Editorial. The Geography of Containerization: Half a Century of Revolution, Adaptation and Diffusion
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1 Editorial The Geography of Containerization: Half a Century of Revolution, Adaptation and Diffusion Jean-Paul Rodrigue a Theo Notteboom b a Department of Global Studies & Geography, Hofstra University, Hempstead, New York 11549, USA. Jean-paul.Rodrigue@Hofstra.edu b Institute of Transport & Maritime Management,University of Antwerp, Keizerstraat 64, B-2000 Antwerp, Belgium. theo.notteboom@.ua.ac.be For GeoJournal Final Version, September The Container: More than a Box If the currently available container quantities are compared with the potential capacities of the terminals, it is clear that the existing equipment can not be used at full economic capacity. The overinvestment is at present so large that even in the years to come the container volume cannot offer prospects for achieving a balance (Coppieters, 1968, p. 53) Containerization has transformed global trade in manufactured goods as dramatically as jet planes have changed the way we travel and the Internet has changed the way we communicate, Joseph Bonney, editor of the Journal of Commerce Low transport costs help make it economically sensible for a factory in China to produce Barbie dolls with Japanese hair, Taiwanese plastics and American colorants, and ship them off to eager girls all over the world (Levinson, 2006) In spite of serious reservations about its potential when it was introduced in the 1960s, as exemplified in the first quote, no other technical improvement has more contributed to the process of globalization than the container. Containerization, through its modes, terminals and flows expresses the physical reality of economic and transport geographies (Hall et al., 2006; Hesse and Rodrigue, 2006). Yet, the functionality and structure that containerization has brought to the economic and transport landscape has not been fully recognized. While transport geography has mainly been concerned by the networks, modes and terminals associated with container shipping, economic geography has mainly viewed the container as a tool and a facilitator of international trade (Coe et al., 2008). Still, it is becoming increasingly evident that there is an emerging geography of containerization with its impacts on production, distribution and even consumption.
2 The container is thus much more than a box; it is a vector of production and distribution. Its introduction has led to various changes in the economic and transport geography and particularly how production and physical distribution interact. The container can be considered revolutionary as completely new practices have taken place after its introduction in the transport system. For instance, its impacts on supply chain management can be considered as revolutionary since completely new means of distribution were established and since the container facilitated a shift from push logistics to pull logistics. There has also been an evolution within containerization as many changes were gradual and incremental within maritime and inland freight transport systems. The ongoing application of economies of scale in container shipping can be considered as evolutionary as gradually lower transportation costs resulted, facilitating its diffusion within the economic landscape. While initially containerization dominantly involved finished goods and parts, the current phase in the evolution of containerization concerns commodities. A closer reconciliation with geographical theory leans at looking at containerization as a form of functional and spatial diffusion and what are its growth prospects. It has become a ubiquitous transport product servicing mobility requirements at almost all stages of supply and commodity chains and being able to be carried virtually everywhere there are transport infrastructures. 2. The Container Revolution: Attempts at Intermodal Integration The history of intermodal transportation and containerization is fairly well documented and points towards higher levels of intermodal integration (see e.g. Mahoney, 1985, McKenzie et al, 1989 and Van Ham and Van Duin, 2001). There is somewhat of a contention about what truly marks the beginning of intermodal transportation; in many ways intermodal transportation has always existed as a form of transshipment. It is clear that in the late 19th and early 20th centuries that attempts were made to improve transshipments between modes, particularly between road and rail. The pallet can be considered as the first successful intermodal unit. For instance, by the early 1930s, about three days were required to unload a rail boxcar containing 13,000 cases of unpalletized canned goods. With pallets and forklifts, a similar task could be done in about four hours (Leblanc, 2002). World War II demonstrated the time and labor saving benefits of using pallets which was an important stepping stone since a manageable load unit became available for the emerging trucking industry. The initial idea about integrating rail and trucking took the form of simply loading trucks on rail cars. This trailer-on-flatcar (TOFC) approach, which began in the 1950s, provided a good