . 23
3. MODEL FOR ANALYSIS . . . . . . . . . 27
3.1 Technical Aspects in Relation to
the Product . . . . . . . . . 28
3.2 Conditions for Containerization . . . 29
3.3 Cost Analysis . . . . . . . . . 31
3.4 Example . . . . . . . . . . . 49
4. DETERMINATION OF THE NUMBER OF CONTAINERS . 60
5. SUMMARY AND CONCLUSIONS . . . . . . . 65
APPENDICES O O O O O O O O O O O O O O 69
BIBLIOGRAPHY O O O O I O O O O O O O O O 82

iii

Figure

13.
14.
15.

16.

LIST OF FIGURES

Brazilian Exports of Liquids . .

Palletization of 200 L Steel Drums
Load Plan of Palletized Drums on Trailer
Load Plan of Palletized Drums on Flat-Car
Load Plan of Steel Drums in Container

Load Plan of Composite Drums in Container

Stowage of Drums in Container .
Collapsible Flat Container . .
Load Plan of 200 L Drums on Flats
Industrial Tank . . . . . .
Flexible Tank in Container . .
Tank Container . . . . . .
Idealized Chronogram of Shipments

Exports of Orange Juice per Month

Containers Handled at the Main Brazilian

Ports 0 O O O O O O I 0

Brazilian Railroad Network. . .

iv

Page

11
13
14
16
18
19
22
24
25
61

63

75

76

l . INTRODUCTION

Brazil is a large exporter of liquid products,
chiefly industrialized agricultural products such as peanut,
castor and vegetable oils, essential oils, soybean oil, fruit
juices, concentrates, syrups and beverages. Most of these
products are exported in drums. Exceptions are molasses
and castor oil, which are usually transported in bulk in
deep tanks and beverages in bottles for distribution to the
consumer.

The volume of products that are usually transported

 

in drums had the following figures in 1973:1
Figures given are in metric tons (t).
Peanut oil 44,092 t
Vegetable oils 78,207 t (except peanut, castor,
and soybean oils)
Essential oils 9,253 t
Soybean oil 30,528 t
Fruit juices 8,545 t (except orange juice)
Orange juice 118,572 t
Total 289,197 t

Figure 1 shows the development of these exports in
1971, 1972 and 1973. A general growth in the exports is

observed, mainly for fruit juices (including orange juice).

 

1Banco do Brasil, Boletim Trimestral no. 3, 1974.

1

 

-I4O

LIZO

__I00 000 ton

 

 

 

 

 

 

 

FIG. I BRAZILIAN EXPORTS OF LIQUIDS

 

E80
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Q x.
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.0
-20
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A / \ onontlololls
" I
l97lr l972 I973

Source: Banco do Brosll
Boletim Trimestrol 09 3

l974

 

Practically all these exports are to Europe, North
America and Japan, thus involving sea transportation.

A serious problem in the development of these
exports is the cost of the traditional system of transpor-
tation in loose drums, specifically the cost of handling
and the cost of packaging.

Handling: The cost of handling is being reduced
mainly in the developed countries by the application of the
concepts of unitization and containerization. The palleti-
zation of drums in Brazil is now being used but the concept
of unit load--the drums and the pallet forming a unit
throughout the transportation processZ--is not fully
utilized. Consequently, the palletization of drums does
not contribute efficiently in Brazil for the reduction in
the cost of handling.

Containerization of drums is now being developed
in Brazil, and it can bring substantial reduction in the
cost of handling in the interfaces of transportation modes.

Packaging: Large tanks for repetitive use should

 

be considered in several technical solutions regarding the
elimination of the cost of drums. These solutions are

associated with the concept of containerization.

 

2Unit Load Council, Guidelines for the promotion
of the unit load concept, 15 ed. Oslo, 1973.

 

The reduction of the costs of packaging and trans-
portation is essential for the reduction of the cost CIF

(or FOB port of destination) of the exported products.

1.1. Purpose of the Study

 

The purpose of this study is to analyze the uni-
tization and containerization of Brazilian exports of
liquid products regarding the optimization of packaging
and transportation costs, and to provide a tool for eval-

uation of a specific system.

1.2. Limits of the Study
Products that require special packaging and special
care in handling and transportation, or hazardous products,
will not be considered in this study. Also, products in
drums with a capacity smaller than 200 l, pails or cans,
intended for distribution on the market rather than indus-

trial processing will not be considered.

1.3. Drums With Dry Products
The analysis of unitization and containerization
of drums developed in this study is also valid when the
drums are used with dry products in the form of powder,
grain, pellets or solid pieces. The only difference is

that removable head drums are used in this case.

1.4. Definitions

 

The term "container" in this study is used in refer-

ence to intermodal freight containers of three types:

1.

general cargo container, also called box
container:
open intermodal container, also called flat:

intermodal tank.

2. TECHNICAL DESCRIPTION OF THE ALTERNATIVES

The experience of several develOped countries sug-
gests the following alternatives of unitization of drums
and containerization of drums and tanks:

1. palletized drums

2. drums in container

. drums on flat

. industrial tanks on flat

. flexible tank in container
. intermodal tank

($th

The three first alternatives involve the utiliza-
tion of drums, unitized or containerized, which is avoided

in the three other systems.

2.1. Palletized Drums

 

QEEEE‘ Standard steel and composite drums are
produced in Brazil (see Appendix 1). The palletization is
feasible Only for steel drums, since composite drums have
lower resistance to weather, compression and puncture.

Only 200 1 drums are used. Smaller drums have
higher cost per unit of capacity and are used only when
this is determined by marketing requirements for distribu-
tion. The typical steel drum for exports is the tight—head
universal drum (type DOT-17E). It has an outside diameter
(over rolling h00ps) of 600 mm, overall height of 883 mm,
an average capacity of 218 1 and a tare weight of 18.1 kg

6

or 22.0 kg (depending on the thickness of the heads).
The ocean shipping cube of this drum is 0.32 cubic metre
(Tweed's Accurate Cubic Tables).3'4
Pallets: The best pallet for the unitization of
these steel drums has dimensions standardized by ISO:

1800 mm x 1200 mm. It has a weight of approximately 60 kg.

Palletization: Six drums can be palletized (see

 

Figure 2), giving a total capacity of 1300 l per unit load.
The palletization in two layers is not possible because
the weight and the height of the unit load would be exces-
sive considering Rules of Freight Conferences.
The weight of the unit load for a product with
density of 1 kg/l (like orange juice, for instance) in
22 kg drums will be approximately 6(218 + 22) + 60 = 1500 kg.
The inland transportation of these unit loads would
require flat trailers with an inside width of 2.40 m and a
length of 12.2 m (40') (made by "Fruehauf do Brasil"),
which are very common in Brazil. A truck load of these
trailers would consist of 13 unit loads with a total
capacity of 17,000 1 and a weight of 18,500 kg, which is
acceptable for a two-axis trailer with a three-axis tractor

truck (see Figure 3).

 

3American National Standard ANSI MH2.1--l974,
Specifications for 55 Gallon Tight-Head Universal Drum..

4Dow Chemical, Product Packaging Information;
Vera Heltzel, Export Shipping Coordination (unpublished).

 

 

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If railroad is used, flat cars with an inside width
of 2.40 m and length of about 15 m (50') can carry 32 unit
loads with a weight of 48,000 kg, which is within the limit
for the usual car (see Figure 4).

For sea transportation, a different kind of problem
is found. The Freight Conferences in general have the
following rules that should be considered:

1. the unit load must have perfectly visible

markings;

2. pallets according to ISO standards are preferred;

3. the load may project out of the contour of the

pallet by no more than 25 mm;

4. the unit load must be able to sustain over-

stowed cargo in a stacking of three units;

5. the load should be attached to the pallet;

6. the pallets must have no sign of biological

infestation;

7. the maximum weight of the unit load should be

1500 kg (3048 kg for the Interamerican Freight

Conference).5

2.2 Drums in Container
The general cargo container with a length of 6 m

(20') is more suitable for the transportation of drums

 

5Instituto de Pesquisas Tecnologicas, Embalagens
de Transporte--Guia de Uso--Grupo de Engenharia e Materiais
de Embalagem, IPT s. Paulo, 1975.

 

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12

than larger units, better for cargo with lower density.
If the product requires special conditions of temperature,
refrigerated or insulated containers can be used.

The container is a good protection for the drums
so that lighter steel drums or composite drums may be used.

Composite drums have an average capacity of 200 1.
They are made of fiber drums with polyethylene liners.
Composite drums are lighter than steel drums: a tare
weight of 14 kg is typical.

