A New Growth Dynamics for Containerization
The maritime industry is constantly researching on new ways to balance and reposition equipment. One of the key issues is the reloading of new containers for export and the optimization of intermodal networks. The economics of global trade require a balance between economies of scale and the cost of transport (Clott, Hartman, Ogard, & Gatto, 2014). Modern research on containerized transport has tended to ignore the products being transported, and instead has focused on terminals and associated models. However, researchers have observed that containerization is acquiring a new trend, characterized by adoption of new transport distribution systems globally (Clott, Hartman, Ogard, & Gatto, 2014).
The emerging approaches to containerization have led to a fusion with the extraction market and the commodity sector in order to meet new demands. The new approach is based on the commodity approach that is naturally characterized by a number of challenges (Rodrigue & Notteboom, 2015). Some of the challenges include higher volumes of product because of globalization; the preference for break-bulk instead of containerized traffic, and the need to reposition empty containers at the intermediary hubs. This has created the need for integrating commodity chains with containerization. Commodities are considered as goods that can be consumed, but cannot be differentiated in terms of quality. A wide range of commodities are traded in the global economy and they range from chemicals to grains. This means that the next phase of functional and geographical integration of containerization will be commodity based (Rodrigue & Notteboom, 2007).
Containerization is likely to bestow the advantages of transporting commodities in bulk and at high speed. This will make transportation affordable and flexible, especially for commodities such as coal, iron ore and grains. Currently, the analysts do not possess any concrete figures on the adoption of containerization, but some products are already fully containerized, while others are in the process of adopting containerization. For example, 95 percent of all the coffee imported into Europe is shipped in containers because coffee is a valuable commodity with a mass market demand (Rodrigue & Notteboom, 2007).
Several factors have played a role in the increasing preference for containers when shipping commodities. These factors include an increase in the availability of containers, economies of scale offered by containers, that is, bulk shipping, an increase in the commodity prices, an increase in the cost of bulk shipping that has created a need for alternatives, and the fluctuating cost of container shipping. Other factors include the preference of having processing locations close to production areas, and the repositioning of empty containers. These factors have allowed for a large pool of containers to be available (Rodrigue & Notteboom, 2007).
Containerization has greatly benefited from economies of scale, especially in maritime transport. Containers eliminate barrier to entry because each container is considered an independent unit that can carry lower volumes of commodities without major disadvantages as long as the container is transported alongside others (Rodrigue & Notteboom, 2007). This enables small-scale producers to access international markets. For example, farmers can establish and develop their own market by shipping small quantities of agricultural products through regular containerized shipping (Rodrigue & Notteboom, 2007).
Apart from the advantage brought by economies of scale, containerization also has some drawbacks. One of the challenges of containerization is encountered while offloading commodities from containers, with the major one being the load unit and locational availability of containers (Rodrigue & Notteboom, 2007). Containers need to be available in proximity and in large quantities for them to be useful. A second drawback in containerized transport is seen in container preparation. Containers are designed to carry commodities directly (floor loaded) on pallets. This poses a challenge for bulky commodities. For example, commodities like grains need a thoroughly cleaned container in order to avoid contamination (Notteboom & Rodrigue, 2009).
In addition, containers require the use of liners to protect bulky dry goods such as minerals and chemicals. Containers sometime need to be fitted with special liners that enable thermo-protection to protect goods from temperature variation that could potentially damage them. These factors increase the cost of shipping goods in containers (Rodrigue & Notteboom, 2007). The option of having dedicated containers would mean that large number of containers would be moving around without commodities. A third challenge of transporting commodities in containers has to do with trans-loading, unloading and loading. Loading or offloading containers in a horizontal position is challenging. Containerized transport also poses the challenge of weight and weight distribution. Containerships are made to carry a specific weight that is distributed in a certain manner (Rodrigue & Notteboom, 2007).
Container transportation is also faced with terminal issues. Most goods are extracted in regions that are located inland, and manufacturers and consumers are more concentrated in coastal regions (Rodrigue & Notteboom, 2007). Container transportation depends on the close link between terminals located inland and gateway ports. This means that a great deal of containers are trans-loaded once they reach the gateway. For example, in the U.S west coast, approximately 20 to 25 percent of all containers are trans-loaded. Shipping companies do not like the idea of having their containers move inland because they want them to stay within their networks (Rodrigue & Notteboom, 2007).
Despite the rapid growth of the use containerized transport, there is no sufficient evidence to support the idea that containerization is in competition with the current bulk commodity chains. Containerization has emerged to complement bulk transportation chains and each one has its own unique characteristics (Guerrero & Rodrigue, 2012). In bulk commodity chains, transporting vessels return empty because this mode of transport only carries commodities in one direction. For example, a tanker ship transporting crude oil will return empty after offloading its cargo. This means that the bulk commodity chains under-utilize their transport resources by about 50 percent, which adds to their operating costs (Rodrigue & Notteboom, 2007). Containerized transport systems are suitable for transporting commodities that require a high degree of separation, for example, when one wants to transport different grades of grains, or smaller quantities of commodity (Rodrigue & Notteboom, 2007).
References
Clott, C., Hartman, B., Ogard, E., & Gatto, A. (2014). Container Repositioning and Agricultural Commodities: Shipping Soybeans by Container from US Hinterland to Overseas Markets. Research in Transportation and Business Management, 1-21.
Guerrero, D., & Rodrigue, J.-P. (2012). The waves of containerization: Shift in global maritime transportation. Journal of Transport Geography, 1-26.
Notteboom, T., & Rodrigue, J.-P. (2009). Perspective from maritimr and inland freight distribution. GeoJournal, 74(1), 7-22.
Rodrigue, J.-P. (2017). The Geography Of Transport Systems. Retrieved from https://people.hofstra.edu/geotrans/eng/ch3en/conc3en/table_advantageschallengescont.html
Rodrigue, J.-P., & Notteboom, T. (2007). The Containerization of Commodities. Retrieved from The Geography Transportation Systems: https://people.hofstra.edu/geotrans/eng/ch3en/appl3en/ch3a2en.html
Rodrigue, J.-P., & Notteboom, T. (2015). Looking inside the box: evidence from the containerization of commodities and the cold chain. Maritime Policy & Management, 42.3, 207-227.