Impact of containerisation on ports


In the evolution of global transport, containerisation proved to be one of the great technical innovations of the second half of the 20th century. The novelty in this case was the introduction of boxes, i.e. containers with a standard dimension used to package transported goods, thereby allowing their unrestricted utilisation whatever the means of transport, sea, road, or rail, and reducing the number of break-points and their attendant costs, whether through delays, theft or damage. First used on the east coast of the United States, this maritime revolution was initially put to the test and then developed in the Caribbean basin. Defined as including all the territories that border the Gulf of Mexico and the Caribbean Sea, this maritime region positioned between the two Americas, North and South, would become the cradle of containerisation by virtue of tis geographical proximity and its established dependent links with its US neighbour. This technical advance, representing today an essential vector of globalisation, in particular along the most frequented East-West maritime routes, would not be adopted anywhere near as quickly across the Caribbean basin. Nevertheless, over a few decades containerisation has progressively transformed both practices and means of transport across this region. In what ways then have the ports of the basin been transformed, both in terms of their physical layout as in their modes of operation, or indeed their position in the hierarchy?

1. The progressive diffusion of containerisation to the ports of the Caribbean Basin

Developed by both American and European shipping companies, containerisation would be resisted by most of the Caribbean states before being generally adopted across this insular and mainland maritime space.

1.1. A technical innovation imposed successively by American, then European companies

Containerisation was an innovation introduced by a road haulage company, Malcolm Mac Lean, and developed in the United States during the mid 1950s. In order to increase the productivity of traditionally very expensive cargo handling operations, as well as to offset costly administrative procedures that significantly slowed down the road transportation of freight between different states, experiments were initiated in 1956 to establish a “sea-bridge” between Newark and Houston, Texas. The four ships used were oil tankers especially converted to carry several containers whose dimensions mirrored those of the road trailers attached to the company’s own lorries. This way of packaging in boxes had already been introduced at the beginning of the 20th centuries for both rail and sea transport, but involved instead a mobile version on wheels, not exceeding 18 cubic metres, which could not be stacked one on top of the other on the deck of a ship. Similarly, this same haulage system had been used during the Second World War for the shipment of American military equipment.

By quickly coming up with the idea of “cellular” container carrying ships, Mac Lean and his company Pan-Atlantic Steamship Corporation, which appropriated the name Sea-Land Service Inc. in 1960, would revolutionise the technique of combined sea and road/rail transport. Regular maritime/terrestrial services were established in 1957 between New York, Florida and Texas; then in 1958 on the short sea routes between the US and Puerto Rico, transforming the port of San Juan into one of the pioneers of this innovative technology. In fact, from 1963 onwards, 40% of this ports packaged dry goods were already containerised, i.e. 1 058 000 tons (Chardon J.P., 1984). In the meantime, Mac Lean had extended his reach to the west coast of the US, with the first container trans-shipment via the Panama Canal in September 1962. Sea-Land’s initiative was rapidly followed by other American companies trading in Central America and the Caribbean islands (Coordinated Caribbean Transport, Trailer Marine Transport Corporation, Seatrain, etc.).

It was not until after 1966, that American transport companies would successfully venture out to compete for the North Atlantic trade, hitherto largely dominated by the major European shipping companies. Containerisation offered the American flagged ships a way of regaining their competitive position. The dimension of container units had been officially standardised the previous year by the International Organization for Standardization (ISO), which in itself would contribute to ensuring the international success of this newly introduced system. Accordingly, two size categories of container were imposed: those measuring 20 feet (6.05 metres in length, 30 m3 approx. in net volume) and those of 40 feet (12.9 m. and 65 m3). However, it was not without reservations that European shipping companies would agree this new system developed by their American competitors, necessitating costly investment for which a secure future was not accepted by everyone. Nevertheless, not wishing to be left behind in this rivalry, the European companies did not delay in realising the advantages of containerisation, in which they also could share. Re-organised around a number of international consortia, the latter started by first developing containerised services along East-West axes, the most frequented and profitable routes, before turning to links with developing countries. In the Caribbean basin, the European companies were increasingly confronted by their American counterparts, who did not hesitate to divert European freight by routeing it via the East coast ports of the US, or those of the Gulf of Mexico. From 1970 onwards, more than 18 000 containers were handled by the Antillian and mainland ports of Central America, that is more than those of South-East Asia, the Middle East or South Africa (Frémont A., 1998).

