The shipping costs associated with shipping in bulk versus shipping wine bottled at source

Volume comparison
Bulk wine shipping According to Oxford dictionary the word bulk mean the mass or size of something large. Bulk wine as the name implied is the wine that is shipped through a tank from the origin, with the intent of being bottled at the destination before distribution. Bulk wine shipping could be done in two different way using Flexi-tank or ISO tank. The focus of this research would be solely on Flexi-tank. Flexi-tanks are disposable/reusable flexible bags that could be fitted into a standard 20ft (6.25m) container (GlassRite, 2008). Depending on the transported product, the material used in making this bags differs. On bulk wine shipments, substantial research and development work has been done to ensure that appropriate materials are used in making this bags without impairing its quality, taste and colours. While the bag comprises of different range of sizes, the maximum capacity of the largest flexi-tank is 24,000 litres filling a 20ft (6.25m) container. Usually most bottled wind has approximately 0.75cl of wine content. The number of bottles that could be derived from 24000 litres of bulk shipment is as follows: 24000 = 32000 0.75 Bottled Wine in container Containerised bottled wine is the shipping of wine in a box on a palletised container, listed below are the specifications for a standard container and pallets allowance.

Container
20 feet container 40 feet container

Pallets
Standard pallets: 10 Standard pallets: 20

Bottles per box Cases per pallets

Holding Capacity
8400 bottles per Teu container 16800 bottles per Feu Container

6 bottles per box

140 cases

Workings:
1) (. ) = 6 * 140 = 840 bottles per pallets = 840*10=8400 bottles per container

A standard 75cl bottle of wine weighs 1.25kg. Thus, six bottles, without a case, would weigh 7.5 kg.
2) ( . . ) = 1.25kg*8400=10,500kg of bottled wine in a container

10,500kg of bottled wine are carried on a container, in reality, the liquid wine is just a fraction of the load on transit as shown in the working below:
3) Bottles weight = 0.5kg Actual product (Wine) = 750 ml (0.75 litres) 0.75*8400 bottes per container = 6300 litres per container

Distinctively, wine case weights differ from 2kg to 6kg. Each variation put the total weight of 6 wine bottles and cases between 9.5kg and 13.5kg respectively. Note: the below calculation is based on the assumption that the wine case weights is 6kg and total weight of 13.5kg per cases.
4) (& . . ) = 13.5kg*140*10=18,900kg of wine in a container Total full load weight: 18900+2330 = 21230kg

40ft. Container No. of pallets: 20 Number of bottled wine per container: 16800 12,600 litres of wine excluding the bottles

Like to like comparison dictated that bulk wine will be compared to 20 ft. container not FEU, due to the fact bulk shipping can only be done on TEU because of weight restrictions.

Shipment Cost
Bottled Wine 20 TEU Bulk wine TEU

Origin Maipo Valley port of Valparaiso

Destination port of Valparaiso Felixstowe

Cost ($) 178 2000** 340** 337

Origin Maipo Valley port of Valparaiso Liverpool

Destination port of Valparaiso Liverpool Manchester

Cost 178 2500** 250**

Felixstowe Daventry Daventry Manchester Labour costs 3 peoples working (loading and unloading) on each mode @ 1 hours Total costs Workings based on assumption:

240 3095

Labour costs 1 person working (loading and unloading) on each mode @ 1 hours

80 3008

Maipo valley to Port of Valparaiso (Bottled & Bulk) Mode: Truck Claim: Rented $120 Fuel price per litres: $1.37 Distance: 56.8 miles MPG = 6 ( 6 ) 4.5 1.37 = 57.54 $58 58 + 120 = $178
56 )

Litres in gallon = 4.5

Felixstowe to Daventry Estimation source: Network rail

Daventry to Manchester Mode: Truck Claim: Rented $163 Fuel price per litres: $2.23 Distance: 128 miles MPG = 6 (
128 ) 6 )

4.5 2.23 = 57.54 $58

214 + 163 = $337

Litres in gallon = 4.5

Labour cost (bottled wine) Number of loading and unloading = 4 Labour required on each = 3 Hour required to load and unload = 1hour Hourly rate = $20 Bulk wine $20 hourly rate * 4 workforce (@ 1 per destinations) = $80 4 3 20 = $240 Bottled

Note: On average, it would take approximately an hour to load a 24000 litres flexitank with a single person, the paying rate for the labour is usually around $20 per hour, furthermore, what determined the loading and unloading time is the pump used and verbosity of the product, however, a 24,000 liter Flexitank can be loaded in 45 minutes (Trans Ocean, 2010). Compared to bottled wine which required about 3 to 4 man power to load a container. While it will cost just $20 to load a flexitank, the loading labour costs on bottled wine container on average could be around $60 to $80 depending on the man power.

