Author: Dr. Theo Notteboom
Break bulk is general cargo carried as single or bundled pieces, not stowed into a container, or not transported in ship-sized liquid or dry bulk loads. Containerisation has undermined many segments in the traditional break bulk market, which has become highly specialized with custom vessels, terminals, and warehousing facilities.
1. The Origins of the Break Bulk Market
A. The pre-container era
The break bulk sector has a long history closely connected to trade. For centuries goods have been shipped around the world and across oceans. All major nations and powers arose from the ability to explore the world looking for new treasures, traded food, jewels, and materials that were not available locally. The process was cumbersome. Barrels, sacks, and crates were used in order to haul the cargo across the globe. High risks of accidents, loss of cargo, and theft made the entire process risky and cumbersome. Basic systems were in place in order to increase efficiencies, such as specialized lifting equipment, sacks designated for coffee beans, and pallets used to store an abundance of goods. However, the rise of railways in the 19th century combined with some major technological advances like steam power and, later on, diesel power highlighted the serious inadequacy of this system.
It took until the 20th century for things to change. Before the Second World War, all transport was done in the form of break bulk and could be described as general cargo. The term originates in the sentence “to break bulk” a nautical term with its roots in shipping. It literally means “begin to unload cargo”. Before the container era, all cargo was transported as break bulk. It was a tedious process of loading and unloading, packing, and repacking. Shipping vessels had a mix of cargo on board, often shipments bulk, liquid bulk, and general cargo all in the same vessel, making it very difficult to estimate the actual general cargo capacity of the world fleet in those days. It also meant that ships had to spend a lot of time in port. Port turnaround times were very long, resulting in port times sometimes exceeding the time at sea. Long port times created a situation in which it was not efficient to exploit economies of scale. Ship sizes were determined by a balance between the capacity, time, and cost required to handle cargo.
After World War II, some specialization appeared with dedicated merchant vessels designed for specific cargoes like bales of wool, wood logs, and liquid bulk. Slowly but surely, economies of scale were gaining importance. However, the bottleneck arising on the dockside kept major advancements at bay. In those days, the cargo was bundled together into pieces or units (bended arrows in the figure) that dock workers could manipulate, a concept defined as the man load, except for gases and some liquids which were transported in bulk (downward arrows). Examples of man load are bags of sugar, cotton bales, and drums of liquids. Dockworkers carried loads of 30 to 50 kg in and out the vessels. In some cases, the single weight to be carried could reach up to 80 kg. The multi-deck Victory and Liberty vessels are textbook examples of applying the man load concept to vessels. A large workforce hired on a daily basis was required, given the low mechanization level in the vessel loading and discharging process. Due to the time-consuming nature of all cargo operations, unloading, sorting, clearing, and repacking, had to be done on the dockside. This led to the establishment of covered sheds in ports specifically designed to perform these activities. All this was about to change with the rise of the unit load. The golden era of general cargo shipping would soon be over.
B. The shift to unit load
Since the 1950s, ports have been facing a goods explosion model characterized by a shift from man load to unit load and bulk cargoes. At one side of the spectrum, bulk commodities (powders, grains) were increasingly carried by specialized bulk vessels and handled on specialized bulk terminals equipped with grab cranes, stackers and reclaimers, conveyor belts, and bulldozers. On the other side of the spectrum, there was a clear trend for general cargo to merge into unit loads such as pallets and containers. The cargo unitization went hand in hand with the development of specialized terminal equipment (e.g. specialized quay cranes, forklifts, terminal tractors, straddle carriers, reach stackers, RMGs, RTGs) and specialized ships (e.g. container ships and RoRo ships). Forklifts, tractors, and other mechanical equipment have been around for more than seventy years.
General cargo was increasingly handled in container ships or RoRo ships. These developments resulted in a spectacular rise in the productivity of labor and port facilities. Vessel turnaround time for a given cargo capacity decreased significantly while far fewer workers were needed. Technology brought new requirements in terms of the skills of the workforce. Up to the late 1950s, dock work basically involved unskilled work requiring little training, except for the operation of the mechanical devices, which at that time accounted for around 10% of the work. Dockworkers were mainly used to handle various bags, and other man loads manually. The multi-skilled nature of dock workers was limited to handling a broad variety of loads, such as bags, bales, crates, and drums.
