The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

LCL rate =$1 per kg

Each tv weigh = 52.8kg

Annual demand= weekly demand by 52 weeks (56X52=2912 units)

Holding cost =$200/year/unit

Ordering cost = $108

  1. Tvs to be shipped through LCL and annual cost.

Ordering cost

$108 x (56 unit x 52 weeks)= $314,496

Annual transportation cost

Cost per unit

52.8 kg x $1= $52.8

Annual cost

2912 units/yr X $52.8 = $15,375.6

Holding cost X annual cost

$200 X 15375.6 = $ 30,750,720

Total annual ordering and transportation costs 30,750,720 + 314,496 = $31,065,216

 

  1. Tvs to be ordered and shipped through FCL

Units/ container =200 units

Costs/ container = $3000 per shipping

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Cost of ordering

Annual orders =2,912 units

29,912 x $108 = $314,496

Transportation costs

2,912/200unit = 15 shipping turns

15 x $3000 = $30,000

30,000 x 200 = 6,000,000

Total annual ordering and transportation cost 6,000,000 + 314,496 = $6,314,496

FCL is more preferable than the CLC shipping.  One of the reasons is because FCL unit shipping is more likely to be cheaper. One is able to maximize the space inside the container without extra charges. More also shipping with FCL does not take long to process compared CLC since the containers do not need to be consolidated at departure and reaching destination. More also, FCL shipping is considered to be much safer since the container is not opened at different destinations like in CLC where by the cargos are tempered with at different warehouses as more cargo are put inside the container. Lastly using FCL it is easy to track the arrival of the cargo at your destination through the shipping companies tracking systems.

 

Work Cited

Levinson, Marc. The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton University Press. 2006

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