Containerisation would encounter a new stage in its development within the Caribbean region during the latter half of the 1970s. With the objective of maintaining those interests acquired through long established trading links with former colonies, four major European shipping companies (the British Harrison Lines, the Dutch KNSM, the German Hapag Lloyd, and the French Compagnie Genérale Maritime) decided in 1974 to unite around a consortium baptised CAROL (Caribbean Overseas Lines) in order to offer a direct, totally containerised service between Europe and the Caribbean. Put in place progressively from 1976 onwards, this new East-West axis would ensure an almost complete mesh covering the basin with container haulage shipping services providing on average capacity of 1 200 TEUs.1 Accordingly, the creation of CAROL allowed European companies to counter American competition, but also that coming from regional companies, in as much as containerisation gave them a certain technological advantage.

The diffusion of this innovative technology across the Caribbean was achieved by successive steps over nearly a quarter of a century, affecting firstly those territories still most dependent on the USA and Europe. Launched initially in the US ports of the Gulf of Mexico and Miami, followed by San Juan, containerisation reached the Greater and Lesser Antilles, and the Central American isthmus in the 1970s, before establishing itself in the three large mainland states (Mexico, Colombia, Venezuela) at the beginning of the 1980s. This differing timescale is explained by the obstacles encountered by those same American and European shipping companies who were in tat the very beginning of the initial spread of containerisation across the Caribbean.

1.2. Early constraints on the development of containerisation to the ports of the Caribbean Basin

Shipping companies of the industrialised states rapidly took stock of the advantages they could gain from containerisation, notwithstanding the multiple investment required, and the necessary reorganisation of the overall shipping network. In the Caribbean Basin, as in other countries in the South at that time, they nevertheless came up against various obstacles, both political and economic, as well as technical.

Those obstacles stemming from the local economies were linked to the very fragility and instability of the latter, to which should be added that of political instability, often precarious across different parts of the region. Maritime trade, essentially originating from, or destined for, the European and North American continents, is obviously of vital importance to the extravert economies of the states and territories of the Caribbean, but which remain modest and often unbalanced as much in terms of value as of volume. The basin’s imports are, in effect, made up of diverse manufactured goods of high added value, whilst the Caribbean exports are still dominated by raw produce, not easily containerised (tropical fruits, mineral ore, bauxite, hydrocarbons...). This pattern, inherited from the former international division of labour, has delayed the introduction of containerisation in the region. In order to rationalise the fleets in use, and to limit the return of empty containers, since the 1970s the companies have had to develop new containers specifically for the transport of tropical fruit, in particular the banana. Two options found favour: the multinationals operating in Central America, such as the American firm United Brands (today known as Chiquita Brands) chose to separate their banana shipments into dedicated “reefer” type refrigerated containers; in contrast, the French shipping company CGM, for its CAROL commitments and that of shipping bananas from the French Antilles, opted for Conair isotherm containers, which necessitates a dedicated system, with refrigeration provided by a power plant on board specialist vessels, “refrigerated multipurpose container ship” (RMCs).2 The development of these new technologies implied heavy financial investment on the part of the shipping companies, anxious to ensure both the continuity and profitability of their activities.

Patting these new ships into service would come up against other technical constraints, linked to the under-equipped ports of the Caribbean basin. In fact, the ports would only be slowly re-equipped as container terminals, given that the latter represented major development costs for countries with generally low incomes. In the absence of modern mobile gantries, the vessels themselves would need to be equipped with cranes which in turn limited their container loading capacity, increased costs, paying for an overall rate of productivity inferior to that of the new quay side gantries.

Finally, opposition to the spread of containerization would come equally from resistance by most of the Caribbean states themselves. The port authorities and regional transport companies found themselves now facing costly investments, whilst most of the countries in question had only just renewed their national conventional fleets in order to reduce their maritime dependence in respect of external trade. Despite recognising the numerous advantages of containerisation, the region saw in the latter a means on the part of industrialised countries of tying down the costs of their shipping fleets by limiting the already high port handling charges. The prospect of suppressing the number of jobs in the ports also provoked an atmosphere of high tension amongst the docker communities. The Caribbean status thus sought to stagger the introduction of containerisation in a more progressive and managed manner. The technology was adapted to the needs of the existing shipping services and traffic, the containers at the beginning being simply loaded onto the decks of conventional vessels, then later onto semi-container ships, before putting into service fully integrated container ships. Port infrastructures were in turn slowly transformed.

