5th Asian Logistics Round Table & Conference, Vancouver, Canada, June 14-15 2012

The Waves of Containerization: Shifts in Global Maritime Transportation

Jean-Paul Rodrigue

Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA

Acknowledgements

■ Part of the background work undertaken with Dr. David Guerrero while a visiting professor at Institut français des sciences et technologies des transports, de l'aménagement et des réseaux, SPLOTT (Systèmes Productifs, Logistique, Organisation des Transports, et Travail) research unit.

■ Guerrero, D. and J-P Rodrigue (2012) "The Waves of Containerization: Shifts in Global Maritime Transportation", submitted for publication in the Journal of Transport Geography.

The Benefits of Containerization

Transport Costs• Lower freight rates• Lower insurance rates• Minimal load unit

Inventory Costs• Lower storage costs• Lower packing and packaging costs• Faster inventory turnover

Service Level• Time reliability• Higher frequency

Containerization Growth Factors

Derived

Economic and income growth

Globalization (outsourcing)

Fragmentation of production and consumption

Substitution

Functional and geographical

diffusion

New niches (commodities

and cold chain)

Capture of bulk and break-bulk

markets

Incidental

Trade imbalances

Repositioning of empty containers

Induced

Transshipment (hub, relay and

interlining)

Multiplying Effects of Derived Demand on Container Transport Peaking?

1970 1975 1980 1985 1990 1995 2000 2005 2010100

1,000

10,000

Global Trade and Container Throughput (1970=100)Container Throughput(520.4 Millions TEU)

GDP in current USD($63.4 Trillion)

Exports in current USD($15.2 Trillion)

World Population(6.84 Billions)

Concentration of the Global Container Port System, 1970-2010

1970

1975

1980

1985

1990

1995

2000

2005

2010

0

50

100

150

200

250

300

350

0

100

200

300

400

500

600

Number of ports

TEUs (millions)

Num

ber o

f por

ts

TEU

s

1970

1975

1980

1985

1990

1995

2000

2005

2010

0.5

0.55

0.6

0.65

0.7

0.75

Gini's concentration ratio

?

Long, Medium and Short Waves of Containerization

Adoption

Acceleration

Peak Growth

Maturity

Cycle

Long Wave

Medium Wave (A)

A

B

Short Wave (B)

Time(Decades)

Traffic

Years Months

Long Waves of Containerization

Let’s ride this groovy wave…

Hierarchical Cluster Analysis (HCA )Parameters of Global Container Ports, 1970-2010

2

3

4

5

6

7

8

9

10

0 20 40 60 80

58.06

31.50

30.69

18.92

16.10

10.20

9.36

7.52

6.74

Dissimilarity per number of classesDissimilarity dendrogram for 7 classes

A

B.1

C

D.1

D.2

E

B.2

Dissimilarity LevelHigh Low

First Wave

Second Wave

Third Wave

Fourth Wave

Fifth Wave

Evolution of Absolute and Relative Container Throughput by HCA Class, 1970-2010

1970

1975

1980

1985

1990

1995

2000

2005

2010

0

10

20

30

40

50

60

70

80

90Share of Global Container

ThroughputAB.1B.2CD.1D.2E

1970

1975

1980

1985

1990

1995

2000

2005

2010

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000Container Throughput

E

D.2

D.1

C

B.2

B.1

A

The First Wave of Containerization, 1970 – The Pioneers of the Triad

Pioneer ports setting containerized operations in the economic triad (North America, Western Europe, Australia and Japan).

Driver: Trade substitution

The Second Wave of Containerization, 1980 – Adoption in the Triad and its Periphery

Expansion of the triad and its trade partners (Caribbean, Mediterranean, Asian Tigers).

Driver: Adoption of containerization

The Third Wave of Containerization, 1990 – Global Diffusion

Large diffusion in new markets (Latin America, Middle East / South Asia, Southeast Asia).

Driver: Setting of global supply chains. Setting of transshipment hubs.

The Fourth Wave of Containerization, 2000 – Global Standard

The container as the standard transport support of the global economy.

Driver: Expansion of global supply chains. China and transshipment hubs.

The Fifth Wave of Containerization, 2010 – Peak Growth

Peak growth and the setting of niches.

Driver: Spillover effect and new transshipment hubs.

Waves of Containerization, 1970-2010

Each wave lasts 8 to 10 years.Hierarchical diffusion pattern.

Medium Waves of Containerization

I may have reached an inflection point…

Shift-Share Analysis, World Container Ports, 2000-05

A shift in the growth dynamics of global container ports.

Shift-Share Analysis, World Container Ports, 2005-10

Shift-Share Analysis, Ports with the Highest Gain and Decline, 2000-05 and 2005-10

2000-05 2005-10

Highest gain Shenzhen (+25.54)Shanghai (+23.21)Ningbo (+9.96)Tanjung Pelepas (+9.89)Qingdao (+7.35)Dubai (+6.60)

Guangzhou (+12.57)Ningbo (+12.34)Shanghai (+9.54)Tianjin (+7.28)Qingdao (+7.09)Lianyungang (+5.07)

Highest decline Hong Kong (-22.15)Singapore (-15.34)Kaohsiung (-8.42)Manila (-6.05)Felixstowe (-5.50)Kobe (-4.26)

Hong Kong (-13.18)Kaohsiung (-7.16)Busan (-6.02)Hamburg (-5.99)Singapore (-5.61)Long Beach (-5.56)

Short Waves of Containerization

Am I a gateway or a transshipment hub?

Gateways and Transshipment Hubs: Different Short Wave Dynamics

Monthly Container Traffic (Jan 2005 =100)

TI = 85%

TI = 95%TI = ~0%

TI = ~0%

Gateways and Transshipment Hubs: Different Short Wave Dynamics

Average Monthly Container Traffic Share, Selected Ports, 2005-2011

Gateways and Transshipment Hubs: Different Short Wave Dynamics

Monthly Container Traffic (Jan 2005 =100)

TI = 27%

TI = 24%

TI = 44% TI = 50%

Gateways and Transshipment Hubs: Different Short Wave Dynamics

Average Monthly Container Traffic Share, Selected Ports, 2005-2011

Transshipment Volume and Incidence by Major Ports, 2007-09

Asia – Mediterranean Corridor Caribbean Transshipment Triangle

East Asia Cluster

Northern Range

Conclusion: Reaching Peak Containerization?

The container, like any technical innovation, has a market and diffusion potential where a phase of maturity is eventually reached.

Five successive long waves of containerization.

Medium waves and inflection points.

Short waves and transshipment dynamics.