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The field of international goods transportation has witnessed several great advances over the last 100 years. Of these, perhaps, none had more far reaching impact than the advent of containerisation. Before 1965, all packaged goods were packed into boxes of different sizes and shapes to be loaded on ships. General cargo ships themselves were small in size – no bigger than 20,000 tonnes or so – and stayed anywhere between 1 week and 4 weeks in any single port. About 70% of ship’s time was spent in non-value producing activities such as planning and loading boxes and crates of diverse sizes and shapes into the ships holds.

Containerisation changed all that. Ships are now built to carry standard containers of 20’ (or 40’). Containers are packed and unpacked in container yards far from ports – reducing the need for holding the ships in port, and costly warehousing space close to port. Size of container ships has increased greatly – the latest ones will carry nearly 10,000 TEUs (twenty equivalent units) or about 100,000 tonnes. These ships utilise more than 80% of their time on value-producing activities. No wonder the cost of shipping one meter cube of packaged cargo has gone down by nearly 75% to 85% in real terms over the last 40 years. This has made it possible to reconfigure the global supply chain in such a way that most activities are now carried out in the best place to do so. Manufacturing boom in China, super large container shipping companies, hub and spoke model of shipping, emergence of 6-10 global container terminals, are all partially a result of containerisation.

So what precisely is the magic in using standard shipping containers instead of boxes and crates? The answer is simple – modularisation. We believe that a similar move towards modularisation of global supply chains is emerging and it will have a far reaching impact on the organisations, nations and businesses. Before looking at its impact, let us examine what modularisation means in a wider context of global supply chains.

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