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September 9, 2008
Professor T. R. Lakshmanan
Containers are steel or aluminum boxes that can be moved on trucks, rail road cars and ships and can carry different kinds of merchandise. Inaugurated on April 26, 1956, container made shipping cheap, thereby changing the shape of the world economy.
. large container-stacking yards and intermodal freight yards permitting seamless transport from point to point.The container in the last three or four decades has become the core of a highly automated system that enables movement of goods from anywhere to anywhere at low costs and with minimum complications on the way. The container is at the core of a technical system which includes the modern container port with its forest of cranes.
Levinson.4% 8.386 Percent of Cost 14. 1960) Freight to US port city Local freight in port vicinity Total port cost Ocean shipping European inland freight Total Cash Outlay $341 $95 $1. 9. Cost of Shipping One Truckload of Medicine from Chicago to Nancy. of Port Authority data reported by J.0% 48.L Eyre.Pre container era . . p.cost of handling freight at the port was the major part of the major part of the total freight cost.7% 24.163 $581 $206 $2.6% Source: American Assoc. The Box. France (estimate ca.3% 4.
Malcolm McLean .the idea has been in use British & French railroads used wooden containers to move furniture in late 19th century Cincinnati motor terminal company developed interchangeable truck bodies which could be lifted on and off wheels with a crane NY Central & Pacific Rail Road used steel containers to be fork lifted and transferred between trains Yet all above were not successful. .The container idea is not new with Mr.
trucks. The container was not just a metal box. cranes. storage facilities. ships. trains and new organizational and operational improvements among the shippers.a new system with new types of ports. but an entire new way of handling freight .McLean’s fundamental insight about the container was that shipping company’s mission was moving freight rather than moving ships. .
87 Source: UNCTAD.1970 Conven tiona l ship Containe r ship Capital Cost $2.81 $17.Under this new system the benefits of containerization became quickly clear.90 $10.50 Operating Cargo Total Cost Handling Cost $3.47 $5.11 $2.30 $2. . Average Cost of Handling One Cubic Meter of Freight .00 $23. 1975. Review of Maritime Transport.
There was a boom in container shipping. Source: UNCTAD .In the light of such cost advantages of container ships over conventional ships.
resulting container systems gave these countries cheap access to the US and European Markets . Hong Kong. took a strategic view of containerization. Singapore. Korea and later China. containerships and associated trade-enhancing organizational improvements . Taiwan.Many Asian countries .Japan. They are invested in the system of container parts.
0 3.4 8.1 5.2 4.7 4.4 5.4 10.5 11. for Asia & the Pacific World’s Largest Containerports Port Hong Kong Singapore China Country Singapore 1990 5.5 1.0 2.8 7.1 0.0 1.3 Containers Handled (million 20-foot equivalents) Bremen/Bremerhaven Laem Chabang Gaioia Tauro Germany Thailand Italy 1.0 1.2 3.0 Source: Containerisation International Yearbook and UN Economic & Social Comm.6 2.6 1.5 3.8 18.3 3.7 10.1 0.5 0.2 3.1 1.7 2.21 2003 20.6 6.1 5.Shanghai Shenzhen Busan Kaoshung Rotterdam Los Angeles Hamburg Antwerp Dubai Port Klang Long Beach Qingdao New York Tanjung Pelepas Tokyo China China Korea Taiwan Netherlands United States Germany Belgium United Arab Emirates Malaysia United States China United States Malaysia Japan 0.2 0.1 6.4 .1 4.9 0.5 3.0 3.6 0.8 4.
1998-2004: Top 10 US Ports .Import Containerized Cargo.
Import and Export Containerized Cargo. 2004: Top 10 US Trading Partners .
It costs $2500 to move a container from Baltimore (USA) to Durban (S. The cost of transporting a container from a city in Central City to a port is three times as much as shipping it from that port to the USA.Containerization has reduced shipping costs more for some than for others. Africa) and $7500 more to haul it by road the 215 miles from Durban to Maseur in Lesotho. .
the railroad. rising regional and international trade and associated economic development. .There are three perspectives available while examining the major economic impacts of containerization. the canal era. the automobile. the interstate system and the jet aircraft . The first perspective is: What are the economic consequences of the new technological system surrounding containers? A variety of economic historical studies of recent transport technologies .exist. these technologies promoted led to higher mobility. the sharp drop in transport costs.the steamboat.
.The container as the core artifact of a new transport technology system has lowered very long by distance freight costs sharply promoting a revolutionary expansion of international trade.
.The second perspective comes from the fact that the benefits of a physical technology and infrastructure associated with containerization are greatly enhanced and indeed multiplied when firms using containerization reshape their operations and indeed their organizational structures to take full advantage of the benefits of containerization.
This reshaping of transport operations and transport organizational structures has resulted from innovating a new transport system built around the container. . This new system is rich in two broad types of innovations. namely physical and non-physical technologies.
stacking and storage yards and facilities for truck.By conceptualizing a seamless freight flow system. rail and inland barge movement. The time and money costs of freight handling at the port are sharply lowered with cargo moving seamlessly from a Chinese city to a warehouse in the US Midwest. . facet of gigantic cranes and transporters. a constellation of physical innovations including containers.
from organizational changes through which businesses reshape themselves to take advantage of the new physical technology. Clearly some economic benefit derive from the container innovation.The second type of innovations pertains to organizational innovations in the transport enterprise. . But major benefits come from the novel ways entrepreneurial users of containers put them to practical use .
. has greatly enhanced the economic effects of containerization as noted next.Institutional and organizational evolution of the transport system. Such an evolution however.
.The third perspective of considering effects of containerization pertains to the way containerization has changed the economic geography of production and containerization in the US and the world. To be elaborated below when we talk of globalization and international trade and Foreign Direct Investment (FDI etc.).
. A brief discussion of these technologies and other economic effects follows.Before discussing the economic effects of containers.interstate high way system and jet aircraft. a brief treatment of two other transport technologies .
Approximately 45000 miles well banked roads allowing 60 -70 mph safe travel. . Keeler and Young (1988) study of benefits of IHS just for class 1 trucking industry. Enhancement of inter urban and intra urban mobility steep drop of time and out-of pocket costs of person & freight movement. Would have paid 72% of costs of the entire IHS.Interstate System (IHS) Initiated in 1957 and expanded since.
Interstate provided higher values of return (for highway capital) than the returns for private capital .
1951-1989 .Net Rates of Return of Highway Capital. Private Capital and Private Interest Rate.