The goods explosion model increased the need for skilled dock workers who have the qualifications and experience to operate a more specialized handling superstructure. A whole new range of crane drivers, straddle carriers drivers, and drivers of other equipment emerged. From an economic point of view, the system dramatically impacted the industry and port economics, even resulting in particular placements of industrial centers around ports and the rise of a specific and highly segmented modern breakbulk sector.
C. The impact of containerization
The current state of the break bulk market cannot be understood without the impacts of containerization. In 1956, the launching of the first containership, the Ideal X, is often considered the beginning of containerization. In the early years of container shipping, vessel capacity remained very limited in scale and geographical deployment, and the ships used were converted general cargo ships or tankers. Shipping companies and other logistics players hesitated to embrace the new technology as it required significant capital investments in ships, terminals, and inland transport. The first transatlantic container service between the US East Coast and Northern Europe in 1966 marked the start of long-distance containerized trade. The first specialized cellular containerships were delivered in 1968, and containerization expanded over maritime and inland freight transport systems.
Container shipping developed rapidly due to the adoption of standard container sizes in the late 1960s and the awareness of industry players about the advantages and cost savings resulting from faster vessel turnaround times in ports, the reduction in the level of damages and associated insurance fees, and the integration with inland transport modes such as trucks, barges, and trains. Containerisation set in motion a cascade of events changing the way transport was conducted. The beauty of the container is that it is handled in the same way no matter which transport mode it uses. This means that handling time and the number of handling moves are significantly reduced. Containers were capturing all the non-specialized cargo in the industry.
How maritime shipping was conducted also changed. The traditional tramp trade evolved towards a liner system which has become the norm. Instead of the ships moving from port to port searching for cargo, specific lines were created linking predetermined ports. Containerisation also impacted port competition since a larger overlap now exists between different hinterlands, such as a shift from captive to contestable or shared hinterlands.
Initially, substitution was the main factor behind containerization with the gradual capture of the break bulk cargo market. This process has been particularly visible in many ports, as illustrated by rising containerization degrees, which is the ratio between containerized throughput of the port and its total general cargo volumes.
Many segments of the traditional pre-container break bulk market are already containerized. Many raw materials and food commodity chains are still in the process of being containerized. Some commodities are already fully containerized (e.g. coffee, tobacco), while for others, containerization is still in its infancy. For instance, 95% of all European coffee imports are containerized since coffee is a high-value commodity and its consumption rather ubiquitous. The demand structure of coffee is thus well suited for the benefits of containerization.
Goods that can easily be stuffed in a container have been massively containerized, partly because of relatively stable and even declining container shipping costs and a growing number and availability of containers in transport markets worldwide. However, temporal shortages of containers (as reported by market players during the COVID-19 health crisis) and specific container sizes can hamper further containerization in some markets.
The unit load formula of containerization makes that container ships typically carry a wide range of containerized cargoes ranging from low-value products (such as waste paper) to high-value consumer electronics. Many of the contemporary break bulk markets still rely on the massification of flows of similar products, such as a reefer ship filled with bananas or a coaster filled with steel coils.
2. The Current Break Bulk Market
It can be erroneously assumed that break bulk or conventional general cargo is a declining cargo segment, destined to disappear as an outdated way of transporting goods. In reality, this is not the case. The break bulk sector has not disappeared but changed in nature, becoming a specialized sector, handling the goods which are too challenging to transport in containers or where containerization does not represent a valid and cost-efficient proposition.
The classic definition of break bulk concerns goods that do not fit into a container. In reality, it is more complicated to propose a comprehensive definition of the modern break bulk sector. The sector moves cargo as big as a 200-ton industrial boiler big enough to occupy the entire deck of a heavy lift ship to palletized cargo, which cannot be transported in containers due to specific cargo-related attributes. The following break bulk definition can be used:
Break bulk is general cargo, loaded into a ship or transport mode as individual or bundled pieces, not stowed into a container, or not transported in ship-sized liquid or dry bulk loads.
