A Guide to Intermodal Shipping Containers and Containerization

Shipping containers and containerization aren’t something that most people, even supply chain managers, think about that much. That’s not surprising, as these containers are so ubiquitous it’s easy to overlook just how much they have revolutionized global trade. Since containerization was introduced, it’s become a vital part of supply chain infrastructure, and it’s worth digging into the facts behind containerization a little more.

Here are answers to the questions you didn’t know you had about containers, containerization and how they make getting products from A to B as efficient as possible.

What is containerization?

Containerization is a way of using specialized intermodal container assets, commonly known as shipping containers, to transport ingredients, raw materials, parts and finished products from one place to another.

Why are these intermodal shipping containers so revolutionary?

The most important feature of the shipping container is that it is intermodal—it can be transported easily using several different types of transport. Whether a container is being pulled by road on a truck, carried on the railway or shipped overseas on a container ship, standardization makes transporting and handling these containers fast and easy. That means cost and efficiency savings throughout the supply chain. Every minute saved translates directly to faster transfer of goods, reduced waste and environmental impact, and better margins.

What are the benefits of using shipping containers?

Shipping containers provide numerous benefits to supply chain management (SCM), logistics companies, distributors, manufacturers, retailers and any other organization involved in the global supply chain.

These benefits include:

• Containers are loaded and unloaded using mechanized equipment, cranes and automated systems. This is a much quicker and more efficient process than handling multiple pieces of irregularly-shaped shipments or cargo.
• Containers are easily shipped over long distances by truck, train or ocean vessel, with minimal time spent transferring between different types of transport.
• Containers are transferred without being opened. This significantly reduces the risk of tampering or theft.
• The rigid construction of containers protects the goods inside from damage and environmental factors.
• Containers are tracked using unique codes, Internet of Things devices and computerized systems, so supply chain managers know where specific goods are in any part of the supply chain.

What impact did containerization have on previous methods of transporting cargo?

Prior to containerization, ports and warehouses spent a great deal of time packing, unpacking, sorting, transferring and consolidating goods. The move to shipping containers significantly reduced the overheads involved with handling “break bulk” cargo.

This break bulk cargo was moved between factories, transport, warehouses and final destinations piece-by-piece, requiring a great deal of manpower and specialized equipment. As containerization became more automated, there was less manual intervention resulting in massively-reduced congestion for ports, transport and warehouses.

Logistics and other distribution and shipping businesses became leaner and maximized efficiency, as standardization resulted in less need for custom equipment or expertise. SCM became streamlined, as the movement and handling times of shipping containers was more predictable and easier to manage.

When was containerization invented?

Containerization has existed in one form or another for centuries, but there have been several major developments over the last 60 years that have popularized it as the default way to transport goods internationally. Some milestones include:

• 1955: Development of the first purpose-built, ocean-going container vessel¹
• 1968: ISO standards for the dimensions and markings of shipping containers²

How much are containers used today?

Over 90 percent of international, non-bulk cargo is moved in shipping containers on container ships.³ Overall, global ocean container transport accounts for around 60 percent of all world ocean trade, and this container trade is worth over 7 trillion dollars a year.⁴

Almost 2 billion metric tons of goods are transported in shipping containers each year,⁵ and the global container ship fleet has a capacity of around 20 million standard containers.⁴ It’s estimated that there are between 20 and 25 million shipping containers in active service, with around 5 or 6 million being moved at any specific time.⁶

International seaborne trade carried by container ships from 1980 to 2017 (in million tons loaded)

Source: Statista, used in accordance with their terms and conditions

Who owns shipping containers?

Shipping containers are typically owned by a container shipping line or by leasing companies. Some major container shipping lines include China Ocean Shipping Company, Maersk Line, CMA-CGM, Mediterranean Shipping Company, Hapag-Lloyd and Evergreen. Some major container leasing companies include Triton Container/TAL International, Textainer Group, HNA/Bohai Group, Florens Container Leasing, SeaCube Container Leasing and CAI International.^7,8

Find out how a leading asset owner used Blume solutions to optimize the capacity of its containers.

Are problems caused by empty shipping containers?

Ideally, containers should always be full when they are moved. This is the most efficient way to transport goods and results in the lowest costs. Unfortunately, due to global trade imbalances and other issues, only transporting containers when they are full is impossible.

This is an issue for several reasons:

• It costs money to transport a container, whether it is full or empty.
• It costs almost as much money to transport an empty container as a full one.
• Just storing containers, whether they are empty or full, normally incurs a cost.
• The cost of transporting a container to where it could be reused may be higher than the cost of purchasing a new container.
• This can result in empty containers being salvaged for steel, or being reused in other ways.
• Other issues include a rise in access charges, wasted manpower spent waiting for access to goods and lost productivity due to congestion.

Because of these imbalances, the repositioning of empty containers is a major issue and cost for shipping lines, leasing businesses and other supply chain organizations. Around 2.5 million “twenty-foot equivalent units” of containers are stored empty. That’s around 10 percent of all container assets and over 20 percent of all containers handled by ports.⁹

How can the movement of empty containers be reduced?

There are several strategies that supply chain organizations and SCM can use to reduce the cost, effort and other resources involved in transporting empty containers.

• Introduce efficient positioning systems that optimizes container routing to ensure fewer are moved empty
• Use IoT devices to track the status, position, capacity and usage of containers at all times
• Improve cargo rotation through more efficient supply, demand and transport planning
• Develop stronger international and export markets for goods
• Enhance information exchange between all supply chain organizations and stakeholders to optimize full container usage
• Transfer container leases and other documentation between organizations

New supply chain technologies have a big part to play in these initiatives. For example:

• Artificial intelligence and machine learning can analyze container shipping datasets to optimize routing and use of containers.
• Predictive and prescriptive analytics can model new routes and intermodal transport for forecasting likely future container usage.
• IoT devices can provide regular status updates and data on containers.
• SCM can use supply chain insight to understand future supply and demand needs.
• Blockchain technology could allow for the effortless, verified transfer of leases, containers and other assets.

Whatever happens, containerization is here to stay. As supply chain managers and other organizations get more insight into the global supply chain, the need for greater efficiencies will demand powerful technical solutions to the empty container problem and trade imbalances.

Learn how Blume Assets enables carriers, service providers and enterprises to manage their key assets—including containers, chassis, trailers and more—across the entire supply chain lifecycle.

References:

1. https://www.marineinsight.com/maritime-history/clifford-j-rodgers-the-worlds-first-purpose-built-container-ship/
2. https://en.wikipedia.org/wiki/ISO_668
3. https://maredu.gunet.gr/modules/document/file.php/MAK265/Dissertations%20in%20English/Container%20shipping.%20Global%20fleet%20and%20trends.pdf
4. https://www.statista.com/topics/1367/container-shipping/
5. https://www.statista.com/statistics/253987/international-seaborne-trade-carried-by-containers/
6. https://www.billiebox.co.uk/facts-about-shipping-containers/
7. https://en.wikipedia.org/wiki/List_of_container_shipping_companies_by_ship_fleets_and_containers
8. https://unctad.org/en/PublicationsLibrary/rmt2017_en.pdf#page=45
9. https://transportgeography.org/?page_id=9481