It is possible to arrange 70 steel drums in two
layers with a total capacity of 15,200 1 per container
(see Figure 5), or 98 composite drums in two layers with a
total capacity of 19,600 1 (see Figure 6). Depending on
the density of the product, however, a smaller number may
be the limit in the case of composite drums, since the
gross weight of the container is limited by ISO standards
to 20,320 kg. If the tare weight of the unit is 2200 kg,
for example, the total load must be smaller than 20,320 -

2200 = 18,120 kg. The maximum number of drums will be

_P-w
n - p.v+t
where: P = maximum payload of the container kg
or P = 20,320 kg--tare weight of the container
w = weight of stowage material kg
0 = density of the liquid kg/l
t = tare weight of each drum kg

Stowage: The drums are placed in the container by

lift truck with a special device replacing the fork. They

13

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total capacity

LOAD PLAN OF COMPOSITE DRUMS IN CONTAINER

FIG. 6

15

are arranged in rows of two layers beginning next to the
wall Opposite the door. For steel drums floor risers are
placed crosswise under the rows with a smaller number of
drums (see Figure 7),6'7 in order to overlap the rolling
hOOpS. Instead of nailing the floor risers to the plywood
floor of the container--that could destroy its watertight—
ness, and is forbidden by some leasing companies--it is
possible to use an easyeremoval glue or double-sticking
adhesive tape between the cleats and the floor.

A separation between the two layers in each row is
made of wooden cleats if the bottom and head of the drums

don't nest.

Palletized Drums in Container

The regular 200 1 steel or composite drums do not
fit efficiently on pallets that are suitable for container—
ization (pallets standardized by ISO with the dimensions
1100 x 1100 mm and 1000 x 1200 mm). Only eight unit loads
on pallets measuring 1200 x 1800 mm (Alternative 1) can be
arranged in a 6 m container, in two layers, with very poor
utilization of the area (63%) and of the cargo capacity

(66%) of the container.

 

6Swedish Transport Research Commission and Swedish
National Committee of ICHCA, Stowing goods in containers and
on flats, Stockholm, 1973.

7Association of American Railroads, Pamphlet no. 4,
Recommended methods for the safe loading of barrels, drums
or kegs in closed cars and protection of eguipment, Freight
Loading and Container Section, Chicago, 1964.

16

 

 

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17

In EurOpe there are 210 1 plastic drums (developed
by Rheem Blagden--London) that fit exactly four in a
1100 x 1100 mm pallet. A 6 m container can carry 80 of
these palletized drums8 with very efficient utilization

of the container.

2.3. Drums on Flat

 

Open intermodal containers, usually called flats,
have two advantages in relation to the regular box con-
tainer: they are less expensive and they have collapsible
end walls so that when empty they have a smaller volume
(see Figure 8). Their disadvantage is that they donot
protect the cargo as well as the box container. This dis-
advantage is not serious if the cargo is steel drums.

It is possible to arrange 72 drums in two layers
with a total capacity of 15,700 1 (see Figure 9) in a flat
with free sides (type Mitsubichi 1C, with inside width
2438 mm, inside length 5551 mm and free height of 2051 mm).9

It is possible also to arrange the same number of
drums on these flats in 12 unit loads similar to the one
described as Alternative l--Palletized drums (see dotted

line in Figure 9).

 

8Packaging, May 1975, p. 69.

9Jane's Freight Containers 1968-1969, George
Downie, editor, London, 1969, p. 508.

18

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20

If the drums are not unitized, wooden cleats or
boards should be placed between the two layers.

A mixed system is possible, with the upper layer
of palletized drums and the lower one with drums directly
on the floor of the container.

In order to reduce handling costs in the loading
of the container, mainly when pallets are not used, empty
drums can be arranged in the first layer and then filled up
and closed. The Operation may be repeated for the upper
layer. In this case the palletization is useful only in
the unloading of the container.

There is no experience in Brazil in the utilization
of flats. They are being used in EurOpe specially for the

transportation of drums.10

2.4. Industrial Tanks on Flat

,Industrial tanks, also called pallet-tanks, are
used in EurOpe not only in transportation within the indus-
try but also between plants, carried by truck or rail.11

A typical tank has a capacity of 800 l and a base measur-

ing 1100 x 1100 mm (according to ISO standard for pallets).

 

loJane's Freight Containers 1973-1974, George Downie,
editor, London, 1974, p. 367.

llBertels, P., Die Verpackungstechnick bei der
Deutschen Bundesbahn, in Neue Verpackung 11, 1974, p. 1499.

 

21

They have a steel frame to permit stacking. The tank itself
is made of high-density polyethylene or glass reinforced
plastic (see Figure 10).

These pallet tanks could be used in international
transportation by themselves. It is better, however, to
have them containerized for increased protection and
reduced handling. Flats are indicated for that container-
ization.

It is possible to carry twenty 800 1 tanks on a
flat, with a total capacity of 16,000 1. The tanks are
arranged in two layers with inlets and outlet valves at
the sides of the flat for easy discharge and filling.

This solution is economical when the tanks can
have load in the two directions in a round trip. The tanks
must be cleaned of all traces of the previous cargo before
a new product is loaded. The recirculation of cleaning
solutions with a high—pressure blast is the best proce-

dure for cleaning.

2.5. Flexible Tank in Container
Large tubular rubber tanks, made by Uniroyal Rubber
Co. and others, are used for the transportation of liquid
cargo in open or closed trailers. They have a lower tare
weight than rigid drums for the same capacity. When empty

they can be rolled up, occupying a very small volume.12

 

12Tabak, H. D. Cargo Containers--Their Stowage, Hand—
ling and Movement, Cambridge, Cornell Maritime Press, 1970,
pp. 17-18.

22

CAPACITY = BOOI

ban pallet = ISO IIOO 1: IIOO mm

 

FIG. IO INDUSTRIAL TANK

23

It is possible to use a similar tank with a length
of 5.5 m and a capacity of about 10,000 1 in a 6 m con-
tainer (see Figure 11). A higher capacity is not possible
because the side walls of the standard container can not
withstand the hydrostatic pressure.

This system may be practical when there is dry
cargo in the container on the return trip with the empty

tank.

2.6. Intermodal Tank

 

Large tanks in a steel frame with dimensions stan-
dardised by ISO (similar to the dimensions of general
cargo containers) can have a capacity between 19,000 1

13’14 They may be insulated

-(Interpool) and 23,000 1 (CTI).
for stabilization of temperature. Usually they are made
of stainless steel or glass reinforced plastic (see Figure
12).

These tanks are more economical when they are
loaded in both directions. If working with two different
types of liquids, however, it is imperative that each con-
tainer be clean and free from all traces of the previous

cargo before a new product is loaded. Cleaning the con-

tainer involves stripping the tank of all component parts,

 

13Interpool, Container Catalogue, New York, 1974.

l4CTI, Container Catalogue, White Plains, N.Y.,

 

1974.

24

 

 

 

 

 

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26

recirculating cleaning solutions through the tank under
pressure, hand cleaning all the valves and vents--even
changing all gaskets.15

These containers are available for leasing only on

a long-term basis (usually 5 years).

 

15Sealand, Scotch to Rum to Oils, in Container
News, September 1974.

3. MODEL FOR ANALYSIS

The alternatives of unitization and containeriza-
tion described in the preceding chapter should be analysed
and compared in terms of

1. technical aspects in relation to the product

2. conditions for containerization

3. costs

The first two steps lead to the definition of the
feasible alternatives and the final step will indicate the

best alternative.

 

 

 

 

 

 

 

%

General Feasible Best
Alternatives Alternatives Alternatives
Analysis ' I Analysis
ET +
I product I , , '
l conditions J - deCISIOq

 

28

3.1. Technical Aspects in Relation
to the Product

 

 

The technical characteristics of each alternative
described in Chapter 2 must be considered in relation to
the product that will be transported.

The characteristics of the product must be well
known by the exporter in order to study and to solve pos-
sible technical problems like the following:

1. Interaction between the product and the walls.
of the drums or tanks.

For instance, acid products like orange juice
will require steel drums withaniepoxi-phenolic coating,
or polyethylene liners in steel or fibre drums, or stain-
.less steel or plastic tanks. PVC liners or tanks must be
avoided for certain foodstuffs.

2. Sensitivity of the product to variations or
excess of temperature.

In this case, the use of insulated or refrigerated
containers may be required.

3. Necessity of limitation of the effects of pos-
sible contamination.

It is advisable to use drums when the product is
sensitive to some microbiological contamination, in order
to avoid a larger propagation of eventual germs.

4. Regulations related to the safety of trans-
portation (mainly for hazardous cargoes) and requirements

of inspection.

29

3.2. Conditions for Containerization

Frequency and Volume
of Shipments

 

 

Containers usually are not suitable for small
shipments or shipments with an irregular schedule. The
high fixed cost of the equipment requires a certain effi-
ciency in its utilization in terms of intensity and con-
tinuity in order to have economical advantages. It is not
economical, up to a certain measure, to use containers
with less than container load (LCL) shipments. For small
volumes, then, palletized drums are indicated.

When the shipments are sporadic or occurring at
long intervals, it is not economical to use own containers
or leased on a long-term basis. In such instances con-
tainers leased on a one-way basis, per trip, may be con—
venient or the shipment of palletized drums, depending on
the cost analysis and other factors.