Conventional general cargo or break bulk cargo encompasses a myriad of different commodities:
- Project cargo. Power generation equipment such as generators, turbines, wind turbines, equipment for the oil and gas industry, such as subsea systems, cables on reels, gas tanks, modules, petrochemical plants, mining equipment, building and construction equipment, brewery tanks, silos, and heavy machinery.
- Iron and steel products. Including coils, plates, steel bars, slabs, plates, steel wire, pipes, and tubes.
- Forest products. Including wood and paper products
- Parcels such as malt, fertilizer, sugar, and rice.
- Reefer vessel trades that mostly concern fruits and meat.
- Break-bulk shipments of smaller lots such as big bags, skidded, and palletized cargoes.
3. The Break Bulk Fleet
The break bulk fleet is relatively old and declining in total deadweight compared to other main cargo groups. However, the multipurpose segment is not dying out. Continuous replacement and innovation enable conventional carriers to capture a larger but more specialized market segment, namely project cargo. There is a considerable difference between the old vessels leaving the fleet, and the new specially built ships for break bulk or conventional cargo. A few of the main trends are increasing lifting capacity, greater efficiency, and an increase in versatility, allowing more types of cargo. Compared to the older, less sophisticated vessels, the new general cargo vessels have box-shaped holds, long and wide hatch covers, and increased lifting capacity, and if installed, flexible decks and open hatch options.
Given the enormous variety that exists when dealing with break bulk cargo, shipments can occur in many different ways.
A. Conventional liner type concepts
Includes a range of options such as:
- Services of a specific frequency operated with dedicated ships.
- Services offering sailings within a period deploying trip charters.
- Services operated on inducement but still within a more or less defined trade lane.
- A mixture of two or three of the above options.
- Parceling or tramping where the ship is chartered on a trip basis once a specified cargo volume is available.
B. Barge carriers
In break bulk shipping, a barge carrier system consists of a mothership (mainly a propelled floating dock) that carries barges loaded with cargo over (long) deepsea distances. It services a very small market segment.
C. Container ships
Some types of break bulk cargoes are carried by cellular container ships, although this is an exception rather than a rule. The type of break bulk cargo transported in container ships can roughly be divided into two parts:
- The first type of cargo comprises large, oversized heavy lift items that do not fit in standard containers. Instead, they are secured on special container equipment such as flats and platforms and then lifted on the ship using a gantry crane. Another solution includes specially constructed platforms or tops under the deck on which the cargo is lifted. Finally, the cargo can be placed on the hatch cover or tank top, a method only possible on container ships equipped with special “stoppers” in the cells so that the lowest tier is left free.
- The second type is small cargo stowed in the containers, conveniently becoming containerized cargo and not being regarded as break bulk anymore.
D. Forest product carrier
The forest products cargo segment encompasses a wide variety of wood and paper products, both in raw-material, semi-finished product, and finished-product form. Examples include wood chips, wood panels, pulp, sawn timber, plywood, newsprint, paper reels, paper rolls, and paperboard. Nowadays, forest products are shipped in specialized vessels such as Open Hatch Gantry Crane vessels (OHGCs) or Totally Enclosed Forest Carriers (TEFCs), which protect against harsh weather conditions, or in more traditional RoRo vessels using trailers.
E. Heavy lift and project carriers
Operators in this market (e.g. Dockwise) generally deploy purpose-built ships able to carry very heavy and very large cargoes such as powerplants or factories, power plant equipment, or offshore oil and gas facilities. Loading and discharging the vessels is done through various methods, including lift on-lift off (LoLo) and roll on-roll off (RoRo). The greatest demand for specialist heavy lift shipping arises from the wide range of offshore and petrochemical industry projects as well as mining activities, factories, and power plants. Heavy-lift vessels do not operate on fixed routes, but they are attracted to those areas where large investments in the oil and gas industry are made.
F. Conventional reefer ships
Conventional reefer ships mainly carry high-value foodstuffs requiring refrigeration and atmosphere control to avoid spoilage. Examples of reefer cargoes include fresh and frozen fruit (e.g. bananas, deciduous, and other citrus fruits), vegetables, fish, meat, poultry, and dairy products. Reefer shipping is a prime example of a one-way (and for some products seasonal) business, with cargoes mainly exported from the Southern Hemisphere to the Northern Hemisphere.
