Assignment-I Case 1-Containerization

Assignment-I Case 1-Containerization
Case Discussion Questions
1. What is containerization and how did the innovative use of containers transform the
distribution of goods?
Container is simply a steel box in which goods can be placed to be transported. The simplicity of
container is that it can be carried on a multi-modal basis i.e. on a lorry, by rail, by sea or air. The
intermodal shipping container, a large steel box built in a small number of standard sizes to
allow transportation of goods by ship, truck, train and airplane. Thus, Containerization refers to
a system of intermodal freight transport using standard intermodal containers as prescribed by
the International Organization for Standardization (ISO). These can be loaded and sealed intact
onto container ships, railroad cars, planes, and trucks.
Since, containerization incorporates supply, transportation, packaging, storage, and security

together with visibility of container and its contents into a distribution system from source to
user it provides with numerous advantages.
Before the innovative use of containers for transportation purpose, the container used for
loading and unloading goods for freight by the sea was highly labor intensive and goods were in
individual crates of different sizes and shapes that then had to be manually lifted and stowed in
the holds of ships which was time consuming as well as inefficient.
So in order to overcome with this drawback the innovative use of containers was practiced. The
containerization first of all needed only few workers and it was much easier to stack containers.
Secondly, it was much easier to load and unload the containers. Thirdly, the container also
made possible to reduce the transportation cost and distribute the goods at cheap price
revolutionizing the supply chain for businesses.
2. What role has containerization played in the development of global economic system?
Submitted By: Sujata Manandhar
MBA Term IV Page 1
Assignment-I Case 1-Containerization
The introduction of containers resulted in vast improvements in port handling efficiency, thus
lowering costs and helping lower freight charges and, in turn, boosting trade flows. The
intermodal shipping container is a simple technology whose use has had a profound social and
economic impact. That impact was initially felt by actors in the shipping industry, particular port
workers and shipping companies. But with many extremely effective technologies, the
containers impact became much wider – affecting not only the shipping industry, but local
development and the global economy.
The invention of container itself led to the revolutionary changes in the world shipping and
freight transportation. The containerization has played an important role in the development of
the global economic system. The containerization made the shipping cheap and this new
economy was based on cheap transport costs most obviously had devastating effects on the
traditional dock areas. It was creating a huge structural problem in those areas with high
unemployment and urban decay.
However, the dramatic changes came in the developing world and especially in the newly
industrializing countries of Southeast Asia. The fall in transport costs meant that these countries
could engage in a fierce export drive to exploit the combination of technological advances and
lower labor costs that were the basis of their industrialization. The shipping container, a simple
technology intended to speed the loading/unloading of goods, has played an important part in
those changes.
Further the cheap transportation also revolutionized the supply chain for businesses. Now the
firms need not locate their inventories near the ports rather can split it up in different places
where the storage cost was cheaper.
The global economic system which is characterized by a growing level of integrated services,
finance, retail, and manufacturing and nonetheless distribution, which is the main outcome of
improved transport and logistics which provided the supportive environment for global trade.
Thus, containerization played an important role in the development of global economic system.
Submitted By: Sujata Manandhar

MBA Term IV Page 2

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Case Discussion Questions

Since, containerization incorporates supply, transportation, packaging, storage, and security

Submitted By: Sujata Manandhar

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