source of income for rail companies since they were able to attract a new market segment (De Boer, 1992). Still, TOFC proved to have significant limitations in terms of capacity and turned out to be an intermediate phase of intermodalism that is likely to endure in niche markets along major corridors. It is the advent of the container that had the largest impact on intermodal transportation. Even if 1956, with the launching of the first containership (Ideal X), can be considered as the beginning of the container era, this event is of limited importance in the greater scheme of things. In the early years, containerization was seen as the simple application of temporary portable storage facilities, loaded with cargo, made mobile as a unit for intermodal unified transport (Rath, 1973). Capacity was very limited and the ships used were simply converted tankers (many World War II surpluses) purchased at rock bottom prices; such a radical shift in transportation was considered a very risky endeavor, even among its strongest proponents. Like 2
3 many technological innovations, the container faced a long period of introduction and experimentation which lasted about a decade. Although significant productivity improvements were realized along the transport segments it was initially applied to (e.g. services to Hawaii and Puerto Rico), major maritime shippers were unwilling to commit substantial financial resources to convert to containerization; each was waiting things out, particularly which standard would eventually prevail. Investing in an intermodal standard which could turn obsolete was seen as a very risky proposition. The two major container shippers of that time, Sea Land and Matson, each had their own standards and intermodal equipment. In the mid 1960s, the adoption of standard container sizes, particularly the now ubiquitous 20 and 40 footers, and of standard latching systems marked a significant revolution and its associated surge in containerized traffic. Those willing to develop containerized services felt more confident as the risk was no longer related to a standard, but simply to market potential development; the container revolution was set. 3. The Container Adaptation Process: from Maritime to Inland, from Goods to Commodities In 1966, the first transatlantic container service was inaugurated, opening up long distance containerized trade. Soon after in 1968, the first cellular containerships were introduced and containerization started to evolve both within maritime and inland freight transport systems. Rail companies started to offer Container-on-Flatcar (COFC) services but their extent was limited due to high intermodal costs. For instance, 1967 saw the first containers transport on rail by Santa Fe (now part of BNSF), and also early attempts at land bridge services, but rail was slow to adopt the container. Inland freight distribution faced several hurdles as its modes, particularly rail, were heavily regulated and in many cases because of public ownership, as in Europe. The situation was much different for maritime transportation which was not hindered by regulations and many players jumped in as container services began to be offered across the Atlantic and the Pacific. Maritime freight distribution was thus much quicker to adapt to containerization since it concerns a mostly private industry that saw clear performance and competitive advantages at doing so. Still, it is by addressing the inland transportation problem that most standardization issues were resolved. While the maritime segment could maintain, albeit inefficiently, different intermodal standards since they were owning their own fleet, cranes and chassis, the complexity of ownership of inland transportation, both for rail and trucking, could not support different intermodal equipment standards without serious disruptions. Thus, in spite of a slow phase of adoption, inland transport systems, particularly rail, were the main factor that forced the evolution of containerization as a fully standard transport product. Efficient containerized inland freight transportation was to follow as the commercial environment became more favorable. By 1980, a deregulation process was set in motion in the United States with the Staggers Act aimed at the rail industry. It improved profitability and favored the merger of existing rail companies into a system that would eventually become six large rail operators. Companies were no longer prohibited from owning across different modes and they developed a strong impetus towards intermodal cooperation. Shipping lines in particular, began to offer integrated rail and road services to their customers. The concentration 3
