ASSOCIATION Asia’s tank container industry is growing at a rapid clip, and a new industry body has been formed to ensure that it will benefit from the lessons learned by its European counterparts.
The Asia Tank Container Organisation (@TCO), which was launched in February this year, held a seminar in Singapore in late June. Some 50 people from major chemical and shipping companies as well as tank container operators, manufacturers and lessors attended the event.
Introducing the event, and the reasons behind the need for @TCO, Organisation president Reginald Lee said: “It took Europe more than 20 years to achieve its current position. These 20 years of experience will now be used for the benefit of the expanding Asian market. @TCO’s mission is to ensure that we achieve the same level of safety and environmentally friendly use of tank containersas Europe but within the next three to five years, not 20 years. This will be of benefit to all stakeholders in the Asia Pacific supply chain.”
Reg said that the global tank container market is on the verge of a new phase of expansion, spurred on by growth of chemical production and exports from China and just-in-time (JIT) delivery. He underscored the importance of Asia for the tank container industry. He noted that while the European tank container market is larger, Asia is growing faster. He said that between 260,000 and 300,000 standard 20-ft and swop body tank containers are in service globally. Of these, 200,000 to 220,000 serve the intra-European market.
He added, “To provide an idea of the size of the intra-European tank container industry, it can be considered that 10 per cent of the fleet is out of service at any one time, undergoing maintenance, repair or otherwise not employed. Assuming an 85 per cent utilisation rate for the in-service fleet and just an average of two moves per tank per week with payloads of just 14 tonnes per trip, the European tank containers transport over 235 million tonnes per annum.”
The remaining 60,000 to 80,000 tank containers in use serve the deepsea international routes, including intra-Asia and domestic China markets. To estimate the amount of cargo being transported, Reg once again assumed that 10 per cent of the fleet is out of service at any one time. However, he assumed a lower 70 per cent utilisation rate for the in-service fleet, five moves per tank per year with an average payload of 17 tonnes per trip. Based on these assumptions, the deepsea and domestic China fleet is transporting over 4.5 million tonnes annually.
Drums in the crosshairs
From this relatively low base though, prospects for the Asian market look good. Reg said, “I believe that from 2012, going forward we will see 20,000-plus tank containers per year being manufactured in China alone, and even doubling the current world fleet by 2020. In addition, new manufacturing companies may come onstream from developing areas such as India and Vietnam.” The growth will come on the back of strong demand for chemicals and conversion from shipping in drums to tank
Reg added that drums would still be used for the foreseeable future in the emerging parts of Asia due to a lack of infrastructure there. Labour costs and environmental requirements are also low, while managing the logistics of a roundtrip tank container operation are difficult and therefore more costly. However, as these markets develop, the benefits of drums will diminish. Environmental requirements will increase the cost of recycling drums for secondary use or disposal. In the longer run, labour costs will increase and the logistics infrastructure will develop, making the tank container the cheaper and greener option. Therefore, added Reg: “The opportunities for conversion from drums to tank containers are enormous in the new emerging markets.”
Guy Bessant, from Sasol Chemicals, Asia Pacific, who also spoke at the seminar, shared Reg’s views as he highlighted the challenges and opportunities in Asia. Guy said that by 2020, 35 per cent of world chemical demand would be in Asia, excluding India. Including India, the number would rise to 50 per cent. “This is the region that is really driving demand for chemicals,” he said.
Guy added that intra-Asian trade is growing faster than extra-Asian trade. Not surprisingly, China accounts for 40 per cent of intra-Asia trade. Given the strong growth in Asia, Guy said, “It is not unforeseeable by 2020 to have 200,000 tank containers in Asia.”
Within the region, China, the Philippines, Indonesia, Thailand and Malaysia are the main growth markets for tank containers. However, these countries also present several major infrastructural challenges.
“The infrastructure for isotanks just isn’t there,” Guy said. For instance, in China, lift-on, lift-off facilities are not available outside the major railway stations, while many Indonesian roads are riddled with potholes. Despite these challenges, Asia still offers “unlimited opportunities”.
Guy noted that there was therefore a key role for industry organisations like @TCO to work for the betterment of the chemical companies, consumers and other stakeholders. “A consolidated industry voice for the tank container industry with specific focus on Asia would be welcome.”
@TCO is certainly more than ready to take up this role, and appears to have the support of the Asian fraternity. Its membership drive has been successful. Reg told HCB that the organisation has already signed up 21 companies, a long way towards its goal of 30 members in the first year.
Among its first initiatives being pursued by @TCO is the establishment of an independent depot auditing procedure for tank containers in Asia, in response to requests from the chemical industry. Reg explained that depots meeting agreed standards can request the independent audit. On completion of a successful audit, their names will be added to the accredited list on the @TCO website. Those wishing to remain in the scheme will need to be reinspected every two years. While @TCO will not charge for the audit or posting the names on the website, the depots will be responsible for the surveyors’ fees.
The audit will cover six different types of facilities, namely:
- cleaning stations for chemicals;
- cleaning stations for chemicals and food, which would have to have separate food and chemical cleaning bays;
- ‘tip and turn’ depots, which offer basic services such as gasket replacement and minor repairs;
- medium-repair depots, which replace major components such as corner posts, cladding repairs, minor pitting repairs and periodic testing;
- heavy-repair depots, which offer all types of repairs, including shell inserts and major pitting repairs; and
- major-repair depots, which offer the full range of repairs as well as tank refurbishment.
So far, Reg revealed, six depots have applied for the survey. Of these, five applied as public tank container depots. They include Kerry-ITS Terminal and OCWS Logistics. The sixth is Stolt Tank Containers, which applied as an in-house depot.
To receive accreditation, the depots must have all the mandatory government approvals. They must also have the relevant third-party and employee liability insurance in compliance with minimum local government requirements. If they store or handle hazardous cargoes or wastes, they must have all the requisite local government environmental control and health and safety permits. Depot-specific health and safety procedures, including confined space entry procedures, must also be in place. Their facilities must have a perimeter fence or wall.
The next step for @TCO is the establishment of a permanent office in Asia within two years. Reg said that Shanghai is the organisation’s first choice because of the burgeoning China market. Singapore, he added, is another alternative.
Published with permission of HCB Publications Ltd