CHAPTER ONE

1.0 Introduction

In this chapter, we will be discussing on the background of study, statement of the problem, research question, and objectives of the study, hypothesis of the study, significance of the study, definition of terms and organization of study.

1.1 Background of study

Globally, Before the advent of containerization, the technology for unloading general cargo through the process of break-bulk shipping had hardly changed since the Phoenicians traded along the coast of the Mediterranean (Parida et al., 2019).

The loading and unloading of individual items in barrels, sacks, and wooden crates from land transport to ship and back again on arrival was slow and labor-intensive. Technological advances through the use of ropes for bundling timber and pallets for stacking and transporting bags or sacks yielded some efficiency gains, but the handling of cargo was almost as labor-intensive after World War II as it was during the beginning of the Victorian age. (Serebrisky et al., 2016).

From a shipper’s perspective, often two-thirds of a ship’s productive time was spent in port causing port congestion and low levels of ship utilization.  Following the spread of the railways, it became apparent already during the first era of globalization that the bottleneck in freight transport was at the interface between the land and sea transport modes. (Suárez-Alemán et al., 2012).

Before World War II, US, British and French railway companies experimented with methods of sealing goods in different sizes and shapes of boxes before transporting them. However, the lack of specialized capital equipment like specialized cranes for loading and unloading combined with union resistance to changes in work practices at the docks delayed the development of container shipping until the mid-1950s.

Supply chain management performs by integrating procurement, suppliers, and facilities of manufacturers, distributors, retailers, and customers while they work together by the production, buying, and sales cycles. This supply chain needs active management since it is impacted by several aspects of the control of the business-like environmental conditions, fuel prices, and so on. While a company is more aware of these aspects, it can effectively manage them. With efficient management of supply chain, production, inventory, distribution, vendor, and sale records are in strict control. The SCM shows the management of expenses at each step and offers products to customers in a quick manner (Gengatharen at al., 2018).

The influence of Digital transformation issues implies that the business environment is changing and that all industries are creating ripple effects. Their effects are extremely contextual and vary from event to event (Köhler et al., 2019). One thing is certain though, the need for companies to embrace digital technology to compete in the world market and to beat rivals is vital. companies are important players for society to maintain a successful transition (Vial, 2019). The accurate balance between the digitalization of strategies and the capacity to meet sustainable objectives is an emerging but important area (Xiang et al., 2018). This is particularly important if this smart transformation is to be accomplished in a manner that does not make society and companies overconsumption and unsustainable.

It presents that each product that is available for sale is present due to several members in the supply chain. The supply chain manager is an expert professional who is liable for a major part of the chain like the careful strategy for the supply, the source of goods used to make products for sale, the effective production of the manufacturing process, the delivery system for moving products and the system for management of unwanted products and returns and so on. The manager performs to save shortage and lessened costs by these aspects (Jie&Gengatharen, 2018).

When completed virtually, supply chain managing can help retail companies in the region to have an edge over rivals by offering products more time to customers. The SCM lowers the expenses of conducting business by lessening the production and buying costs. For instance, retail companies choose to buy products from farmers directly to prevent costs linked to third-party suppliers. The direct purchase of products from the source can help find the better process and offer the food to customers more effectively and quickly (Herath, 2016).

Due to its creative character digital transformation and additional ICTs are capable of increasing efficiency, promoting dematerialization, and facilitating better business strategies. In addition, digitization was posited as one of the most potential perspectives in society (Gouvea et al., 2018) for sustainable development (SD).

efficiency and implementation: resource productivity, proof-based decision-making, environmental social governance, and modified paradigms both for consumers as well as investors (Holst, Löffler, &Philipps, 2017). In addition, digitalization was proposed to help redefine companies’ customer connections, workers, and natural resources (Vial, 2019).

Containerization started as a private endeavor by the shipping lines. In the early stages, shipping lines had to bear most of the costs since many ports such as New York and London were reluctant to spend significant funds on ‘a new technology’ with uncertain returns at the time.