2. Ports progressively transformed by containerisation

Since colonial times, ports played an essential role in the opening up and economic development of the Caribbean basin. Located generally in the capital cities, the established port infrastructure have had to adapt to the new demands of modern transport.

2.1. The adaptation of port infrastructures

Defined as the transhipment points (‘break-bulk points’) between ocean navigation and terrestrial transport, ports have undergone considerable transformations in order to adapt to recent change in the transport chain. Enlarged, modernised, with the multiplication of purpose-built, deep-water quays catering for specialist ships, ports have been in receipt of significant investments in which the stakes are huge, with the agreed strategic directions committing the players involved for several decades. Containerisation constituted one such essential stage in the recent changes in morphology of Caribbean ports. In fact, in 1976, if one excludes the United States frontage onto the basin, only the ports of San Juan, Kingston (Jamaica) and Puerto Cortés (Honduras) disposed of a modern terminal. Today, these infrastructures have multiplied, as much across the insular Caribbean as around the surrounding mainland, even if not all the states enjoy the same level of port equipment.

The transformations of these port areas can be observed at various levels. The infrastructure in place for the arrival of ships, for example, affords both access channels and quayside docking sufficiently deep so as to accommodate vessels of ever increasing size. A loaded container ship of 4 000 TEUs has a draught of around 14 metres, but rare are the Caribbean ports able to handle such ships, whilst those of more than 8 000 TEUs have been in service since the 1990s, and a smaller number over 16 000 TEUs are currently under construction. In 2001, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) estimated the average capacity of the insular Caribbean container fleet at 1 242 TEUs, and that of mainland Central America at 2 029 TEUs. This obvious modest size of vessel is well adapted to a redistribution role (“feedering”) and is equally constrained by the limited markets available regionally. Terminals have seen a lengthening of quays (270 to 350 metres are presently required for docking) as well as the area needed for stocking container units: in Kingston, for example, the total storage area has been increased to 194 hectares following the recent expansion of the container terminal. Equipment has been progressively modernised in numerous ports of the Caribbean, long reputed for their slowness to adapt and their inadequate responses to the demands of modern transport. If their lack of quayside ‘rolling’ technology had initially limited investment linked to handling container units, the terminals were now to be equipped with bigger and bigger mobile gantries, heavier and more costly than before, of the “post-Panamax” generation, even “super post-Panamax” (Kingston, Freeport), that were able to accommodate vessels whose passage through the lock-gates of the Panama Canal (32.2 metres wide) was still precluded.

The working conditions and status of dockers have been fundamentally transformed: less in number, they are more and more specialized and qualified. So as to speed up and simplify the transit of ships and their cargoes through the port, sophisticated IT system have been developed to manage in real time the combination of operations in respect of the administration, customs and logistics involved. Consequently, there is an accompanying growth in port service activities. Port installations apart, the terrestrial transport infrastructure needed to be re-thought in order to increase productivity in terms of costs, time, and avoiding delays in forwarding goods. However, across the Caribbean basin, the poorly developed road network and the traffic densities around urban areas are often ill-adapted to the circulation of lorries and towed trailers transporting large container units.

To improve their competitiveness, the ports must attract the maximum number of associated activities into their immediate hinterlands, hence the need to create industrial and logistical platforms, that is to say, areas inland concentrating all the activities relating to transport (collection and distribution of container units) and/or the processing of goods. These zones, strategically located in relation to the maritime network, would allow the creation of added value, as well as a providing conduit for return trade promoting new businesses and employments. Their success could be reinforced by setting up free port zones. That of Colon in Panama has become globally the second most important after Hong Kong (see below).