Other Cost (Direct Material) Under the current EU directive 2004/12/EC, UK has a set target of green glass that must be recycled every year, according to WSTA (2013), the target for glass was 60%; this necessitate the need for bulk shipping of wine, as the recycled glass could be used in bottling the imported wine in the UK. Using recycled materials in wine packaging has some advantages such as reducing the raw material imported into the UK and energy usage in producing new glasses on every shipments, which can lead to cost savings and environmental improvements (WRAP, 2013). Looking at it in cost perspective, Rabobank (2013) report concluded that shipping in bottles can add about 25cent (0.15) per bottled wine ship. This price is usually pass-on to the consumer of wine. Perhaps, is partly why bottled wine is more expensive than bulk wine.

Final remark (Bulk v Bottled wine) Base on the calculation figures the shipping cost including labours associated with bulk is $3008 while that of bottled wine will costs $3095. Shipping in bulk is not only cheaper based on volume comparison, it work out cheaper on labour, due to the fact that it is less labour

intensive when compared to bottled wine (i.e. a single person could load and unload a flexitank while it takes 3 or more to load and unload bottled container in an hour). However, when the UK import duties is included with the shipping cost using the below calculation bulk shipping incurred a higher cost of 36163.2 in tax compared to bottled wine who tariff is relatively smaller registering 7119.63.

UK import duties are calculated in hectolitre thus the bulk and bottled wine need to be converted into litres as follows: Bulk
24000 0.75

= 32000 Bottled wine can be obtained from a single bulk shipment

An hectolitres = 100 thus Current wine duty

= 320

Wine and made-wine: Exceeding 4% - not exceeding 5.5% abv

113.01

(hmrc, 2013) Therefore 320hl * 113.01 = 36163.2

Bottled wine

8400 0.75 113.01 = 7119.63 100 Lastly, the above calculation was not included on the table due to the flexibility of importer of wine been able to pay the import tariffs on a later date instead of payment at the point of clearance. Therefore, this calculation will not be used in the bulk or bottled import decision later in the research.

The environmental costs associated with shipping in bulk versus shipping wine bottled at source
To work out the environment cost/impact associated with both form of shipping, we need to consider the mode of transport involve in shipping bulk and bottled. Below are the summary of the intermodal transport that will be used in the shipment, the distance covered in mileage and the C02 emission per mode.

Intermodal Transport of Bottled container Origin a Maipo Valley b port of Valparaiso c Felixstowe d Daventry Total emissions Working: a) Destination port of Valparaiso Felixstowe Daventry Manchester Mode Truck Ship Train Truck Distance mile. 56.8 11060.5 137 128 per C02 Emission (tonne) 0.055 1.4206 1.03 0.123 2.629 tonnes

Maipo Valley to Valparaiso

Full Truck load Fuel Consumption: 6 miles per gallon 1 gallon = 4.55 litres 1 litre of diesel produces 2.63 kg of greenhouse gases
( ) .

(56.8 /6) *4.55 * 2.63 = 113.3 kg is the carbon footprint of a truck shipment based on 44000kg (Full load) In the UK, with some exceptions, the maximum vehicle weight is 44 tonnes gross (truck, fuel and load) and has up to six sets of axles. Note: as shown from earlier working the total weight for the bottled container is 21230kg, which means the shipment is less than a full load capacity of a tuck. Therefore we need to calculate the actual emission for LTL (Less than truck load) Truckload = 44,000 kg Shipment = 21,230 kg

113.3/44000 = 0.00256818181

0.00257 * 21230 (Shipment load) = 54.56kg 0.055 tonnes

b)

port of Valparaiso to Felixstowe

Jfhillibrand (2010) The above emission calculation was extracted from jfhillebrand.com CO2 calculator. The total emission from grams to metric tonnes is converted as follows: 1420583.58 = 1.42058358 1.4206 tonnes 1000000 Note: the 1.4206 tonnes CO2 emission is for just a single container, a container ship could carried around 11000 container per shipment journey example Emma Mrsk is able to carry around 11,000 twenty-foot equivalent units (TEU) or 14,770 TEU depending on arrangement and products type.

c)

Felixstowe to Daventry

McKinnon et al. (2010) Activity-based method formula for emission

Distances covered = 137 miles 220.480128 220.5 km Shipment weight = 21,230 kg 21.23 metric tonnes CO2 emission factors for train = 22g CO2/tonne-km Thus Tonnes of CO2 emission =
( 21.23 220.5 22 ) 1000000

= 1.02987 tonnes

d)

Daventry to Manchester

Full Truck load Fuel Consumption: 6 miles per gallon 1 gallon = 4.55 litres 1 litre of diesel produces 2.63 kg of greenhouse gases
( ) .

