TCA Annual Conference
Dec 1, 1997 12:00 PM
Tank Containers Continue to Gain Favor for International Shipments TANK CONTAINERS will continue to gain ground, but they will face stiff competition from tank trailers in domestic transportation in many parts of the world for many years to come. Price will remain a key factor in mode selection. The IMO-1 tank will remain the workhorse of the industry.
These were some of the predictions as members of the industry looked into the future during the Tank Container Association's annual Tank Container Industry Conference October 1, in Houston, Texas. Tank container shippers, lessors, operators, and manufacturers were represented at the conference.
Price and safety are the prime considerations that determine whether tank containers areused today, and that's not going to change, according to Peter Cray, marine operations management, Materials & Services, Exxon Chemical Americas. "Chemical companies are in business to make a profit," he said. "It's up to the tank container operators to give us what we need and price it competitively."
The IMO-1 will remain the workhorse of the chemical industry for most products. Tank containers will continue to be used for short-term storage in addition to transportation. That's one reason they are an attractive option for chemical companies.
Europe will continue to lead the way in tank container use. Cray speculated that there will be no more drum shipments to Europe in three years.
US Limits Closer to home, tank containers will remain a limited option in the United States. "We don't see much of a role for ISO tank containers in the US domestic market," Cray said. "Tank trailers are so well entrenched that it would take a major reorientation to shift the chemical industry to tank containers."
Mexico is very similar to the United States. Tank trailers and rail tankcars handle a majority of the domestic chemical shipments. Liquid bulk cargoes to and from the United States also move in tankcars or tank trailers. "We believe tank containers will be more competitive in Mexico in the future, but there is little interest now," Cray said.
Exxon would like to send more tank container shipments to customers in the various South American countries, but many areas still have limited handling capabilities. Tank container use should increase as the market becomes more sophisticated and companies look for more efficient transportation.
The Far East is likely to become the biggest growth area for tank containers. Cray suggested that many countries in the region will develop laws that will accelerate the move to tank containers.
David Davison, supply chain manager methylamines products and logistics consultant, E I Du Pont de Nemours & Co Inc, added that DuPont's use of tank containers grew significantly as chemical exports doubled over the past two years. DuPont's main export destinations from the United States are in Europe, but the Asian and South American markets are growing.
Tank containers now account for about 7% of DuPont's containerized freight. Whether the percentage grows depends on the tank container industry's ability to meet DuPont's need for better tracking and monitoring systems and for greater uniformity in depot services.
Depot Uniformity Colin Rubery, general manager for tank containers at Sea Containers Services Ltd, echoed the DuPont call for greater depot uniformity. However, he added that tank container owners and users are partly to blame for the lack of uniformity.
"The primary control system is for the depot customer to have a service contract detailing each party's responsibilities," he said. "I fear that in many cases, the contract is confined to a mere agreement on labor, lift, and storage rates. It's no wonder that dissatisfaction exists when depot customers have not defined and set the service parameters they require."
Lack of well-established standards adds to depot costs in a number of ways. For instance, it is not uncommon for a tank container to undergo as many as six surveys during a single trip to a depot. These include a depot inspection, customer estimate control, joint survey, quality control, on-hire inspection, and pre-trip inspection.
Depot customers need to be very clear on tank repairs. It is necessary to instruct the depot in the criteria to determine appropriate repairs to be carried out. Few depots have their own documented or published repair criteria. They expect the customer to provide repair specifications.
When no instruction is given, repairs are determined by a mixture of experience, engineering knowledge, and previously established criteria. Not surprisingly, this ad hoc process has been unsatisfactory for most depot customers.
Trade Associations Fortunately, trade associations are beginning to provide solutions. Rubery pointed out that the criteria developed bythe Tank Container Association (TCA) and the International Tank Container Lessors Association (ITCLA) are very similar. The biggest difference is the way the material is presented. Regardless of where they are formulated, standards must focus on frequently-carried-out functions. The cleaning certificate format is one example, Rubery said. ITCLA has published a uniform cleaning certificate that should be adopted worldwide.
Rising operating costs must be contained. Rubery called on the tank container industry to implement a standard tariff, starting with the 20 most frequent costs. Costs will continue to rise if overheads are not controlled.
Depots need to be able to prove that cost estimates are accurately prepared and that quality is properly controlled. Once those objectives are achieved, surveys will become less necessary.
