Page 234 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

Unit 10: Containerization and Leasing Practices

These material handling equipment can be generally classified as: Notes
Transport equipment is used to move materials from one location to another. It includes
cranes and industrial trucks.

Positioning equipment is used to handle material at a single location, so that it is in the
correct position for subsequent handling, machining, transport, or storage. It includes
hoists and lifts. Unlike transport equipment, positioning equipment is usually used at a
single workplace.
Unit load formation equipment is used to maintain integrity when handling a single load
during transport and for storage. It includes pallets, bags and skids.

10.5 Container Leasing Practices

Containers are taken on lease by carriers from container manufacturing companies or leasing
companies who own containers. There are four types of leasing arrangements.
1. Trip Lease: Trip lease or short term lease. The lease is for one voyage or one trip. (Voyage
implies to and fro trips and trip connotes one leg only).
2. Long Term Lease: Containers are usually leased for a period of 3 years to 5 years.
3. Financial Lease: This is more of a hire-purchase or instalment purchase scheme rather
than a lease as in this case at the end of the term for which containers are taken on financial
lease, the ownership of the container is transferred to the lessee.

4. Master Lease: In this case, one shipowner concludes a deal with a container leasing company
for a period of usually 1-2 years whereby he guarantees that a minimum number of
containers will always be under his lease from the leasing company. Against this guarantee,
the container leasing company also assures the ship owner that a minimum number of
empties will be made available to the ship owner at the various ports as agreed upon
between the two contracting parties.
Lease rent is charged at per day container. The rate depends upon the supply and demand
situation. The International Container Lessors Association has drawn up forms of contract to
assist the working of the leasing market. The rent component can also include insurance premium
for loss/damage to a limited extent.
Users normally prefer to lease a container than owning it. This is more true of shipowners who
use bulk of the containers available. Owning involves investment of capital, maintenance,
workshop management etc., but owning containers provide self-reliance to shipowners and
also source of advertisement for their lines wherever containers move.

!
Caution There is Institute of International Containers Lessors (IICL), New York, which
covers the largest nine lessors, of which three largest members control 63 percent of the
leased fleet of containers and 27 percent of the total owned and leased units worldwide.
(These figures change from time to time).

Self Assessment

Fill in the blanks:
11. The ........................... across the countries may take place by sea, by air, by road and rail or
through multi-modal transportation.

LOVELY PROFESSIONAL UNIVERSITY 229