Restrictions to the Use of
Containers by the Impprter

The possibility of utilization of containers in a
house-to-house system or in a direct transportation system
must be also analysed, usually during the negotiation of
the export contract.

Sometimes there are no facilities for handling
containers in the importer's country or legal restrictions

may occur, making it impossible for house-to-house deliveries.

30

The possibility of house-to-port shipments should then be
analysed--or the use of palletized drums, for which there

are no such restrictions of handling and customs clearance.

Cargo on the Return Trip

 

An important factor to be analysed in the study
of the possibilities of containerization is the existence
or nonexistence of load for the container in the two direc-
tions of each trip. The ownership or the long-term leas-
ing of the equipment requires their operation in round
trips and it is economical to have load in the container
on the return trip. If the containers are empty on the
return trip, their cost and the cost of their freight are
allocated to the cargo transported in one direction and

these costs are considerable.

Possibility of Use of Flats

General cargo containers are more expensive in
terms of initial and Operational costs than Open contain-
ers (flats). The freight of empty flats is lower than
that of empty containers because flats are collapsible,
occupying a small volume when empty. For these reasons,
the utilization of flats for the transportation of drums
when there is no load in the two directions may be advis-

able and this possibility should be analysed.

31

Expprt Contract

 

An ideal situation that should be tried occurs
when all the transportation problems, with the definition
of the best system and costs are studied in the negotia-
tion of the export contract. Sometimes the importer
requires the containerization of the product. The costs
of the containers and of the freight of empty units may
be covered by the importer. The FOB, CIF or FAS terms
must be carefully explained in the contract with the defi-
nition of responsibilities related to the containeriza-
tion. The time limits and locations for the restitution

of the containers must be stipulated in the contract.

3.3. Cost Analysis

 

Since the different alternatives have different
capacities of transportation, the only way to compare their
costs is in terms of specific cost. In the case of liquids
the use of cents per liter (¢/l) is more convenient than
dollars per ton or cwt as usual in transportation.

The exporter will have to consider all the items
of cost that increase the value per liter of his product
from the production line up to the cost CIF or FOB (or
FAS) port of destination. Selling FOB port of destination
he can capitalize on his transport purchasing power. On

the other hand, the inland transportation and Operations

32

in the country of destination are usually better con-
trolled by the importer.

The cost components of that increase in value,
related basically to packing, handling and transportation,
are analyzed. The components in each item are related to ”

packaging materials, labor, equipment and space. These .

items are presented in Table l.

I 7". .T "PKII‘ r

Alternative l-- ,
Palletized Drums 5

 

 

Item l--Cost of drums, including the cost of trans-

 

portation and storage of empty drums. Sometimes a resale
value of the drums may be specified in the export con-'
tract and this value may be a reduction in the cost of
drums.

Item 3--Cost of pallets and palletization.--The
same consideration as for drums regarding the cost of the
pallets. In addition, palletization involves the follow-
ing Operations and materials:

-—handling of empty pallets from their storage
place to the side of the pile of empty drums;

--handling of empty drums (usually by hand) from
their storage pile to the pallets;

--attachment of the drums to the pallets by means
of wooden blocks and steel strapping;

-—wooden blocks and steel strap.

33

 

.mumoo mean on» nuw3 macaw muwdwncw mocwq “muoz

 

 

 

 

 

 

 

 

 

 

 

"H" "H QHHU Cguwu CO >Unw50 :89
’l "a I II I I Qwflaflu cgumu no OUHMU fifls 38H.
mmxma .vH
macaumo
Ificsasoo a chHmmwanu .mH
mmmmOH can mucousmcH .NH
o uwcfimucoo
>um5m mo unvwmum .HH
unwamum .0H
0 Hosamucoo mo umoo .m
IIIII mumoo uuom .m
panda on uuom Bonn
quEw :Ofiumuuomwcmus .h
.IIIII whom ou unwam
scum cOwumuuommcmua .0
o o o .llIlI HowumuME wmmzoum
mcfiosaocw .ocwomoq .m
mxcmu mo mcflcmmao
Ocfiosaocfl .mcwaawm .v
o o o o cofiumuaumaamm a mumaamm .m
o o o o mxcms .N
o o o manna .H
. . .. . A.c omoa yang
ooo om ooo oH ooo OH con ma om~.va OOMH no umzflmucoo non suflommmo
m Hmcfimucou umHm m nomad :00 menu
a ““hwucH cw xcma co mxcma :Oumhmu ad wewu one m on «\o :w mumoo
H v wanwxoam HmwuumsocH o . O O .u Ha m
o m v m N H m>fiumcuouad

 

.m«m>amc¢ umOU How HOOOZII.H mqmdfi

34

Item 4--Cost of filling.--

 

--Handling the palletized drums to the filling
conveyor with fork lift truck;

—-Special equipment eventually necessary, like
storage tank, pump, hoses, valves, conveyors and measur-
ing devices;

--Filling (may be the six drums simultaneously),
Operation that requires one man, and control of volume
or weight;

--Control and labelling.

Item 5—-Stowing the unit loads on trailer or flat
ga£.--Handling of the unit loads with a fork lift truck
from the filling conveyor or storage to the right posi-
tion on the trailer or flat car. The cost per hour of the
lift truck must be known by the industry. This cost
includes the driver's and helper's expenses, operating
costs (fuel, tires, maintenance, etc.), overhead (depre-
ciation, insurance and taxes), interest on investment and
indirect costs (salaries other than driver's and helper's,
utilities, supplies and so forth).

Item 6—-Transportation from plant to port.--Several
alternatives may be considered: truck (private or con-
tracted), railroad or waterway, if possible. The decision

between these alternatives will require a special study.

35

Trucking has a cost considerably higher than the
other modes, but frequently, mainly in Brazil, it is the
only feasible mode.

Owned or leased trucking is advisable when a large,
long-term export contract is made. Common carriers may
be contracted for irregular or low-frequency shipments,
at a higher cost.

If the exporter's facilities are adjacent to rail
sidings, and the railroad has a connection with the port,
a cost of transportation considerably smaller is possible.
The degree of managerial control over the railroad,
however, is minimum. This is critical if some synchroni-
zation with the ship line schedule is necessary.

The use of waterways to reach the port is advisable
when possible-—and sometimes, as in the Amazon region,
it is the only possibility. It is more economical for
large shipments, especially containerized shipments (con-
tainer on barge system).

For terms of comparison, only trucking costs will
be considered in the study of the alternatives.

Item 8--Port costs.—-Storage and handling costs have

 

to be considered.

Item lO--Freight.--The freight rate is established

 

by the Freight Conferences of each route for products in
drums. If the drums are palletized according to their

rules (presented in Chapter 2. Technical Characteristics

36

of Each Alternative), there is usually an allowance in
the freight. For instance:

--Interamerican Freight Conference, allowance of
US $3.00/m3, not considered the volume Of the pallet;

--Freight Conference Brazil--Mediterranean--Brazi1,
allowance of US $1.00/m3;

—-Freight Conference Brazil—-Europe--Brazi1, allow-
ance of US $1.15 or DM 4.10 or 0.50 per cubic meter;

-—Freight Conference Brazi1--Far East--Brazi1,
allowance of 10% of the volume.16

Costs quoted here and later are from 1974.

The volume of the unit load in the present case is
1.9 m3, not considered the volume of the pallet.

For example, the freight rate of orange juice in
200 l drums from Santos to New York is 92 dollars per
cubic meter. If palletized drums are used, according to
the rules of the Interamerican Freight Conference, the
freight rate will be (92 - 3) = 89 dollars per cubic meter,
and the freight 89 . 1.9 = 169.10 dollars, corresponding
to a specific cost of 13.01¢/1.

Item 12.-—Insurance and losses.--The costs of

 

insurance and losses are dependent on the value of the
product and on the degree of protection that is pro-

vided. For palletized cargo these costs are lower than

 

16Instituto de Pesquisas Tecnolégicas, Container--
Guia do Exportador, Grupo de Engenharia e Materiais de
Embalagem, IPT, S. Paulo, 1974.

 

37

that for loose cargo. The cost of losses can only be
estimated.

Item l3--Commissions and communications.—-Informa-
tion about taxes, insurance, freight and port costs should
be gathered and updated with the help of the freight
forwarder. An allowance for his services and for other
agents must be paid.

Item l4--Taxes.--Taxes in Brazil have a cost of

 

approximately 25% of the freight.

Alternative 2--
Drums in Containers

The following costs must be considered.

Item 1-—Cost of drums.--The same as for Alternative

 

l-—Pa11etization--if steel drums are used. If composite
drums are used this cost will be different, of course,
not only because of a difference in the initial cost but
also because they need better protected storage.

Item 4--Cost of filling.--This cost is the same as

 

for Alternative 1.

