What is Globalization?
Globalization can be loosely explained as the ability to outsource manufacturing, cultivation or catch to another country.
So manufacturers is able to either relocate their factories overseas or outsource the manufacturing of the components to one or more countries overseas.
What Led to Globalization?
Long ago, in the days of break bulk cargo shipping, except for luxury or specialty items, it was not profitable to ship products over long distance from overseas. The process of loading and unloading cargoes was time-consuming and used a lot of dockside labor; delivery trucks; wharf space and warehouse areas. There were often pilferages.
Then came containerization, not only in seafrieght but in air frieght. Containerization is the greatest driver of a global economy and trade network.
The advantages were:
- Labor charges were greatly reduced. Everywhere containerization was introduce, there were dock workers’ strike and loss of jobs.
- The loading and unloading time was reduced. In the case of a ship, it reduced berth charges. Thus it cuts down on shipping turnaround time.
- Pilferages were minimized.
- The standardization of container sizes led to the standardization of transportation (road and rail) and container yard infrastructure. This led to intermodal containerized transportation.
The reduction in overall costs means that manufacturers instead of having to locate their factory close to their markets can either outsource their products or components from overseas or move their factories overseas.
Containerization: The Most Influential Invention That You’ve Never Heard Of
Malcom Purcell McLean (November 14, 1913– May 25, 2001) was an American businessman. He was a transport entrepreneur who developed the modern intermodal shipping container, which revolutionized transport and international trade in the second half of the twentieth century. He was the founder of McLean Trucking Company; Sea-Land Service Inc. and Trailer Bridge Inc.
Containerized Cargo: “Outgoing Cargo” from Industry on Parade circa 1954 NAM Newsreel