These new developments in both infrastructure and activities necessitate the constant extension and adaptation of port areas so as to avoid any possible saturation generated by growing traffic. The extremely high costs of creating and maintaining the associated infrastructure explains the choice of those cities than can easily be developed, and offer the best potential for further growth. For example, the integrated containerized traffic between Guadeloupe and metropolitan France, from 1980 onwards, brought about an end to the overseas department’s dual port facilities: the banana port of Basse-Terre lost the major part of its activity to the advantage of Pointe-à-Pitre/Jarry, where the container terminal was constructed, able now to accommodate the RMCs brought into service during that period by the CGM (Compagnie Générale Maritime). Because of the sheer scale of such developments, the construction of container terminals has often led to their physical separation from the original port installations, now squeezed into urbanised sites.

2.2. The port as a node in the transport chain

As elsewhere, the advent of the containership in the Caribbean basin forced the evolution of port functions, as well as stirring the traditional apprehensions of the marine transport industry. Ports that hitherto had developed independently could no longer just be viewed as an intermediary link in the transport chain. It was the ‘break-bulk’ point in the latter where a multi-modal transfer took place, an interface between sea and land transport that would normally facilitate and accelerate the transit of ships and goods. The port therefore had to contribute to the efficiency overall of the transport chain. It is a nerve point where its operations together with tose of other such nodes must ensure the competitiveness of the whole chain. This dynamic has necessitated changes in port function from its simple maritime role to the adoption of commercial, industrial, and logistical operations. For maritime transport enterprises, it as ashore that one can generate the most added-value, particularly in the zones devoted to logistics operations within or near to the ports themselves. It is in this perspective, but also to ensure the viability of the chain, that the major shipping companies seek to diversify their activities, through vertical integration by investing in the construction of private terminals (e.g. the Taiwanese Evergreen, and American Stevedoring Service of America at Colon, Panama) or in association with public sector bodies (Freeport in the Bahamas). Since the 1990s, several countries in the Caribbean basin, like Mexico, Venezuela, or Colombia, have privatized either partly or wholly the totality of their port infrastructures, which allowed them to modernize and improve the labour productivity of these platforms. Such an evolution contrasts with that of a port administration long characterised by inertia and the absence of any flexibility.

Intense competition between shipping companies led them to greatly expand trading links in order to achieve economies of scale. Horizontal integration of the chain is made possible through the creation of partnerships, mergers or through acquisitions. This strategy favoured the emergence of “mega-carriers,” powerful shipping companies that weave the wet of global transport. The foremost world operator, the Danish company Maersk, thus absorbed in 1999 the American firm Sea-Land, inheritor of the invention of the container box. The arrival in the Caribbean basin, in the mid-60s, of these global operators provoked a metamorphosis in the organisation of shipping services around this sea. Most of the companies operating up until then offered a regular timetable of services from port to port, i.e. a system of rotation in which the last ports of call supply most often the bulk of the return trade. The so-called global operators would open up the Caribbean basin to a world-system by progressively integrating the region within their own worldwide networks. Given their operational presence on the three main axes of East-West traffic (trans-Pacific, trans-Atlantic, and Europe-Asia), whether via “round the world” routes (which may include “land-bridges”), or via ‘pendular’ connections,3 the ambition of these major shipping companies is to offer to the transport sector an increasingly, complete service to any destination in the world in the shortest time possible. In order to rationalise such operations, the strategy often adopted is to connect into the East-West network the North-South routes serviced by smaller ships, operating out of several carefully chosen, competitive ports. This innovatory system is facilitated by the widespread adoption of containerised transport, and the application of the “hub and spoke” principle in which the “hub” provides the transfer poit for the ocean-going mother ships which off-load onto ‘feeder-ships’ for redistribution along the “spokes” to other destinations. The Caribbean basin is well situated at the intersection of East-West and North-South maritime routes (Europe–South America, North America–South America, or Asia–South America, for example), and can thus reinforce its position as a maritime crossroads at the global scale. This re-organisation translates into a very dense web of linkages, and a network becoming more and more hierarchical in which a few trans-shipment ports, located along the main thresholds of the region, constitute the nodal points that dominate the secondary relay-stations servicing more regionally orientated trade.

3. An increasingly hierarchical port system



Given a context of intense competition, heightened by the very volatile nature of the trade flows in question, the impact of containerisation on the Caribbean basin had led to a polarisation of port activity around a few platforms (see map) offering the most benefit to shipping companies. These may be judged by reference to several criteria: location with regard to the major flows, volume and type of traffic, quality of the infrastructure, cost of port operations and associated services, or even the political and social stability of the states in question. Port hierarchy has thus fluctuated significantly, contributing more or less rapidly to the fortune or decline of certain ports, including the oldest regional centres (Miami and San Juan).