Item 5--Cost of loading the container.--This cost
is higher than that of loading palletized drums on trail—
ers or railroad flats. While six drums in one pallet are
stowed per minute on a trailer with a lift truck, driver
and helper, approximately 5 minutes are necessary to handle
and arrange in the right position, six individual drums

with a lift truck, driver and two helpers. Besides, the

38

cost of floor risers and separators will increase the cost
of stowage.

Item 6--Transportation from plant to port.--This

 

cost is approximately the same as for the transportation
of palletized loads.

Item 7--Transportation of empty container from

 

port to plant.——This cost is about the same as that of

 

transportation of an empty trailer. In order to reduce
this cost, it is possible in some countries to use the
container with some load from the port to the city where
it will receive the export cargo. In Brazil such a pos-
sibility does not exist but it is being discussed by the
present legislature.

Item 8--Port costs.--A six days free storage at

 

the port is allowed for containers in Brazil (30 days

17 The cost of stevedoring,

for empty containers).
charged by weight, is approximately the same as that for
palletized loads.

Item 9--Cost of the container.--The container may

 

be owned by the exporter or leased per one-way trip, per
round trip, in a short-term contract (one year, for
instance) or in a long-term contract (5 years, usually).

If the exporter will have an intensive use of
containers for a long period of time, 5 years for instance,

it may be advisable for him to own the equipment. In

 

17Ibid.

39

Brazil there are financial incentives for the purchase of
containers. In a taxable situation, the owner also has
some advantages in terms of discount of the interest on
the debt and depreciation allowances.

The purchase cost of a 6 m regular container
varies between 2500 and 5500 dollars, according to the
material (steel, aluminum or reinforced plastic) and the
conditions of purchase.18

Another possibility in that situation is the leas-
ing of the equipment on a long-term basis.

If the exporter, on the other hand, makes irregu-
lar shipments, or with very low frequency, it will be
better to lease containers on a one-way basis (or per
round trip if he has cargo on the return trip), directly
from the shipping line. This system of leasing is, of
course, more expensive.

For example, a 6 m container leased one-way from
Santos to New York costs 80 dollars per trip.19

The same container leased in a five-year contract
costs US $1.50 per day.20 With a rotativity of 30 days,

the cost will be 30 - 1.50 = 45 dollars per round trip.

 

18Capitol Consultants, Washington, D.C., Edward
L. Mueller.

19Netumar International Inc., New York.

20Interpool, New York, Joseph A. Gura, Manager
National Accounts.

40

If the capacity Of the container, with steel drums,
is 15,260 1, the specific cost will be, in each case,

0.524¢/1 and 0.295¢/1.

Item 10--Freight.--The freight of containerized

 

drums is basically the same as that of loose drums, but
some of the Freight Conferences give an allowance for
house-to-house shipments. For instance, the Interamerican
Freight Conference and the Brazil--Far East-~Brazil Freight
Conference give an allowance of 10%, while the Freight
Conferences between Brazil and Europe do not give any
allowance.2]"22
For example, the freight rate of orange juice in
steel drums from Santos to New York, stipulated at 92
dollars per cubic meter, will be 92 - 0.9 = 82.8 dollars
per cubic meter. The cubage of a steel drum is
0.60 - 0.60 - 0.88 = 0.32 m3. For 70 drums the freight
will be 70 - 0.32 - 82.8 = 1837.33 dollars (higher than
the minimum freight of $1348.46 for 6 m container323).
The specific cost will be 1837.33/70 - 218 = 12.04¢/l.
Item 11--Freight of the empty container on the

return trip.--If the container has no cargo on the return

 

trip, the cost of its transportation should be allocated

 

2J'Instituto de Pesquisas Tecnologicas, Containers--
Guia do Exportador.

22

 

Moore McCormack Lines, New York, New York.

23Ibid.

41

to the cargo it had on the round trip. The freight of a
regular 6 m container when empty is the minimum freight
established by the Freight Conferences.

For example, between New York and Santos it is
US $1348.46,24 which gives a specific cost of 134346/15260
= 8.84¢/1 for containerized cargo in steel drums (15,260 1
per container).

Item 12--Insurance and losses.--The insurance
premium of containerized cargo is lower than that of
noncontainerized equivalent. If the container is owned
by the exporter, however, the cost of insurance of the
container itself must also be considered.

Regarding the prevention of losses, the container
assures an almost perfect protection of the cargo.

Item l3--Commissions and communications.--Commis-
sions for freight forwarders and other agents are approxi-
mately the same as for palletized cargo, or may be some-
what higher because of the necessity of keeping a control
of the container.

Item 14--Taxes.--Are the same as that of noncon-

 

tainerized cargo. The empty containers do not pay the

Tax for Improvement of Ports and Merchant Marine.

Alternative 3--Drums on Flats

Item 1--Cost of drums.--The same as for Alternative

 

2--Drums in Containers or Alternative 1--Palletized Drums.

 

24Ibid.

42

Item 4--Cost of filling.—-Idem.

 

Item 5--Cost of loading the container.--Idem.

Item 6--Transportation from plant to port.-—Idem.

 

Item 7--Transportation of empty containers from

 

port to p1ant.--If the shipments are of more than one

 

flat, up to five of them can be transported collapsed in
the place of one container, with lower cost per flat.

Item 8-—Port costs.--The same as for Alternative 2--

 

Drums in Containers.

Item 9--Cost of the container.--The purchase cost

 

of a flat is approximately 1700 dollars (considerably
less than a regular container, which costs more than 2500
dollars).25 The Operational cost is also smaller since
expensive maintenance and repair of walls, roof and door
of regular containers are avoided.

Flats are not available for short-term or trip
leasing.

Item lO--Freight.--The same as for Alternative 2--

 

Drums in Containers.

Item 11--Freight of the empty container.--Since
flats are collapsible, occupying a smaller volume when
empty, their freight should be smaller than that of regu-
lar containers. The Freight Conferences, however, do not

have any specification about this freight so it should be

 

25Capitol Consultants, Washington, D.C., Edwin
L. Mueller.

43

determined directly and independently by the shipping lines.
There is no experience on the transportation Of flats

to or from Brazil and no freight rates established. It

is possible, however, to determine a reasonable freight
considering that it should be proportional to the volume,
for the same difficulty of handling. If for a regular

3

6 m container, with a volume of 35 m , the freight when

empty is f, the collapsed flat with a volume of 1/4 35 m3
will have a freight of f/4.

Item 12—-Insurance and losses.--Approximately the

 

same as for Alternative 2.
Item l3--Commissions and communications.--(idem).

Item l4--Taxes.--Approximately the same for all

 

the alternatives since it depends mainly on the value of

the product.

Alternative 4-—Industrial
Tanks on Flat

 

 

The following costs must be considered:

Item 2—-Cost of the tanks.--The cost of the indus-

 

trial tanks per trip must be determined. The cost
includes the initial less the final value. The mainten-
ance and repair costs, the interest on investment (if
not deducted from the income tax) and indirect costs.
For terms of comparison, all these costs must be con-
sidered in their present value. The number of trips

that the tanks will have should be determined either by

44

previous experience on the life of the equipment or, more
realistically, by the number of shipments established from
the export contract (and eventual subsequent contractS).
The cost per trip is then allocated as an increase of
value of the exported product (in terms of cents per
liter, for instance) or divided between two products if
the tanks are loaded in both ways in a round trip.

For instance, if one tank has an initial cost of
US $1000.00 and a resale value (present) of US $300.00
after 20 round trips, requiring US $100.00 of maintenance
and repair, the cost per trip will be approximately
(neglecting indirect costs and interest on investment)
40 dollars. If the capacity of the tank is 800 2 and it
is empty on the return trip, the specific cost will be
5.00 ¢/£. If the tank has cargo of equal value on the
return trip, this cost could be allocated on a fifty-
fity basis.

Item 4--Cost of filling.-—The following Operations

 

must be considered:

--cleaning of tanks

--stowing the tanks on the flat (in the first
shipment: they are supposed to use the same flat on
future round trips)

--fi11ing the tanks--the cost of filling the tanks
includes the cost of equipment such as storage tanks,

pumps, hoses, valves and measuring devices used in this

45

Operation. A proportional allocation may be necessary if
the equipment is also used for other purposes.

Item 6-—Transportation from plant to port.--
Approximately the same as in the other alternatives.

Item 7--Transportation from port to p1ant.--Approx-
imately the same as for the transportation from plant to

port, even if the tanks are empty on the return trip.

Item 8--Port costs.--The same as in Alternative 2--

 

Drums in Containers, or Alternative 3--Drums on Flats.

Item 9--Cost of the container.--The same as for

 

Alternative 3--Drums on Flats.

Item 10--Freight.--The shipping lines have no

 

experience with this kind of tank in transportation to
or from Brazil. A special application to the Freight
Conference should be made by the exporter. The freight,
in any case, should be lower than that for drums.