Michael Balahutrak, Ermewa Inc, said that depot uniformity is just one of the challenges faced by today's tank container leasing companies. Leasing competition is coming from other sectors, including the depots, truckers, rail lines, and equipment manufacturers. Regulatory pressure is growing.
Considering the challenges, it would be a mistake for tank container lessors to become isolationists, standing apart from the rest of the industry, Balahutrak said. Lessors should work in open harmony with all segments of the tank container industry.
Groups such as TCA give all facets of the industry an open forum to discuss issues of general concern. "We have an opportunity to openly discuss concerns, such as market inefficiencies," Balahutrak said. "We can have an impact in regulatory forums, and we can promote safety and related issues."
Tank Guidelines The Tank Container Repair Guidelines and Definitions manual is one example of work done by TCA to benefit all elements in the tank container industry. Work is being finalized on the second edition.
Bob Yuna, president of CMS Intermodal Services, discussed some of the changes in the second edition. Confined spaces will be addressed. The manual cautions that depot workers should not enter any tank that is lacking a valid certificate of cleanliness and an entry permit.
Additions to the manual address the need to verify internal tank pressure and to ensure that the tank is depressured before valves, manlids, or other fittings are opened or removed. Safety steps are outlined for steam lines. Workers are cautioned to be aware of the possibility that pressurized steam might be released when steam lines are disconnected.
The second edition also will contain procedures for gas tank repairs, tank corrosion, and loading. The revised manual should be available in December 1997.
ASME Subcommittee TCA has five members on a new subcommittee that was formed by the American Society of Mechanical Engineers (ASME) to develop a new pressure vessel standard for cargo tanks, including tank containers. "ASME has acknowledged that transport tanks are very different from stationary units," said Aris Antoniou.
A first draft is expected in 1998, followed by a completed standard in 1999. Entitled Section 12, it will be solely dedicated to transport vessels and will meet the requirements to serve as reference for regulatory authorities and safety organizations worldwide.
Three subgroups in the standard are: design and materials, fabrication and inspection, and general requirements. Antoniou said the new standard will establish a "T" stamp that will replace the "U" stamp currently used by cargo tank builders. He speculated that the new standard will have a greater impact on gas tank design than on liquid tanks.
Wastewater Treatment Pending regulations that address wastewater treatment at tank cleaning facilities were provided by John Tinger, project manager, transportation equipment cleaning guidelines, Environmental Protection Agency (EPA). A proposed rulemaking will be published in the Federal Register sometime in February 1998.
Tinger acknowledged that the wastewater treatment requirements probably will force some tank wash facilities to close. Compliance will not becheap for companies that don't already have sophisticated treatment systems. Companies will have one year to comply once the final rule takes effect around 2000.
The EPA requirements will be technology-based, although the agency doesn't endorse any specific technology. Monthly monitoring will be required. The most stringent limits will be placed on chemical effluents, but Tinger said EPA probably won't set limits on biological oxygen demand (BOD) and total suspended solids (TSS). The main thrust will be flow reduction.
Turning to issues that have a more immediate impact on tank container operators, Lawrence Bierlein, an attorney with Swidler & Berlin, reviewed the need for risk assessment. He pointed out that accidents, and the litigation that often accompanies them, can seriously destabilize a company.
Management needs to assess risks and determine what can be done to reduce the potential for harm. "It's not a big-budget effort," Bierlein said. "Use the people in your organization who have the most experience. Take a fresh look at everything you are doing."
Starting from scratch, a tank container operator needs to evaluate the risks of every product hauled. What steps can be taken to mitigate the hazards posed by each product? Hazardous materials routing must be reviewed.
"Carriers have made the routing decisions in the past, but those days are coming to an end," Bierlein said. "Shippers need to work with carriers to decide on the best routes."
Insurance Considerations Insurance can be less costly for tank container operators that put more effort into reducing risk, according to Allan Pound, managing director of Pound Gates & Company. A lot of money is wasted on insurance that either provides overlapping coverage or leaves serious gaps.
"Cheap insurance brings false economies," he said. "You want to insure as much as possible with as little overlap as possible. You need to make sure that you have the right insurance coverage."
The principal classes of insurance to be considered are physical damage, liability, and contingency. Equipment values must be properly calculated.
"Shop around for insurance," Pound said. "You need to explore options worldwide. Consider self-insurance as a way to reduce total cost. You can reduce a premium by up to 40% through self-insurance."
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