4 of liner services on only a limited number of container ports was counterbalanced by extensive port equalization systems in inland transport. The advantages of each mode could be exploited in a seamless system. Customers could purchase the service to ship their products from door to door, without having to concern themselves with modal barriers. With one bill of lading, clients can obtain one through rate, despite the transfer of goods from one mode to another. Additionally, doublestacking, Inter Box Connectors (which removed the requirement for bulkheads on doublestack rail cars) and the setting of landbridges in the mid 1980s proved to be a boost to long distance inland containerized distribution. This placed pressures to introduce efficient and high volume intermodal rail cranes (1985), which played a significant role in improving intermodal rail operations. The evolution of containerization also saw an evolution in what was being carried. For manufacturing parts and finished retail goods, containerization can be considered as essentially complete. Still, the container evolves into new supply chains. While commodities have always showed a level of containerization, particularly with the usage of refrigerated containers in the food sector (reefers), the last decade has seen the emergence of a solid and growing market. Containerized commodity flows have particularly benefited from the distribution environment brought in part by containerization in the global economy. Trade imbalances have been transposed in empty container flows, creating opportunities to fill empty backhaul movements. This is particularly the case for international container flows in North America. It remains to be assessed how dominant containerization will be by commodity group. For some, it will remain a niche market, while for others complete containerization of the supply chain will become the norm. 4. The Container Diffusion: Paradigm Shifts and Towards Maturity It can be argued that three major paradigm shifts have taken place within containerized freight distribution systems with each shift representing a specific functional and geographic diffusion. The first is the introduction of the container and its diffusion within maritime systems, particularly from the mid 1960s when standardization resulted in common size and lashing systems. The efficiency of port transshipments improved and inland services, dominantly relying on trucking, began to be established. The second is the diffusion of containerization within inland transport systems. For instance, the introduction of doublestacking rail services required the setting and redesign of inland container rail terminals in North America. The adoption of the container in Europe gained momentum when an intermodal system started to emerge in the late 1970s. For example, the shift from conventional and highly irregular barge services to scheduled and reliable container services in the second half of the 1970s gave impetus to a fast containerization process along the Rhine basin up to the main ports of Rotterdam and Antwerp (Notteboom and Konings, 2004). We are now in the early stages of the third paradigm shift which concerns intermodal and transmodal operations and the functional diffusion of containerization within supply chains. This efficiency is mainly based in the reduction of the number of times a container is handled. In theory, there should be only one movement for an intermodal transfer, but the reality is otherwise. For instance, at a rail terminal a container is unloaded trackside on a chassis. The chassis is then brought to a storage area where the container can be unloaded and stacked. Once ready to be picked up, the container will be put on a chassis and brought to a pick up area. Thus, what appears to be functionally one intermodal movement actually involves several. This 4
5 could involve even more movements if containers need to be repositioned within the storage area as other containers are brought in or removed. The same issue applies to maritime container terminals as several intermediate stages are required to move a container from a ship to the terminal s gate. The reduction of the distances involved in intermodal and transmodal operations is also an issue of concern. It includes movements within the terminal, but also the array of movements between terminals when transmodal operations are performed. Chicago is notorious for such a problem as all the major North American class one rail carriers are converging within the metropolitan area (Rodrigue, 2008). A great deal of the transmodal movements actually involve intermodal operations and cross town movements from one terminal to the other. 5. About the Special Issue: a Multi-Faceted Look at Half a Century of Containerization After more than 50 years of containerization, the true impacts of the container remain to be more comprehensively assessed as they turned out to be more far-reaching than initially expected (Levinson, 2006). New economic systems and new forms of distribution that characterize the global economy could only be made possible through the massive diffusion of the container within transport practices and in the geographical landscape. Functionally and geographically linking the global economic geography requires a priori a level of integration of the physical systems of distribution supported by intermodal transportation. Still, there are several hurdles left to overcome in order to insure the setting of a truly efficient global containerized distribution system. They mainly concern a closer integration of maritime and inland freight distribution. On the maritime side, it is acknowledged that ships and terminals are variations on the same old principle invented half a century ago. Technological advances