Table of Contents
A container is a steel box where goods are placed awaiting transportation. A simple nature of a container makes it easy to carry things on a multi modal basis, i.e. by air or by sea, by rail or truck (Ashar 2002). Many containers comprise smaller containers of standard sizes. This allows transportation of goods by air, truck, ship and train. Containerization therefore is an intermodal freight system of transport that uses standard intermodal containers as recommended by the International Organization for Standardization (ISO). The sealing and loading can be made intact in the planes, container ships, trucks and railroad cars (Cudahy 2006).
Containerization presents numerous advantages to the distribution system in that it incorporates storage, packaging, supply, transportation and security. The container and its contents are visible to the user and this makes containerization useful. Initially, manual means were used in ports when lifting and storing crates of goods of different shapes and sizes in the ship holds. This made it time consuming, labor intensive and inefficient (Cullinane et al 1999). This called for innovative use of containers in transporting goods to overcome the drawbacks experienced. The containerization required only a few workers and it became easier to stack containers. Secondly, it also became much easier in loading and unloading the containers. Thirdly, transportation costs were greatly reduced and the distribution of goods was hence made cheaper thus revolutionizing the business supply chain.
The revolutionary changes in world shipping and freight transportation were not because of the invention of a container; they were brought by the desire to cut costs by some entrepreneurs. The organization of the transport industry involved changes and alterations across the industry regarding the way in which ports are operated and the technology which is required to operate those ports.
In the field of logistics, the concept of containerization is one of the key innovations, which has revolutionized freight handling in the twentieth century. It has greatly increased reliability among the users and these benefits are making the industry more advantageous in terms of speed and flexibility. More innovations and simplicity of logistics tasks are expected with the development of the internet and new technologies.
Container volumes have witnessed growth globally within the last 50 years. This is a hastened progression compared to the mid-1990s. Empirical literature reveals that the amount of full containers shipped on trade routes globally amounted to 77.8 million TEU in 2002, compared to 28.7 million TEU in the 1990s. The innovative use of containers has witnessed an increase on the east-west trades (Asia/Europe, Transpacific and Transatlantic); north-south trade also increased at an average rate of 6% annually. The booming of intra-Asian trades shows a significant growth of approximately 7.5% because of hub points, which have been used as transshipment points for regional markets. According to Drewry Shipping Consultants (2006), the amount handled by the container points across the world registered an increase from approximately 236 million TEU in 2000 to 399 million TEU in 2005 (including transshipment and empties).
Globally, especially in the developed regions, containerization has a high share in the import and export flows of maritime cargo. This is a result of many technological novelties, which have accelerated the advancement of container port systems. This has greatly enhanced the distribution of goods, which has also seen an increase of imports and exports. In logistics and transport, ensuing diffusion and innovations have been influenced by the international trade patterns (Chopra & Meindl 2001). The life cycle theory states that all evolving innovations follow a pioneering phase, a growth phase, a maturity phase, a saturation phase and then a declining phase prompted by obsolescence. Each stage of the life cycle has its own duration that depends on the type of innovation, how well it is supported and the level of market penetration. The innovation growth as explained in each stage has led to a remarkable growth in the distribution of goods. This has in turn enhanced businesses globally. With the distribution of goods made easy, accessibility of various goods across the world is also enhanced.
Logistics and the velocity of freight
Containerization has widened the scope of global freight distribution. It has enabled greater velocity in freight distribution, opening up new global markets (Boile et al 2006). The new global markets have widened the space for exports and imports and similarly reduced the amount of time and lowered the costs as compared to the old way of operations. The transshipment function has improved due to containerization. This has similarly increased the efficiency of the transport terminals and consequently the supply chains.
Though the development in innovation led to significant costs, the maritime technology has recorded marginal speed and it has become very reliable. This has significantly enhanced the distribution of goods globally (Levinson 2006).
What are the advantages of using containers to transport goods by sea, road and rail?
There are numerous advantages associated with the use of containers when transport goods by sea, road and rail. The fact that the containers have their dimensions regulated by the International Organization of Standards (ISO), makes them easily manipulated anywhere globally. Standardization provides ease of access to the system of distribution as well as reduces the capital investment risk in the terminals. The containers are accessible to all the company segments and its competitors. The rapid diffusion of containerization was enhanced due to the fact that containerization was not patented by the inventor, Malcom Mclean.
Use of containers offers flexibility. This is because it enhances transportation of varied goods both raw and manufactured. Various forms of the products, like liquids and perishable food items, can be efficiently transported in refrigerated containers (reefers). Old and the discarded containers are used as structures for storage, retail structures and housing.
