How Containerisation has Revolutionised the Transportation of Modern World Goods

It’s now January, and Christmas is well and truly over. This year, we were spoilt for choice with all of the clothes, toys and electronics available in the shops. But where do they come from? How do they get here? Why does there seem to be more and more choice every year? The world’s trade is ever growing, and is becoming more and more connected to each other with low cost methods of transporting goods. The key to this is containerisation.

Containerisation is a system of intermodal freight transport. It uses standardised containers, made of weathering steel, which can be easily transferred from one mode of transport to another. The containers are hired by shippers, packed with products, and shipped off to a designated port. From here, they can be easily transported (by lorry or rail) to the desired location elsewhere. These containers, invented in 1956 by an American truck businessman named Malcolm McLean, have revolutionised the transportation of cargo goods.
Prior to containerisation, all cargoes (other than bulk commodities) were moved package-by-package, piece-by-piece with multiple handling. This often resulted in damage, pilferage and time loss. By using these shipping containers, the goods are far more protected from both damage and theft. Containerisation has also greatly reduced the expense of international trade, and increased its speed, especially of consumer goods and commodities. It has enhanced and created many major ports all over the world; Shanghai, Singapore, Rotterdam and Hamburg are just a few examples of this.

Containerisation has several huge advantages over previous modes of transporting goods. Firstly, loading and unloading is easier, more efficient and requires far less of a workforce. Due to the fact that the majority of it is mechanised (by cranes, forklift trucks etc.), large crews of longshoremen are no longer necessary at port facilities. This has greatly increased labour productivity – in 1965 dock labour could move only 1.7 tonnes per hour onto a cargo ship, but just five years later they could load 30 tonnes per hour (‘Economist’).

Secondly, the widespread use of containers has significantly aided the reduction of trade cost. The container principle is a great example of this. By increasing the surface area of a shape, the volume increases at a more than proportional rate. If you double the surface area, the volume of goods that can be transported could increase to 4 times as big. As these standardised containers are larger than boxes previously used, far more cargo can be transported. As mentioned earlier, these containers are quicker to load and unload. This encouraged the creation of larger ‘container ships’. As these loads could be offloaded in a shorter time, there was a reduced cost of ship transport. In addition to this, containerisation is much more secure. There has consequently been less money lost through damage and theft, also resulting in reduced cost of insuring these goods. The containers are also reused over and over, and are rarely damaged enough to not be reusable. This again decreases cost.

Containers stacked on transport ships, as of 2009, move approximately 90% of non-bulk cargo. It has greatly contributed to the process of globalisation. China is the largest exporter of manufactured goods; in 2012 ports situated in China occupied 9 of the top 20 busiest ports in the world. Shanghai had the largest amount of Container Traffic – 32,530 twenty-foot equivalent units (TEUs). As of 2014, 26% of all container transhipment is carried out in China. The amount of container ships is ever increasing. In 2011, 118 container stops were made in Southampton; by mid 2014, it is estimated there will be around 263 stops (BBC News). Several things have to be done to meet such demands. In Southampton, a 500m berth is being constructed – this is to allow more space for a ship’s allotted place at the dock, allowing more ships to stop here. In addition to this, the sea-bed is being dredged, to make it wider and deeper. It is estimated that GDP growth in China will continue, but rather than at the rate of around 10% seen over the last 20 years, it will slow to around 6.5% over the next 10 years (ICIS).

Containerisation has also led to increased standardisation. The size of containers was standardised in the late 1960s, at a series of conferences by the International Organisation for Standardisation (ISO). There are many benefits of international standardisation; it helps in standardising transport, such as lorries and forklift trucks, as well as airfreight containers. This helps to maximise compatibility, safety and quality, and can also facilitate commoditisation. For producers, it creates certainty. With lower costs and higher certainty of costs, it is easier to plan the production of goods. This benefits both the producer, and the consumer, who get the goods at lower prices (due to reduced cost of transporting the goods).

The future of containerisation is fairly clear; transhipping is set to grow and grow. With a big ship, more goods can be transported at lower costs, increasing trade volumes with reduced costs. This increased trade allows bigger ships to be built, leading to further reduced costs, leading to more goods being produced (because of reduced costs). A feedback loop is created (See Figure 2). Here we see economies of scale.

Though appearing a very simple concept, containerisation is credited with drastically improving the efficiency of trade, as well as economic growth as a whole. The real strength of the container is helping to reduce costs, improve trade and increase the efficiency of international trade. Of course, there have been many other factors boosting international trade, such as lower tariffs, the growth of emerging economies, but the container has played an important role in this aspect of trade. It is the reason why we have a thriving global market place, and is the reason why we can move cargo from remote parts of the world, at minimal cost. It has revolutionised the transportation of modern world goods.

Think of this next time you’re out shopping. If world trade has come so far in the last 50 years, who knows where it will be in the next 50?

 

Contributed by Rory Whitley

Leave a Reply

Your email address will not be published. Required fields are marked *