Economics, conflict of interest and the risks of substandard box construction

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So many, if not all, elements of container transport are these days are under the severest cost-cutting scrutiny.

The basic building block of the industry – the simple steel box – is not immune from this search for economies. Indeed, recently it has been somewhat of a focus, and it is worth reflecting, therefore, on the value of quality in the manufacture of this vital unit.

Some manufacturers may develop feedback loops to ensure quality is built into their culture and manufacturing process. Other manufacturers may take a more relaxed approach, using quality control methods which require a systematic inspection regime to confirm that parts are as designed and scrapping those that are not.

Manufacturers may suggest that conformance to requirements is satisfied if a number of physical tests listed in the specification are undertaken. These tests are required to satisfy the requirement of the International Convention for Safe Containers (CSC).

The buyer will also require that the container is built using the correct materials and techniques, and the finished product has an appropriate life expectancy.

During container manufacture there are two distinct inspection requirements: the first (statutory inspection), is carried out by classification societies on behalf of the country’s administration that approved the design. This confirms that containers of the same design type series are manufactured to the approved design, and is required so the Safety Approval Plate, described in the International Convention for Safe Containers (CSC), may be affixed. The classification society inspectors should confirm that that the methods of construction and the materials used for the structural components are as specified, including welding beads and stitches.

The second type of inspection is that carried out on behalf of the buyer to ensure that the finished product is exactly as promised by the manufacturer. The buyer’s inspectors will look at material specifications of non-critical/non-structural components, such as hinge pins, as well as paint and the finishing processes, including painting, flooring fitting and sealing, decal application and general appearance.

Inevitably, differing risk appetites will determine the inspection practices adopted by container owners. One approach is where the buyer expects the manufacturer to produce what has been ordered and that the resultant container conforms in full to the specification. This may well be accompanied by an acceptance inspection, where an inspector appointed by the buyer checks that the containers comply with the image requirements of the owner.

A second approach is to have the buyer’s inspector involved in the entire manufacturing process, preventing errors and diversions from the specification and accepting no components, sub-assemblies or containers that do not conform to the specification. On the face of it, a buyer derives greater comfort from this approach. An easy solution to fulfill this more engaged approach would be to employ the same organisation that is already responsible for the statutory inspections, expanding their scope of activity to include additional inspection elements. Alternatively, the buyer could decide to employ their own inspectors to work alongside the class societies to check the manufacturing and finishing processes.

Economics will play a part in the buyer’s decision, but what risk factors should be considered? The majority of container manufacturers provide statutory inspections as part of their offering, using their own choice of classification society. At a factory where hundreds of containers can be produced per day, it more than possible that the classification society will be keen to retain that relationship – leading to a possible conflict of interest.

Such commercial pressures may bring a degree of uncertainty to the management of the manufacturing risk, as there is a possibility that the more narrowly scoped statutory inspections do not ensure that errors and deficiencies are detected and consequentially eliminated. This risk might be magnified when the classification society is providing both the statutory and buyer’s inspection. As a result, some buyers choose to employ other inspectors, often from outside of the region where the manufacturing plant is situated, to avoid conflict.

The engagement of additional inspectors may appear to reduce or assume the responsibility of a manufacturer in relation to quality management. After all, the manufacturer has a central interest in delivering and enhancing customer satisfaction. As such, container manufacturers might be expected to analyse customer requirements, define processes that contribute to the consistent achievement of acceptable product and maintain control of such processes. Quality management thus provides confidence to the manufacturer and its customers that it is able to provide products that consistently fulfil requirements.

Whatever quality management approach is adopted by a manufacturer, there are sufficient anecdotes (not to mention some resultant accidents) to cause container buyers to consider carefully the way in which to gain assurance that the delivered product (asset) meets not just the statutory requirements, but all details of the specification.

The importance of container integrity is clear – so many stakeholders in the supply chain rely on the equipment performing as expected. Fundamental to carrying on doing so in the harsh operating conditions of a container is ensuring there is adequate independent assurance at the time of manufacture. ‘Right first time’ quality of manufacture correctly values not only the asset but also the lives of those it will pass through the years.