Dr. Lalith Edirisinghe

Committee: International Scientific Committee of Transport and Vehicle Engineering
University: CINEC Campus
Department: Department of Transportation Management
Research Fields: Transport, Logistics, Supply Chain Management, Marketing, Business Management


3 Virtual Container Yard: Assessing the Perceived Impact of Legal Implications to Container Carriers

Authors: L. Edirisinghe, P. Mukherjee, H. Edirisinghe


Virtual Container Yard (VCY) is a modern concept that helps to reduce the empty container repositioning cost of carriers. The concept of VCY is based on container interchange between shipping lines. Although this mechanism has been theoretically accepted by the shipping community as a feasible solution, it has not yet achieved the necessary momentum among container shipping lines (CSL). This paper investigates whether there is any legal influence on this industry myopia about the VCY. It is believed that this is the first publication that focuses on the legal aspects of container exchange between carriers. Not much literature on this subject is available. This study establishes with statistical evidence that there is a phobia prevailing in the shipping industry that exchanging containers with other carriers may lead to various legal implications. The complexity of exchange is two faceted. CSLs assume that offering a container to another carrier (obviously, a competitor in terms of commercial context) or using a container offered by another carrier may lead to undue legal implications. This research reveals that this fear is reflected through four types of perceived components, namely: shipping associate; warehouse associate; network associate; and trading associate. These components carry eighteen subcomponents that comprehensively cover the entire process of a container shipment. The statistical explanation has been supported through regression analysis; INCO terms were used to illustrate the shipping process.

Keywords: Legal, Virtual, Shipping, container

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2 The Virtual Container Yard: Identifying the Persuasive Factors in Container Interchange

Authors: L. Edirisinghe, Zhihong Jin, A. W. Wijeratne, R. Mudunkotuwa


The virtual container yard is an effective solution to the container inventory imbalance problem which is a global issue. It causes substantial cost to carriers, which inadvertently adds to the prices of consumer goods. The virtual container yard is rooted in the fundamentals of container interchange between carriers. If carriers opt to interchange their excess containers with those who are deficit, a substantial part of the empty reposition cost could be eliminated. Unlike in other types of ships, cargo cannot be directly loaded to a container ship. Slots and containers are supplementary components; thus, without containers, a carrier cannot ship cargo if the containers are not available and vice versa. Few decades ago, carriers recognized slot (the unit of space in a container ship) interchange as a viable solution for the imbalance of shipping space. Carriers interchange slots among them and it also increases the advantage of scale of economies in container shipping. Some of these service agreements between mega carriers have provisions to interchange containers too. However, the interchange mechanism is still not popular among carriers for containers. This is the paradox that prevails in the liner shipping industry. At present, carriers reposition their excess empty containers to areas where they are in demand. This research applied factor analysis statistical method. The paper reveals that five major components may influence the virtual container yard namely organisation, practice and culture, legal and environment, international nature, and marketing. There are 12 variables that may impact the virtual container yard, and these are explained in the paper.

Keywords: Management, Inventory, virtual container yard, imbalance

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1 Mitigating the Cost of Empty Container Repositioning through the Virtual Container Yard: An Appraisal of Carriers’ Perceptions

Authors: L. Edirisinghe, Z. Jin, A. W. Wijeratne, R. Mudunkotuwa


Empty container repositioning is a fundamental problem faced by the shipping industry. The virtual container yard is a novel strategy underpinning the container interchange between carriers that could substantially reduce this ever-increasing shipping cost. This paper evaluates the shipping industry perception of the virtual container yard using chi-square tests. It examines if the carriers perceive that the selected independent variables, namely culture, organization, decision, marketing, attitudes, legal, independent, complexity, and stakeholders of carriers, impact the efficiency and benefits of the virtual container yard. There are two major findings of the research. Firstly, carriers view that complexity, attitudes, and stakeholders may impact the effectiveness of container interchange and may influence the perceived benefits of the virtual container yard. Secondly, the three factors of legal, organization, and decision influence only the perceived benefits of the virtual container yard. Accordingly, the implementation of the virtual container yard will be influenced by six key factors, namely complexity, attitudes, stakeholders, legal, organization and decision. Since the virtual container yard could reduce overall shipping costs, it is vital to examine the carriers’ perception of this concept.

Keywords: Management, Inventory, virtual container yard, imbalance

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1 Mathematical Model to Operationalize the Virtual Container

Authors: Lalith Edirisinghe, Zhiong Jin, Hansa Edirisinghe


The container inventory imbalance has a direct impact to shipping lines, but it is inevitable due to nature of shipping business. This adds a substantial cost on sea transportation. If the transport cost is brought down the price of goods and services are expected to reduce. This would help a country to bring down its inflation. Similarly, the country’s exports will be more competitive in the global market due to lower transport cost. These factors would have direct impact on the welfare of the economy. Federal maritime commission in the USA has raised its concern because of the trade and weight imbalance, transpacific carriers need to return substantial numbers of empty containers back to Asia. In order to strike a balance between inward flow and outward flow of container fleet at a specific location container shipping lines are compelled to transport the empty containers at their cost. Due to the nature of liner shipping industry the supply and demand is very difficult to match. This similar imbalance problem was evident in the ship space (slots in a container ship) as ships got bigger and bigger focusing on scale of economies of ships. As a result, they found space sharing of vessels is economical and they formed strategic alliances to enhance performance and sustain the highly competitive liner shipping market. Now there are several shipping alliances in which they share ship space and this system works very fine. However, container liner carriers still manage their container inventory independently. The concept of virtual container yard is formulated through collaboration among shipping lines. It provides flexibility to shipping lines to exchange empty containers among between them thus to reduce the repositioning costs of empty containers. Nevertheless, the initialising of collaboration among liner carriers is challenging because, in realty, it reflects a partnership between oligopoly competitors. Many initiatives has taken place in this regard as to find the variables that affect container demand and supply; to identify the factors that influence current container inventory management strategies; to understand the industry perception with respect to container exchange; to identify the variables that influence container exchange between carriers and finally to develop a model for the proposed virtual container yard Generally, the goal of a liner carrier is the maximization of its own profit (or minimization of its individual cost). In this model, the researchers aim to determine the number of empty containers at a specific period delivered from a liner carrier of surplus port to another liner carrier in a deficit port to obtain an optimization solution of empty container allocation for both liner carriers. Specific mathematical notations were defined in order to facilitate description and formulation of the problem using dynamic model about period (week). It aims to minimize the cost to find the optimal empty containers exchange solution. The growing imbalance of container inventory globally creates a substantial cost and environmental issues. Therefore, the proposed mathematical solution may help find a solution to this paradox.

Keywords: Inventory, Shipping, virtual container yard, collaboation

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