contribution of cargoes containerization in logistic …
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CONTRIBUTION OF CARGOES CONTAINERIZATION IN
LOGISTIC AND SUPPLY CHAIN MANAGEMENT:A CASE OF
TANZANIA BREWERIES LIMITED
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CONTRIBUTION OF CARGOES CONTAINERIZATION IN
LOGISTIC AND SU PPLY CHAIN MANAGEMENT:A CASE OF
TANZANIA BREWERIES LIMITED
By:
Muni Silaa
A Dissertation Submitted to Mzumbe University in Partial Fulfilment of the
Requirements for an Award of a Master Degree of Science in Procurement and
Supply Chain Management (MSC-PSCM) of Mzumbe University
2013
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CERTIFICATIONWe, the undersigned, certify that we have read and here by recommend that for
acceptance by the Mzumbe University, a dissertation entitled Contribution of
Cargoes Containerization in Logistics and Supply Chain Management, in partial
fulfillment of the requirements for the award of degree of Master of Science in
Procurement and Supply Chain management of Mzumbe University.
………………………………………….
Major Supervisor
.......................................................
Internal Examiner
Accepted for the Board of.....................................................
DEAN, DIRECTOR FACULTY/DIRECTORATE BOARD
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DECLARATION
I, MUNI SILAA declare that this dissertation is my own original work and that it
has not been presented and will not be presented to any other University or College
for a similar or any other degree award.
Signature ____________________________
Date _________/___________/___________
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COPYRIGHT
This dissertation is copyright material protected under the Berne convention, the
Copyright Act of 1999 and other international and national enactments, in that
behalf, on intellectual property. It may not be reproduced by any means, in full or in
part, except for short extracts in fair dealings, for research or private study, critical
scholarly review or discourse with an acknowledgement, without the written
permission of the Directorate of Postgraduate Studies, Research and Publication, on
behalf of both the author and Mzumbe University.
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ACKNOWLDGEMENTS
Delightfully the researcher wishes to thank the almighty God that all the obstacles
which would have lead to failure were away throughout the period, special thanks
also should go to my supervisor Ms Sarah R. Mngoya who worked closely with me
all the time from the beginning to the end of this research.
The researcher would also like to thank the management of Tanzania Breweries Ltd
and his employees who were ready to provide information for this work. Since it is
difficult to mention thanks all the researcher would like to thank all those whose
names are not mentioned, you are highly appreciated.
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DEDICATION
I wish to dedicate this work to the Almight God for His endless love and care.
Secondly, my husband and to my daughters Maurine and Glitter for their
contribution and perseverance during the whole period of study. May God bless you!
\
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LIST OF ABBREVIATION
AAR Association of American Railroads.
GNP Global Production Networks
HPH Hytchson Ports Holdings
ISO International Standard Organization
MSC- PSCM Master of Science in Procurement and Supply Chain Management
N(Gen) Next Generation Terminal Management System.
PSPTB Procurement and Supply Professional and Technicians Board
PVC Poly Viny1 Chloride
RCH Railway Clearing House
TBL Tanzania Breweries Ltd
TEU Twenty – Foot Equivalent Unit.
U.S United States
UK United Kingdom
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ABSTRACT
This dissertation was designed to find out whether TBL were experiencing
contribution of containerization in logistics and supply chain management and to see
challenges in regards to containerization modal of transportation as a strategy
towards efficiency and effectiveness in logistics and supply chain management. The
issue of significance here is that, although the organization invested much on
developing containerization in logistics and supply chain management in some past
years, yet there were no assurance of performing effectively and efficiently in the
area of logistics and supply chain management in the organization.
The major findings have demonstrated that TBL were experiencing much
contributions as it was revealed that by 90% of respondents, the contributions
demonstrated suggests that some of these had its roots from the management side
where some were the outcome of containerization modal.To illustrate this, the most
pressing aspects of which these contributions lies are as follows; the TBL
management revealed that the organization reduced cost of transportation of its raw
materials from abroad by 50% due to the use of containerization. The respondents
said that through containerization modal the company enjoys much use of modern
equipment in off loading materials which saves time of performing the task, and it
was noticed that respondents in the department of Logistics and Supply Management
were proud of working at the company.
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TABLE OF CONTENTS
DECLARATION........................................................................................................ ii
COPYRIGHT ............................................................................................................ iii
ACKNOWLDGEMENTS ........................................................................................ iv
DEDICATION............................................................................................................ v
LIST OF ABBREVIATION..................................................................................... vi
ABSTRACT .............................................................................................................. vii
TABLE OF CONTENTS........................................................................................ viii
LIST OF TABLES ................................................................................................... xii
LIST OF FIGURES ................................................................................................ xiii
CHAPTER ONE ........................................................................................................ 1
PROBLEM SETTING............................................................................................... 1
1.0 Introduction ............................................................................................................ 1
1.1 Background ............................................................................................................ 1
1.2. Statement of the problem ...................................................................................... 2
1.3 Objective of the Study............................................................................................ 3
1.3.1 General objective. ......................................................................................... 3
3.2 Specific objectives ................................................................................................. 3
1.4. Research question.................................................................................................. 3
1.4.1 General research questions........................................................................... 3
1.4.2Specific research questions ........................................................................... 4
1.5. Significance of the research .................................................................................. 4
1.6. Limitations of the Study........................................................................................ 4
1.7. Delimitation of the study....................................................................................... 5
1.8. Organization of the Research ................................................................................ 5
CHAPTER TWO ....................................................................................................... 7
LITERATURE REVIEW.......................................................................................... 7
2.0 Introduction ............................................................................................................ 7
2.1 Conceptual definitions ........................................................................................... 7
2.1.1.Containerized cargoes ...................................................................... 7
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2.1.2 Types of containers ........................................................................ 10
2.2. Theoretical bases of Research ................................................................. 11
2.2.1 Competitive advantages of the containerization from various
literatures................................................................................................. 15
2.3 Empirical Literature Review ................................................................... 20
2.3.1 Review of General Reports ............................................................ 20
2.3.2Review of studies from abroad........................................................ 20
2.3.2.1 Containerization towards a phase of maturity...................... 22
2.3.2.2 The role of container in global supply chain................................. 24
2.3.2.3 Maritime Economics & Logistics ................................................. 25
2.3.2.4 Containerized global production networks ................................... 25
2.3.2.5 Pressures on inland distribution .................................................... 26
2.3. 3 Review of studies from Tanzania............................................................ 28
2.4. Conceptual Framework ....................................................................................... 29
2.4.2 Underlying Assumptions................................................................ 29
CHAPTER THREE ................................................................................................. 31
RESEARCH METHODOLOGY ........................................................................... 31
3.0. Introduction. ........................................................................................................ 31
3.1. Research design................................................................................................... 31
3.1.1 Descriptive Case Study Design ...................................................... 31
3.2. Research approach .............................................................................................. 32
3.3. Research Design.................................................................................................. 32
3.4. Study population ................................................................................................. 32
3.5. Sample size and sampling ................................................................................... 32
3.5.1 Sampling technique ........................................................................ 33
3.5.2 Sample size..................................................................................... 33
3.6. Data collection Methods: .................................................................................... 33
3.6.1 Primary data ...................................................................................................... 34
3.6.2 Questionnaires................................................................................ 34
3.6.3 Interview......................................................................................... 34
3.6.4 Secondary data ............................................................................... 35
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3.7. Measurement of variables ................................................................................... 35
3.7.1 Data processing, analysis and presentation .................................... 35
3.7.2 Data editing .................................................................................... 36
3.7.3 Data coding .................................................................................... 36
CHAPTER FOUR .................................................................................................... 37
DATA PRESENTATION AND DISCUSSION OF THE RESEARCH
FINDINGS ............................................................................................. 37
4.0 Introduction .......................................................................................................... 37
4.1 Characteristics of Respondents ............................................................................ 39
4.1.1 Respondents Gender and Age ........................................................ 39
4.1.2 Respondents’ Level of Education .................................................. 40
4.1.3 Position of Employment................................................................. 41
4.1.4 Respondents’ Duration of Stay TBL ............................................. 42
4.2 Presentation and Analysis of the Research objectives ......................................... 43
4.2.1 Contribution of Cargoes Containerization in Logistics and Supply
Chain Management at TBL – Dar es Salaam.......................................... 43
4.2.2. Reasons for the use Containers in Transporting Goods and Raw Materials
from one Point to Another at TBL. ......................................................... 44
4.2.3 Reasons toward the use of Cargoes Containerization at TBL- Dar es salaam45
4.2.4 Benefits of Customers due to TBL Cargoes Containerization Strategy. .... 46
4.3 The Contribution of Cargoes Containerization to Efficiency and Effectiveness in
Supply Chain Management at TBL......................................................... 47
4.3.1 Reduction in Transportation Costs................................................. 48
4.3.2 The use of Modern Equipments ..................................................... 49
4.3.3 Maximum Safety of the Goods and Raw Materials ....................... 50
4.3.4 Transport Facilitations.................................................................... 51
4.4 Reasons for the use Containers in Transporting Goods and Raw Materials from
one Point to another at TBL .................................................................... 51
4.5 Reasons toward use of Cargoes Ccontainerization at TBL- Dar es salaam......... 52
4.6 Benefits of customers due to TBL Cargoes Ccontainerization Strategy.............. 53
4.6.1 Availability of Goods ..................................................................... 53
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4.6.2 Maximum Safety of Goods on Transit ........................................... 54
CHAPTER FIVE...................................................................................................... 57
SUMMARY, CONCLUSION, AND RECOMMENDATIONS........................... 57
5.0 Introduction .......................................................................................................... 57
5.1 Study Summary.................................................................................................... 57
5.2 Conclusion ........................................................................................................... 58
5.3 Recommendations .............................................................................................. 58
5.3.1 Need of initial Cost ....................................................................... 58
5.3.2 Need of Modern Equipment........................................................... 59
5.3.3 Change of Mind that Cargoes Containerization adds Value to Logistics
and Supply Chain Management .............................................................. 59
5.3.4 Prepare Objective Training ............................................................ 59
5.3.5 Increase Efforts to Avoid Rush Transportation.............................. 60
5.4 Suggestion for Further Studies............................................................................. 60
REFERENCE ........................................................................................................... 61
APPENDIX I ............................................................................................................ 64
Appendix II: Questionnaire....................................................................................... 65
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LIST OF TABLES
Table 3.5. 1 Showing the number and type of respondents ....................................... 33
Table 4.1.3 Respondents Employment position......................................................... 42
Table 4.2.1 the contribution of cargoes containerization in logistics and supply chain
management at TBL-DSM. ..................................................................... 44
Table 4.2.3. Shows Reasons toward the use of cargoes containerization at TBL- Dar
es salaam ................................................................................................. 46
Table 4.2.4 shows the Benefits of customers due to TBL cargoes containerization
strategy .................................................................................................... 47
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LIST OF FIGURES
Figure 2.1 Conceptual Model..................................................................................... 29
Figure 4.1.1:Distribution of Respondents By Age and Sex ....................................... 40
Figure 4.1.2:Education Level of Respondents ........................................................... 41
Figure 4.1.4:Respondents’ Duration of stay in TBL.................................................. 43
Figure: 4.2.2: Shows the response on the reasons made to use containers in
transporting goods and raw materials from one point to another at TBL 45
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CHAPTER ONE
PROBLEM SETTING
1.0 IntroductionThis chapter presents the discussion about background of the problem, statement of
the problem, purposes and objectives of the study, research questions, and
significance of the study, limitation and delimitation of the study.
1.1 BackgroundContainerization is a system of freight transport based on a range of steel intermodal
containers. Containers are built to standardized dimensions, and can be loaded and
unloaded, stacked, transported efficiently over long distances, and transferred from
one mode of transport to another container ships, rail and semi-trailer trucks without
being opened. The system, developed after world war II, led to greatly reduced
transport costs, and supported a vast increase in international trade, William Gibson
(August, 2007).
Christopher (2005) asserts that, Logistic and Supply Chain Management (LSCM) can
provide a major source of competitive advantage, in other words a position of
enduring superior over competitors in terms of customer preference may be achieved
through better management of Logistic and Supply Chain.