3.1. Hub-ports on the northern shore: increasing overtures towards the Caribbean Basin

Here the port-system is dominated by the platforms of Houston (1 768 627 TEUs in 2007)4 and Freeport in the Bahamas (1 636 000 TEUs). The former accounts for two-thirds of the containerised traffic generated by the American ports of the Gulf of Mexico; the latter have benefitted from the establishment of free market accords between the USA and its neighbours in Latin America designed to capture a share of the containerised traffic. As a result, the port of Houston registered a growth of 76% in its trade between 1999 and 2007. Faced with the saturation of the container terminal at Barbours Cut, in February 2007 the port authorities inaugurated the new terminal of Bayport with a capacity of 2.3 million TEUs. Miami, the traditional port of entry into the northern Caribbean basin (884 945 TEUs in 2007, a drop of 12% by comparison with 2004) has now lost out to its neighbours, such as Port Everglades (948 687 TEUs in 2007) as well as Freeport. Situated on the island of Grand Bahama, only 100 km from the coast of Florida, Freeport is a perfect example of the newly constructed port zones destined to exploit an advantageous location in order to promote activities in trans-shipment and redistribution of cargo. Opened in 1997, the Freeport Container Port is a joint venture between Hutchinson Port Holdings (a subsidiary of the powerful Whampoa Group in Hong Kong with some 50 terminals spread across the world), and the Grand Bahama Port Authority Group. This multi-modal platform has experienced very rapid growth, tripling the number of containers handled in less than 10 years (1 636 000 TEUs in 2007). Its trump cards are all too evident: proximity to the North American mainland and the major oceanic East-West routes, its location within a free port zone with its very up-to-date infrastructure, constantly upgraded as a result of heavy financial investment. In 2009, the port disposed of a line of quays 1 036 metres long, 16 metres depth of water, 10 container box gantries, and 59 mobile dockside carriages. Almost all the port traffic is made up of container units transhipped for global operators such as Maersk-Sealand, Mediterranean Shipping Company, etc. The port thus functions as a veritable hub for links between the East coast of the US, the Caribbean basin, South America and routes towards Europe, the Mediterranean, Far East, and Australia. It has recently consolidated its hold on the whole northern sector of the basin with regard to the regional port economy.

3.2. The pre-eminence of the hub-ports of Kingston and San Juan in the Central Caribbean Basin

In the heart of the Caribbean basin, close to the deep-water sea passages between the islands of the Antillian arc, the dual ports of Kingston and San Juan constitute port complexes whose respective recent histories nevertheless provide contrasting situations. San Juan, one of the ports that pioneered containerisation has recently lost its number one position in the basin. With only 1 695 134 TEUs handled in 2007, as against 2 057 733 TEUs in 2001, its traffic has been in regular decline for several years. The close links between Puerto Rico and the United States (of which it is an Associated State), the advantageous geographical position of this island in the Antillian arc, the existence of a market of nearly four million consumers, and the presence of chemical, agro-food, textile, and high performance electronic industries, re-located for the post part, have long underpinned the development of the port economy. However, an important part of San Juan’s port activities is still made up of coastwise shipping with the United States. The public authority charged with the management of the port infrastructure, Puerto Rico Ports Authority, has attempted to promote to greater advantage transhipment activity, but is confronted by the problem of the overload on facilities, and competition from neighbouring ports with greater productivity, and offering lower handling charges.

Kingston is far from being in that situation, having doubled its containerised traffic between, 2001 (983 400 TEUs) and 2007 (2 016 792 TEUs). This dynamism is due totally to the transhipment of container units, originally from northern routes, and which represent 90% of traffic. Kingston Container Terminal (KCT) is in fact one of the oldest ‘hub’ ports in the Caribbean basin, because in 1984 the Taiwanese company Evergreen had made it, together with the port of Cristobal (Panama), one of its two ports of call in the region for its “round the world” route. The reputation of this platform is based on long experience in this domain, service efficiency, competitive costs, and a policy of regularly modernising the infrastructure. The Port Authority of Jamaica has recently initiated an extension programme, adding to the two existing terminals (North and South) a third situated to the West of the present installations. The whole complex in 2009 was equipped with 23 gantries post or super-post-Panamax which make it one of the best endowed ports of the basin.

