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Moving Inside the Box: The Containerization of Commodities. Jean-Paul Rodrigue Associate Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA Theo Notteboom President, Institute of Transport and Maritime Management, University of Antwerp, Belgium.

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Moving inside the box the containerization of commodities

Moving Inside the Box:The Containerization of Commodities

Jean-Paul RodrigueAssociate Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA

Theo Notteboom

President, Institute of Transport and Maritime Management, University of Antwerp, Belgium


Moving from logistics to commodity chains
Moving from Logistics to Commodity Chains

A New Growth Dynamics for Containerization

Market Potential: Hype and Reality

Commodities in Containers

Containerized Commodity Chains



Containers are more than boxes
Containers are More than Boxes…

  • Looking inside the box

    • Containerization mainly viewed from the principle of flow.

    • Development of maritime and inland logistics:

      • Network and service configuration.

      • Maritime terminals and inland ports.

    • Globalization and global production networks:

      • Most considered perspective about the driver of container transport demand.

      • Global supply chains.

    • Global commodity chains:

      • An underrepresented dimension of containerization.


From logistics to commodity chains
From Logistics to Commodity Chains

Suppliers

DC

Inland

Logistics

Gateway

MaritimeLogistics

Global

Supply

Chain

Intermediatehub

CommodityChain

Inland

Logistics

Inland

Terminal

Customers



Bulk and containerized commodity chains
Bulk and Containerized Commodity Chains

Bulk Commodity Chain

Supplier

Customer

Port

Point-to-Point

Consolidationcenter

Complementarity

Container

port

Pendulum

Services

Intermodal

terminal

Containerized Commodity Chain



Continuous commodity index crb monthly close 1970 2009 april
Continuous Commodity Index (CRB), Monthly Close, 1970-2009 (April)

C

B

II

III

a

c

b

I

d

1

A

2

3

5

4




Container shipping costs and cargo value
Container Shipping Costs and Cargo Value Rates, 1994-2009 (1994=100)



Containerized cargo flows along major trade routes 2007
Containerized Cargo Flows along Major Trade Routes, 2007 Rates, 1994-2009 (1994=100)

Million TEUs

Growth (2000-2007)

15.4 (+175%)

14.9

4.9 (+48%)

Asia

19.9

33.1

USA

10.0 (+178%)

7.6

17.7 (+293%)

Imports (M TEUs)

4.5 (+55%)

20.4

Europe

14.5

2.7 (+23%)

Exports (M TEUs)




The containerized commodities market
The Containerized Commodities Market (Canadian Wheat)

  • A different market dynamic

    • Scale economies are achieved by the shipper:

      • Modes, terminals and corridors.

    • Few differences in scale economies for a producer.

    • Limited barriers to entry:

      • The entry unit is a container load.

      • As long as there is a containerized volume.

    • Double benefit:

      • Development of global niche markets where numerous small exporters may compete.

      • New economic development venues in commodity sectors which could not previously access foreign markets.


Composition of the leased container fleet 2008 09
Composition of the Leased Container Fleet, 2008-09 (Canadian Wheat)

40.6%

40.7%

31.2%

31.4%

20.4%

15.7%

21.6%

16.7%

28.9%

44.3%

27.6%

42.6%



Share of main american international trade commodities transported by containership 2000
Share of Main American International Trade Commodities Transported by Containership, 2000


Commodity group and containerization potential
Commodity Group and Containerization Potential Transported by Containership, 2000


Commodity markets embedding containerization
Commodity Markets: Embedding Containerization Transported by Containership, 2000


Challenges for the containerization of commodities
Challenges for the Containerization of Commodities Transported by Containership, 2000


Commodities in containers
Commodities in Containers Transported by Containership, 2000

  • Container preparation

    • Containers are well adapted to handle packaged freight either directly ("floor loaded") or on pallets.

    • Not well adapted to handle commodities in bulk.

    • Shipment contamination:

      • Some commodities, like grains, would require a container to be thoroughly cleaned.

      • Require the cleaning of a container once unloaded.

    • The usage of dedicated containers?

    • Specialized containers exist for liquids and for refrigerated cargo.


Commodities in containers1
Commodities in Containers Transported by Containership, 2000

  • Container loading, unloading and transloading

    • Horizontal loading / unloading:

      • Complex task often requiring a panel to block the back door and hold the loose cargo.

    • Vertical loading / unloading:

      • Require specialized handling equipment.

      • Attractive option in situations of constant volume.

    • Transloading:

      • Usage of different modes to reach the load center (such as rail hopper cars).

    • Source loading:

      • Maintaining the integrity of some commodity chains (e.g. grains).

      • Shipment quality and product differentiation.


Horizontal bulk loading system
Horizontal Bulk Loading System Transported by Containership, 2000

Source: DirectIndustry


Commodities in containers2
Commodities in Containers Transported by Containership, 2000

  • Weight

    • Container loads are much lighter for conventional (mainly retail) freight than for commodities:

      • 10 to 14 tons per TEU.

    • The shipping industry prefers using larger containers (40 footers); more volume for the same handling costs.

    • Shipping commodities tends to rely on 20 footers:

      • Each load around 26 to 28 tons.

      • A 40 footer has a loading capacity of about 30 tons.

    • Load unit mismatch.


Commodities in containers3
Commodities in Containers Transported by Containership, 2000

  • Weight distribution

    • Containerships designed to accommodate a specific weight load and distribution:

      • 10 to 14 tons per loaded TEU are common operational considerations.

    • Large commodity shipments are problematic:

      • More than 20 tons per TEU; adjustments in the distribution of this load must be made.

      • A containership presented with a full load of heavy containers could only by filled to 75% of its capacity.

    • Trade imbalances:

      • Inbound full loads of relatively light containers.

      • Outbound heavies and empties.


Weight distribution
Weight Distribution… Transported by Containership, 2000


Containerized commodity chains
Containerized Commodity Chains Transported by Containership, 2000

  • Inertia

    • Substantial investment in bulk handling equipment.

    • Stakeholders reluctant to change practices.

    • Suitability:

      • New or expanding markets.

      • Low volume situations.

      • Surge in demand.

  • Demand mismatches

    • Import regions are not the same than exports regions:

      • Imports regions: consumption related (large metropolitan areas).

      • Exports regions: rural areas or resource extraction areas (low population densities).

    • Cargo rotation:

      • Permit repositioning opportunities.

      • Mitigate the availability of containers for exports.


Containerized commodity chains1
Containerized Commodity Chains Transported by Containership, 2000

  • Seasonality

    • Attribute of many commodities.

    • Surge in demand at specific times of the year.

    • Seasonality has a geography:

      • Harvesting time varies between different regions of the world.

      • Temporal and geographical fluctuations in the repositioning of empty containers.

    • A double-edged sword:

      • Surge in supply (demand for containers).

      • Drop in commodity price.


Conclusion a look inside the box
Conclusion: A Look Inside the Box Transported by Containership, 2000

Commodities and the Functional and

Geographical Diffusion of Containerization

A Complex Complementarity


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