(128 /6) *4.55 * 2.63 = 255.3 kg is the carbon footprint of a truck shipment based on 44000kg (Full load)

Shipment weight: 21230kg LTL (Less than truck load) Truckload = 44,000 kg

255.3/44000 = 0.0058

0.0058 * 21230 (Shipment load) = 123.134kg 0.123134 tonnes

Bulk shipments Origin 1 Maipo Valley port of Valparaiso San Antonio 2 3 Liverpool Destination port of Valparaiso San Antonio Liverpool Mode Truck Ship Ship Distance per C02 Emission mile. 56.8 0.062 95.5 10973.8 50

1.4206 0.0598

Manchester Ship Barge Canal 4 Manchester Ship Manchester Truck Canal Total emissions Workings 1. Maipo Valley to Valparaiso

5 ** Based on 0.00544 assumption 1.548 CO2 tonnes

Full Truck load

Fuel Consumption: 6 miles per gallon 1 gallon = 4.55 litres 1 litre of diesel produces 2.63 kg of greenhouse gases
( ) .

(56.8 /6) *4.55 * 2.63 = 113.3 kg is the carbon footprint of a truck shipment based on 44000kg (Full load) In the UK, with some exceptions, the maximum vehicle weight is 44 tonnes gross (truck, fuel and load) and has up to six sets of axles. Note: as shown from earlier working the total weight for the bottled container is 21230kg, which means the shipment is less than a full load capacity of a tuck. Therefore we need to calculate the actual emission for LTL (Less than truck load) Truckload = 44,000 kg Shipment = 24,000 kg

113.3/44000 = 0.00256818181

0.00257 * 24000 (Shipment load) = 61.68kg 0.062 tonnes

2.

Port of Valparaiso to Felixstowe via San Antonio

Jfhillibrand (2010) 1420583.58 = 1.42058358 1.4206 tonnes 1000000

3.

Liverpool port to Manchester ship canal

Activity-based method formula for emission

Distances covered = 50 miles 80.4672 80.5 km Shipment weight = 24,000 kg 24 metric tonnes CO2 emission factors for train = 31g CO2/tonne-km Thus Tonnes of CO2 emission =
24 80.5 31 ( ) 1000000

= 0.0598 tonnes

4.

Manchester ship canal to warehouse

Note: the final destination of the bulk wine was not included on the case study. Thus the below calculation is based on the assumption that the bulk wine will be transported to a designated warehouse in Manchester and be stored or bottled there, hence the need for more transportation mode. It is assumed the mileage covered to reach the final destination is 5 miles and Truck as the preferred mode of transport.

Full Truck load Fuel Consumption: 6 miles per gallon 1 gallon = 4.55 litres 1 litre of diesel produces 2.63 kg of greenhouse gases
( ) .

(5 /6) *4.55 * 2.63 = 9.97 kg is the carbon footprint of a truck shipment based on 44000kg (Full load)

Shipment weight: 24000kg LTL (Less than truck load) Truckload = 44,000 kg

9.97/44000 = 0.0002265909

0.0002265909 * 24000 (Shipment load) = 5.44kg 0.00544 tonnes

CO2 emission Bulk v Bottled Container Shipping wine in Bulk covered 11181.1 miles generating 1.548 tonnes of CO2 in the process while bottled wine shipment will generate 2.629 tonnes of C02 emission with slightly more distance covering 11382.3 mileage in the process.

Generic environment impact of shipping Emission

Which form of transport is cheaper per bottle of wine? Wine bottled in Chile or the same wine bottled in UK?
Bottled wine Shipping Cost $3095 No of bottles
3095

Bulk shipment $3008 32000

8400

= $0.4 8400

32000

= $0.1

From the calculation above, it is apparent that bulk shipping is cheaper based on volume per shipping cost ratio, bulk registered $0.1 cost per bottled wine imported while palletised bottled wine registered $0.4 per bottle. The dissimilarity in cost is a result of the volumes of wine a bulk shipping can carry compare to palletise bottled that carried just 6300 litres of wine, logically, bottled wine carries more of other loads with relatively small amount of wine.

Which form of transport is more environmentally friendly? Wine bottled in Chile or the same wine bottled in the UK?
Bulk v Bottled shipping Bulk Economy of scales C02 emission 8400 bottles per shipment 2629 tonnes Bottled wine 32000 bottles per shipment 1548 tonnes

Bulk to bottled ratio

= 4 Journeys of bottled wine to attain 32000 bottles of wine derived from a single journey of

bulk shipping. Environment impact scales based on bulk to bottled ratios of travel time required. Environment impact Emissions Air Emissions NOx, SOx & PM Carbon Emissions Vessel Discharges Ballast Water Invasive Species Bulk Bottled wine 4x 4x 4x

1 1

4x 4x

http://www.businessweek.com/articles/2013-02-07/most-australian-wine-exports-ship-ingiant-plastic-bladders http://www.transoceanbulk.com/en/faqs.aspx?faqid=55#faq55

http://www.wsta.co.uk/Glass-recycling.html

http://www.wrap.org.uk/content/recycled-content-wine-packaging

http://www.networkrail.co.uk/Freight/The-cost-of-using-rail-freight/

http://www.hmrc.gov.uk/rates/alcohol-duty.htm