Container shipping has become an essential driver in reshaping global supply chains. It has created global sourcing strategies, pull logistics strategies and the development of global production networks. New supply chain practices have increased the requirements on container shipping in terms of frequency, schedule reliability, global coverage of services, rate setting and environmental performance.
The container: we barely know thee
While the dynamics of containerisation and container flows are well-known, what is actually being carried by containers is known much less, particularly as it concerns commodities. The container has evolved from a transport unit to a supply or commodity chain unit, and as such, carriers pay limited attention to what is being carried inside a container. This is understandable, since it is not the role of carriers to be overly concerned by the containerised cargo they carry. The container transport market is however becoming increasingly fragmented with a growing commodity sector and niche market opportunities to satisfy new demands. Containerisation is increasingly driven by a commoditywise approach which inherently creates an array of challenges such as weight restrictions, the conditioning of cargo and safety and security considerations. By ‘looking inside the box’ it is possible to assess the underlying factors that enable the growth or decline of commoditybased niche markets in containerisation.
Ubiquitous box, divergent growth
Containerised freight is commonly characterised as the movement of manufactured goods and parts from manufacturing facilities to retail centres with a whole range of distribution activities in between. This process has substantially benefited from the mobility containerisation provided in terms of spatial flexibility and distribution efficiency. Although the container is a ubiquitous standard, the drivers of its growth are quite distinct (see figure 1).
Initially, substitution was the main factor behind the growth of containerisation with the gradual capture of the break bulk cargo market. This process has been particularly visible in many ports, as illustrated by rising containerisation degrees (the ratio between containerised throughput of a port and the total general cargo volumes). The container penetration into world general cargo traffic increased from 21% in 1980 to a rather solid 65% in 2010. Furthermore, the largest container ports have reached containerisation degrees above 80%. Since almost all break bulk cargo that could be containerised has been containerised, this substitution process is essentially near to completion in developed economies. It is also rising rapidly in emerging economies and developing countries. This leaves the possible further containerisation of niche markets such as commodities and temperature sensitive cargo.