The management of the transport process is easily done. This is because a container is a unit that is inseparable carrying an identification number alongside a size type code. It is in terms of units that the management is done. The identification number also helps in ensuring that only the authorized agents take care of the cargo and it ensures that the verification of the cargo is done at terminal gates. Additionally, the use of computerized management of containers considerably reduced the waiting time as well as the time taken while locating containers. The use of computerized management also enhances assignment of cargo based on priority, available transport capacities and the desired destination. Booking of slots in maritime convoys is made easier for the transport companies and also while distributing containers. Thus, the container serves as production, transport and distribution unit.
Cost-effectiveness is greatly achieved with containerization. This is because transport costs are reduced about 20 times or less. This is mainly based on nature of the goods being transported. This results from the fact that containerization leads to increased speed and flexibility. Usage of larger containerships adds more benefits to the use of container shipping. The usage of larger containerships translates further to reduced costs. For instance,in 1996, the 6,000 TEUs landmark was replaced with Regina Maersk, which in 2006 was surpassed by Emma Maersk, a 14000 TEU landmark. The operation cost of a 5000 TEU containership per container appears to be 50% lower than a 2500 TEU vessel. It was found that the choice to replace 4,000 TEU with 12,000 TEU reduced the cost of operation per every container by a factor of about 20%. It is significant taking into consideration the additional volume involved. In the entire system, there have been great cost reductions due to the use of containerization.
Containerization has resulted to reduced overall speed of transportation. This is mainly due to minimal transshipment operations which are also rapid. The utilization of the modal assets has been further reduced. A modern container ship has got a capacity of about 3-6 times more than that of a conventional cargo ship. This can be attributed to the benefits obtained in transshipment time. This is because a crane can handle around 30 movements (i.e. loading and unloading) per hour. This has further reduced the time the cargo spends in a port from weeks to hours. This is because it is not common to fully load or unload a ship along pendulum routes. With larger containerships, more cranes can be allocated to transshipment as there is not much difference in loading and unloading time. Larger container ships accommodate more cranes for transshipment. For instance, it is found that 5 to 6 cranes can effectively service a 5,000 TEU container ship, implying that large-sized ships do not have much difference in loading or unloading time. Also, the container ships on average are faster than regular freighter ships. The less the time spent in the ports by the containers, the more time they spend in the sea which translates to more profit to the operators. Therefore the containerization concept has greatly reduced the travel time.
There is enhanced warehousing since the use of containers reduces damage risks for the goods being carried. This is because the container is able to resist shocks as well as weather conditions. As a result, the packaging of goods is simplified, which makes it less expensive, occupying less volume. Double stacking of containers on ships and trains is possible. This is because the containers can easily fit together. For instance, 3 loaded and 6 unloaded containers can be placed on the ground. In essence, the container is thus acts as a warehouse.
Security of the container and its contents is greatly increased. This is because the contents of the container are anonymous of to outsiders. Thus the container can be opened at the origin, customs and final destination. There is thus considerable reduction in theft especially of valuable commodities. Before containerization, there was a lot of cases of theft at the ports mainly because the longshoremen gained access to the cargo and tamper with it.
Delivery of fragile and easily contaminated cargoes is more reliable and with greater protection. This is mainly because the containers are designed to withstand many external forces during the transportation and distribution process.
When dealing with cargoes of different categories, physical separation is enhanced. For instance, dirty cargoes can be separated and can be transported in containers separately from clean cargo.
Delivery of cargoes in the containers is possible from door-to door. This is because the container is used in carrying goods directly from the shipper’s premises to the customer’s locations. Probably, the opening of the container only happens while en routing it for customer's inspection. In doing this, the shipper assumes the responsibility of the cargo security and its proper stowage. This includes any damage that may affect the cargo or the vehicle in transit.
Where the cargo volume is a less-than-container load (LCL) or when loading or unloading of the containerized cargo is conducted at the shipper`s premises, the services of forwarders, consolidators or the carrier can be utilized to stow the goods in containers at the port of departure. It is possible to combine door-to-door and port-to-port services based on the shipper`s desires and available facilities.
The transformation in the distribution of goods due to the innovative use of containers cannot be underestimated. With freight transportation becoming the most costly and volatile component of many logistics operations and supply chains, the use of containers has seen a marked increase. With the delays in the transport systems, trade imbalances, rising oil prices, shortage in labor and equipments, managers have to deal with problems of handling freight crises and missteps. With this, reliability of operations and capacity issues have been cited as critical factors to be put into consideration.
The very fundamentals of the container system have been undermined by these developments. Therefore, the government and the market players globally are urged to look for innovations in the manner in which container flows and the logistics infrastructure are managed. Good container management is paramount for a sustainable positioning of the container concept in global supply chains in the long term.
In this paper, we have seen the transformation brought about by the innovative use of containers and by the concept of containerization. We have also dealt with some of the critical factors notwithstanding the sustained containerization. Further development of the port system is an important element in ensuring service and flexibility in global supply chains. This is in line with Gilman`s (1980) views; he stated that the idea of a super port that would serve a region is fictional. His motivation relied on some operational aspects related to shipping networks.