3.3. A southern sector dominated by Panama

The ports situated in proximity to the free-part zone of Colon, around the Caribbean Sea outlet of the Panama Canal have risen to the top-most ranking within the basin. This growth is explained by the proximity of the Canal itself, one of the world’s major waterways for maritime traffic accounting for the transit of 5% of international commerce. In 2008, the Panama Canal Authority registered the passage of 13 147 large ships, of which 3 544 were container ships. This inter-ocean sea route is a vital artery for countries of the Pacific coast of Latin America even though it is the exchanges between the East coast of the US and Asia that dominate in terms of tonnage. Confronted by saturated facilities and the increasing gauge of ships (post-Panamax), the Panamanian authorities undertook a programme of enlarging the Canal, which had been seceded to the country by the US on 31 December 1999. At the same time in order to improve the attraction of the canal zone, notably aimed at foreign investors, the Panamanian government initiated a vast programme of privatisation and fiscal incentives. The main axes of development proposed were the promotion of port activities in particular those linked to transhipment of containers, the creation of new free port zones for export, and the establishment of a veritable multi-modal platform in Panama. This is how major international consortia were able to acquire port concessions as in the case of Hutchinson Port Holdings which arrived in 1997, in one or other part of the Canal, or in the ports of Cristobal (on the Caribbean side), and Balboa (the Pacific side). Others created new terminals on their concessions near to the free port of Colon. This was the case, for example, with the Taiwanese shipping company, Evergreen, which built the Colon Container Terminal (CCT), and of the American Stevedoring of America, which developed the Manzanillo International Terminal (MIT) in 1995. Nearly 70% of the usage of these platforms is accounted for by transhipment traffic destined for the Caribbean and South America. They benefit from the proximity of the free port zone of Colon, the second most important free zone in the world after Hong Kong, and the main centre of redistribution for Central and South America. In 2006, 1 180 firms (essentially import-export) were located in 400 hectares employing a workforce of 20 904 people. In terms of value, 70% of imports into the free port zone came from Asia (mainly China and Japan), 9% from the USA, and 9% from the EU. Re-exports were destined largely for Venezuela (20.6%), Colombia (16.5%), Panama (7.5%), and the Dominican Republic (5.3%). The recent rapid expansion of port infrastructure in Panama offers an example of the role that can be played by major global maritime actors in a country where, despite the presence of the Canal, there was no real tradition as regards a “port culture.”

After having previously delayed the onset of containerisation across the whole of the basin, the Caribbean states today aspire to attracting major players from the world of international maritime transport into their own ports. The modernisation of infrastructures (linked notably to a growing liberalisation of the economies of the region), the general growth of containerised shipping, underlines a regional commitment not to remain apart from this process of globalisation. But this aspiration in itself adds to reinforcing inequalities across a space already fragmented geographically, economically, politically, and culturally. The ports of the basin do not all dispose of the same advantages in this new highly competitive environment in terms of international trade, and would not be able to match the required demands of a port specialising in transhipment or redistribution. Numerous examples (notably in the French Antilles) demonstrate that the quality of infrastructure does not suffice to instil any real dynamic capable of attracting sustainable new trading flows and port activities. The impact of containerisation in the Caribbean basin must thus be measured at every scale: such an innovation has not only transformed the morphology of port spaces, or even that of distribution networks. It is also the marker of new external dependencies and the revealer of regional solidarities.

1 Twenty-foot Equivalent Unit (TEU) i.e. a container box 6 metres long.

2 With an average capacity of 1 500 TEUs, these RMCs were replaced in 2003 by ships with 2 200 TEU capacity, using ‘reefer’ containers.

3 The ‘pendular’ links from the hub-port, in an East-West direction, in general connect with three geographical zones: for example, northern Europe, North America, Far East.

4 These statistics come from the American Association of Port Authorities and the Economic Commission for Latin America and the Caribbean (ECLAC).




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Author: Colette Ranely Vergé-Dépré
Translation:  : Louis Shurmer-Smith