Reefer ships tend to be divided into more spaces than conventional dry cargo ships, with several decks. Different commodities can be separated and carried, if required, at different temperatures. Below decks, a reefer ship resembles a large modern warehouse, and cargo is usually carried and handled in palletized forms, moved on conveyors or by electric forklift trucks. Reefer ships can usually carry reefer containers on deck, with the more modern vessels able to carry other containers.
As is the case for the forest product industry, the reefer shipping sector is increasingly being put under pressure from container shipping. The specialist reefer ships, which are generally operated as tramps rather than in the liner trades, see their cargo base shifting to large container ships, offering more slots for refrigerated boxes. This is very visible in the banana trade, where large producers such as Chiquita moving towards full containerization. Compared to conventional reefer ships, reefer containers have the additional advantage that they can also be used to transport non-food cargoes which are temperature-sensitive, such as electronic equipment, photographic film, pharmaceuticals, or computer chips, so there is more chance for a full backhaul.
G. Roll-on roll-off vessels
Although mainly aimed at the transport of wheeled cargo, certain RoRo ships are also used to transport break bulk cargoes on deepsea trade lanes. A distinction can be made between four RoRo vessel types, which are full RoRo cargo vessels, general cargo ships with (auxiliary) RoRo access, container vessels with RoRo capacity (so-called ConRos), and Pure Car Carriers (PCCs) and Pure Car and Truck Carriers (PCTCs).
RoRo cargo can be either wheeled by itself (i.e. cars, trucks, or rolling equipment) or mobilized (i.e. placed on a trailer-type unit and then towed on board). RoRo thus provides the ability to carry an extensive range of cargo, such as cars (of all kinds), trucks and trailers, (agricultural) machinery, mining equipment, roadbuilding equipment, project cargo, forest products, iron and steel, coils, cables, oversized cargo, etc. Advantages of RoRo vessels are that there is no need for dockside cargo handling equipment and that it enables fast turnaround times for certain cargo types. On the other hand, stowage productivity for RoRo ships is relatively low, and extensive lashing and securing can be needed to avoid sudden movement of cargo.
4. Major Break Bulk Market Segments
A. Common market developments
The break bulk sector is very heterogeneous. Still, some common developments are affecting the break bulk market:
- Environmental issues are having an ever-larger impact on break bulk shipping and ports. Shipping lines and terminal operators in the break bulk market must demonstrate a high level of environmental performance in order to ensure a license to operate and in view of attracting trading partners and potential investors. Old heavily polluting plants and transport and cargo handling methods are phased out and steadily replaced by new units and processes having less environmental impacts.
- Markets are characterized by consolidation, both on the supply and the demand side. Mergers and acquisitions shape the contemporary business environment, also in the break bulk market segments. The consolidation trend puts additional pressure on intermediary parties (such as cargo handling terminals), which now have to deal with large ship operators and shippers or consignees with strong bargaining power. Most sectors are quite susceptible to changes in business outlook or are faced with increased competition and low margins, thus creating an extra incentive for value-added activities in order to raise margins and profitability.
- Logistics integration levels in many of the break bulk sectors are increasing. Large logistics operators emerged with control over many segments of the break bulk supply chain. The integration strategies of the market players created an environment in which ports are increasingly competing not as individual places that handle ships but within transport networks or supply chains. As the loyalty of port clients cannot be taken for granted, seaports are striving to approach some shippers and carriers who control massive cargo flows and who are in a good position to generate added value for the port region. Seaports are forced to develop a strong customer-oriented focus to secure their position as decoupling points in break bulk supply chains.
- Seaports competitiveness in the various break bulk markets is not only dependent on out-of-the-pocket cost considerations. Reliability, capacity considerations, proven expertise, quality of information services, and a commercial and customer-oriented approach characterized by a clear ability to think along with the customer (not only in the port but throughout the supply chains and networks) are becoming ever more important to compete effectively in the break bulk cargo handling markets.
