The Future of Containerization: Box Logistics in Light of Global Supply ChainsJean-Paul RODRIGUEDepartment of Economics & GeographyHofstra University, Hempstead, New York 11549, USA

Theo NOTTEBOOMITMMA – University of AntwerpKeizerstraat 64, 2000 Antwerp, BELGIUM

Containerization, Production and Distribution

• Introduction: Looking Back at 50 Years of Containerization

• Containers in Global Supply Chains• Challenges to Liner Shipping Networks• Ports and Terminals: Convergence and

Divergence• Pressures on Inland Distribution

Looking Back at 50 Years of Containerization

• Intermodal Integration• 50 years of stepwise technical improvements.

• Growth and Diffusion• Forces shaping containerization and its adoption.

• Peak Growth?• A look at the inflection of the logistic curve.

Major Steps in Intermodal Integration

Pallets (1930s)

TOFC (1950s)

Containerization (1956)

Standardization (size and latching) (1965)

Transatlantic (1966); Containerships (1968)

Deregulation (1980s)

Doublestacking; IBCs (1985)

COFC (1967)

Time

Inte

rmod

al In

teg

rati

on Advanced Terminals

Regionalization

Advanced Containers

Intermodal rail crane (1985)

Two Processes behind Containerization: Growth and Diffusion

Diffusion (Functional and Geographical)

Gro

wth

Globalization

Global containerized commoditychains (Optimal: 75% ?)

Experimental nichemarkets

Regionalization

Port / inlandterminals systems

Diffusion: Degree of Containerization, Selected European Ports, 1980-2005

0

10

20

30

40

50

60

70

80

90

100

Hamburg

Le Hav

re

Algec

iras

Rotterd

am

Antwer

p

Genoa

Mar

seill

es

Zeebru

gge

1980

1985

1990

1995

2000

2005

The Largest Available Containership, 1970-2006 (in TEUs)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

World Container Traffic, 1980-2005. Reaching Peak Growth?

0

100

200

300

400

500

600

700

800

900

1000

1980 1985 1990 1995 2000 2005 2010 2015 2020

Mill

ion

TEU

Divergence

Adoption Acceleration Peak Growth Maturity

1966-1992

1992-2002

2002-2010(?)

2010(?) -

Containers in Global Supply Chains

• Logistics and the Velocity of Freight• Intermodalism and pull logistics

• Containerized Global Production Networks• The container as a production, transport and

distribution unit

The Velocity of Freight: From Push to Pull Logistics

Push Logistics

Shipment Speed

Transshipment Speed

Pull Logistics

Containerization

Speed barrier

Logistical threshold

Future improvements

Containerized Global Production Networks

Container

Production Distribution

Transport

Modes, terminals, intermodal and transmodal operations

Flow management (time-based), warehousing unit

Synchronization of inputs and outputs (batches)

Challenges to Liner Shipping Networks

• Liner Service Networks in Transition• Reconciling frequency, direct accessibility and

transit times.• Schedule Integrity Issues

• Port congestion as the main factor.• New Intercontinental Shipping Routes

• Circum-hemispheric maritime / land interface.

Liner Shipping Networks: Variety of Scales and Services

Conventional liner / break bulk services

Mainline services

Feeder services

First order network

Second order network

Third order network

Regional Port System

Regional Port System

Schedule Integrity of Liner Services on Specific Trade Routes

53%

63%

44%

0% 20% 40% 60% 80% 100%

Transatlantic

Transpacific

Asia / Europe(Med)

Circum Hemispheric Rings of Circulation

Equator

North American Landbridge

Eurasian Landbridge

Circum-Equatorial Maritime Highway

Arctic Routes

Atlantic Connector

Pacific Connector

Ports and Terminals: Convergence and Divergence

• Convergence: Terminalization and Value Capture• Terminals and commodity chains.

• Divergence: Planning Process• Scarcity in terminal capacity.

Commodity Chain

The Value Capture Process along Commodity Chains

Port Holding

Port

Aut

horit

yMaritime Services

Inland Services

Port Services

Horizontal Integration / VerticalVertical Integration

Maritime Shipping

Port Terminal Operations

Inland Modes and Terminals

Distribution Centers

Delays in the Planning Process: Some Cases in Northwest Europe

Development of initial plans

Proposed date for start

operations (first phase)

Earliest date for start terminal

operations

Le Havre ‘Port 2000’ – France 1994 2003 2006Antwerp – Deurganck Dock - Belgium 1995 2001 2005Rotterdam – Euromax Terminal – the Netherlands

2000 2004 2008

Rotterdam – Maasvlakte II – the Netherlands

1991 2002 2013/2014

Deepening Westerscheldt -the Netherlands/Belgium

1998 2003 2008?

Wilhelmshaven/JadeWeserPort - Germany NA 2006 2010Cuxhaven - Germany NA 2006 NeverDibden Bay – UK NA 2000 NeverLondon Gateway – UK NA 2006 2009Felixstowe South – UK NA 2006 2007Hull Quay 2000/2005 NA 2000 2007

Some Terminal Development Options

Congestion level

High

Low

(A)Initial situation

(C) New terminals along

the wider coastline

(D)New terminals/portsnear existing ports

SEA LAND

(B)New terminal development

in existing ports

Multi-port gateway region

Corridor

Pressures on Inland Distribution

• Imbalances and Repositioning• Coping with macro-economics and the global

structure of production.• Port Regionalization

• Improving the maritime / land interface.• Maritime Gateways

• Corridors and the logistical hinterland.

Imbalances and Container Repositioning Strategies

Repositioning Distance (TEU – KM)

Unit R

epositioning Costs

Local

Regional

International

Container manufacturing costs

(Empty interchange)

(Intermodal repositioning)

High imbalance

Low imbalance

Repositioning not economically feasible (Overseas repositioning)

Imbalances not considered a problem

High limit of feasible actions

Low limit of feasible actions

Port Regionalization and the Development of Logistics Poles

Com

pany

-spe

cific

logi

stic

s ne

twor

k

LAND

SEA

Primary and secondary logistics zone

Multimodal transshipment center

Logistics site

Logistics Pole

Transport corridor

Container port / terminal

Logistics zone / site

Strongly developed corridor

Poorly developed corridor

Multi-port gateway region

Pacific-Asia(e.g. Pearl River Delta)

North American West Coast(e.g. LA/Long Beach)

North Europe(e.g. Rhine Scheldt Delta)

Landbridge

Gateways and the Logistical Hinterland

Conclusion: Containerization Reaching Maturity

• Risks in supply chains• Growing efforts spent at dealing with disruptions.

• Coexistence of shipping networks• Flexibility in routing options in light of global

production networks (costs / time options).• Development of multi-port gateway regions

• New port hierarchies and a multiplication of the number of ports engaged in containerization.

• Three scales of inland containerization• Continental: high capacity long distance corridors.• Regional: integration between maritime and inland

transport systems.• Local: advanced terminals.