Thus the focus of Supply Chain Management is upon the Management of
relationships in order to achieve a more profitable outcome for all parties in the
chain. This brings with it some significant challenges source they may be occasions
when the narrow self interest of one part has to be subsumed for the benefit of the
chain as a whole containerization being among those.
With recent economic pressures, forcing companies to seek more ways to drive costs
out of the Supply Chain. The desire to minimize the number of touches through out
main fact using and distribution has attracted more attention to the advantages of
bulk packaging.
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Company have shown a new renewed interest in bulk containers for discrete
component shipping, driven by the high costs of both multiple handling touches and
transportation. Pushton, Croucher and Baker (2010) maintain that, Container systems
can be viewed as a specialized mode of freight transport, although the container is
now a fundamental feature of all the major national and international transport modes
road, rail, sea and air. Containerization makes possible the development of what is
known as the ‘intermodal’ system of freight transport, enabling the uncomplicated
movement of goods in bulk from one transport mode to another.
According to Pushton, Croucher and Baker (2010), Containerization if well used can
result into the following:
i. They enable a number of small packages to be consolidated into large single
unit loads.
ii. There is a reduction in the handling of goods, as they are distributed from
their Point of origin to their point of destination.
iii. There is a reduction in individual packaging requirements, depending on the
load within the container.
iv. There is a reduction in damage to products caused by other cargo due to good
cushioning between cargoes packed in transit containers.
v. Insurance charges are lower due to the reduced damage incidences
which if happened the insurance claim may arise.
vi. Handling costs at the docks and at other modal interfaces are reduced due
to use of sophisticated modern equipments.
1.2. Statement of the problemSupply Chain Management is the Management of upstream and downstream
relationships with Suppliers and Customers to deliver superior quality value at less
cost to the Supply Chain as a whole. The whole purpose of supply chain management
and logistics is to provide customers with the level and quality of service that they
require and to do so at less cost to the total supply chain. The goods of all kind are
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mostly transported from one location to another where they can experience better
value, this need proper handling to allow intended objectives to be achieved. In
developing a market-driven logistics strategy the aim is to achieve ‘service
excellence’ in a consistent and cost-effective way. The quality of transport logistics
is now recognized as being vital to the success of many organizations. The ability to
transport goods quickly, safely, economically and reliably is seen as vital to a
nation's prosperity and capacity to compete in a rapidly globalizing economy.
However; wherever ones travel these days there is always a container nearby.
Whether it is on a train, on a ship, or on a truck, intermodal containers are an integral
part of today’s supply chain. The movement of goods by the containerized mode has
increased over the last few years. This has happened both in the import/export as
well as the internal movement sector, now how this does contributes the achievement
of Supply Chain Management is the main concern of this study.
1.3. Objective of the Study
1.3.1 General objective.
The main objective of this study is to look into the contribution of containerization
in Supply Chain Management at (TBL) Dar es salaam.
3.2 Specific objectivesi.To determine the reasons for cargoes containerization at (TBL).from the
point of importing materials up to delivering the product to customers.
ii.To establish the extent to which the intended objectives are achieved by
Supply Chain Management.
iii.To determine the extent to which customers are benefited by the use of
containers.
1.4. Research question
1.4.1 General research questionsThe General research question of this research asks. How does the use of containers
contribute to efficiency and effectiveness in Supply Chain Management at (TBL)?
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1.4.2Specific research questions
i. What are the reasons that made (TBL) decide to use containers from the
point of importing materials up to delivering the product to customers?
ii. To what extent does the use of containers in Supply Chain Management
achieved the objectives for which it was intended?
iii. To what extent customers of (TBL) benefited due to containerization.
1.5. Significance of the research
The rationale for conducting this study it is that, the study intended to look into the
contribution of containerization in supply chain management at Tanzania Breweries
Limited Dar es salaam. It besides provides useful information to other stakeholders
using containerization modal of transport on how to take working measures to utilize
containerization modal of transport toward efficiency and effectiveness with regard
to supply chain management and to eradicate those factors causing poor management
of supply chain in connection to containerization. Also, the findings through this
study contributes to the knowledge base that are helpful for further researches by
scholars and professionals of the field in Tanzania and for future references. Finally,
since this study was a partial academic requirement for the program of Master
degree, successful results contribute to the award of Master of Science Degree in
Procurement and Supply Chain Management (Msc - PSCM) offered at Mzumbe
University.
1.6. Limitations of the StudyThe following limitations encountered by the researcher:
Financial constraint, there so many requirements which were needed during the
whole research exercise. The researcher does not have a sponsor to pay for the study.
Therefore, she used her own meagre resources to meet the research expenses.
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The researched topic covers a wide area. Therefore, it needs a lot of time to reach
the entire expected respondents. Confidentiality of information, some of the
information is likely to be treated as confidential and, therefore, deny access to it by
the researcher.
Uncooperative attitude by potential respondents, This is a common problem where
common people who does not know the importance of the research and even the
educated ones who are used to giving out the opinions and see nothing being done
were not be willing to cooperate with the researcher.
In spite of the above constraints, the researcher believes that the findings provided a
fair presentation of the current situation with contribution of containerization in
Supply Chain Management.
1.7. Delimitation of the studyThe researcher made a close follow up of the questionnaires either by physical visits
or by phone calls to ensure complete participation in the study also through assurance
that the information will be used only for academic purposes. The questionnaires
prepared were simple, short up to the point and attracted participants to fill them.
By using skills, profession and theoretical orientation in research methods, the
researcher thoroughly explained to participants about the study rationale and
implication for them by participating in the study.
1.8. Organization of the Research
This dissertation is organized into five chapters; the first chapter introduces the
problem under the study, statement of the problem, objective of the study, research
questions, scope of the study, significance of the study, limitation and delimitations
of the study at hand.. The second chapter covers literature review in its twofold
dimensions, which is empirical and theoretical. Third chapter is methodology of the
study. It highlights and explains how and what procedures employed to come up with
research findings. The fourth chapter presents data analysis and discussion of the
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research findings. The fifth chapter presents summary, conclusion and policy
implication as well as further areas for research. References and appendices finalizes
the study.
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CHAPTER TWO
LITERATURE REVIEW
2.0 IntroductionThe purpose of this chapter is to review different relative researches done in the
similar area with the objective of adding knowledge and familiarization with any
relevant information about the problem being studied.
2.1 Conceptual definitions
In practice, the aim of supply chain management is to optimize the three flows
involved in supply chains: ‘the flow of goods from sources to end-consumers, the
flow of funds to satisfy the market needs at minimum costs, the flow of information
to respond to customer requirements efficiently and effectively’ (European
Commission, 1999).
Quayle (2006) asserts that, supply chain management has been an important feature
of industrial and economic life for years, but it is only in the recent past that it has
been recognized as a major function in its own right. Distribution activities make
extensive use of the human and natural resources that affect a national economy. The
appreciation of the scope and importance of distribution, especially with respect to
new technology, has led to a more scientific approach being adopted toward the
subject and to the recognition of the importance of managing the new technology and
the changes that it can bring about. This approach is aimed at the individual
subsystems, but especially at the overall concepts of the distribution and logistics
function. Supply chain management is a powerful means of resolving these
problems. Understanding and management of the logistics supply chain is critical to
any Company’s drive to improve productivity and profitability.
2.1.1. Containerized cargoes
Before the intermodal container was developed, goods were moved from land to sea
using crates, barrels, sacks, pallets, and boxes. The loading and unloading of ships
when they arrived at the dock was slow and labor intensive. The term used for this
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type cargo is called break bulk, derived from the phrase “breaking bulk” which
means the extraction of a portion of the cargo of a ship. The ships were unloaded of
their cargo and the cargo to be placed in the ships hold would be moved to the dock
from warehouses at the port. If the items were large enough they were hoisted on to
the shop using dockside cranes or the ship’s equipment. Smaller items were first
placed on to trays or placed in cargo nets so they could be moved on to the ship.
When the railroads arrived at the ports the labor intensity of the break bulk system
was multiplied as the cargo had to be removed from the ship to the dock and then on
to the freight trains. The system of break bulk was used throughout the Second
World War in the same manners that have been used for the previous hundred years.
It was ten years after the end of the war that the era of containerization began. In
1953 Malcolm McLean started to develop a vehicle that could be driven directly
from the road to the ship. The concept was not successful as it did not use the space
efficiently. McLean modified his design so that the container could be removed from
the chassis and loaded on the ship, rather than the complete truck. In 1955 Malcolm
McLean sold his trucking company and purchased two Second World War tankers.
The first tanker, the Ideal X, was converted with a reinforced deck to carry 58 metal
container boxes as well as 15,000 tons of bulk petroleum. The maiden voyage was
from Port Elizabeth, New Jersey to the Port of Houston on April 26th, 1956.
House (2005) defined a container as (a) of a permanent character and accordingly
strong enough to be suitable for repeated use. (b) Specially designed to facilitate the
transport of goods by one or more modes of transport without intermediate reloading.
(c) Designed to be secured and or readily handled, having corner fitting for these
purposes
Malcolm McLean’s initial design for the container in 1956 was 8 feet tall by 8 ft
wide box in 10 ft long units constructed from 2.5 mm thick corrugated steel. As the
container system started to be adopted in the late 1950’s and early 1960’s, there was
no standard as to container size and construction. Shipping companies had their own
standards, with Matson using 24 foot long containers and Sea-Land, owned by
McLean, and used 35 foot long containers. To ensure that containers could be moved
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between shipping companies in the US and across the world, the International
Organization for Standardization (ISO) developed standards for intermodal
containers, such as corner fittings, identification markings, and minimum internal
dimensions.
The normal intermodal container is usually 8 feet wide by 8.5 feet high. The length
of the container can vary; 20 feet, 40 feet, 45 feet, and 53 feet. There is a container
called a Hi-Cube that is 9.5 feet high, but still 8 feet wide. There are a number of
container variations such as the open top container and the refrigerated container.
Containers can be stacked using twist lock fastenings at the container’s corners. An
ISO standard defines the maximum size and position of the holes in the connector
used on the container. Standard 20 foot containers can be stacked seven high.
A container is now a major piece of transport equipment, and because its purpose is
to ensure that a load is transported without interference to the consignor, it is
important that it can be moved across national boundaries. It would be a major
problem if containers were of different sizes and aptness in various countries,
therefore the International Standards Organization (ISO) has made recommendations
for freight containers that are generally accepted by national and international
standards (see, for example, ISO 17712:2003).
The ISO suggests that general-purpose freight containers are of a rectangular shape,
weatherproof for transporting and storing a number of unit loads, packages, or bulk
materials; they confine and protect the contents from loss or damage and can be
separated from the means of transport, handled as unit loads, and transshipped
without re handling the contents. In spite of its standardization, several different
sizes and types of containers have to be distinguished. However, all these
different freight containers that are handled around the world are
standardized according to the ISO 668 standards.
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2.1.2 Types of containersi. Conventional units (general purposes) also known as dry container are made
from steel and fully enclosed with a timber floor.
ii. Open top containers– covered by tarpaulin and permits top loading
discharging
iii. For Awkward sized loads which can not be easily handled through the door
ways of general purpose containers. These may be fitted with a removable top
rail over and above door aperture.
iv. Half height containers– it is an open top container which is 3.4 ft in
Height.
a. They were designed for the carriage of dense cargoes such as steel
ingots, copper
b. Ingots or heavy steel cargoes or stones.
Flat rack containers- this is a flat bed with fixed or collapsible ends and no roof.
i. They are used to accommodate cargoes of non compatibles dimensions or
a. Special cargoes that require additional ventilation.
ii. Bulk containers– are designed to carry free flowing cargoes like grains, sugar
or
iii. Cement.
iv. Tank containers– are frame tank unit for the carriage of liquids. The
cylindrical
v. Ventilated containers– generally designed as a general purpose container
but with added full length ventilation grills at the top and bottom of sides’
wall of the unit
vi. Open side containers– these units are constructed with removable steels grate
sides which are covered by poly viny1 chloride (PVC) sheeting. The sides’
grates allow adequate ventilation when it is used to carry perishable goods
and or livestock.
vii. Insulated containers– are often used to keep perishable cargoes example
meats, fruits, vegetable and milk.