have increased scale and performance of both vessels and deepsea terminals, but future gains are likely to become ever more marginal, thereby increasingly shifting the burden to the land side. This raises the question whether a quantum leap in the performance of maritime transportation and vessel handling is feasible. Without such a quantum leap, the maritime dimension in containerization might soon reach a maturity phase. A first contribution in this special issue addresses several questions related to the future of containerization. What are the future growth prospects of containerization? How far are we from a phase of maturity where containerization has completed its diffusion, both geographically and in terms of its adoption as a mode of freight transportation? Once maturity is reached, growth (or decline) is mainly the outcome of changes in the level of economic activity. These are the main issues discussed by Notteboom and Rodrigue as they assess potential future developments of containerization over maritime and inland freight transport systems. Containerization, like any technological revolution, favors the emergence and setting of new players. In their paper, Slack and Fremont provide a salient look at the organizational structure of maritime container shipping companies. The strong entrepreneurial character of the industry is underlined with many shipping lines being family controlled. This is a reflection of its geographical footlessness and of rapid market changes, which requires a flexible management approach. 5
6 Few other economies have been more transformed by containerization than China. The world s leading container ports, such Hong Kong, Shanghai, and even Singapore, are essentially Chinese. China s whole export oriented strategy of economic development implicitly relies on containerization as an access vector to global markets. This process is however changing as Rimmer and Comtois underline the ongoing containerization of the Chinese freight distribution system, which is gradually developing inland connections after a development phase focused on the coast and its ports. The emergence of China on the global container market, in particular the associated trade imbalances, has also led to numerous distribution challenges on supply chains. The empty container problem is among the most prominent and enduring issue brought by containerization since it requires repositioning, an activity considered to be unproductive and tying terminal and modal capacity. Theofanis and Boile introduce the extent of the problem and the scales at which it takes place. Although several management strategies are possible to alleviate the issue, namely a better inventory integration between maritime shippers and inland actors, the empty container problem remains difficult to effectively address. At the local level containerization has significantly changed labor relations. Port activities, once labor intensive, have been thoroughly mechanized, leading to a transformation of the role and function of port labor. Hall underlines a growing disconnection between container ports and their regions as local communities see the acute externalities brought by large container port terminals, such as congestion, but do not perceive the economic benefits as it was the case in the past when ports provided higher employment levels. The findings provide further insights into the strained relationship between seaports and port cities in the era of containerization and economic globalization. References Coe, N.M., P. Dicken and M. Hess (2008) Global production networks: realizing the potential, Journal of Economic Geography, Vol. 8, pp Coppieters, (1968), Konventionelle Shiffsliegeplätze und Container Terminals. Beschreibung und Leistungsvergleich. Hinterland, no. 56, pp De Boer, D.J. (1992) Piggyback and Containers: A History of Rail Intermodal on America's Steel Highway, San Marino, CA: Golden West Books. Hall, P.V., M. Hesse and J-P Rodrigue (2006) Guest Editorial: Re-Exploring the Interface between Economic and Transport Geography, Environment & Planning A, Vol. 38, No. 8, pp Hesse, M. and J-P Rodrigue (2006) Global Production Networks and the Role of Logistics and Transportation. Growth and Change, Vol. 37, pp Leblanc, R. (2002): Pallet Evolved Along with Forklift, Pallet Enterprise, Levinson, M. (2006): The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Princeton, Princeton University Press. Mahoney, J.H. (1985): Intermodal Freight Transportation, Connecticut, ENO Foundation for Transportation McKenzie, D.R., North, M.C., Smith, D.S. (1989): Intermodal transportation the whole story, Omaha, Simmons-Boardman Books Notteboom, T., Konings, R. (2004): Network dynamics in container transport by barge, Belgeo, 5:
7 Rath, E. (1973): Container systems, New York, John Wiley & Sons Rodrigue, J-P (2008): The Thruport Concept and Transmodal Rail Freight Distribution in North America, Journal of Transport Geography, Vol. 16, pp Van Ham, J.C.., Van Duin, J.H.R (2001): The second container Revolution, in Puig, J.O., Rodriguez- Martos, R., Dauer, R., Gonzalez Blanco (eds), Maritime Transport, Barcelona, Technical University of Catalonia,
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