ITCO concentrates on growth areas

ASIA’S BRIGHT FUTURE

ASIA • ITCO IS FOCUSING ITS EFFORTS ON CHINA, NOT ONLY THE MAIN SUPPLIER OF NEW TANKS BUT ALSO THE MAIN SUPPLIER OF NEW TANK DEMAND

EARLIER THIS YEAR, NTtank, one of the large Chinese tank container manufacturers, opened a new production line at its facility near Shanghai. That in itself is news but the most significant element of the project is that the new line is highly automated, even down to the positioning and welding of the dished ends. That reduces the need for labour and, NTtank says, cuts the time to build a tank significantly compared to standard processes.

The new line is evidence not just of the continued interest on the part of Chinese container manufacturers in the tank container sector but also of their intent to improve production processes to increase output and reduce costs. Moreover, it remains the case that China is the only tank production region where every new tank container off the production lines can be guaranteed an export cargo as it moves into the global supply chain.

DEMAND RESPONSE The output of tanks in China has increased rapidly in recent years, as the tank container fleet report on the following pages indicates. It would appear that the numbers will be even higher this year, raising the question: who is buying all these tanks?

According to Reg Lee, president of the International Tank Container Organisation (ITCO), most of the incremental demand for tanks is coming from Asia, of which China represents the largest slice. This is not just for export trades, as domestic use of tanks – including swap bodies – is rising quickly.

Outside of China, lessors have been investing heavily in the last few years, attracted by low prices, but Lee says there are signs that tank operators are joining the party, with some of the major players expanding their fleets in 2018 and a number of new, smaller operators emerging in niche markets.

ITCO is also following the focus on Asia. It was noticeable that the ‘ITCO Village’ at this year’s biennial Transport Logistic China event, held in Shanghai in May, was as well supported as the equivalent event in Munich, which has long been regarded as the main showcase for the tank container sector. Both exhibitions manage to attract not just transport operators and their suppliers, but also the end customers – the chemical shippers. This adds considerable value for ITCO members.

MORE TO COME Lee believes there is still plenty of opportunity for further growth in the Chinese market. Domestic chemical companies located in inland areas still “lack confidence” in tank containers, he says, but he also feels that the movement of those chemicals in steel drums, as is the current widespread practice, is not sustainable in the long term.

“The tank container is a proven vessel for bulk liquids products,” Lee stresses, urging ITCO members to refocus on the quality benefits and flexibility of tanks, particularly »

EVIDENCE FROM THIS YEAR’S TRANSPORT

LOGISTIC CHINA EVENT SHOWS THE TANK INDUSTRY

in comparison to drums and IBCs – and most particularly in contrast to flexibags.

Not only are flexibags prone to leaks – indeed, many operators seem to accept a certain proportion of failure – but they are also single-use vessels. With increasing public opposition to single-use plastics items, and widespread government pressure to phase out their use, the prospects for flexibags could look bleak. And the Chinese government is taking part in that process, having now put in place a ban on the import of plastics waste that will take effect at the start of 2019 and could include shredded flexibags.

RAIL BACKING More support for the use of tank containers in China is coming from China Railway, which has started using swap bodies and is beginning to open up to third-party tank operators. Its own tank container division, China Railway Tielong Container Logistics (CRT), is also expanding its own tank fleet: from a slow start in 2000, CRT’s tank fleet grew to more than 10,000 units by 2012 and is expected to reach some 30,000 by the end of 2018. It is anticipated that by 2020 around 20 per cent of all liquid rail freight in China will move in tank containers.

It is also notable that China Railway has built its own impact testing facility, obviating the need for new tank designs to be tested in France or Canada. It is also beginning to invest heavily in the necessary handling equipment and other infrastructure to facilitate the shift of liquid cargo into tanks.

Much of this was revealed by Guan Xiaodong, deputy general manager of CRT, in a presentation at the CIMC Symposium held in Nantong in May. Guan noted the need for deep structural reform on the supply side, strengthening links between China Railway and its shipper clients. In terms of international relationships, the ‘One Belt, One Road’ initiative is also promoting the use of intermodal transport over long distances – some European-based tank container operators have already established regular train movements between northern Europe and a range of locations in China. THE NEXT GENERATION While urging its members to do more to promote the benefits of tank containers, ITCO itself is taking a lead within China. While in Shanghai for the Transport Logistic Event, Lee and Patrick Hicks, ITCO secretary, took the opportunity to visit Shanghai Maritime University (SMU), with which the Asian Tank Container Organisation (@tco) – which merged with ITCO at the start of this year – had already developed strong links. Lee says he was very impressed at the facilities at SMU, where China Ocean Shipping (COSCO) has provided assets to help with the training of cadets. ITCO has now offered to provide a tank container to help train logistics students on their use, while SMU may adopt the e-learning tool developed by ITCO in collaboration with Exis Technologies. SMU would like to be able to offer a certification based on this training course and there are moves afoot within the Association of International Chemical Manufacturers (AICM) to develop such a scheme.

It is, though, important to remember that China remains a Communist state and central control does not always match market needs. A number of tank cleaning facilities have recently been closed, simply because they now find themselves in the wrong place. Beijing has instructed provincial governments to force the relocation of high-hazard industries – especially chemical manufacturing – into dedicated areas away from centres of population and critical infrastructure. This follows the Tianjin disaster in August 2015, the impact of which was exacerbated by poor land-use planning and the resulting concentration of explosion hazards in the port area.

Although such a move is perhaps understandable, the forced closure of cleaning stations is worsening the shortage of capacity in China – although Lee says there is still plenty of repair and maintenance capacity available. The @tco/ ITCO depot audit scheme is still very much in place and provides tank operators with a level of confidence when looking for suitable tank cleaning and repair depots. HCB