Item 11--Freight of the empty container.--In this

 

case, it means the freight of empty tanks on the flat.
Since the weight is very small, the minimum freight
for a 6 m container, established by the Freight Conference,
will be charged.

For example, between New York and Santos it is
US $1348.46 giving a specific cost of 134846/16000 =
8.43 ¢/IL (with 20x8009. tanks - 16.00051 - per flat)

Item 12--Insurance and losses.--Approximately the

 

same as for Alternative 3--Drums on Flats.

46

Item 13--Commissions and communications.--Approx-
imately the same as for the Alternatives 2 and 3.

Item l4--Taxes.--The same as for the other

 

alternatives.

Alternative 5-—F1exible
Tank in Container

 

 

Item 2--Cost of the tanks.--The cost of the tank

 

per trip should be determined. They have no cargo on the
return trip, since their main advantage is to be
collapsible allowing other general cargo in the container.

Item 4--Cost of filling.--The same as for

 

Alternative 4--Industrial Tanks on Flats.

Item 6--Transportation from plant to port.--The
same as for Alternative 2--Drums in Containers.

Item 7--Transportation of empty containers from

port to p1ant.--The same as in Alternative 2, with the

 

difference that the container will have the tank collapsed
and rolled up, occupying a small volume.

Item 8--Port costs.--The same as for Alternative 2.

 

Item 9--Cost of container.--The same as for

 

Alternative 2.

Item lO--Freight.--Since the capacity is only

 

10000£ the freight will be the minimum.
Item ll--Freight of the empty container on the

return trip.--This cost will be zero since the alternative

 

is valid only if there is other cargo in the container

on the return trip. Otherwise it will be the minimum

47

freight, the same as in Alternative 2, and the same as
the freight of the cargo (Item 10).

Item 12--Insurance and losses.--Approximately the

 

same as for Alternatives 2, 3 and 4.

Item l3--Commissions and communications.--

 

Approximately the same as for the Alternatives 2, 3 and
4.

Item l4--Taxes.-—The same for all the alternatives.

 

Alternative 6--Intermoda1 Tank

 

Item 4--Cost of filling.-—Will be the same as for

 

Alternative 4.

Item 6--Transportation from plant to port.--The

 

same as in Alternatives 2, 3, 4 and 5.
Item 7--Transportation from port to p1ant.--The
same as in Alternative 4--Industrial Tanks on Flats.

Item 8--Port costs.-—The same as in Alternatives

 

2, 3, 4 and 5.

Item 9-—Cost Of the container.--Intermodal tanks

 

are not available for trip or short term leasing. In a
5 year leasing contract the cost per diem per unit is
US $9.00 (considerably more expensive than a box con-
tainer--US $1.50 per diem), for a tank container with a

capacity Of 200001 (Interpool - Group 2902)?’6

 

26Interpool.

48

The purchase cost is approximatelyllooo dollars

per unit.27

Item lO--Freight.--Since the cargo is considered

 

in bulk, the freight rates are considerably smaller than
in any other alternative.

The Freight Conferences to and from Brazil have
no specification of rates. Some shipping lines, however,
established their own rates (based, perhaps, on the
experience with Bacardi Rum exported to the U.S.). For
Netumar International Inc., for instance, it is approxi-
mately US $1820.00 per unit, from Santos to New York,
independent of the product (non-hazardous). This cost
includes a heavy lift additional Of approximately
US $200.00, since the Conference Rules for containers
do nOt apply.

Item ll--Freight of empty container in the back
trip,--Again, there is nothing established by the Freight
Conferences and the shipping lines determine the freight.
For example, an empty intermodal tank from New York to
Santos will have a freight of US $1228.00 at Netumar
International Inc. The specific cost being the capacity

of the container 203002, will be 6.l4¢/2.

 

27Fruehauff Trailer, Detroit, Michigan.

49

Item 12--Insurance and losses.--Approximate1y the

 

same as for the Alternatives 2, 3, 4 and 5.

Item 13--Commissions and communications.--Approxi-

 

mately the same as for the Alternatives 2, 3, 4 and 5.

Item l4--Taxes.--The same as for the other alterna-

 

tives.

3.4 Example

 

As an illustration of the use of this model for
decision of alternatives, a case study is presented next.
The export Of orange juice from the state of Sao Paulo
via port of Santos, to the United States via port of
New York is analysed regarding the system of containeri-
zation or unitization.

The steps of the analysis according to the model
are:

Step 1: Technical aspects of each alternative

in relation to the product
Step 2: Conditions for containerization
Step 3: Cost analysis.

Step l--Technical Aspects in
Relation to the Product

 

 

Alternative l--Palletization Of Drums.--The

 

utilization of epoxy phenolic coated drums for orange
juice is approved by a long practice. The utilization

of these drums is possible since the plant has a fork

50

lift truck with a capacity Of 2000 kg. The Alternative 1
is then technically approved.

Alternative 2--Drums in containers.--The shipping

 

dock Of the plant can be used for the loading Of con-
tainers on the trailer. Containers are considered better
than palletization in terms of protection of the drums.
So, the utilization of composite drums must be considered
in comparison with steel drums. High density polyethylene
lined fiber drums have good compatibility with the
product.

Thus, Alternative 2 is technically approved, with
two sub-alternatives: steel and composite drums.

The capacity Of the container with steel drums
is 152602. With composite drums, limited by the maximum
payload of 18150 kg, it will be 168002 (84 drums).

Alternative 3--Drums on f1at.--The alternative is

 

approved for steel drums. There is no possibility of
filling all the drums on the container because that
operation would take a long time. A mixed system is
prOposed: empty drums are arranged in a first layer,
filled up and closed, and then a second layer of pre-
viously filled drums in unit loads is stowed.

Alternative 4--Industria1 tanks on flat.--The
compatibility between the product and the glass reinforced

plastic walls of the tanks is verified by the control

51

laboratory. In order to fill the tanks on the flat (on
the trailer) longer hoses will be necessary. The altern-

ative is feasible.

Alternative 5--Flexible tank in container.--

 

Experiments by the control laboratory testing the
compatibility of the product with the rubber were made
with negative results. An alteration in taste was
noticed, related to the plasticizer of the rubber. The
alternative then is not approved.

Alternative 6--Intermoda1 tank.--There is no

 

problem of compatibility with the stainless steel tank.
The alternative is feasible but a higher quality control
of the product is recommended in order to avoid the loss
of the large volume of product in the tank in case of
eventual microbiological contamination.

Step 2--Conditions for
Containerization

 

 

The export of 4000002 per month is being studied,
with the contract being negotiated. There are conditions
for transportation and handling of containers throughout
the route from plant to plant. The transportation from
the plant to the port of Santos will be made by private
trucking, partly owned, partly leased.

In principle there will be no load on the return

trip Of the containers, but that possibility should be

 

52

studied in the case of utilization of general cargo
units (Alternative 2).
The rules for the maritime transportation are

those of the Interamerican Freight Conference.

Step 3--Cost Analysis

 

Item 1--Drums.

 

Alternative l--Palletized drums: Steel drums
cost 16 dollars apiece, with the costs of transportation
and storage included. A resale value of 3 dollars is
expected. The specific cost will be 5.96¢/2.

Alternative 2--Drums in container: Steel drums--
the same as in Alternative 1; Composite drums--the cost
including transportation and shelter storage, is 15
dollars each, with a resale value of 2 dollars. The
Specific cost will be 6.5¢/2.

Alternative 3--Drums on flat: Steel drums--the
same as in Alternative 1.

,Item 2--Tanks.

 

Alternative 4--Industrial tanks on flat: The
initial cost of the tanks is US $1000.00. A resale value
of US $300.00 is expected after 20 round trips that will
require US $100.00 of maintenance and indirect costs. The
cost per trip then will be 40 dollars. Since the capacity

of each tank is 8002 the specific cost will be 5.00¢/2.

53

Item 3--Pallets and palletization.

 

Alternative l--Pa11etized drums: The pallets
cost 11 dollars per unit, including tranSportation and
storage. The resale value is 3 dollars. The cost of
palletization--work and materials-~is 2 dollars per unit. Wu“
The total cost is 10 dollars per unit and the specific .

cost will be 0.77¢/2.

“ 'l"

Alternative 3--Drums on flat: Six pallets are

 

used in the second layer. At a cost of 10 dollars per
unit the specific cost will be 0.38 ¢/2 for 72 drums on
the flat.

Item 4--Filling.

 

Alternatives 1, 2 and 3--Drums: The cost of
filling the drums will be practically the same for these
alternatives. The specific cost was estimated as
0.04 ¢/2.

Alternatives 4 and 6-—Tanks: The necessity of
cleaning the tanks and the necessity Of new longer hoses
will result in higher cost. An estimate was made Of
0.06 ¢/2.

Item 5--Loading.

 

Alternative l--Palletized drums: A trailer is
loaded with 13 unit loads in 0.50 hours, with a lift
truck and one helper. The cost of operation of the lift
truck is known by the company: 2.0 dollars per hour.