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viii. Refrigerated containers- more generally known as the reefer container, they
are totally insulated and fitted with their own refrigeration plant.
2.2. Theoretical bases of ResearchSupply chain concepts invoke a strategic view of thinking which seeks to account for
all links in the flow of materials and related information in a flexible but integrated
manner so that they perform in unison to achieve an overall optimum result for the
business. Just as marketing grew in the 1960s to encompass sales, retailing,
advertising, customer relations, product design, and market research and in so doing
encouraged an overview that then revolutionized the approach to serving the
customer; so supply chain has evolved to encourage a similar integration of
materials-related functions. Moreover, and what is perhaps more important, the
supply chain approach recognizes the importance of those functions both
individually and collectively and the need to manage then in totality. Supply chain
management coordinates and integrates all of the materials-based functions inherent
in planning and forecasting, coursing, manufacturing or servicing and processing a
product, and its distribution. The agile supply chain in particular is market sensitive.
The aim is to enable businesses to keep ahead of market changes where quality,
price, response time, and service are crucial factors. The goal is to link the market
place and its distribution channels to the Procurement and manufacturing operation
in such a way that competitive advantage can be achieved and maintained. The
benefits accrue in cost reduction, sales generation, much improved Service levels,
and increased profitability.
According to Rodrigue (1999), container shipping has changed the scale and scope
of global freight distribution. By enabling a greater velocity in freight distribution, it
has opened up new global markets for export and import as a greater quantity of
space could be traded with a similar, if not lower, amount of time and often at a
lower cost. This velocity is much more a function of time than of speed as
containerization mostly improved the function of transshipment. Thus, it is not that
freight is moving faster along the respective modes servicing supply chains, but that
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the efficiency of transport terminals has dramatically increased the velocity of
transshipments and, consequently, of supply chains. The concept of transshipment
here is taken in a large sense to include activities taking place when the freight is not
in circulation, namely warehousing, which has adapted to provide a higher velocity
to freight in the form of distribution centre. While prior to the introduction of the
container, a standard break-bulk cargo ship could take weeks to be loaded or
unloaded, a quantity of containerized freight can be transshipped in a matter of hours
Cudahy ( 2006) argued that the velocity of freight from a modal perspective has been
achieved for more than half a century, but that containerization, through the
transshipment function, truly permitted a multiplying effect for this velocity. Once a
specific velocity threshold is reached, a time-based management of production
becomes a possibility as logistics moves from a push (supply-based) to a pull
(demand-based) structure, reaping significant distributional benefits.
Containerization has provided the mechanism to expand to international markets
while improving the reliability, flexibility and costs of freight distribution. The
convergence of these factors permitted the setting of global supply chains, many
based on the principle of ‘just-in-time’, which is an integration of the velocity of
freight with production and distribution strategies.
Container ships are designed so that no space is wasted. Capacity is measured in
Twenty-foot Equivalent Unit (TEU), the number of standard. 20-foot containers
measuring 20 x 8.0 feet (6.1 x 2.4 x 2.6 meters) a vessel can carry. This not
withstanding, most containers used today measure 40 feet (12 meters) in length. The
maximum gross mass for a 20 ff (6.1m) dry cargo container is 30,480 kg, and for a
40-ft (including the 2.87 m (9 ft 6 in) high cube container), it is 34,000 kg. Allowing
for the tare mass of the container, the maximum payload mass is therefore reduced to
approximately 28,380 kg for 20 ft (6.1 m), and 30,100 kg for 40 ft (12 m) container.
Informally, containers were known as “box boats”, they carry the majority of the
world’s dry cargo, and meaning manufactures goods. Cargoes like metal ores or coal
or wheat are carried in bulk carriers. There are large main line vessels that play the
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deep sea routes, then many small “feeder” ships that supply the large ships at
centralized hub ports. Most container ships are propelled by diesel engines, and have
crews of between 20 and 40. They generally have a large accommodation block at
the stern, near the engine room. Container ships now carry up to 15,000 TEU
(approximately equivalent to 35 100-car double-stack intermodal freight trains) on a
voyage. The world’s largest container ship, the M/V Emma Maersk has a capacity of
15,200 containers. In 2008 the South Korean shipbuilder STX announced plans to
construct a container ship capable of carrying 22,000 TEU and with a proposed
length of 450ms and a bean of 60ms. If constructed, the container ship would
become the largest seagoing vessel in the worlds.
Intermodal freight transport involves the transportation of freight in an intermodal
container or vehicle, using multiple modes of transportation (rail, ship, and truck),
without any handling of the freight itself when changing modes. The method reduces
cargo handling, and so improves security, reduces damage and loss, and allows
freight to be transported faster. Reduced costs over road trucking are the key benefit
for intercontinental use, as well as reduced greenhouse gas emissions. This may be
offset by reduced timings for road transport over shorter distance.
Intermodal transportation goes back to the 18th century and predates the railways.
Some of the earliest containers were those used for shipping coal on the bridge water
canal in England in the 1780s. coal containers (called “loose boxes”) were soon
deployed on the early canals and railways and were used for road/rail transfers (road
at the time meaning horse drawn vehicles ( Booer,1987).
Wooden coal containers used on railways go back to the 1830s on the Liverpool and
Manchester Railway. In 1841 Isambard Kingdom Brunel introduced iron containers
to move coal from the vale of Neath to Swansea Docks. By the outbreak of the First
World War the Great Eastern Railway was using wooden containers to trans-ship
passenger luggage between trains and sailings via the port of Harwich. The early
1900s saw the first adoption of covered containers, primarily for the movement of
furniture and intermodal freight between road and rail. A lack of standards limited
14
the value of this service and this in turn drove standardization. In the U.S. such
containers, known as “lift vans”, were in use from as early as 1911.
In the United Kingdom containers were first standardized by Railway Clearing
House (RCH) in the 1920s, allowing both railway owned and privately owned
vehicles to be carried on standard container flats. By modern standards these
containers were small, being 1.5 or 3.0 meters long (5 or 10ft), normally wooden and
with a curved roof and insufficient strength for stacking. From 1928 the Landon,
Midland and Scottish Railway offered “door to door” intermodal road –rail services
using these containers. This standard failed to become popular outside the United
Kingdom. Pallets made their first major appearance during World War II, when the
United States military assembled freight on pallets, allowing fast transfer between
warehouses, trucks, trains, ships, and aircraft. Because no freight Handling was
required, fewer personnel were needed and loading times were decreased. Truck
trailers were first carried by railway before World War II, an arrangement often
called “piggyback”, by the small class I railroad, the Chicago Great Western in 1936.
The Canadian Pacific Railway was a pioneer in piggyback transport, becoming the
first major North American railway to introduce the service in 1952. In the United
Kingdom the big four railway companies offered services using standard (RCH)
containers that could be craned on and off the back of trucks. Moving companies
such as pick fords offered private services in the same way. In the 1950s, a new
standardardized steel intermodal container based on specifications from the United
States department of defense began to revolutionize freight transportation. The
International Organization for Standardization (ISO) then issued standards based
upon the U.S. Department of Defense standards between 1968 and 1970. The White
Pass and Yukon Route railway acquired the world’s first container ship, the Clifford
J. Rogers, built in 1955, and introduced containers to its railway in 1956. In the
United Kingdom the modernization plan and in turn the Beeching Report strongly
pushed containerization. The British Railways freightliner service was launched
carrying 8-foot (2.4) high pre- ISO containers. The older wooden containers and the
pre-ISO containers were rapidly replaced by 10-foot (3.0m) and 20-foot (6.1m) ISO
standard containers, and later by 40-foot (12m) containers and larger. In the U.S.,
15
starting in 1960s, the use of containers increased steadily. Rail intermodal traffic
tripled between 1980s and 2002, according to the Association of American Railroads
(AAR), from 3.1 million trailers and containers to 9.3 million. Large investments
were made in intermodal freight projects. An example was the USD $740,000,000
port of Oakland intermodal rail facility begun in late 1980s. Since 1984, a
mechanism for intermodal shipping knows as double-stack rail transport has become
increasingly common ( DeBoer, 1992)
2.2.1 Competitive advantages of the containerization from various literaturesBooker (1987) outlined that method of liner shipping operation with North Atlantic,
Australian, South African, Middle Eastern and far Eastern and Asian trades all being
converted to container operation. The principal benefits from containerization have
been in a greatly reduced turn around time for the vessels, so allowing smaller fleet
to carry a greater volume of goods at greatly reduced handling costs. In other words,
the container has revolutionized shipping by allowing speedier turn around of the
vessels and more rapid door to door transits as there is no intermediates unloading
and reloading of the goods to other modes of transport. For the shipper, faster transits
from door to door have enabled a reduction in the stock chain and containerization
has eliminated the damage from the unnecessary intermediates transshipments of
goods. Booker added that containerization have brought with it the dramatic
decrease in the incidence of loss and damage to goods as the container potentially
offers improved protection for cargo. Further more, containerization has led to the
formation of new professionals the freight forwarder consolidators and the combined
transport operator.
Christopher (2003) maintain that, container revolution brought into reality the idea
of parking small packages into a huge a box with the number of purpose first,
reducing cargo handling second, decreasing the risk of loss and third, damage or
pilferage of cargo and so enhancing the notion of safe transport and fourth, hopefully
cutting down the time vessels had to spend I port loading or discharging and thus
reducing voyage times and costs generation.
16
David (2005) showed the potential of the container in the intermodal freight
transport. This is the concept of utilizing two or more suitable modes in combination
to form an integrated transport chain aimed at achieving operationally efficient and
cost effective delivery of goods in an environment sustainable manner from their
point of origin to their destination. Some containerized freight movements may use
of different transport modes such as road, rail or inland water way or either short or
deep sea shipping. The principal benefits of unit load (containerized) intermodalism
is that it can provide;-lower transit costs over long journey, potentially faster delivery
time in certain circumstances. A reduction in road congestion since a semi trailer can
haul a two TEUs, containers of total of forty tons which would not be the same if the
container was not adapted and this is a major beneficial in these modern times. A
more environmentally acceptable solution to congestion and related problems such as
emission of noise and fumes, the damage caused to the built environment by
vibration and so on. Reduced consumption of fossil fuels since the long haul section
of the route is more fuel efficient and lastly it is safer transit for some dangerous
product.
Global trade and container traffic shipping is truly the lynchpin of global economy
and international trade. More than 90% of world merchandise trade is carried by sea
and over 50% of that volume is containerized. In today’s are of globalization,
international trade has evolved to the level where no nation can be self sufficient and
global trade has fostered an interdependency and interconnectivity between
countries. Shipping has always provided the most cost effective means of
transportation over long distances and containerization played a crucial in world
maritime transport.
Containerization has revolution cargo shipping. Today, approximately 90% of non-
bulk cargo worldwide moves by containers stacked on transport ships; 26% of all
containers originate from China. AS of 2005, some 18 million total containers make
over 200 million trips per year. There are ships that can carry over 14,500 twenty-
foot equivalent unit (TEU), for example the Emma Maersk, 396 m long, launched
August 2006. It has even been predicted that, at some point, container ships will be
17
constrained in size only by the depth of the Straits of Malacca – one of the world’s
busiest shipping lanes-linking the Indian Ocean to the Pacific Ocean. This so-called
Malacca ax size constrains a ship to dimensions of 470m in length and 60m wide
91542 feet by 197feet).
In the 1950s, Harvard University economist Bendamin Chinitz predicted that
containerization would benefit New York by allowing it to ship industrial goods.
Produced there cheaply to the Southern United States than other areas, but did not
anticipate that containerization might make it cheaper to import such goods from
abroad. Most economic studies of containerization merely assumed that shipping
companies would begin to replace older forms of transportation with
containerization, but did not predict that the process of containerization itself would
have some influence on producers and the extent of trading. The widespread use of
ISO (International Organization for Standardization) standard containers has driven
modifications in other freight-moving standards, gradually forcing removable truck
bodies or swap bodies into the standard sizes and shapes 9through without the
strength needed to be stacked) and changing completely the worldwide use of freight
pallets that fit into ISO container or into commercial vehicles.
