The Role Played By Containers in the Transportation of Goods by Sea
Department: Transport and Logistics
No of Pages: 60
Project Code: T&L5
References: Yes
Cost: 5,000XAF Cameroonian
: $15 for International students
CHAPTER ONE
INTRODUCTION
The
introduction of containers in the second half of 1950s marked a major
innovation in transportation: the box improved efficiency by allowing automation
in cargo handling, connecting sea transport with intermodal inland transport,
and reducing spoilage/pilferage on and off the ship.
All
these benefits generated economies of scale and slashed transit times (Levinson,
2008; Hummel’s, 2007). Despite its ubiquity, the mechanisms through which
containerization affected world trade are still unexplored.
Understanding
the drivers of container usage at the decision-making level is the key to the
measurement of transportation costs affecting the volume and pattern of international
trade. We provide the first such analysis using micro-level data on Cameroon
exports at the firm, product and destination level for the year 2020.
We
start by documenting novel facts from Douala micro data and Equatorial Guinea
aggregate data: despite the perception that international maritime trade is now
highly containerized, there is still an important margin of modal choice for
exporters between containers and break-bulk.
As
of 2020, only 40 and 53 percent of Douala Cameroon maritime exports were containerized,
respectively, with the break-bulk alternative accounting for the rest. The data
shows large variation in container usage across firms, products and
destinations.
We
find four patterns in this variation:
FIRST,
it is by and large explained by exporting firms, rather than by products and
destinations.
SECOND,
container usage increases with distance to the destination.
THIRD,
container usage also increases with shipment size but decreases with unit
prices.
FOUR,
container usage increases with firm size and labor productivity.
These
findings imply that, conditional on physical feasibility due to product
characteristics and the necessary infrastructure being available in both the
origin and the destination, exporting firm still face a choice on the mode of
maritime transportation and only some of them find it profitable to ship in the
box.
An
intermodal container is a large standardized shipping container, designed and
built for intermodal freight transport, meaning these containers can be used across
different modes of transport, from ship to rail, to truck-without unloading and
reloading their cargo.
The
container help reduce the global supply chain cost; however, the management of
container inventory has become
a serious concern
with its gradual increase
in volume over
the past decades. Worldwide,
empty containers account for approximately 20% of container flows at sea.
Container
inventory imbalances can primarily be attributed to global trade imbalances.
Therefore, the core issue in the industry is the identification of the best
method to minimize the idle time of
containers, thus optimizing
their utilization that
will reduce supply
chain cost substantially.
Shipping is
a business that
grew up with
the world economy
,exploring and exploiting the ebb
and flow of trade (Stop ford, 2009). Cross-border transportation is an engine
to promote the foreign trade (Zhihong & Qi, 2012).
The system, that proved its potential as an increasingly efficient and swift method of transport, led to greatly reduced transport costs, and supported a vast increase in international trade.
It is needless to mention that the carrier
actions, and their reactions to various market conditions particularly the
demand for shipping have impact to
supply chains.
Some serious and recurring issues produce a
degree of uncertainty which impact supply chain processes. Global container
inventory imbalance is one of such problems that is part and partial of
container shipping.
This
problem therefore needs closer look due to the ever increasing volumes of
container shipping business.
1.1 Background of Study
Before the advent of containerization, the technology for unloading general cargo through the process of break-bulk shipping had hardly changed since the Phoenicians traded along the coast of the Mediterranean.
The loading and
unloading of individual items in barrels, sacks and wooden crates from land
transport to ship and back again on arrival was slow and labor-intensive.
Technological
advances through the use of ropes for bundling timber and pallets for stacking
and transporting bags or sacks yielded some efficiency gains, but the handling
of cargo was almost as labor intensive after World War II as it was during the
beginning of the Victorian age.
From a shipper's perspective, often two-thirds of a ship's productive time was spent in port causing port congestion and low levels of ship utilization.
Following the spread of the railways, it
became apparent already during the first era of globalization that the
bottleneck in freight transport was at the interface between the land and sea
transport modes.
Before World War II, US, British and French railway companies experimented with methods of sealing goods in different sizes and shapes of boxes before transporting them.
However, the lack of specialized capital equipment like
specialized cranes for loading and unloading combined with union resistance to
changes in work practices at the docks delayed the development of container
shipping until the mid-1950s.
Containerization
started as a private endeavor by the shipping lines. In the early stages,
shipping lines had to bear most of the costs since many ports such as New York
and London were reluctant to spend significant funds on ‘a new technology’ with
uncertain returns at the time.
Many shipping lines had to operate from small and formerly unknown ports and install their own cranes. The process was extremely expensive.
After the container proved to be successful, ports warmed up to containerization and a race started among ports to attract the most shipping lines by building new terminals and providing the infrastructure to handle containers.
Containerization
required major technological changes in port facilities, which often led to the
creation of new container ports. In many countries, port authorities fall under
the administration of the government. Because of the high costs, careful
planning and analysis had to be undertaken by governments to study the
feasibility of containerization.
In the UK, the government commissioned McKinsey (1967) to conduct a cost and benefit analysis before spending significant public funds on container port facilities.
Five years later, McKinsey
(1972) provided a quantitative assessment of the effects of containerization
following the first five years after its adoption in the UK and Western Europe.
1.2 Problem Statement
The
issues of sustainability in maritime transport and logistics services have been
considered in terms of environment, economy, and society.
Recently,
a substantial amount of research has been conducted on the improvement of
energy efficiency and the use of cutting-edge technology. While there are many
concerns about the ongoing US–China trade conflict and the proliferation of
global protectionism, in-depth research is lacking.
Trade
volume and maritime logistics services are closely linked, and sea freight
prices have fluctuated widely since January 2018, as illustrated by the trend of
the Baltic Dry Index (BDI). The BDI is a shipping cost index, which is used to
be a leading indicator of future economic growth.
1.3 Objectives of the
Research
General objective
- The role played by containers in the transportation of goods by sea.
Specific Objectives
- Safety and security
- Ease of transport
- Evaluate the effective of sea transport
- Employment possibilities
Check out: Transport and Logistics Project Topics with Materials