The helper will cost 0.5 dollars per hour. The total

54

cost will be 2.50 dollars per hour, or $1.25 for the
0.50 hour. The specific cost, a truckload corresponding
to 16900 2, will be approximately 0.01 ¢/2.

Alternative 2--Drums in container: Steel drums--
two hours are necessary to load the container, with the
lift truck and two helpers. The cost will be 6 dollars.
The stowage materials--floor risers, separators and
strapping--will cost 10 dollars more. A total cost of
16 collars will correspond to a specific cost of 1600/
15260 = 0.10 ¢/2.

Composite drums-—The specific cost will be
approximately the same as for steel drums.

Alternative 3--Drums on flat.: First layer-—

36 empty drums are arranged by two men in 0.30 hours,
at a cost of 1 dollar per hour or 0.30 dollars.

Second 1ayer--6 unit loads are arranged in 0.25
hour, at a cost of 3 dollars per hour or 0.75 dollars.
The total cost will be 1.05 dollars or less than 0.01 ¢/2.

Item 6--Transportation fromqplant to port.

Alternative l--Pa11etized drums: From the orange
growing area of Sao Paulo to Santos there are 400 km
of highway. The cost of private trucking, based on an
average Of ownership and leasing costs, will be US $150.00

28

per trip. The specific cost is 0.88¢/2.

 

28E. W. Smykay, Physical Distribution Management
(3rd. ed.; New York: Macmillan Publishing CO., Inc, 1973).

 

55

Alternative 2--Drums in container: The cost is
the same: US $150.00. The specific costs, however,
will be different:

Steel Drums - 15000/15260 = 0.98 ¢/2
Composite Drums- 15,000/16,800 = 0.89 ¢/2

Alternative 3--Drums on flat: The specific cost

will be: 15000/15700 = 0.95 ¢/2

Alternative 4--Industrial tanks on flat: Specific

 

{I

cost: l5p00/16900 = 0.94 ¢/2

Alternative 6—-Intermoda1 tank: Specific cost:
15000/20000 = 0.75 ¢/2.

Item 7--Transportation from port to plant.--If
the trailer returns empty or with an empty container
from the port, the cost of the trip has no other cargo
to which it could be allocated. The costs then will be
the same as in Item 6 for all the alternatives.

Item 8—-Port costs.

 

Alternative l--Palletized drums: The costs of
storage and stevedoring in Santos are US $0.20/m3 per
day and US $2.00 apiece, respectively (those are esti-
mates for illustrative purposes: actual figures are not
available). With an average storage of two days, the
specific cost will be:

[(20¢/m3'day) 1.9m3

- 2 days + 200¢]/13002 = 0.21 ¢/2.
Alternative 2--Drums in container: The storage

of containers in the port for less than 5 days is free.

56

The handling charges are 40 dollars for loaded containers
and 10 dollars for empty ones (illustrative estimates).
An expense of 50 dollars per container per round trip is
then expected at the port.
For steel drums the specific cost will be 0.33 ¢/2
and for composite drums 0.30 ¢/2.
Alternative 3--Drums on flats: The specific cost
will be 5000/15700 = 0.32 ¢/2.
Alternative 4--Industrial tanks on flats: The
Specific cost will be SOD/16000 = 0.31 ¢/2.
Alternative 6--Intermodal tank: The specific
cost will be 5000/20000 = 0.25 ¢/2.
Item 9--Cost of the container.--In a 5 year lease
the cost of containers per day per unit is:
box: US $1.5029
flat: US $1.20 (estimate)
tank: US $9.0030
With a round trip taking 30 days, the specific
costs will be:
Alternative 2--
Steel drums: 0.30 ¢/2
Composite drums: 0.27 ¢/2
Alternatives 3 and 4--0.23 ¢/2.

Alternative 6-- --1.35 ¢/2.

 

29CTI Container Transport International Inc.
White Plains, New York, Mark Flaumen, Director.

30Interpool.

 

57

Item 10--Freight.

 

Alternative l-—The specific cost, according to
the example on page 36, will be 13.01 ¢/2.

Alternative 2--According to the example on page 40
the Specific cost will be 12.04 ¢/2 for steel drums.

It will be approximately the same for composite drums.

Alternative 3--The same as for Alternative 2,
with steel drums.

Alternative 4--An estimate, based on the freight
for drums, is 12.00 ¢/2 (the Conference has not estab-
lished rates for liquids in industrial tanks).

Alternative 6--The freight is US $1820.00,
according to Netumar International Inc. The specific
cost will be 9.1 ¢/2.

Item ll--Freight of emptyfcontainers.

Alternative 2--

8.84 ¢/2.

Steel drums: 134846/15260

Composite drums: 134846/16800 8.03 ¢/2.
(The freight is the minimum freight: US $1348.46.)

Alternative 3--The freight is assumed 1/4 of the
minimum for box containers: US $337.00. The specific
freight will be 33700/15300 = 2.15 ¢/2.

Alternative 4--Minimum freight. Specific cost =

134346/16900 = 8.43 ¢/2.

58

Alternative 6--According to Netumar International
Inc., the freight of the empty tank container is
US $1228.00. The specific cost is 6.14 ¢/2.

Item 12--Insurance and losses.--The specific cost

 

is estimated at 0.02 ¢/2 for palletized cargo and is
0.01 ¢/2 for containerized.

Item 13--Commissions and communications.--A
specific cost of 0.01 ¢/2 was estimated for palletized
drums. For containerized cargo a higher cost was
estimated: 0.02 ¢/2 considering the control of the
containers.

Item l4--Taxes.--Taxes in Brazil are approximately

 

25% of the freight. A specific cost Of 3.00 ¢/2 is

considered representative for all the alternatives.

Table 2 presents the figures per item and per
alternative, and the total costs that will increase the
value of the product from the production line to the
value CIF New York.

The final conclusion of this case study is that
only the Alternatives 1 and 6 are economical: palletiza-
tion of drums and utilization of intermodal tanks.

This example was only illustrative, based on a

particular situation, and cannot be generalized.

TABLE 2.--Example of Cost Analysis.

559

 

 

 

 

Alternatives
1 2 3 4 S 6
Palletized Drums in Drums on Industrial Flexible Intermodal
Drums Containers Plats Tanks on Tank on Tank
Plat Container
1. Drums, including Steel Comp.
transportation and
storage 5.96 5.96 6.50 5.96 0 0
2. Tanks 0 o o 5.00a o
3. Pallets and
palletization 0.77 0 0.38 0 0
4. Filling, including
cleaning Of tanks 0.04 0.04 0.04 0.06 0.06
5. Loading, including
storage material 0.01 0.10 0.01 0 0
6. Transportation from
plant to portb 0.88 0.98 0.89 0.95 0.94 0.75
7. Transportation empty
from port to plantC 0.86 0.98 0.89 0.95 0.94 0.75
8. Port costsd 0.21 0.33 0.30 0.32 0.31 0.25
9. Cost of containere O 0.30 0.27 0.23 0.23 1.35
10. Frvight 13.01 12.04 12.00 12.04 12.00d 9.10
11. Freight of empty 0 8.84 8.03 2.15f 8.43 6.14
container
12. Insurance and Lossesd 0.02 0.01. 0.01 0.01 0.01
13. CommiSsions and
communications 0.01 0.02 0.02 0.02 0.02
14. Taxesd 3.00 3.00 3.00 3.00 3.00
TOTAL ¢/2 24.77 32.60 32.05 26.06 30.94 21.43
TOTAL with load in the
back trip - 23.46 23.67 — - -
Capacity (2) container
or unit load 1300 15260 16800 15700 16000 10900 20900

 

aFor 20 round trips with no cargo in the back trip.

b

400 km loaded trip at US $150.00 per trip.

c .
Is approximately the same if there is no load on the back trip.

4 .
Estimates.

eIn a S-year lease, with no cargo on the back trip.

fThe collapsed flat with 1/4 of the volume of a container, then l/4

Of minimum freight.

4. DETERMINATION OF THE NUMBER

OF CONTAINERS

If containerization is decided, the number of
containers necessary for a certain export contract--or
a number of contracts-~must be determined. This number
is dependent, first of all, on the volume and frequency
of shipments contracted or with some risk forecast.

An analysis of the flow chart should be made and
the schedule of shipments must be established in accord-
ance with the timetable of the shipping lines. If one
shipping line is used, with a specific liner assigned
to the route, the time between two shipments is equal
to the time of a round trip. If two shipping lines are
used this time will be smaller, ideally one half of the
time of a round trip (see Chronogram, Figure 13). In
the case A the number of containers will be three times
that necessary for one shipment. In the case B it will
be four times but with higher rotativity. One advantage
of the regular schedule is that when the container is
brought to the ship the same trailer will receive the
returning unit.