Improved cargo security is also an important benefit of containerization. The cargo
is not visible to the casual viewer and thus is less likely to be stolen and the doors of
the containers are generally sealed so that tempering is more evident. This has
reduced the “falling off the truck” syndrome that long plagued the shipping industry.
( DeBoer,1992) outlined that method of liner shipping operation with North Atlantic,
Australian, South African, Middle Eastern and far Eastern and Asian trades all being
converted to container operation. The principal benefits from containerization have
been in a greatly reduced turn around time for the vessels, so allowing smaller fleet
to carry a greater volume of goods at greatly reduced handling costs. In other words,
the container has revolutionized shipping by allowing speedier turn around of the
vessels and more rapid door to door transits as there is no intermediates unloading
and reloading of the goods to other modes of transport. For the shipper, faster transits
from door to door have enabled a reduction in the stock chain and containerization
18
has eliminated the damage from the unnecessary intermediates transshipments of
goods. Booker added that containerization have brought with it the dramatic
decrease in the incidence of loss and damage to goods as the container potentially
offers improved protection for cargo. Furthermore, containerization has led to the
formation of new professionals the freight forwarder consolidators and the combined
transport operator.
Hill (2003), said that container revolution brought into reality the idea of parking
small packages into a huge a box with the number of purpose first, reducing cargo
handling second, decreasing the risk of loss and third, damage or pilferage of cargo
and so enhancing the notion of safe transport and fourth, hopefully cutting down the
time vessels had to spend I port loading or discharging and thus reducing voyage
times and costs generation.
Lowe (2005) showed the potential of the container in the intermodal freight
transport. This is the concept of utilizing two or more suitable modes in combination
to form an integrated transport chain aimed at achieving operationally efficient and
cost effective delivery of goods in an environment sustainable manner from their
point of origin to their destination. Some containerized freight movements may use
of different transport modes such as road, rail or inland water way or either short or
deep sea shipping.
The principal benefits of unit load (containerized) intermodalism is that it can
provide;-lower transit costs over long journey, potentially faster delivery time in
certain circumstances. A reduction in road congestion since a semi trailer can haul a
two TEUs, containers of total of forty tons which would not be the same if the
container was not adapted and this is a major beneficial in these modern times. A
more environmentally acceptable solution to congestion and related problems such as
emission of noise and fumes, the damage caused to the built environment by
vibration and so on. Reduced consumption of fossil fuels since the long haul section
of the route is more fuel efficient and lastly it is safer transit for some dangerous
product.
19
Global trade and container traffic shipping is truly the lynchpin of global economy
and international trade. More than 90% of world merchandise trade is carried by sea
and over 50% of that volume is containerized. In today’s are of globalization,
international trade has evolved to the level where no nation can be self sufficient and
global trade has fostered an interdependency and interconnectivity between
countries. Shipping has always provided the most cost effective means of
transportation over long distances and containerization played a crucial in world
maritime transport.
Containerization has revolution cargo shipping. Today, approximately 90% of non-
bulk cargo worldwide moves by containers stacked on transport ships; 26% of all
containers originate from China. AS of 2005, some 18 million total containers make
over 200 million trips per year. There are ships that can carry over 14,500 twenty-
foot equivalent unit (TEU), for example the Emma Maersk, 396 m long, launched
August 2006. It has even been predicted that, at some point, container ships will be
constrained in size only by the depth of the Straits of Malacca – one of the world’s
busiest shipping lanes-linking the Indian Ocean to the Pacific Ocean. This so-called
Malacca ax size constrains a ship to dimensions of 470m in length and 60m wide
91542 feet by 197feet).
In the 1950s, Harvard University economist Bendamin Chinitz predicted that
containerization would benefit new York by allowing it to ship industrial goods
Produced there cheaply to the Southern United States than other areas, but did not
anticipate that containerization might make it cheaper to import such goods from
abroad. Most economic studies of containerization merely assumed that shipping
companies would begin to replace older forms of transportation with
containerization, but did not predict that the process of containerization itself would
have some influence on producers and the extent of trading. The widespread use of
ISO (International Organization for Standardization) standard containers has driven
modifications in other freight-moving standards, gradually forcing removable truck
bodies or swap bodies into the standard sizes and shapes 9through without the
20
strength needed to be stacked) and changing completely the worldwide use of freight
pallets that fit into ISO container or into commercial vehicles.
Improved cargo security is also an important benefit of containerization. The cargo
is not visible to the casual viewer and thus is less likely to be stolen and the doors of
the containers are generally sealed so that tempering is more evident. This has
reduced the “falling off the truck” syndrome that long plagued the shipping industry.
In short; the introduction of the container has completely changed in which goods are
moved. Over ninety percent of non-bulk cargo is moved using containers. Some
ships can move almost 15,000 twenty-foot containers with China leading the world
in the number of container movements with over 105 million in 2009. In comparison
the US had only 34 million movements in the same year. The standardization of
container sizes has allowed the ease of movement of containers between nations
accelerating the development of international trade
2.3 Empirical Literature Review
2.3.1 Review of General ReportsContainerization is a most designable way to move goods from one country to
another by simple handling of contents of the sealed containers. It is the provision of
such equipment that the advantages of containers become apparent. The shipper is
able to pack his cargo into the container at his own premises, have it handled by road
or by rail to a suitable port (terminal) where it is loaded to the container ship,
transport to the foreign port, unloaded to an internal transport system, and deliver to
his customer without each individual package of the consignment being handled at
each intermediate stage ( Whiteaker, 2005).
2.3.2 Review of studies from abroadIn 2006, container shipping celebrated its 50th anniversary as an innovation that had
a tremendous impact on the geography of production and distribution. Production
became globalised by a better usage of comparative advantages while distribution
systems were able to interact more efficiently. The mounting pressures on box
logistics in light of global supply chains. It will be demonstrated that the basic
principle of containerization remained the same notwithstanding scale increases in
21
vessels and terminals and a clear productivity increase in container handling.
Although the container was an innovation initially applied for maritime
transportation, the emergence of global supply chains has placed intense pressures to
implement containerization over inland freight distribution systems. Box –
containerized – logistics is increasingly challenged to deal with the ever-increasing
time, reliability and costs requirements of global supply chains. Imbalances in trade
flows and accessibility and capacity constraints are among some of the developments
that are making it increasingly difficult to reap the full benefits of containerization.
Container volumes around the world have witnessed tremendous growth in the last
50 years, with an accelerated growth since the mid-1990s. According to UNESCAP
(2005), the total number of full containers shipped on worldwide trade routes
(excluding transshipment) amounted to 77.8 million TEU for the year 2002,
compared to just 28.7 million TEU in 1990. In 2015, the volume is expected to reach
177.6 million TEU. Volumes on the east–west trades (Transpacific, Transatlantic and
Asia/Europe) and north–south trades are expected to increase at an average rate of
around 6% per year. Intra-regional trades, however, are expected to show a
significantly higher growth of around 7.5%, mainly as a result of booming intra-
Asian trades, but also because of the setting of hub ports acting as points of
transshipment for regional markets.
Drewry Shipping Consultants (2006) estimates that the total throughput handled by
the world’s container ports (not to be confounded with the trade route volumes
mentioned above) increased from about 236 million TEU in 2000 to an estimated
399 million TEU in 2005 (including empties and transshipment), representing an
average annual growth rate of 11%. Transshipment traffic has been the driving force
behind growth in container handling in the last decade. In 1980, total container
throughput in world ports did not exceed 40 million TEU. In 1990, it reached 75
million TEU. As far as the near future is concerned, worldwide container handling is
expected to increase further to 628 million TEU in 2010, of which 57% are port-to-
port full containers, 14% are port-to-port empty containers and 29% are
transshipment (Drewry, 2006). In most developed regions around the world, the
22
container has a high share in the maritime-related import and export flows of general
cargo.
However, improvements in maritime propulsion technology over the last half century
implied marginal speed improvements, but significant cost and reliability ones Given
the inevitable fact that all technologies have a lifecycle, the question arises as to what
will happen to the container system as we know it in the decades to come, in
particular when considering the requirements imposed on the system by global
supply chains. Among the most significant questions that such an expectation puts
forward are: what is the ultimate market potential of containerization in terms of
volume and market penetration (usage)? What shapes and structures in respective
maritime and inland containerized freight distribution may this potential imply?
When is a phase of maturity likely to be reached? What could seriously undermine
future containerization developments in terms of economic and technical issues?
Although absolute answers to these questions cannot be provided.
2.3.2.1 Containerization towards a phase of maturityThe container market, although still observing huge volume growth, is fast reaching
a maturity phase characterized by a wide diffusion of the technology around the
world and technical improvements that are more and more becoming marginal. Ships
are getting larger and more efficient, but in essence the container technology driving
the business altogether is basically the same as some 40–50 years ago. Shipping lines
are deploying ever larger container vessels on the main trading routes driven by the
promise of cost savings through achievement of economies of scale (at sea), as
evidenced by Cullinane et al (1999), Lim (1998) and Notteboom (2004). The
technical concept of a container vessel has not altered dramatically during the
evolution from first generation vessels to the latest ultra large container carriers of
more than 10,000 TEU capacity (cf. Emma Maersk: LOA 397 m, beam 56.40,
official capacity of 11,000 TEU). Economies of scale are likely to be pushed as far as
it is technically and economically feasible. Container terminals have witnessed a
series of innovations aimed at improving quay and yard productivity. Container
gantry cranes now have longer outreaches (up to 22 containers wide), more lifting
23
capacity (ZPMC developed cranes with up to 120 tons of lifting capacity) and the
spreaders have become more sophisticated (double lift, twin lift and tests by ZPMC
for triple lifts). But again, the basic design of a gantry crane and spreader remained
unchanged since the first developments by Sea-Land and Matson’s in the early
1960s. The development of straddle carriers, RMG (rubber-tyred gantry cranes),
RTG (rail-mounted gantry cranes) and other yard equipment really took off in the
early 1970s. The use of AGVs (automated guided vehicles) is of more recent date,
that is, a first application at Delta Terminal Rotterdam in the early 1990s. But here
also, the basic principle remained unchanged: loading/discharging a container vessel
(vertical movements) and stacking the containers one by one on the terminal
(vertical/horizontal movements). Modern terminal equipment is becoming
widespread and more standardized with the emergence of global terminal operators
(HPH, PSA, APM Terminals and DP World, to name but a few) and with leading
equipment manufacturers (ZPMC, Kalmar, Fantuzzi and others) having customers all
over the world. This has made it increasingly difficult for terminal operators to
achieve a competitive advantage solely through the terminal equipment used.
Productivity gains have more than ever become a matter of terminal management
skills (software and know how) and of course hinterland size instead of hardware.
Technology gains in equipment for moving containers inland are also becoming
marginal. Push convoys have been around for quite some time now and although
inland barges on the Rhine now reach capacities of close to 500 TEU, their design is
quite standard (Notteboom and Konings, 2004). Rail shuttle technology dates back to
the early days of containerization and even the double-stack trains in North America
were conceived as early as the 1980s (Thuong, 1989).
To summarize, the world is still embracing a decades-old concept – the container – to
deal with the challenges of contemporary global supply chains. And although
globalization and the associated profound changes in worldwide manufacturing and
distribution processes to a large degree have been made possible by containerization,
the same global supply chains are now exerting strong pressures on the container
concept, leaving the players in container markets with quite some challenges. To
further support the growth of containerization and to avoid a phase of saturation or
24
even decline, major innovations are needed in the way in which containerized
logistics systems are managed. Smarter management of the container system and its
related networks is a prerequisite for a sustainable deployment of the container
concept in global supply chains in the longer term.
2.3.2.2 The role of container in global supply chain
Container shipping has changed the scale and scope of global freight distribution. By
enabling a greater velocity in freight distribution, it has opened up new global
markets for export and import as a greater quantity of space could be traded with a
similar, if not lower, amount of time and often at a lower cost. This velocity is much
more a function of time than of speed as containerization mostly improved the
function of transshipment (Rodrigue, 1999). Thus, it is not that freight is moving
faster along the respective modes servicing supply chains, but that the efficiency of
transport terminals has dramatically increased the velocity of transshipments and,
consequently, of supply chains. The concept of transshipment here is taken in a large
sense to include activities taking place when the freight is not in circulation, namely
warehousing, which has adapted to provide a higher velocity to freight in the form of
distribution centers.
