Stowage As A Profit Centre - Pt 1
Stowage Coordination (or stowage planning) is probably one of the least understood aspects of container shipping operations. To put it simply, it is the department of a shipping company that decides where containers are to be stowed on a vessel during at each port call.
The reality, is much more complex, but, in this article, I want to focus on both the technical aspects, the knowledge required to successfully stow a container vessel and money – profit and loss, and how the Stowage Centre can be a key influencer in the profitability of a carrier.
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Stowage departments across the container shipping world are relatively small in size, considering what they are responsible for. For example, Maersk Line has approximately 23,000 staff worldwide and, of those, only about 80 are involved in stowing the vessels. That is only 0.3% of the entire workforce that is responsible for the operation of 600+ vessels and millions of container moves per year. At 0.3%, it’s no surprise that those outside the world of stowage are unable to see why this is such a crucial part of the business.
Stowage (if it is known about by anyone in a company at all), tends to be seen as something of a black box. Information goes in, stowage plans come out, but very few people know what happens in between.
Traditionally, stowage has been viewed as purely a “cost centre” (i.e. a department that can only spend money or save money). I would counter that with the argument that stowage is the place where a company ultimately makes a profit or a loss and, in this series of articles, I will explain why I believe this is so.
Example of an actual stowage plan
As can be seen in Fig. 1, the stowage team is the last department in the shipping process, that is under the carriers control, before the vessel is handed over to the terminal for operations. This means that they have the final say in how the vessel will be loaded. This is where money can be made or lost, depending on the skill and experience of the stowage coordinator.
At a very basic level, stowage coordination is the practice of determining, where on a vessel, containers should be loaded to allow for the optimal load and discharge of that vessel. It should take into account considerations for the ports in the rotation, the number of ports in the rotation, the correct segregation of the cargo, the number of cranes required and the overall vessel stability. Of course, the reality of stowage coordination is much more complex than this implies.
Stowage is a giant puzzle that needs to be solved. The difference between stowage and an actual puzzle is that there is no one single end result to stowage planning. There are almost infinite combinations that can be applied to solve the puzzle and none of them can be described as truly correct or incorrect. Every scenario will have positive and negative aspects to it, often depending on what the stowage coordinator is trying to achieve with this particular stow.
The other aspect is that this is a never ending puzzle, in that it does not even really have an end result, just steps along the way. Very rarely do container ships completely discharge and then re-load. Container ships usually operate in a never ending loop of port calls. At every port, some containers will be discharged, some more will be loaded. The puzzle has many different solutions but rarely does it have an end goal.
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Fig. 3 – Example Service, 19 port calls, 96 cranes required
Due to the dynamic nature of container shipping operations, there is no ‘one size fits all’ solution to stowage. Every service, often every port and/or vessel, will have differing requirements and restrictions that affect the stowage. What works well for one particular stow may not work at all for another. What makes stowage coordination particularly challenging to teach is that it is unusual to have one single or definitive answer to any question. More often than not, the answer to a particular stowage question will be ‘it depends’. Accurate, but unhelpful.
The best way to look at stowage is to break it down into its individual components. There are quite clear rules for each specific aspect of stowage, such as hazardous cargo segregation, reefer loadings, out of gauge pieces etc, it is then up to the stowage coordinator to look at the stowage he or she is currently trying to solve and then apply the solutions that work this time. It’s rather like having a ‘stowage toolbox’. Not every tool will fit every problem but there is a solution to everything. Ultimately, if nothing in the toolbox will work then restowing containers will solve everything. It’s not an elegant solution and it comes at a cost but it is always there as a backup.
What should be remembered about stowage is that virtually every decision that the stowage coordinator makes comes down to a trade off or compromise. If I make ‘this’ decision, what effect will ‘that’ have elsewhere? Often, a good stowage is about coming up with the solution that has the least negative effect on something else.
What makes stowage even more complex is that the coordinator is often having to work with a combination of actual information, forecast information and experience. This is the main reason that stowage is still quite a manual ‘thought based’ process. Container shipping is simply too dynamic to have 100% (or even close to) accurate forecasts which means that the even the best “automated” stowage system in the world is currently still no match for the human brain.
Whenever a stowage is being created, the planner should be keeping an eye on both operational and commercial concerns. If the vessel cannot be filled because of wasted space or unnecessary restows, then the vessel will not be profitable. If the port stay is longer than anticipated, the vessel will have to burn additional fuel to reach the next port on schedule. All this costs money in an industry where the profit margins are very small to begin with.
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The two main challenges within the industry are getting the carriers to understand that stowage is an asset, rather than a risk and, secondly, giving the planners the financial information needed in order to change from a Cost Centre to a Profit Centre.