A regular flow chart of shipments, however, is
sometimes impossible, mainly for seasonal products. The

60

61

t 2.93 n”
n 2.2. E
N 3.30 g
. 2.20 m

mcmzzhzou

 

c2353... 1

3:25....

mhzmifirm no 25100205.“. ou~....<mo_ 3.2....

 

 

 

 

 

 

 

\\
‘Qe

 

ll

 

 

 

I nunnn m at... - at. v.52 .J

 

5|]
2.:

 

 

 

 

 

62

shipments Should follow, as much as possible, within the
contractual limitations, the flow chart of production in
order to avoid inventory costs.

If the shipments occur at long intervals, such
as seasonal, as was shown in the study of alternatives,
it is not economical to use containers but palletized
loads.

An intermediate situation is more usual, permitting
a certain number of regular containerized shipments,
monthly for instance, and a certain volume of palletized
cargo exported in the seasonal peaks.

The graph of Brazilian exports of orange juice,
for example, has a peak in August, extended to December,
and a regular pattern in the other months (see Figure 14).
If an exporter has one tenth Of this volume, for instance,
it will be advisable for him to have containers to export
400 t per month. The fluctuations in the flow would be
palletized exports. In 1972 the volume Of palletized
shipments would be 260 t per month between January and
October (in average), 650 t in November and 520 t in
December.

The fixed volume of containerized shipments,
assuming a flow of 400,0002 per month in tank containers
with a capacity of 20,0002, would require the following

number of containers:

63

 

_I4000

 

_12000

L-

_I0000 t

L

_8000

 

1!

 

 

P6000

 

_4000

_2000

—

 

 

 

 

 

 

 

 

alrlulAjulJlJlAlslo N 0 JEJMlAlMlJIJ A s olulo JIFINIAIMIJIJ A s
l972 l973 I974

 

 

 

 

Source: Banco do Brasil - Boletim Trimutrol 09 3 - I974

FIG.|4 EXPORTS OF ORANGE JUICE PER MONTH

64

Case 1: One liner with a round trip of 30 days,

one shipment per month.

Number of containers per shipment
400000/20000 = 20
Total number of containers = 3.20 = 60
Case 2: Two liners, two shipments per month.

10

Number of containers per shipment
Total number Of containers = 4.10 = 40.
The second case has the advantage in terms of cost
of equipment but the coordination it requires with two

shipping lines, or two liners, is often impossible.

 

5. SUMMARY AND CONCLUSIONS

Several alternatives for the export of liquids
destined for industrial processing (instead of direct
distribution) are feasible in Brazil. The traditional
system of loose drums is being gradually replaced by
the unitization system but the growth in the exports
requires more advanced concepts of transportation.
Containerization, which seems to be the answer for
this requirement, is being developed in Brazil.
Besides the Alternative l--Palletization of drums,

f others are possible with the containerization:

Alternative 2--Drums in container

Alternative 3--Drums on flat

Alternative 4--Industrial tanks on flat

Alternative 5--Flexible tank in container

Alternative 6--Intermodal tank

The container brings a protection to the cargo
that makes possible the shipment of composite drums.
Steel drums, that don't need special protection, can be
carried in cheaper Open containers (flats) that can also
be used in the transportation Of industrial palletized
tanks. Flexible rubber tanks in containers is a new
solution, with limited experience. Finally, the

65

66

intermodal tank seems to be the best system for the
tranSportation of liquids in bulk.

In order to compensate the cost of the equipment,
it is very advisable that containers be used with cargo
in the two directions on a round trip. Otherwise the F‘}
use of palletized drums could be economically better. I
A model for the comparison of costs of each alternative

is presented in Table l.

 

 

The development of containerization in Brazil L_
still has some problems, more related to a certain lag
in the updating and coordination of regulatory organiza—
tions than to the lack Of material facilities.

The Freight Conferences, for example, do not have
any rules or rates regarding flats or intermodal tanks.
(An intermodal tank has to pay a "heavy lift additional"
that is not charged for general cargo containers.)

Containers have two essential functions: cargo
handling and cargo protection. In the case Of drums
the regular box container is an expensive protection that
they really don't need: they have intrinsic resistance
to weather (steel drums) and pilferage. The advantage is
in terms of handling but, depending on the Freight
Conference, that advantage is for the shipping line and
not for the shipper. Only the Interamerican Freight Con-
ference and the Far East Conference give an allowance in

the freight for containerized cargo. That incoherence

67

between the Freight Conferences is shown by the fact
that the freight of palletized cargo from Brazil to
EurOpe is lower than that of the same cargo in containers.
The most important cost in the process of trans—
ference of the product from the production line to the
importer in the port Of destination is the maritime
freight. The cost analysis is then made difficult by the
insufficiency of the rules of the Freight Conferences.
In sum, the following conclusions may be outlined
for each alternative Of unification or containerization

of the Brazilian exports of liquid products:

Alternative l--Palletized Drums
This system has a high versatility and low cost.
It is the only economical system for shipments with an

irregular schedule.

Alternative 2--Drums in Containers
The utilization of containers is economical only
if it is intensive and continuous, with cargo on both

directions of the round trip.

Alternative 3--Drums on Flat
Flat containers are more economical than box
containers, mainly if there is no load on the return

trip and they can be collapsed.

68

Alternative 4--Industrial Tanks on Flat
Depending on the cost of industrial tanks this
system may be more economical than the utilization Of
drums. The corresponding specific cost can be reduced
by a long life and intensive utilization of these tanks,
with liquid cargo on the two directions of the round
trip. The freight rates for flats depend on future rules

of the Freight Conferences.

Alternative 5--F1exib1e Tank in Container
More experience and information is necessary about
the performance and cost of flexible rubber tanks. A
serious setback for this system is that the capacity Of
these tanks is limited to approximately 10,0002 if 6 m

containers are used.

Alternative 6--Intermodal Tanks
This system has advantages in terms Of freight
since the freight rate for bulk cargo is always lower
than that of the same cargo in packages. Other advan-
tages are the savings in the cost of packing and handl-
ing. These advantages compensate the high cost Of the
container so that this can be the best system is effi-

ciently utilized.

 

 

 

I [III'iII lollilll

APPENDICES

69

APPENDIX I

PRODUCTION OF DRUMS IN BRAZIL

70

APPENDIX I

PRODUCTION OF DRUMS IN BRAZIL

Steel Drums31

2102 steel drums are made in Brazil by CVL, with
plants in S. Paulo and Rio de Janeiro using knowledge
secured from the Royal Packaging Industries Van Leer,

B.V. - Holand. These drums are produced with tight-head
(universal drum - type DOT 17C) and removable head

(DOT 17H, not used in international transportation), and
can have the following internal finishing: degreased
black plate, resinous oil film, epoxy-phenolic or phenolic
resin coating or galvanized. ‘The same industry also

makes liners of high density polyethylene for these drums.

Composite Drums
Fiber drums with a capacity of 2002 are made in
S. Paulo by Lipoquimica Ltda. They can receive poly-

ethylene liners for the transportation of liquids.

Plastic Drums
Plastic drums are not made in Brazil and there is
no indication that they will be produced in the near

future.

 

31CVL Embalagens Industriais do Brasil Ltda.
Catalogue. S. Paulo, 1974.

32

 

Lipoquimica Ltda. Catalogue. S. Paulo, 1974.

 

71

lilllul'l tifllli'l‘ilill

APPENDIX II

DEVELOPMENT OF CONTAINERIZATION
IN BRAZIL

72

APPENDIX II

DEVELOPMENT OF CONTAINERIZATION

IN BRAZIL

The development of the utilization of intermodal
containers in the world (started in 1957 with the Pan
American Steamship Co., prerunner Of Sea-Land Service
Inc.) is determined by the following characteristics Of
the system:

1. high speed of cargo handling in the inter-

faces between transportation modes;

2. possibility Of house to house shipments with-
out any intermediary direct handling Of the
containerized goods, with advantages in terms
of safety;

3. protection of the cargo by the container
during transportation and storage, with
reduction in protective packaging.

These characteristics are of higher importance in
transportation by ship since a large reduction of port
time results in a very significant reduction of the Oper-
ational costs for the shipping lines.

In Brazil the utilization of cargo containers was
introduced in 1967, but only in 1971, because of the

success of the first experiments, a significant increase

73

llllll‘llll‘IIll‘nilll J (J,

74

was Observed with a growth rate of 11,500 containers per
year. In 1974 the number of containers handled in the
three main ports--Santos, Rio de Janeiro and Paranagué--
reached 40,000 units (see Figure 15).

Furniture, shoes and instant coffee are currently
the main containerized cargoes. Other industries are
starting now to use containers instead of wooden boxes
and crates (Volkswagen and GM, for instance). The use of
refrigerated containers for exports Of beef and Shrimp is
growing. Large industries are using containers to import
industrialized products like chemicals (Kodak), equipment
(IBM and Zerox), synthetic fibers (Rhodia), etc. This
trend toward containerization was made possible by a
reformulation of the Customs structure permitting house-
to—house deliveries, and by the installation of new
facilities in the ports. This trend is being forced
also by the expansion of the external trade and by the
increasing cost of the traditional shipping packs and

their handling.

