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The Containerization of Commodities

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The Containerization of Commodities

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The article, ‘The containerization of Commodities’ by Dr. Jean-Paul Rodrigue and Dr. Theo Notteboom examines the aspect of containerization of commodities as a supply chain which ought to be embraced as an alternative or complimentary of bulk commodity chain. Despite the world becoming highly globalized as well as the extensive adoption of containerization by large and small scale producers, the recognition of containerization as a commodity or supply chain is highly underrepresented (Rodrigue & Notteboom, 2018). There is need to examine the aspect of containerization from the principle of flow, service configuration, shipping networks as well as the operation of inland ports and maritime terminals.

I do support the fact that it is normal for a new supply chain to receive lower levels of acceptance especially due to the fear of the risks that it may entail. The fear of uncertainty is common to every entrepreneur. Precisely, the aspect of containerization is new to most suppliers, and just the same way most entrepreneurs tend to be reluctant to embrace a new strategy due to the fear of uncertainty, so is why containerization appears to be under recognized as a supply chain for commodities and the cold chain (Sosna et al., 2010). However, this trend needs to change, especially due to the fact that from the time when the aspect of carrying cargo by containers was introduced, this chain has received a myriad of growth dynamics, to such an extent that it can be perceived to be a more effective alternative or complimentary supply chain. The fact that the development of niche opportunities and markets for containerization were initially bypassed shows that the initial aim of introducing containers as a supply chain for commodities was to assess its market penetration and acceptance in the globalized world. This is equivalent to the manner in which an organization releases a new product into the market in order to assess customers` perception in order to make a decision on whether or not to embark on producing that product in large scale. For this reason, I do support the aspect of bypassing the development of niche markets and opportunities for containerization and focusing on assessing its acceptance and penetration in the market. Considering that this supply chain is highly being accepted due to its speed and flexibility, planning for the development of containerized traffic, strategies of repositioning empty containers, and higher levels of transshipment at the intermediary hubs can be done with no regrets (Rodrigue & Notteboom, 2018). Actually, the demand for containerization can now greatly increase if the niche markets and opportunities can be developed.

In addition, the recognition of containerization as an alternative or complimentary supply chain in the globalized world that we are in today would greatly help in lowering and stabilizing the bulk shipping rates, which have been continuously fluctuating and rising (Rodrigue & Notteboom, 2018). Precisely, the adoption of containerization would create a form of competition with the bulk supply chain, and this would end the long term duration where the latter had been enjoying the market alone as a monopoly. In any industry that is dominated by a monopoly form of market structure, the quality of services delivered to consumers is always poor and expensive (Schotter, 2009). With the entry of containerization commodity chain as an alternative supply chain, the large and small scale commodity exporters would reap more benefits ranging from lower container shipping costs, high quality services, processing being moved close to the point of production, quicker shipping duration and export subsidy for backhaul cargo.

However, I also concur with the authors` arguments that though containerization is being hailed as one of the most effective supply chain in the present world, it has a number of issues or challenges which must be examined before an exporter decides to use it. for example, the aspect of removing and placing commodities to a container needs to be considered. Some commodities call for unique loading units and containers, which must be available in proximity, suitable load unit, and in sufficient quantities. In addition, the container needs to be prepared adequately before putting the commodity being shipped into it. some of the container preparations are not limited to cleaning, use of contained liners, and shielding against thermal spikes, which collectively increase the preparation cost. In addition to this, container loading, unloading and trans-loading, weight of the container, and weight distribution must also be taken into account before the container is ready to be shipped (Rodrigue & Notteboom, 2018). I also support the authors` argument that most regions where commodities are extracted tend to be located inland while consumption and manufacturing areas are located in the coastal regions. This means for effective and timely containerization to be achieved, there must be a close association or link between inland terminals and gateway ports. However, most maritime shipping companies do not allow their containers to be moved inland in order to be loaded with commodities and instead prefer them being within the companies` network or proximity. This means that it is challenging for a small scale exporter to convey his or her commodities from the interior regions to the coastal region, and the situation may even become worse of the commodities intended to be shipped are perishable.

However, I do differ with the authors` claim that the aspect of containerization of commodities does not compete with the existing bulk commodity chains. Though the containerization of commodities can be one of the emerging complementary chain with bulk commodity chain, majority of large scale and small scale exporters would prefer to use containerized commodity chains more than the bulk commodity chain and this is due to a number of factors. For example, containerized commodity chains is associated with quicker speed of shipping commodities compared to the bulk chain, and this is one of the major factors that exporters of agricultural and other perishable commodities take into consideration before deciding the commodity chain to use. Most exporters would prefer to pay higher commodity shipment costs and the consignment reaches the intended destination faster and fresh. Moreover, the shipping charges of containerization are low and stable compared to bulk chain, and price is one of the factors that influence customer`s decision to or not to buy a particular product (Smith, 2012). In addition, containerization is flexible to most exporters and plays an important role in mitigating trade imbalances.

References

Rodrigue J. P., and Notteboom T., (2018). The Containerization of Commodities. Retrieved from, https://transportgeography.org/?page_id=8394

Schotter, A. (2009). Microeconomics: A modern approach. Mason, OH: South-Western Cengage Learning.

Smith, T. J. (2012). Pricing strategy: Setting price levels, managing price discounts, & establishing price structures.

Sosna, M., Trevinyo-Rodríguez, R. N., & Velamuri, S. R. (2010). Business model innovation through trial-and-error learning: The Naturhouse case. Long range planning, 43(2-3), 383-407.

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