While prior to the introduction of the container, a standard break-bulk cargo ship
could take weeks to be loaded or unloaded, a similar quantity of containerized freight
can be transshipped in a matter of hours (Cudahy, 2006). It can be argued that the
velocity of freight from a modal perspective has been achieved for more than half a
century, but that containerization, through the transshipment function, truly permitted
a multiplying effect for this velocity. Once a specific velocity threshold is reached, a
time-based management of production becomes a possibility as logistics moves from
a push (supply-based) to a pull (demand-based) structure, reaping significant
distributional benefits. Containerization has provided the mechanism to expand to
international markets while improving the reliability, flexibility and costs of freight
distribution. The convergence of these factors permitted the setting of global T
Notteboom & J-P Rodrigue Containerization, Box Logistics and Global Supply
Chains.
25
2.3.2.3 Maritime Economics & Logistics
Supply chains, many based on the principle of ‘just-in-time’, which is an integration
of the velocity of freight with production and distribution strategies.
2.3.2.4 Containerized global production networks
Global production networks (GPN) represent a functionally integrated network of
production, trade and service activities that includes all the stages in a commodity
chain, from the transformation of raw materials, through intermediate manufacturing
stages such as assembly, to the delivery of goods to the markets (Henderson et al,
2002; Coe et al, 2004). Within this framework, GPN have made many manufacturers
contemplate global logistics strategies rather than simply relying on conventional
shipping or forwarding activities. Most actors in the transport chain have responded
by providing new value-added services in an integrated package, through freight
integration along the supply chain. Thus, it has become widely acknowledged that
the functional integration of commodity chains goes beyond the function of
manufacturing, but also includes governance and transportation (Gereffi and
Korzeniewicz, 1994; Gereffi, 2001; Chopra and Meindl, 2001; Appelbaum, 2004;
Rodrigue, 2006).
The competitiveness of GPN is to a large part determined by the performance of the
logistics networks as they link production, distribution and consumption (Hesse and
Rodrigue, 2004). These logistics networks are highly dynamic as a result of mass
customization in response to product and market segmentation, lean manufacturing
practices and associated shifts in costs as production and distribution assets are
repositioned within global supply chains. The container is at the same time a
transport, storage and management unit. When embedded within GPN, the container
becomes a production unit since it carries all the inputs of manufacturing as
identifiable and manageable batches. Production and distribution thus become a
matter of ensuring that containers – mobile inputs – reach the proper locations within
a specified time range. Containerization also leveled the competitive playing field for
global manufacturing. Manufacturers who previously had limited access to the global
market because of remote locations and lack of transport infrastructures realized that
26
the ubiquity of the container as a global transport product is linked to a whole new
set of opportunities through containerization.
All competitors have potentially the same level of access to an efficient and global
freight distribution system through port facilities. Paradoxically, manufacturing
clusters near major container terminals along the Chinese coast may have better
accessibility to global markets than activities located in conventional central
locations such as the American Midwest and the Western European Rhine/Ruhr
deltas. Still, containerization remains under-acknowledged in its role and function in
supporting GPN (Hesse and Rodrigue, 2006). T Notteboom & J-P Rodrigue
Containerization, Box Logistics and Global Supply Chains 158
2.3.2.5 Pressures on inland distributionThe current development and expansion of intermodal transportation relies on the
synchronization of different systems of circulation as well as of different
geographical scales. But when the synchronization level increases, the maritime/land
interface as a whole becomes more vulnerable to disruptions. For instance, if a
segment in the container chain does not work efficiently in a highly synchronized
environment, then the whole chain will be affected, triggering unforeseen
consequences in time-dependent GPN. This leads to extra costs to find alternative
routes, which, from a maritime standpoint, does not present too many difficulties as
this simply involves new port calls along inland distribution systems, new routings
and new volumes are much more difficult to accommodate. There have thus been
mounting pressures on inland freight distribution to cope with the growth of
maritime containerized shipping.
The future is likely to bring attempts to cope with three particular geographical
scales. At the continental level, the setting of high-capacity long distance corridors
will continue to offer a viable option for long-distance container movements.
Regionally, the process of integration between maritime and inland transport systems
27
will lead to a number of penetration and modal shift strategies where each mode is
used in its most cost- and time-effective way.
The conventional representation of a hinterland, often linking the clients of the port
with a distance decay perspective, is being replaced with one where spatial
discontinuity and clustering prevails, but that is more functionally integrated, and
locally, on-dock rail facilities where containers are exiting/entering a port terminal
on rail instead of on truck, with the destination of these rail shipments often going
much further inland. The ‘Agile Port’ concept is an expansion of this strategy by
linking directly on-dock rail or barge facilities to a nearby inland terminal where
containers can be sorted by destination. These configurations can ease the pressure
on deep sea container terminals by moving the sorting function inland, thus
increasing the efficiency of existing terminal facilities and the overall throughput. In
all cases, the future of containerization will largely depend on the land side,
particularly on efficient intermodal and trans modal operations.
According to Rodrigue, Notteboom (2008) the container is thus much more than a
box; it is a vector of production and distribution. Its introduction has led to various
changes in the economic and transport geography and patricianly how production
and physical distribution interact. The container can be considered revolutionary as
completely new practices have taken place after its introduction in the transport
system. For instance, its impacts on Supply Chain Management can be considered as
revolutionary since completely new means of distribution were established and since
the container facilitated a shift from push logistics to pull logistics. There has also
been an evolution within containerization as many changes were gradual and
incremental within maritime and inland freight transport systems. The ongoing
application of economies of scale in container shipping can be considered as
evolutionary as gradually lower transportation costs resulted, facilitating its diffusion
within the economic landscape. While initially containerization dominantly involved
finished goods and parts, the current phase in the evolution of containerization
concerns commodities. A closer reconciliation with geographical theory leans at
looking at containerization as a form of functional and spatial diffusion and what are
28
its growth prospects. It has become a ubiquitous transport product servicing mobility
requirements at almost all stages of supply and commodity chains and being able to
be carried virtually everywhere there are transport infrastructures.
Christopher, (2003), has outlined the safety laws for carrying the containers and
working in the docks. The carriage of International Standard Organization (ISO)
containers and swap bodies can be accomplished very safely if legal provisions and
correct procedures are followed. Generally ISO containers should not be carried on
vehicles unless specifically designed with security twist locks are fitted on The
vehicle and or trailer and are secured to the container by inter locking into the corner
castings. For maximum safety at least four twist locks be used one to each corner.
Containers owners and those who lease or are in control of freight containers must
ensure that they comply with international for safe containers agreed in Geneva in
1972, the freight containers safety conversion regulation 1984. Safety in dealing
with containerized cargoes referred as an ideal situation while the previous are of
handling the loose cargo was extremely risk where the injuries and death were
common to dock workers ( Sutton, 1970).
2.3. 3 Review of studies from TanzaniaThe goods of all kind are mostly transported from one location to another where they
can experience better value. On doing this the need of proper handling is virtual to
allow the maximization of the intended objectives to be achieved.
From the research project by Kakulime, ( 2012 ) on “ Assessment of the contribution
of containerization in logistic’’ on the case study of Tanzania International Container
Terminal Services, (TICTS) revealed that containerization has revolutionized the
transportation business, significantly lowering the costs of shipping goods over long
distance. Before containerization moving goods from one mode of transport to
another was a very labor intensive, lengthy and costly process. It could take several
days to unload ship and reload goods onto trucks to delivering to their next and or
final destinations. Transportation costs have plummeted because of the efficiency
gains associated with containerization. Due to containerization transportation costs
associated with globalization of production have declined.
29
2.4. Conceptual FrameworkContainerization greatly reduces the expense of International trade and increases its
speed, especially of consumer goods and commodities. It also dramatically changed
the character of port cities Worldwide. Meanwhile the port facilities need to support
containerization. However, few initially foresaw the extent of influence of
containerization on the shipping industry. This study therefore, looks into the
benefits of containerization in terms of cost reduction, improving cargo security and
bulk carriage of cargo on time.
Figure 2.1Conceptual Model
Source; Researcher’s own formulation, 2013
2.4.2 Underlying AssumptionsContainerization modal of transport allow full utilization of modern equipment at
the time of loading and off-loading of cargoes.Bulk packaging and transportation
using containerization modal of transport reduce total cost of transportation,
Contribution of CargoesContainerization in Logistics andSupply Chain Management
Better use of modern equipment Reduction of transportation costs Safety of Cargoes on Transit
Reduction of Labour Costs
30
hence, reasonable price to final users Bulk packaging and transportation using
containerization modal of transport facilitate safeties of goods on transit, hence,
goods received in good condition and good order. Containerization modal of
transport reduce lead time to both down and upper stream of the supply chain player
and also reduce labor cost due to use of modern equipment.
31
CHAPTER THREE
RESEARCH METHODOLOGY
3.0. IntroductionThis chapter deals with description of the methods applied in carrying out the
research study. Kothari, (2009), defined research as the structured enquiry which
utilizes acceptable scientific methodology to solve problems and create new
knowledge that is generally acceptable. Research methodology has been defined as a
systematic way to solve research problem. Methodology consists of systematic
observation, classification and interpretation of the study findings. This section was
concerned with the discussion of the methodology of the study which included,
population of the study, sampling techniques and sample size, types of data, data
collection techniques and data analysis plan.
3.1. Research design
This research carried out in a descriptive case study design. Research design is an
approach strategy that must be followed to collect data, analyze and interpret them. It
is a framework of what to be done in order to come out with a way on how to collect
data, data processing, sources of data collection, sampling procedures, sampling
method, sampling design, study population and data presentation.
3.1.1 Descriptive Case Study Design
In descriptive research design, the major emphasis is on determining the frequency
with which something occurs or the extent to which two variables vary. It is typically
guided by an initial hypothesis. Descriptive studies are also concerned with specific
predictions, narrations of facts and characteristics concerning individuals, groups or
situation (Kothari, 2006). This study will use descriptive in nature. The design seems
to suit this research because it attempts to describe how a particular approach is
being used to solve an existing problem. The study will use a case study approach
because it enable the researcher to collect more information.
32
3.2. Research approach
This study looked at reasons for containerization as a strategy used by TBL and its
benefits with regard to efficiencies and effectiveness within the supply chains both
for downstream and upstream transportation requirements. The process of achieving
this included investigation on the reasons that influence the use of containers at
Tanzania Breweries Limited (TBL). The (TBL) employee in the transport and
logistics department, employee in other departments and management team provided
the necessary input to this study.
3.3. Research Design
The study covered the aspect of case study. It mainly described the relationship of
variables for example the interaction of factors and events in relation to the
containerization which is the topic studied. Case study preferred with the view that
provided an opportunity to study the aspects of the problem in some depth within
some limited time scale. (Bell, 1992)
Though the process both qualitative as well as quantitative approaches
accommodated so as to remove biases.
3.4. Study population
Population refers to an entire group of individuals, events or objects having common
observable characteristics. In other words, population is the aggregate of all who
conform to a given specification (Kothari, 2006).
As far as this study is concerned, the population for the study was TBL employees. It
involved senior officers in the transportation and logistics department, head of other
departments as well as middle and low level employee of which the researcher
believed could provide real picture of the problem under study.
3.5. Sample size and sampling
Sample size refers to the exact number of items selected fro a population to
constitute a sample. It is recommended to use a large sample size t be able to
33
generalize your findings. This is because the larger the sample size, the lower the
likely error in generalizing to the population ( Kamuzora, 2008).
3.5.1 Sampling technique
Kothari (2006) defines a sample as a collection of some parts of the population on
the basis of which judgment is made small enough to convenient data collection and
large enough to be a true representative of the population from which it had been
selected. Sample size refers to a number of items to be selected from the universe to
constitute a sample. The sample must be optimum. According to Kothari, sampling
refers to the process of picking up few or small units out of whole population for
study. Such unit is expected to be a representative of the whole population. The
researcher will use purposive sampling method to select respondents from among
members of staff of TBL, based on their line of duties and responsibility concerning
public procurement.