Inland Transportation

 

The network of highways and railroads in Brazil

is concentrated in the south central states, serving all

the principal ports (see map, Figure 16).33

 

33Jane's Freight Containers 1968-1969.

 

75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/
14.8.8315.
/
20000 /
"“2?" /
uni): /
(/
I0 000 ; RIC)
/ /
I /
+++wfr . 1 —*°%T.u§:
.174: g at _. ‘T
67 68 89 I970 7| 72 73 74
m.

IPT - Relatérlo sabre Containers para STl/Mlc

FIG.I5 CONTAINERS HANDLED AT THE MAIN BRAZILIAN PORTS

76

 

r f ’r
"\ I 1'
, x. ., ‘33-, J Source
0’ a, ’0’.‘ -.’ O 0 a
”I! x, ,- Jones Freight Containers
, .
'~-’ l968-l969
‘- 4/x1,/
,1

 

 

 

~ ..... ‘ ‘ ""-
- \ O
2 V ‘
BOLIVIA -’
.I
‘1.” P...
' '. m
PARAGUAY I... v .0 Rio de Janeiro
' ' Santos —
\“Q- "
/ 3‘." .‘ ‘. Paronagud
I

ARGENTINA {A'.

—_ In operation
w -.--- projected

URUGUAY I

 

. 15 °

 

 

FIG.I6 BRAZILIAN RAILROAD NETWORK

 

77

New highways are being opened, reaching remote
regions or increasing the transportation capabilities in
the developed south central area. The highways have a
load limit of 10 tons per axle. Trailers with two or
more axles are required for carrying completely loaded
containers.

The railroads have generally a l m gauge. In
S. Paulo there is also a railroad with 1.60 m gauge.
There are international connections by rail with Argentina
and Bolivia. The main railroads in S. Paulo, Rio de
Janeiro and Parana have facilities for the transportation
of containers such as special yards with gantry cranes.
Standard flat cars are used, with no lockers for the con-
tainer base corner devices.

The inland waterways may be used for the trans-
portation of containers (container on barge system)

mainly in the Amazon and Prata Basins.

Portuary Facilities34

Santos

The port of Santos is located in the state of
S. Paulo. The movement of containers in this port is
having a very fast growth (see Figure 15) and the admin-
istration is being forced to deve10p new facilities in

regard to this trend. Provisional solutions, however,

 

34Instituto de Pesquisas Tecnologicas.Re1atorio
Final - Levantamento de Dados,Diagnose da Situacao dos
Containers para Exportacao no Brasil - submetido a
STI/MIC 1974 (unpublished).

78

are often attempted that are far from the ideal in terms
of efficiency. Several small areas are converted to con-

35

tainer yards with a total capacity of 4,000 TEU stacked

two high, in a total area of 57,620 m2. In 1974 there
were in operation at the port a large over-tires crane
and four van-carriers for handling of containers with
serious problems of maintenance.

A new terminal is being planned with an area of
about 125,000 m2.

The accesses to the port are mainly a highway
between Santos and S. Paulo city, and two railroads
one with 1.60 m gauge.

The following movement of containers was regis-

tered in Santos in 1973.

Number of Containers

 

 

Received I Shipped
total 10303 total 9219
loaded 8458 loaded 5932
empty 1845 empty 3287
to house 5278 from house 9198
unloaded at the port 2271 loaded at the port 12
with damage 1783

 

3STwenty Feet Equivalent Units, a 12 m container
corresponding to two 6 m units.

79

Rio de Janeiro

 

The port of Rio has a heavy cargo yard being used
as a container yard connected by rail to the quayside.
In 1973, 3412 units were received and 3079 shipped (see
graph, Figure 15). From January to July, 1974, 4160

containers were handled, with the following distribution:

Received

6 m 12 m Total

 

 

Quant. Weight (t) Quant. Weight (t)

loaded 1478 12933 354 5015
empty 425 746 52 176
total 1903 406 2309
Shipped
6 m 12 m Total

 

 

Quant. Weight (t) Quant. Weight (t)

loaded 963 10520 213 2788

empty 562 1229 113 373

total 1525 326 1851
Paranagua

 

Situated in the coffee producing state of Parana,
this port handled 2423 containers in 1973 and 1555 from
January to July 1974. All the containers are loaded and

unloaded at the port.

80

Other Ports

 

Smaller ports occasionally handle containers.
They have no special facilities and rely on the cargo
handling systems of the ship. The port of Manaus on the
Amazon River, since declared a tax free zone, has
received a few containers. The port of Recife in the
northeast of Brazil, handles tank containers for Bacardi

Rum exported to the U.S.

Shipping Lines

 

The main shipping lines that operate regularly
with containers between Brazil and other countries are:

Moore McCormack Lines

Delta Lines“

Hamburg - Sud

Netumar

Loide Brasileiro

Ships not specialized in containers are used with

the containers carried on the deck or in general cargo

holds.

Leasing Companies

 

The main international container leasing com-
panies have agents in Brazil:

Sea Containers (CICON-Rio)

ICS - Integrated Container Services (INC - Rio)
CTI - Container Transport International (Agencia
Maritima Lauritis Lachmann - Rio, Santos,

Paranagua)

Contrans (Container leasing do Brasil, Rio -
Deicmar, Santos)

Interpool (V. Morel S.A., Santos)

81

Trip leases can be contracted with the shipping
lines that have long term contracts with the leasing
companies. This is valid, however, only for general dry
cargo containers since special containers are usually

leased only on round trips or on a long term basis.

B IBLIOGRAPHY

82

B IBLIOGRAPHY

American National Standard. ANSI. MH2.1, 1974.
Specifications for 55 Gallon Tight-Head Universal
Drum.

 

Association of American Railroads. Pamphlet No. 4.
Recommended Methods for the Safe Loading of
BarreIE, Drums ormRegs in_glosed Cars and
Protection of Equipment. Freight Loading and

Container Section. Chicago, 1964.

 

. Idem. Supplement, June, 1974.

Banco do Brasil. Boletim Trimestral No. 3, 1974.

 

Bertels, P. Die Verpackungstechnick bei der Deutschen
Bundesbahn, in Neue Verpackung II, 1974.

 

CTI. Container Catalogue. White Plains, N.Y., 1974.

 

CVL Embalagens Industriais do Brasil Ltda. Catalogue.
S. Paulo, 1974.

Dow Chemical. Product Packaging Information. Vera Heltzel.
Export Shipping Coordination (unpublished).

Instituto de Pesquisas Tecnologicas. Containers. Guia
do Ex ortador. Grupo de Engenharia e Materiais
de Embalagem. IPT, S. Paulo, 1974.

 

 

. Embalagens de Transporte--Guia de Uso.
Grupo de Engenharia e Materiais de Embalagem IPT,
S. Paulo, 1975.

. Relatério Final - Levantamento de Dados e
Diagnose da Situagao dos Containers para
Exportacao no Brasili- submetido a STI/MIC 1975
(unpublished).

 

Interpool. Container Catalogue. New York, 1974.

 

Jane's Freight Containers 1968-1969. George Downie, ed.
London, 1969.

83

84

. 1973-1974. London, 1974.

Lipoquimica Ltda. Catalogue. S. Paulo, 1974.

 

Packaging, May, 1974.

Sealand. Scotch to Rum to Oils in Container News,
September,71974.

 

Smykay, E. W. Physical Distribution Management, 3rd ed.
Macmillan Publishing Co., Inc., New York, 1973.

Swedish Transport Research Commission and Swedish
National Committee of ICHCA. Stowing_Goods in
Containers and on Flats. Stockholm, 1973.

 

Tabak, H. D. Cargo Containers—-Their Stowage, Handling,
and Movement. Cambridge, Cornell Maritime Press,
1970.

 

Unit Load Council. Guidelines for the Promotion of the
Unit Load Concept, 15 ed. Oslo, 1973.

 

General Reference

Packaging Institute. Glossary of Packaging Terms, 4th ed.

Other Sources

 

Information was also gathered in contacts with the
following companies:

Capitol Consultants, Washington D.C. Edwin L. Mueller.

CCR--Campagnie des Containers Reservoirs. Paris, J. Seguy,
Secretaire General.

Conferencia Interamericana de Fretes. Rio de Janeiro.
Frank R. A. Levier, Administrative Executive.

CTI--Container Transport International Inc. White
Plains, New York. Mark Flaumen, Director.

Dow Chemical, U.S.A., Midland, Michigan. Larry E.
Wingerter, Manager. P.E. & D., Metal Containers.

Fruehauff Trailer. Detroit, Michigan.

Interpool, New York. Joseph A. Gura, Manager, National
Accounts.

85

Kodak, Rochester, New York. Marvin Decker, Package
Engineering Laboratory.

Moore McCormack Lines, New York.

Netumar International Inc., New York.