- Many of the break bulk sectors can obtain major benefits from clustering. Not only from an economic point of view with economies of scale and added scope but also for environmental considerations. Closed production cycles are good examples leading to a concentration of industrial activities within ports, benefiting major seaports and allowing for increased use of intermodal options like barge and rail.
B. The steel market
Steel manufacturing is a competitive global industry, with consolidation and continuous improvements in manufacturing operations contributing to increased productivity. Mergers and acquisitions have remained an important growth strategy, such as the acquisition by Mittal Steels of Arcelor in 2006 and their merger in 2007. The Tata Steel and Corus merger in 2008 is another example. The steel industry operates in a highly competitive environment globally, where rigorous cost management is imperative for maintaining and strengthening its competitiveness. Therefore, steelmaking processes have been developed and refined over the years. Steelmaking is capital intensive and long average plant life, making changes to new technologies possible only in a timeframe of several decades.
Many of the world’s largest steel plants are located in or close to seaports. On the import side, steel plants generate large flows of iron ore, pellets, cokes coal, metal scrap, and steel slabs. The outgoing cargo flows typically include steel coils, steel booms, steel wires, and related products. Steel trade occurs between the major producers and between countries with a strong steel-dependent manufacturing sector. The most prominent drivers of steel consumption have historically been the automotive and construction markets. The maritime shipment of finished steel products, such as coils and wires, remains one of the largest segments in the break bulk market.
C. Fresh fruit
The international shipment of fruit is another prominent reefer cargo market, although containerization has significantly reduced this market in the past few decades. In reefer commodity trade, a distinction is made between the transport of living and non-living cargo. Bananas, exotics (pineapples, kiwifruit, avocados), deciduous (apples, grapes, pears), and citrus (oranges, lemons/limes, grapefruit, others) are a part of the living group. The non-living commodities exist out of fish, seafood, and meat. The diary (cheese/curd, butter) and other groups (tomatoes, frozen potatoes, stone fruit, berries, melons, frozen vegetables, fresh vegetables) contain living and non-living commodities. Making the distinction between living and non-living cargo is vital for the transport mode because of the distinction in temperature setup and atmosphere control. Living commodities will be transported under refrigerated conditions with a limited lifespan. Non-living commodities can be frozen, resulting in a longer lifespan.
The fruit market is subject to very specific inputs and characteristics, the most important being seasonality. November to July marks the peak season in fruit transport. Some specific fruits are transported all year long, like bananas and frozen commodities. Moreover, the volume of these shipments is subject to political, climatic, and economic factors creating uncertainty within the supply chain. One of the subsets of fruit transports is the market of juice concentrates, which are transported in bulk, break bulk, or containers.
In some cases, distributors have their own cold storage facilities. In the past decades, supermarkets (the final destination in the chain) are exercising greater influence in the chain as their consolidation resulted in improved purchasing power. Since this benefits the demand side, the supply side is trying to counter this trend with consolidations.
An increase in value-added logistics surrounding cold storage can be observed. For instance, packing and washing are performed at the loading and discharging ports. Some major companies have their own warehouses, but these port-based activities are the only financially viable option for smaller producers. This means that the creation and finalization of the consumer product are shifting towards a different point in the supply chain. Originally products were shipped ready for consumption. Now, the final steps often happen at the destination. Ripening facilities for bananas are a typical example.
The rise of reefer containers makes it increasingly feasible to transit a port without stripping the container and only discharging the cargo at the destination, such as an inland distribution center of an importer, retailer, or supermarket chain. Such bypass operations could affect the position of dedicated fruit terminals in seaports, particularly in terms of value-added creation at the port. At the same time, retailers are pushing for the perishables transport industry to adopt many of the disciplined supply chain processes common in the hard goods industries. There is a sense that logistics thinking in the container industry might be more aligned with this approach than traditional commodity-focused tramp reefer shipping.
D. Forest products
The forest products trade is subject to predefined markets since large extraction areas such as Canada and Scandinavia have been suppliers for centuries. Overall, the consumption of forest products is still on the rise despite the increased use of synthetic materials and the digitalization of the economy (electronic documentation). International climate change policies, as well as sustainable consumption and production policies, are affecting the forest products industry.
