An interesting story and comment from Martin Lariviere at Kellogg school. The container certainly increased the potential for efficiency by standardizing the process batch in the supply chain. As Martin points out, ports and other carriers are hung up on high utilization of their expensive capital facilities, and this limits the flexibility required for risk reduction. Problem is, who will pay for an expensive facility which will be idle a lot as a buffer for risk.
A few months ago we had a post about how shipping containers have impacted supply chains and global trade. Today we have a longer piece from Nautilus on the history of shipping containers as well as some current trends in global shipping (The Box That Built the Modern World, Jul 25). I have three take aways from reading the article. First, everyone should read The Box by Marc Levinson because (a) it’s a good book and (b) it seems that no one can write about containerized shipping without more-or-less admitting that Mr. Levinson saved them a lot of effort in researching the topic.
The second point is that the article provides a nice illustration of how slapping stuff in containers can dramatically drive down shipping costs.
To get a sense of how the system works, imagine one of the containers aboard the Hong Kong Express, which is owned by…
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