This study used judgmental sampling this is because the researcher believes that it
provides the necessary information relevant to the study problem.
3.5.2 Sample sizeThe sample size involved 100 employees of (TBL).
Table 3.5. 1 Showing the number and type of respondents
Category of respondents Study Population Percentage %
Top management 10 10.0
Transport and Logistics department 5 6.0
Marketing department 10 10
Other employee from different units 75 74
Total 100 100
Source: Researcher, 2013
3.6. Data collection MethodsSincerely speaking, in research we consider two types of data namely primary data
and secondary data. Therefore study used both primary as well as secondary data.
34
3.6.1 Primary dataPrimary data is the type of data collected for the first time by researcher. It is first
hand information. This is the type of data which are collected in the field of study for
answering the research question. It is the data collected by the research assistants
from the field for the purpose of answering a research question/issue (Adam J&
Kamuzora F, 2008). According to Kothari 2004, these data tend to be original by its
nature. The primary data are collected either through observation or through direct
communication, with respondents in one form or another or through personal
interviews. It means that there are several methods of collecting primary data such as
observation method, interview method, through questionnaire but few to mention
(Kothari 2009).However observation, questionnaire and interview are common
research tools used to collect primary data. They are administered by researcher
herself/himself through questionnaires and face to face interviews or observation
especially in some aspects. Regards this study, the methods which were used to
collect primary data will be questionnaire and interview.
3.6.2 QuestionnairesThe questionnaires with both open-ended and close-ended questions will be used.
The typed questionnaires in a definite order on a form or set of forms given to the
person concerned with a request to answer questions and the researcher collected
dully filled forms processed. It is considered that questionnaire is cheap and provided
meaningful information about containerization at TBL. The questionnaires with both
open-ended and close-ended questions will be used. The advantage of using closed-
end questions is that it helped to avoid ambiguity in answering questions while open-
ended questions enabled respondents to give detailed answers.
3.6.3 InterviewThis method refers to a face to face contact between interviewer and interviewee or
respondents. This can take place at home (do to do interviewing), office (executive
interviewing) or even at the shopping centers (mall intercept surveys depending on
the nature of your respondents (Kamuzora, 2008). It is used for the purpose of
eliciting some information given out by respondent. In the course of this study, this
method was employed whereby it gathered various information from the required
35
respondents, by asking relevant questions concerning the subject under the study.
This method comprised multiple ended questions were asked accordingly. The
interview was carried on the scoped area. This method was good because in most
cases it leads researcher to follow up ideals, probe responses and investigate
awareness and feelings in relation to containerization at TBL.
3.6.4 Secondary data
These are second hand in formations. Secondary data means data that are already
available; that is; it refer the data which have already been collected and analyzed by
someone else (Kothari, 2009). Secondary data are data obtained from literature
sources or data collected by other people for some other purposes ( Kamuzora,2008).
These data may either be published data or unpublished data, thus secondary data
provide second hand information and they include both raw data and published ones
(Sounders et al, 2000). These include books, journals, articles, news papers, report
and publications of various associations and organization, documentary reviews from
the internet, as well as company records to seek information related to the study.
Second hand information was useful to the researcher for the fact that she established
the focus of the study before going to the relevant primary source.
3.7. Measurement of variablesThe study used ranking in respondents responses to get weight of the variable which
is containerization and come up with findings. This ranged from strongly agree to
strongly disagree and some of explanations depending upon the respondents category
as it has differentiated in the sample size table.
3.7.1 Data processing, analysis and presentationTwo methods of data analysis were used.
Data analyzed both qualitatively and quantitatively this is because the study collected
both qualitative and quantitative data. The act of analyzing qualitative data is likely
to occur at the same time as the researcher collects them. However the same may
also be analyzed later (Kothari, 1990).
36
The quantitative data that collected quantified so that frequencies of response and
percentage calculated and tabulated for easy interpretations and analysis. It involved
the use of graphs, chart and frequency tables.
3.7.2 Data editingData that were collected were also edited by carefully checking to ensure
completeness, accuracy and uniformity.
3.7.3 Data codingThis involved assignment of numerical value to represent a specific response to
specific questions along the column position as per designed code symbol that
occupied on data records.
37
CHAPTER FOUR
DATA PRESENTATION AND DISCUSSION OF THE RESEARCHFINDINGS
4.0 Introduction
This section presents and interprets the results from the data analysis. Data collected
from the study is presented, analyzed and discussed. The technique of presentation of
data is based on the specific objectives. The data were generated from filled
questionnaires, documentary review, interviews and observation. The obtained data
were collected from 100 employees of Tanzania Breweries Limited (TBL) in Dar es
Salaam.
Tanzania Breweries Limited (a subsidiary of SABMiller) manufactures sells and
distributes clear beer, alcoholic fruit beverages and non-alcoholic beverages within
Tanzania. SABMiller plc is a multinational brewing and beverage company
headquartered in London, United Kingdom. It is the world's second-largest brewer
measured by revenues after Anheuser-Busch InBev and is also a major bottler of
Coca-Cola. Its brands include Fosters, Grolsch, Miller Brewing Company, Peroni
Nastro Azzurro and Pilsner Urquell. It has operations in 75 countries across Africa,
Asia, Australasia, Europe, North America and South America and sells around 21
billion liters of lager per year.
SABMiller's origins date back to the foundation of Castle Breweries in 1895 as to
serve a growing market of miners and prospectors in and around Johannesburg,
South Africa. Two years later, it became the first industrial company to list on the
Johannesburg Stock Exchange and the year after (1898) it listed on the London Stock
Exchange. From the early 1990s onwards, the company increasingly expanded
internationally, making several acquisitions in both emerging and developed markets.
In 1999, it formed a new UK-based holding company, SAB plc, and moved its
primary listing to London. In May 2002, SAB plc acquired Miller Brewing, forming
SABMiller plc.
38
SABMiller has a primary listing on the London Stock Exchange and is a constituent
of the FTSE 100 Index. It had a market capitalization of approximately £35.6 billion
as of 23 December 2011, the 11th-largest of any company with a primary listing on
the London Stock Exchange. It has a secondary listing on the Johannesburg Stock
Exchange.
Tanzania Breweries Limited (a subsidiary of SABMiller) manufactures sells and
distributes clear beer, alcoholic fruit beverages and non-alcoholic beverages within
Tanzania. TBL has controlling interests in Tanzania Distilleries Limited. TBLs most
popular clear beer brands include Safari Lager, Kilimanjaro Premium Lager, Ndovu
Special Malt, Castle Lager, and Castle Lite. Other prominent brands associated with
the TBL group are Konyagi Gin, Amarula Cream, and Redds Premium Cold. The
TBL Group is listed on the Dar es salaam Stock Exchange, employs about 1,400
people and is represented throughout the country with 4 clear beer breweries in Dar
es Salaam, Mbeya, Mwanza and Arusha, a distillery, a malting facility and 11
distribution depots.
TB’s Vision:
To be the most admired company in the global beer industry
i. Investment of choice
ii. Employer of choice
iii. Partner of choice
TBL’s Mission:
To own and nurture local and international brands that is the first choice of the
consumer.
TBL’s core values values:
i. Our people are our enduring advantage
ii. Accountability is clear and personal
iii. We work and win in teams
39
iv. We understand and respect our customers and consumers
v. Our reputation is indivisible
The objective in this research focused on the contribution of containerization in
supply chain management at (TBL). The research also looked on how the use of
containers contributes to efficiency and effectiveness in supply chain management at
(TBL). The research collected data through questionnaires and interviews which are
further processed to get results.
4.1 Characteristics of Respondents
The research expected to include all respondents (N=100) in providing responses to
the researcher. Respondents involved in this study were employees from top
management, transport and logistics department, marketing department and other
employee from other departments who are working at Tanzania Breweries Limited
and they are familiar with the organization particularly the area of the study that is
the contributions of containerization modal of transport in the whole operation of
(TBL) especially in the department of transport and logistics.
In this regard, gender, the age of employee, level of education, employment position
and duration of stay in the company were regarded in determining the experience and
familiarity about the organization which plays a significant role on the study at hand
4.1.1 Respondents Gender and Age
All 100 respondents were people whose age range between 25 and 55 years while
60/60%) were male and 40/40%) female. The difference in respondents’ sex could be
explained by the fact that the organization has more male than females. The big
difference lies on the staff whose age is between 35 and 55 years.
40
Figure 4.1.1: Distribution of Respondents By Age and Sex
Source: Researcher, 2013
4.1.2 Respondents’ Level of Education
Findings show that the education level of the respondents ranged from form four to
Master degree whereby 20% were respondents with ordinary level education, 50%
with first degree and 30% had Masters Degree. In this regard therefore most of staffs
in Tanzania Breweries Limited have first Degree as illustrated below;
41
Figure 4.1.2: Education Level of Respondents
Source: Researcher, 2013
4.1.3 Position of Employment
As far as employment level in the respondents’ respective organization is concerned;
findings from the scoped areas of the study indicate as follows. About 6(6%)
respondents were in managerial level, 34(34%) were in Middle level and 60(60%)
were at the lower level staffs or operation level. (Figure 4.1.3. below)
42
Table 4.1.3 Respondents Employment position
Source:
Researcher, 2013
4.1.4 Respondents’ Duration of Stay TBLDuring the study it was revealed that Tanzania Breweries Limited (TBL) was
established in the year 1963.Therefore, the respondents’ duration of stay in the
organization was also considered in order to know their views on the use of
containers contributes to efficiency and effectiveness in supply chain management at
(TBL). As it is seen in figure 4.2.4 below most of the employees have stayed in the
organization for a period six and twelve years and being in good position of knowing
much about the topic under the study.
43
Figure 4.1.4: Respondents’ Duration of stay in TBL
Source: Researcher, 2013
4.2 Presentation and Analysis of the Research objectivesResearch objectives tell what a researcher wants to achieve at the end of the study.
Thus the process of analysis the research objectives aims at determining whether our
finding support the hypotheses we formulated before going into the field to collect
the information, or reject them ( Kamuzora,2008 ).
4.2.1 Contribution of Cargoes Containerization in Logistics and Supply ChainManagement at TBL – Dar es Salaam.Data from the field show that the contribution of cargoes containerization in logistics
and supply chain management at TBL-DSM received different connotation from the
respondents at the company. It was seen that about 81(81%) of the respondents
agreed with the affirmation above, while 19(19%) disagreed.
44
Table 4.2.1 the contribution of cargoes containerization in logistics and supplychain management at TBL-DSM.
Source: Researcher, 2013
4.2.2. Reasons for the use Containers in Transporting Goods and Raw Materialsfrom one Point to Another at TBL.Regarding the perception of the respondents concerning the underlined reasons
behind the use of containers in transportation of goods and raw materials from one
destination to another; the research showed that about 91(91%) of all respondents
agreed, while 9(9%) disagreed.
45
Figure: 4.2.2: Shows the response on the reasons made to use containers intransporting goods and raw materials from one point to another at TBL
Source: Researcher, 2013
4.2.3 Reasons toward the use of Cargoes Containerization at TBL- Dar essalaamCargoes containerization at TBL.DSM plant and elsewhere in the world is the
strategy that aims reducing total costs of transporting goods, cargoes containerization
allows the use of modern equipment maximize safety of goods on transit and
facilitate the transportation of big lot of goods. The research showed that about
89(89%) of the respondents agreed, while 11(11%) of the respondents disagreed.
46
Table 4.2.3. Shows Reasons toward the use of cargoes containerization at TBL-Dar es salaam
Source: Researcher, 2013
4.2.4 Benefits of Customers due to TBL Cargoes Containerization Strategy.As far as the benefits accrued from the implementation of cargo containerization
strategy, the research revealed that the respondents were in position to realize a
number of benefits as well as giving an optimistic perception on the that strategy.
About 97 (97%) of the respondents agreed, while 3(3%) disagreed.