The paper industry is driven by volume generation, also known as the fill the mill concept. Waves of consolidation attest to the need for scale increases. Over the past decades, mergers have occurred among producers and buyers alike. Due to this consolidation trend, the power is shifting towards the producers that are integrating into complete supply chains. A storage facility near the market is preferred, and integration also incites logistical and transport concepts unique to the industry. A well-known example is the StoraEnso Cargo Unit (SECU) used for transport between the mills in Scandinavia and the main hub in Zeebrugge. Forwarders and terminal operators are increasingly working for the producers and less for the traders. The traditional approach was a collection of small independent traders who have lost their importance. This incites a consolidation on both the supply and demand side to deliver added value.
Horizontal integration has become an incentive for vertical integration where wood producers opt for an internal distribution system by investing in terminals and derived activities. The emergence of Just in Time (JIT) in the paper industry creates a need for a central supply. For the maritime shipments of forest products, the number of ports of call is relatively low, reducing the advantage of smaller ports since the trade is drawn towards major, better-equipped load centers.
Ports are also experiencing an impact concerning the shift of power towards suppliers. The actual trading is disappearing, and the ports are becoming storage and distribution facilities. This is why the ports have focused on creating specialized terminals and equipment in order to guarantee quality and speed during transport. This includes covered terminals, special hoisting equipment, and climate-controlled areas.
E. Project cargo
What consists of project cargo, heavy lifts, and machinery is one of the most important segments within break bulk. As with most other segments, it is a collection of different load units with no common standard since their units are project-related. Project cargo consists, for instance, of knocked down plants, new industrial manufacturing plants, power generation equipment, equipment for the oil and gas industry, diesel engines, mining equipment, and breweries.
Amongst other trends impacting the sector, shorter build times are prevailing. This creates the need for reduced shipping times and a steady flow of components. Also, the risk of penalties is more elevated and the chances of consolidating cargo are slimmer due to the multitude of smaller projects. The shift of assembly activities towards the port area places increased stress on the hinterland connections of ports. In the long run, the physical limitations of hinterland connections could endanger the competitive position of ports.
Due to the complex handling activities, the need for added value is relatively high in the project cargo segment. Cargo consolidation is happening at ports and requires industrial packaging of the goods. This creates the need for intermediaries able to provide transport solutions at sea and in the hinterland. Ultimately this leads to the outsourcing of the logistical process. Industrial and engineering companies focus on their core activities but demand excellence and flexibility, which can only be delivered by a project-based custom approach of the partners responsible for the logistical aspects.
On the whole, the project cargo sector is dependent on a few core main markets. Energy plants are on the rise since the search for green sustainable energy is booming. Wind turbines are appearing all across the landscape, driving the demand for the industry. Construction projects are another cornerstone of the sector, with mega-project in developing countries an important driver. Finally, mining is a relatively reliable business delivering cargo on a fairly constant basis.
When there is an economic crisis, project movement lags because of the decline in capital investments. The project cargo market typically has a lagging effect that can vary depending on the region but could be eight months or longer in the up and down cycles. This makes it challenging to forecast the demand for projects and thus project cargo.
Within the project cargo sector, a consolidation and cooperation wave is taking place in order to offer a larger geographical scope and an adjusted ship tonnage. Some examples of horizontal integration are Spliethoff and Mammoet Shipping (renamed to Biglift Shipping in 2000). Despite the consolidation, the sector still has many smaller operators that have developed unique skills and equipment. Most ship operators follow a business model that runs on a combination of cargos. Essentially, almost anything up to and including containers in some cases can qualify as project cargo because a combination of cargos is necessary to make a successful voyage. This implies that ship operators typically do not build their business around heavy-lift cargoes only. As a result, most of the vessels deployed in the heavy-lift market are multipurpose and suitable to carry any dry cargo, forest products, steel, containers, and even bulk.
