The Evolution Of Containers – Strategy With RS
Containers, today, have become an ubiquitous sight across the world.
Since it made its debut, in 1956, the world trade has grown 700% every year till it encountered global recessionary trends in 2008.
The reason for its growth is self evident – hand loading cost was estimated at $ 5.86 per ton while loading a container costed merely $0.16 per ton.
The question for you – did you ever wonder what strategic thought process lead to the designing of containers?
There could be several answers to this question. But I would argue that smart folks working in the industry ‘framed the business issue ‘ correctly by posing right question to themselves that lead to the designing of Containers.
For centuries, sea was the preferred mode for transporting cargo across the world. Over century, the system was perfected, as much as it could be!
In a quest to make this mode of cargo transportation more efficient, effective & profitable, smart folks could have posed the following question to themselves – ‘When does a cargo ship make money? When on high seas or docked on the shore?
The answer was self-evident.
The ship makes money when it is on high seas.
The next question they could have posed to themselves – ‘What can we do to ensure that the ship is always on high seas?’
This lead them to critically examine where did the ship spend its time when it is not on high seas! It was safely docked on the shore to facilitate the unloading & loading of cargo.
This lead the smart folks to pose an audacious question to them – Is there a way of loading the ship even when it is on high seas?
When the question was framed thus, the solution was self-evident – design a container, which can be loaded even as the ship is on high seas – and when the ship it is docked on shore, it can be, quickly loaded on it so that it could be on the high seas again.
Bingo! The solution was as simple as it was effective. World trade was never the same again!
After container was introduced, 3 innovative initiatives lead to it getting adopted at break neck speed by the world:
1. Standardization of size of container: The Federal Maritime Board stepped in & standardized the container size to 8’ feet wide, 8’ feet high with 4 length – 10’, 20’, 30’ & 40’ long.
2.Modification of Trucks & Trains: Trucks & trains modified their design to carry the containers. For the 1st time in human history 3 main modes of cargo transportation were in seamless embrace – sea, road & rail!
3. Specially designed Cranes to lift containers: In 1959 cranes, specially designed to lift container, were introduced which led to further improvements in profitability – 400 tons could be loaded on a ship in an hour, which was 40X faster then if men loaded it manually.
Business lesson for us: Learn to frame the business issue correctly by asking the right question. The solutions should become be self-evident.
If you too wish to learn how to frame the business issue correctly by posing right question, then I would invite you to read my article published earlier titled, ‘Are You Asking The Right Question?’
In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here