47
Table 4.2.4 shows the Benefits of customers due to TBL cargoescontainerization strategy
Source: Researcher, 2013
4.3 The Contribution of Cargoes Containerization to Efficiency andEffectiveness in Supply Chain Management at TBL
Logistics and supply chain management is concerned with the effective movement of
goods from point of production to point of consumption and managing the associated
services. Two aspects of such movement are noteworthy when non-bulk goods are
moved over long distances: First, goods are generally containerized, and this is
especially true for higher value goods. Second, the movement of goods in such cases
usually involves more than one major mode of transport (Narayan Rangaraj, 2006).
Using different modes of transport may be effective for a shipper and other
intermodal modes of transport as it may offer the right mix of cost effectiveness,
speed and location flexibility. It could also be globally effective in the sense that it
involves lower environmental, energy and overall social costs. For this reason,
government and organization’s strategy and policies must aim at facilitating this kind
of movement in an effective and efficient manner. In the course of the research done
at TBL; the adoption of the strategy of containerization has helped the company in
various aspects as far as logistic and supply chains is concerned. These are as follow
48
4.3.1 Reduction in Transportation Costs
Total Delivered Cost Management involves the ability to analyze and predict the
total supply chain costs from the source of supply to its final point of distribution
(Supply Chain, 2006). From the research it was seen that most of the respondents
agreed that the use of containers in transporting goods and raw materials reduced
costs of operation in the department of transport and logistics at Tanzania Breweries
Limited. About 91.9% of respondents from other employees agree that the use of
containers in transporting goods and raw materials facilitate much the transportation
of big lot of cargoes at once.
About 80% of respondents from top management agree on the reduction of costs of
transportation of goods and raw materials due to the use of containerization modal of
transport. The use of containerization modal of transport connect the down and
upstream supply chain with less cost in regards to supply chain players and
ultimately reduce costs to end users of industries products since the automation of
carriage have been maintained by containerization system and reduce costs of
carriage.
Earlier research showed that the application of containerization enables a greater
efficiency of movements with an appropriate choice of modes, terminals, routes and
scheduling. The implied purpose of containerization is to make available goods, raw
materials and commodities, fulfilling four major requirements related to order,
delivery, quality and cost fulfillment (Rodrigue. J.P, 2013). Containerization is thus a
multidimensional value added activity including production, location, time and
control of elements of the supply chain. It represents the material and organizational
support of globalization requiring a complex set of decisions to be made concerning
an array of issues such as the location of suppliers, the transport modes to be used
and the timing and sequencing of deliveries. Activities comprising logistics include
physical distribution; the derived transport segment, and materials management.
Again from the above analysis of data it shows that containerization modal of
transport have a significant positive contribution to the total operation and
49
achievements in transport and logistics at Tanzania Breweries Limited Dar es
salaam.
4.3.2 The use of Modern Equipments
The top management respondents said that in this modern generation the
organizations need to use as much as possible the new technology in equipments and
in information technology in all most all aspects of operations in order to meet
objective. Tanzania Breweries like other companies use modern technology in its
operation. They said that information technology given an important aspects by using
next generation terminal management system (N (Gen) information in its operations.
nGen is an acronym for Next Generation Terminal management System. It is the
system of the operation and the control of the department in handling all the
containers activities. This system was designed by Hytchson Ports Holdings (HPH)
through its two companies Hong Kong International Terminal (HIT) and Yantian
International container Terminal (YICT) for the aim of increasing efficiency and
effectiveness of port activities. This nGen is a scalable system that would facilitate
port operations in many languages on several continents and across many different
time zones.
Respondent from top management said that efficiency is the outcome of the
technology application as in cargo containerization in order for it to work smoothly;
the flow of information is needed to be more reliable. E-commerce has catalyzed the
supply chain of various goods which can be containerized through the internet
selection of goods, ordering, electronic payment and voyage monitoring of the
consignment is enhanced by Information Technology. Additionally; the department
of transport and logistics, 66% of respondents agreed on the fact that containerization
modal of transport allow the use of modern equipments in loading and off loading of
goods and raw materials, while in the transport and logistics 66.7% of respondents
agreed that the use of containers allow the use of modern equipments in their day to
day operations
In Tanzania breweries, the information Technology is the part and parcel of their
activities. All the logistics of the containerized good goes parallel with the
50
telephones, internet and faxes without these the clearing and forwarding of
containerized goods including the activities of legal procedures would have been
nearly too impossible. Hence information technologies / E-commerce do move hand
in hand with the vast array of information processing changes brought by
containerization. The commodity chain is linked with physical flows as well as with
information flows, notably through Electronic Data Interchange (EDI) (Rodrigue,
2013). Producers, distributors and consumers are embedded in a web of reciprocal
transactions. While these transactions mostly take place virtually, their outcomes are
physical flows. E-commerce offers advantages for the whole commodity chain, from
consumers being exposed to better product information to manufacturers and
distributors being able to adapt quickly to changes in the demand. Through the
research interview and direct observation in Tanzania Breweries Limited, it is
obvious that information technology is playing a big roll.
4.3.3 Maximum Safety of the Goods and Raw Materials
Respondents from marketing department agreed that the use of containers in
transporting goods and raw materials maximize safety of goods and raw materials on
transit. In the department of marketing, 80% of respondent agreed that the use of
containers in transporting goods from one point to another maximize safety of goods
on transit. Using containers in transportation of raw materials and finished goods to
and from abroad is also safe since containers made in such a way that goods are safe
from thieves on transit and also safe from wet or sunrises. Moreover; once placed in
a container, the cargo is not visible to the outside world and is thus less likely to
catch the eye of would-be thieves or vandals. Containers are usually sealed to
prevented theft or tampering, thus ensuring the security of the goods and raw
materials (Lowe, 2005).
Sealing of the containers reduces the chance that the cargoes will fall off the truck,
which is something that can occur when transporting or shipping freight nationally or
internationally.
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4.3.4 Transport Facilitations
Transportation refers to the movement of product from one location to another as it
makes its way from the beginning of a supply chain to the customer (Chopra &
Meindl, 2007). Transportation is an important supply chain driver because products
are rarely produced and consumed in the same location. Depending on the mode of
transportation, transportation is a significant component of the costs incurred by most
supply chains. The role of transportation is even more significant in global supply
chains.
About 81% respondents from other departments agreed that transportation of goods
and raw materials using containers facilitate transportation of big lot of cargoes at
once. This means that the strategy of containerization has created the so called
flexibility in transportation within TBL. Flexibility implies a highly differentiated,
strongly market and customer driven mode of creating added-value. Contemporary
production and distribution is no longer subject to single-firm activity, but it is a
global increasingly practiced in networks of suppliers and subcontractors (Rodrigue,
2013). Supply chains through various forms today are more likely than ever to be a
global. Establishing a regional and global supply chain creates many benefits, such
as the ability to source from a global base of suppliers who may offer better or
cheaper goods than were available in a company’s home nation (Chopra & Meindl,
2007).
The supply chain bundles together all this by information, communication,
cooperation, and, last but not least, by physical distribution which at TBL has been
powered by the containerization technology.
4.4 Reasons for the use Containers in Transporting Goods and Raw Materialsfrom one Point to another at TBLDuring the last decades, the container volume handled worldwide has
continuously increased as a result of globalization, economical growth and
geographical distribution of activities.
52
Chopra & Meindl , (2007 pg 457) argued that,
“any company must understand the customer needs and the uncertainty the supply
chain faces in satisfying their need. These needs help the company define the desired
cost and service requirements. The supply chain uncertainty helps the company to
identify the extent of the unpredictability of demand, disruption and delay that the
supply chain must be prepared for. The preparation and the strategy adopted would
be basis of its effectiveness and efficiency in its supply chain”
During the research, the researcher made a carefully interview with various
interviewers so as to know whether the use of containerization modal of transport
contributed on efficiency and effectiveness of transport and logistics at Tanzania
Breweries Limited. From the field it was seen that containerization modal of
transport have a significant contribution to the total operation and achievements in
transport and logistics at Tanzania Breweries Limited Dar es salaam.
It was further revealed that; the use of containers contribute much to efficiency and
effectiveness in supply chain management at TBL as respondents illustrates that the
use of cargoes containerization reduce costs of transportation, allow the use of
modern equipment, maximize safety of goods on transit and facilitate transportation
of big lot of materials at a time so as to meet customers demand.
4.5 Reasons toward use of Cargoes Ccontainerization at TBL- Dar es salaam
Transportation choices have a large impact on supply chain responsiveness and
efficiency (Chopra & Meindl , 2007). There are reasons made TBL decide to use
containers in transporting finished goods and raw materials from one point to
another. Respondents from the field reveled that through cargoes containerization,
total costs of transporting goods reduced, cargoes containerization allows the use of
modern equipment, maximize safety of goods on transit and facilitate the
transportation of big lot of goods at a time.
The research further showed that about 60% of respondents from top management
agreed that the use of containers in transporting goods and raw materials reduced
53
costs of operation in the department of transport and logistics at Tanzania Breweries
Limited while in the transport and logistics 66.7% of respondents agreed that the use
of containers allow the use of modern equipments in their day to day operations. In
the department of marketing 80% of respondent agreed that the use of containers in
transporting goods from one point to another maximize safety of goods on transit and
91.9% of respondents from other employees agree that the use of containers in
transporting goods and raw materials facilitate much the transportation of big lot of
cargoes at once. Again from the above analysis of data it shows that containerization
modal of transport have a significant positive contribution to the total operation and
achievements in transport and logistics at Tanzania Breweries Limited Dar es
salaam.
4.6 Benefits of customers due to TBL Cargoes Ccontainerization Strategy.4.6.1 Availability of GoodsA company’s competitive strategy defines, relative to its competitors, the set of
customer needs that it seeks to satisfy through its products and services ( Chopra &
Meindl , (2007).
As it is well known that in this modern world the business competition is a big
challenge therefore in order to make the situation easy, there is a need to be smart at
the area of distribution were timely delivering under the safe condition and cost
effectiveness are the main ideas to play with. Distribution refers to the steps taken to
move and store a product from the supplier stage to a customer stage in the supply
chain. Distribution is the key driver of the overall profitability of a firm because it
affects both the supply chain costs and the customer experience directly.
Times delivering refers to the ability to make goods available to the access of the
customers at the right time of their need. It implies that this strategy has led TBL to
attain what is technically called time mitigation. This shows that; whereas transport
was traditionally regarded as a tool for overcoming space, containerization in
logistics is concerned with mitigating time. Due to the requirements of modern
distribution, the issue of time is becoming increasingly important in the management
of commodity chains (Rodrigue.J.P, 2013). Time is a major issue for freight shipping
as well as containerization as it imposes inventory holding and depreciation costs,
54
which becomes sensitive for tightly integrated supply chains. So it can be seen that,
the appropriate distribution network can be used to achieve a variety of supply chain
objectives ranging from the low-cost to high responsiveness.
Responding to the researcher the Managing Director of Logistics and Transportation
Department argued that “No time to time stock out to producer due to big lot
importation of raw materials through containerization”.
Therefore; through containerization strategy there is the reliability of distribution
which can be measured in terms of the availability of the ordered goods and the
frequency at which orders are correctly serviced in terms of quantity and time. The
key to achieving strategic fit is a company’s ability to find a balance between
responsiveness and efficiency that best matches the needs of its targeted customers.
This implies that, that through this strategy of containerization, TBL has managed to
create a strategy fit between itself and the customers. It contrary to this strategy the
company could have failed to create this fit as it is argued that a company may fail
either because of lack of strategic fit or because its overall supply chain design,
process and resource do not provide capabilities to support the desired strategic fit
(Chopra & Meindl, 2007). Thus, a firm must evaluate the impact on customer service
and cost as it compares different distribution network options. The customer needs
that are met influence the company’s revenues, which along with cost decide the
profitability of the delivery network.
4.6.2 Maximum Safety of Goods on TransitA secure and efficient supply chain will be the product of an interconnected system
of human and technological agents. Recently, the private sector has looked to new
technologies for solutions for improving supply-chain efficiency and reducing
shrinkage. The global supply chain is the network of suppliers, manufacturing
centers, warehouses, distribution centers, and retail outlets that transforms raw
materials into finished products and delivers them to consumers (Simchi-Levi et al,
2002). Security of the system has traditionally focused on reducing shrinkage—the
loss of cargo shipments and inland transportation through theft and misrouting.