Next to the shipping lines, the freight forwarding community plays an essential role in the project cargo market. In many cases, they arrange ocean transportation, clearance in ports, and inland transportation. Ship operators generally do not compete with freight forwarders on a direct basis. However, on specific projects, ship operators might have quotes on cargos that include services such as barging, rail or trucking (heavy haul), documentation, and packing at the terminal for customers who want to consolidate their cargos in a single location from multiple suppliers. All these services in a one-stop-shop approach can be provided either in-house or in collaboration with other freight forwarders. Activities can also include extensive engineering for special projects as well as lumpsum contracting of integrated projects.
F. Coffee and cocoa
Coffee and cacao are products that are both traded in a similar fashion and primarily transported in containers. They are not in the confines of the pure break bulk definition. However, the product is still handled in a very traditional way.
Inside the container, coffee is usually stowed in bags of 60kg. Other stowage options are big bags or container stowage in bulk mode. The bag will remain as a storage and transport unit due to three reasons. First, the trade market requires this way of packaging as a unit of measure. Second, coffee is grown in areas that can be difficult to access and represents a unit that can be handled manually. Finally, bags increase the durability of the product. The coffee supply chain consists of cultivators, transporters, processors, traders, and consumers. Most steps in the chain are governed by small corporations, particularly on the production side with farmers and exporters. Traders are mostly grouped into big companies selling the coffee to the consumers, which are, in most cases, major corporations in the food industry and specialized retailers.
The power in the chain shifts yearly. If the harvest in certain parts of the world is below expectations, farmers in other geographical areas have the opportunity to keep their stocks and raise prices. However, there is a trend of final consumers, namely the big food corporations, in integrating along the supply chain. The coffee sector is one where trading remains an essential aspect of the market. Big trading consortia buy shares of the available stocks in warehouses worldwide and try to sell them to the highest bidder. The trader often takes a part of the transport leg for its account. Since the lowest transport cost is looked for, this will influence how the cargo is transported. If break bulk charter rates are below container rates, the coffee (or cacao) will be transported in break bulk ships.
Major coffee and cocoa producers tend to be located around the equator. Often harvests do not reach the levels that were predicted due to disruptions, particularly weather-related. The major coffee exporters are Brazil, Colombia, Vietnam, and Ethiopia. Although each exporter tries to create a brand name concerning their coffee, the product is interchangeable for most segments of the mass market. The leading importers are the United States, Europe, and Japan, impacting the modes used in major coffee trades. The biggest cacao exporters are Côte d’Ivoire, Ghana, and Nigeria, with the biggest trade flows between the African continent and Europe.
5. Break bulk: Generating Employment and Added-Value in Ports
Break bulk cargo handling creates jobs at terminal and stevedoring companies in the form of dockworker and management positions. Dock labor needs are very dependent on the cargo flows handled in the port. Other cargo service-related jobs include cargo survey, land transport and storage, and port-related storage. Compared to the handling of commodities such as crude oil or major dry bulks, conventional general cargo is much more labor-intensive. It generates a substantially higher added value per ton and is the largest generator of dock-related jobs per volume unit, although a significant difference might exist among commodities and ports.
The break bulk market segments, as important sources of employment in ports, impact port labor requirements. Large break bulk customers and large cargo handling companies can exert a significant impact on port labor. As these companies often develop a strong network focus by their presence in several ports, the experience they gain at different ports is the basis for explicit or implicit port labor benchmarking exercises comparing the turnaround time in each port, terminal productivity, flexibility in working practices, and cost profiles. The increased benchmarking at the company level on an international scale exposes well-established structures and practices in a specific port area to external impulses for change.
The internationalization in the cargo handling industry also facilitates the transfer of new technologies over a wide range of ports. Creating a competitive advantage in terms of terminal productivity is no longer only a question of operating modern terminal equipment but increasingly a matter of ensuring that the most efficient human resource system is in place to operate the terminal equipment. Given the size of some of the break bulk customers, a loss or gain of a large customer can exert a major impact on the port and is directly reflected in the number of dockworkers required.
Employment in ports is also affected by the combination of quay-related cargo-handling activities at terminals and a wide array of logistics activities at warehouses or near the terminals. As such, a mix of pure stevedoring activities and logistics activities occurs, each requiring people with the necessary skills and know-how.
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