Many shipping lines had to operate from small and formerly unknown ports and install their own cranes. (Ahmad et al., 2020). The process was extremely expensive. After the container proved to be successful, ports warmed up to containerization and a race started among ports to attract the most shipping lines by building new terminals and providing the infrastructure to handle containers. Containerization required major technological changes in port facilities, which often led to the creation of new container ports.

In many countries, port authorities fall under the administration of the government. Because of the high costs, careful planning and analysis had to be undertaken by governments to study the feasibility of containerization.

In the UK, the government commissioned McKinsey (1967) to conduct a cost and benefit analysis before spending significant public funds on container port facilities.  Five years later, McKinsey (1972) provided a quantitative assessment of the effects of containerization following the first five years after its adoption in the UK and Western Europe.

Africa’s ports are vital to the continent’s domestic economies. Maritime trade accounts for more than 90 percent of the continent’s imports and exports and ports therefore play a fundamental role in facilitating Africa’s integration to international trade. However both importers and exporters face high costs for sea transport and substantial inefficiencies in port clearance operations. According  to UNCTAD (2003) reports, that the average freight rate for imports for example is 47 percent higher than in other developing countries and twice the rate in developed countries, estimated at 5.21 percent (UNCTAD, 2003). For containerized imports, cargo dwell time – defined as the time between vessel arrival and container exit from the port facilities – exceeds 20 days in average for most ports in the continent which makes African ports the most time-inefficient ports in the world. This is an added burden on business as compared to other regions in the world, as businesses relying on just in time shipment are less likely to develop in such environment, and local importers need to integrate higher storage and inventory costs.

The choice of Douala as a case study builds on its critical position as the gateway to several Central African countries and as one of the largest ports in Western and Central Africa. Thanks to a longstanding partnership between Cameroon (and especially the Cameroon Customs, the Facilitation Committee and the Single Window for External trade), World Customs Organization (WCO) and the World Bank, the port platform performance including cargo dwell time has been long monitored (tracking of delays within the logistics chain in Douala have been thoroughly monitored by several sources since the end of the 1990’s, first as part of adjustment and debt reduction initiatives and then at the initiative of Cameroonian stakeholders).

1.3 Statement of the problem

The issues of sustainability in maritime transport and logistics services have been considered in terms of environment, economy, and society. Some of the problem encounter at the Douala seaport due to containerization was thefts, illegal smuggling of drugs, bribery, high tax rate on goods. Recently, a substantial amount of research has been conducted on the improvement of energy efficiency and the use of cutting-edge technology. While there are many concerns about the ongoing US-China trade conflict and the proliferation of global protectionism, an in-depth research is lacking. Trade volume and maritime logistics services are closely linked, and sea freight prices have fluctuated widely since January 2018, as illustrated by the trend of the Baltic Dry Index (BDI). The BDI is a shipping cost index, which is used to be a leading indicator of future economic growth.

1.4 Research Questions

1.4.1 Main research question

The main research question of this study is how does containerization affects the shipping industry at the Douala sea port?

1.4.2 Specific research questions

Specifically, this research work will seek to answer the following questions;

• What are the benefits and challenges in the shipping business at the Douala sea port?
• How has containerization affected the efficiency of operation at the Douala sea port?
• What are the economic impacts of containerization on the shipping business in Douala?
• How has containerization changed the logistic and supply chain management at the Douala sea port?

1.5 Research Objectives

1.5.1 Main research Objective

The main objective of this work is to analyze the effects of containerization on the shipping industry at the Douala sea port

1.5.2 Specific research Objectives

Specifically, this work seeks to;

• To identify the benefits and challenges of containerization in the shipping business in Douala.
• To evaluate the efficiency of operations at the Douala Sea port before and after the adoption of containerization.
• To analyze the economic impacts of containerization on the shipping business in the Douala sea port.
• To examine the changes in logistic and supply chains management at the Douala Sea port due to containerization.