55
Containerization has been a driving force behind globalization and is dominantly
associated with the movements of commercial goods such as parts and retail goods. (
Jean-Paul Rodrigue, 2012). It began by replacing the conventional system of
handling break-bulk cargo in general cargo vessels or passenger vessels that handled
express type shipments. These goods when handled individually were subject to a
great deal of loss and damage (Long shoring was a synonym for organized crime in
the fifties). The first step was to containerize the most valuable cargos such as high
end consumer goods that were prone to theft and subject to damage when handled.
Ultimately, almost all consumer goods were containerized followed by most
manufactured goods, such as parts.
Customers benefit much on TBL’s decision to use cargoes containerization as a
strategy of transportation of finished goods and raw materials from one point to
another because of enjoying un doubtable availability of goods whatever needed,
getting goods in good working condition due to maximum safety on transit and
enjoying reasonable prices due to quantity discount TBL getting from manufactures
which enable to sale for a reasonable price to whole sellers and retailers.
Responses from TBL’s Marketing manager of Dar es Salaam region
“Maximum safety of goods on transit, hence customers are getting goods in its good
working condition.”
This means that safety of goods from theft and different condition of transport that is
weather, corrugated roads ocean waves and the like are not severe when containers
are used. Therefore; the customer is pleased to receive or to buy the goods at the
good condition that is not damaged or spoiled.Moreover, the container protects the
cargo from rain, temperature and other weather influences as well as damage during
transport and safety. Therefore; the customer is pleased to receive or to buy the
goods at the good condition that is not damaged or spoiled.
56
A sales officer from VGK Company which is a TBL’s distribution agent in Dar es
Salaam argued that ;
“customers of TBL benefited from the use of containers in transporting goods and
raw materials by not running out of stock and getting the finished goods by
reasonable price.”
All of these show the contributions of containerization modal of transport in supply
and logistics management at Tanzania Breweries Limited. It has been shown in this
research that the use of containers in holding goods in the logistics and supply chain
system need to be encouraged strongly since it is so convenience when intermodal
transport is used.
57
CHAPTER FIVE
SUMMARY, CONCLUSION, AND RECOMMENDATIONS
5.0 IntroductionThis chapter presents a summary of the study derived from the analysis and
discussion in the previous chapter. The conclusion together with suggestive solutions
and strategies to tackle the existing situation and way forward finalized this chapter.
5.1 Study SummaryContainerization, as one of major aspect of the cargo transportation, is so far
evolving from one point to another. Particularly, containerization of raw materials
made this modal of transport much significant as production industries spends over
20% of its operation budget on transportation of raw materials, finished goods and
equipments (Hill, 2003). Containerization, being the main area that highlights what
to be transported, when to be transported and what quantity to be transported to meet
user requirements on time, safety and at a reasonable cost of transportation are
reported to be sometimes poorly prepared which in turn influences the cargo
transported to be in short delivery, much cost and delay to meet customer
expectations.
By using containers there is a possibility of attaining the world class goods
distribution services for we have saw that there is the possibility of automating the
port a facts which has been started practiced in some of developed countries ports.
Therefore there is a need to encourage the application of the containers by producing
or manufacturing all the commodities in the form which can be containerized.
In summary, the followings are the main causes of using containerization: (i)
Reduction of transportation costs because of transportation of big quantity at a time;
(ii) Use of modern equipment to eases the task of loading and off-loading finished
goods and raw materials. (iii) Maximization of safety of goods on transit and (iv)
Facilitate the transportation of big lot of materials at a time.
58
The study has also examined the reasons that made TBL decide to use containers
from the point of importing materials up to delivering the product to customers, to
what extent does the use of containers in supply chain management achieve the
objective for which it was intended and extent that customers of TBL benefit due to
containerization. Findings were that in all aspects looked, cargoes containerization
adds value to logistics and supply chain management.
5.2 ConclusionThe study generally aimed at assessing contribution of cargoes containerization in
logistics and supply chain management. According to the findings presented and
discussed, this study concludes that cargoes containerization modal of transport adds
value to the logistics and supply chain management toward successful operation of
TBL and other stakeholders within supply chain operations. This is in line with other
earlier researches that the best practical example of load unitization is the container
(Ballou, 2005). A huge advantage of a container is that it can be used for the
transport of goods by different modalities without unloading and loading the goods
(Klooster et al., 2008; Ballou, 2005). It is seen as door-to-door equipment. The
standardization of containers’ dimensions has been very important in the global
growth of container usage (Ballou, 2005). Seen from an international marketing
perspective, the development of containers is playing a major role in in
accomplishing the protection function of packaging (Mühlbacher et al.; 2006).
Although containerization enables a better level of inventory management of
commodities. Yet, the availability of containers is a recurring challenge since
maritime shipping companies, as dominant managers of containerized assets, will
allocate them where there are commercial opportunities to recoup the costs of having
these containers circulating outside ( Jean-Paul Rodrigue, 2012)
5.3 Recommendations
5.3.1 Need of initial CostIn many cases, it was found that use of containers need big initial cost, this may
affect the organization to decide on whether or not use cargoes containerization
59
modal of transport in its day to day operation. Therefore, the organization need to
plan and include the initial costs of using containers before the full swing of using
them so that its budget may accommodate the decision in order to enjoy the benefits
of using cargoes containerization as a strategy.
5.3.2 Need of Modern Equipment
TBL- Dare salaam decided to use used modern equipment instead of new one. The
decision to use cargoes containerization involves the use of modern equipment which
need enough capital to acquire, therefore the organization need to plan before on
how to acquire new modern equipment instead of deciding on using used equipment
and suffer time to time maintenance which cost more and weaken the whole meaning
of using containerization modal of transport.
5.3.3 Change of Mind that Cargoes Containerization adds Value to Logisticsand Supply Chain Management
It was observed that many officers/staff in the public and private institutions believe
that cargoes containerization may only managed by rich and developed countries.
This has lead even to forget budgeting for cargoes containerization. To this extent,
the work of planning what can be transported is sometimes assigned to officers
whose cannot plan beyond road vehicles cargoes transportation modal. It is a time
now to think big for the organization to benefit from cargoes containerization.
5.3.4 Prepare Objective Training
Despite that TBL implemented cargoes containerization without objective training, it
need to train workers on how to use modern equipment and the benefits associated
so as to get full participation and realize the benefits of using containers in
transporting their goods
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5.3.5 Increase Efforts to Avoid Rush Transportation
As revealed, emergent transportation is always associated with pressures to release
funds quickly, therefore, TBL should increase their efforts to plan for transporting
goods in bulk through containerization so as to avoid rush transportation. Each part
should play its role in making sure that all materials to be used in a certain financial
year are mentioned in the procurement plan in order to plan also for transportation of
goods need to procured from abroad.
5.4 Suggestion for Further Studies
The researcher suggests the further study to be conducted in the following areas.
i. How to reduce the massive capital which is needed in purchasing the
container and its loading facilities.
ii. Each container vessel need three sets of containers that is one set on the ship
and one at terminal of origin and the other set at destination. The study to
overcome this problem is needed to be conducted.
iii. By containerizing goods has eliminated the petty pilferage of goods but the
total omission of the container is existing.
iv. The empty containers occupy the same volume space like the full container
there is a need to find the solution on this.
v. There is unbalance of trade in containerization where the load factor is not in
a good range that means the vessel can go with un paying load and even with
empty containers from the destination therefore the study need to be carried
out on this.
61
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Realities” 1st Edition, Pub in United States of America.
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Rodrigue, J.P. (1999). “Globalization and the synchronization of transport
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Notteboom, T. & Konings, R. (2004). “ Network dynamics in container transport by
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64
APPENDIX I
Re: Questionnaire
Dear Sir/Madame
The Subject above refers:
The questionnaire attached to this letter has been prepared to facilitate the data
collection on the containerization modal of transportation at(TBL). In contrary to that
I assure you that the information given will be treated as confidential and will be
used for fulfillment of the research and for academic purpose only. It is hope that,
findings obtained from this study will be useful with other organizations in
improving containerization model of transportation in Tanzania and other part of the
world.
It is my hope that I will receive maximum cooperation.
Thank you in advance.
Muni
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Appendix II: QuestionnaireQuestionnaire on the study of to the efficiency and effectiveness of using
containerization model of transportation. A Case study of Tanzania Breweries
Limited (TBL).
Dear Respondents;I am carrying out a study on the above mentioned topic. Please find enclosed
questionnaire that you are requested to respond to in order to enable the researcher
to carry out the study successfully. There is no right or wrong answer. Please feel
free to provide your comments. Your information will be treated with the highest
confidentiality it deserves and the information will be used for the study purpose
only. This study is part of requirement for partial fulfillment of my graduate studies
in Master’s of Science in Procurement and Supply Chain Management (MSc.PSCM)
of Mzumbe University-Dar es Salaam Campus College.You are requested to respond
to the question to the best of your knowledge.
A. Personal details.1. Sex:
Male 1 Female 22. Age
18-23 1 24-29 230-35 3 36-41 442-47 5 48-53 654-59 7 60 above 8
3. Education level
Primary school 1 Secondary school 2Diploma 3 Bachelor degree 4Master degree 5 PhD 6Others 7 Mention__________________
4. Duration of employment at TBL
Below 1 year 1 1-5 26-10 3 11- 15 416- 20 5 21-25 626-30 7 31 above 8
6. Position
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i. Management level
ii. Middle level / line manager
iii. Operational level ( )
B.Reseacrch Questions
1. Does your organization have qualified transport personnel to handle transportation
logistics especially in containerization model? Yes/No ( )
If the answer is no, please explain
…………………………………………………………………………………………
…………………………………………………………………………………………
2. What are the problems of using containers in transporting goods from one point to
another?
a)………………………………………………………………………………………
b)………………………………………………………………………………………
c)………………………………………………………………………………………
d)………………………………………………………………………………………
e)………………………………………………………………………………………
f)………………………………………………………………………………………
3. Mention any five (5) benefits realized due to the use of containerization model of
transportation in your Company
a)………………………………………………………………………………………
b)………………………………………………………………………………………
c)……………………………………………...………………………………………
d)………………………………………………………………………………………
e)………………………………………………………………………………………
4. Mention any five importance of using containers in transporting goods from one
point to another
a)………………………………………………………………………………………
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b)………………………………………………………………………………………
c)………………………………………………………………………………………
d)………………………………………………………………………………………
e)………………………………………….....................................................................
5. Do Tanzania environment allow much use of containers in transporting goods
from one point to another?
Yes/No ( )
If the answer is no please explain.
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
6. Do your Company complain on your performance as a department?
Yes/No ( )
If the answer is yes please explain.
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
7. Does your Company have enough personnel in the area of logistics and transport
to handle efficiently and effectively matters related to containerization?
Yes/No ( )
If the answer is no then, how do you manage to deliver expected outcomes to the
Company?.......................................................................................................................
.........................................................................................................................................
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.........................................................................................................................................
.........................................................................................................................................
8. Do Tanzania breweries Limited (TBL) facilitate on job training with regard to
containerization?
Yes/No ( )
If the answer is yes, where do those training being conducted?....................................
9. Do containerization model of transport add value to the capturing of market
opportunities during sales of goods offered by Tanzania breweries Limited (TBL)?
Yes/No ( )
If the answer is yes explain how
.........................................................................................................................................
………………………………………………………………………………………
10. How do nGen system and other Information Technology linked with cargo
containerization in TICTS organization?
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
11. What are the goods which can not be containerized?
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
12. What are the factors to be considered when making the charges of the
containers?......................................................................................................................
.........................................................................................................................................
.................................................................................................................
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13. How much the charges of 40 feet and 20 feet container do differ when packed the
same commodities?
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
14. Transporting goods is either as a loose cargo or as a containerizing cargo.
a. What are the advantages of transporting loose cargoes?
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
b. What are the advantages of transporting the goods in the containers?
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
c. In your organization which means of goods transportation is most preferred
between loose cargo and containerized cargo?
…………………………………………………………………………………………
THANK YOU FOR YOUR CONTRIBUTION