TT Talk - Revolution or evolution?
- Date: 03/07/2018
- Source: TT Talk 239
The innovation marked by containerisation transformed and unlocked international trade, but frontiers remain to be taken in trade, infrastructure and process.
Whatever start date might be placed on the concept of containerised transport (and there are a number), it is worth reflecting on the last half century. Maritime containerisation hit Europe in the mid-60s, having been pioneered mainly in American regional trade until then. It required brave visionaries to embrace the concept and to be prepared to battle through the practical, physical, legal and geopolitical challenges of the day.
There is little doubt that the introduction of the shipping container was revolutionary at the time; it transformed significant elements of trade practice and has since spawned multiple related supply chain opportunities as international trade has been unlocked in an era of unprecedented growth.
‘Coming together is a beginning’
There are numerous sources of history for the box industry (including ‘The Box’ anthology), but the supplement produced by Lloyd’s List in December 1995 entitled ‘From childhood friends to international business partners: the Club and the container industry’ is illuminating, entertaining and particularly cognisant of TT Club’s environment.
It can be difficult to appreciate the pre-containerisation cargo environment. The death knell was sounded in maritime trade to labour intensive, dangerous ship loading processes focused at the waterfront. However, not only did the container facilitate cargo packing by those that had less appreciation of ships and hazards at sea, but also was a paradigm shift in the investment required in the wharfside operation – requiring heavy lift cranes, substantial areas of available storage and strengthened hinterland connectivity. Over time, packing (and unpacking) has increasingly been done by shippers and forwarders/logistics operators; the latter have propagated multiple value-add skills to facilitate trade and first/last mile requirements.
Furthermore, unitising cargo in intermodal ‘cargo transport units’ has transformed the safety and security parameters in the supply chain. On one hand units provide the potential of avoiding pilferage of attractive cargo and, well stuffed, can avoid damage from multiple handling. On the other, what is packed in the box may be hidden from justified scrutiny and, following the advent of the internet, the criminal rewards can be considerably greater.
‘Working together is success’
Behind the innovation inherent in the transformative box was massive collaboration. The challenge to achieve interoperability through the international supply chain gave rise to deft and open-handed problem-solving in both engineering and hinterland infrastructures, amongst others. Most obviously, the work leading to the 1972 International Convention for Safe Containers (CSC) was crucial. This framework has served the industry well, together with ongoing development of International Organization for Standardization (ISO) standards for construction, testing and maintenance, which underpin the activities of those who own and operate the equipment.
TT Club itself was born out of such collaboration, as those adopting containerisation required insurance for the unit asset itself, together with a plethora of liabilities arising as both the unit and contents travelled far inland and across multiple national borders, being exposed to differing carriage liability regimes for each inland mode, the vagaries of national fiscal and health and safety regulations, and the potential to cause injury or property damage. In such scenarios, the mutual-structured Club has been facilitator, catalyst and advisor to the necessary legal mosaic, itself championing standardisation and good practice, while carefully balancing the needs of the industry.
‘Keeping together is progress’
Embedding a revolution requires detailed on-going evolution; constant change and continual improvement are necessary, not only for immediate stakeholders but also to account for societal change. While innovation and regulation may be driven most by adversity (such as following the ‘Annabella’ incident, which revealed continuing challenges with differing size standards and poor communications), the supply chain industry – particularly maritime – is facing the pressures for environmental performance. Alongside the debates surrounding greenhouse gases, it may be expected that there will be decreasing tolerance towards delays, congestion, lack of real-time information and even broader environmental impacts.
The last half-century has demonstrated that the intermodal dream of seamless shipping at sea and ashore is not a passing fashion. In probably 99.9% of supply chain transactions, all works well; the small ‘failure rate’ is testament to its success but also disproportionately disruptive. A core strength of TT Club remains the ability to apply in-depth problem solving skills across the globe as need arises.
Whether classed as revolution or evolution, ‘digital’ is seen as the future game-changer – see the joint TT Club and McKinsey & Company report ‘Brave New World? Container Transport in 2043’. The opportunities to delight the customer, while facilitating trade and driving down cost and inefficiencies, are substantial. So are the risks inherent in a thoroughly interconnected trade and transport environment built in large part upon open and shared platforms, let alone centuries-old legal frameworks. The call for industry statesmen/women for such tasks is as great today as ever.
We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.
We look forward to hearing from you.
Risk Management Director, TT Club