Advantages and Drawbacks of Containerization

Advantages and Drawbacks of Containerization

Even if containerization conveys numerous advantages to freight distribution, it does not come without challenges. The main advantages of containerization are:

  • Standardization. The container is a standard transport product that can be handled anywhere in the world (ISO standard) through specialized modes (ships, trucks, barges, and wagons), equipment, and terminals. Each container has a unique identification number and a size type code. A container is a unique transport unit that can be managed as such.
  • Flexibility. Containers can be used to carry a wide variety of goods such as commodities (coal, wheat), manufactured goods, cars, and refrigerated (perishable) goods. There are adapted containers for dry cargo, liquids (oil and chemical products), and refrigerated cargo. Discarded containers can be recycled and reused for other purposes.
  • Costs. Container transportation offers lower transport costs due to the advantages of standardization. Moving the same amount of break-bulk freight in a container is about 20 times less expensive than conventional means. Containers enable economies of scale at modes and terminals that were not possible through standard break-bulk handling. The main cost advantages of containerization are derived from lower intermodal transport costs.
  • Velocity. Transshipment operations are minimal and rapid, and ship port turnaround times have been reduced from 3 weeks to about 24 hours. Because of this transshipment advantage, transport chains involved containers are faster. Container shipping networks are well connected and offer a wide range of shipping options. Containerships are also faster than regular cargo ships.
  • Warehousing. The container is its own warehouse, protecting the cargo it contains. This implies simpler and less expensive packaging for containerized cargoes, particularly consumption goods. The stacking capacity on ships, trains (double-stacking), and on the ground (container yards) is a net advantage of containerization. With the proper equipment, a container yard can increase its stacking density.
  • Security and safety. The container contents are unknown to carriers since it can only be opened at the origin (seller/shipper), at customs, and the destination (buyer). This implies reduced spoilage and losses (theft).

The main drawbacks of containerization are:

  • Site constraints. Containers are a large consumer of terminal space (mostly for storage), implying that many intermodal terminals have been relocated to the urban periphery. Draft issues at the port are emerging with the introduction of larger containerships, particularly those of the post-Panamax class. A large post-Panamax containership requires a draft of at least 13 meters.
  • Capital intensiveness. Container handling infrastructures and equipment (giant cranes, warehousing facilities, inland road, rail access) are important capital investments that require large pools of available capital. Further, the push towards automation is increasing the capital intensiveness of intermodal terminals.
  • Stacking. The complexity of the arrangement of containers, both on the ground and modes (containerships and double-stack trains), requires frequent restacking, which incurs additional costs and time for terminal operators. The larger the load unit or the yard, the more complex its operational management.
  • Repositioning. Because of trade imbalances, many containers are moved empty (20% of all flows). However, either full or empty, a container takes the same amount of space. The observed divergence between production and consumption at the global level requires the repositioning of containerized assets over long distances (transoceanic).
  • Theft and losses. High-value goods and a load unit that can forcefully be opened or carried away (on a truck) implied a level of cargo vulnerability between a terminal and the final destination. About 1,500 containers are lost at sea each year (fall overboard), mainly because of bad weather.
  • Illicit trade. The container is an instrument used in the illicit trade of goods, drugs, and weapons, as well as for illegal immigration (rare).