Link to story on Reuters – LINK.

Um, that’s great but why do I care?  It in itself is not that interesting unless you are an active business traveler and need a small, lightweight laptop.  However, it does point to a significant trend in our supply chains – stuff is getting smaller.  Just take a second and think about the size of the computers you have owned over the past 20 years.  My first computer was an Apple IIe that was absolutely huge and heavy.  Over the years, my computers have progressed to tower desktops, to mid sized desktops to the computer I now use.  I can now use my laptop to do everything my old clunky desktop used to do, and more.

That laptop now takes up only 157 cubic inches (yes, I measured) vs the old tower desktop that takes up 5,102 cubic inches (again, I measured).  That is a reduction in size of over 96% and represents an increase in utility.  Computers are just one example of the products that have been steadily shrinking in size.  Flat screen TVs take up much less space than their CRT counterparts.  Cell phones continue to shrink.  MP3 players are vastly smaller than their Walkman predecessors.  And the list goes on.

Even non-electronic items are shrinking, or at least their packaging is.  We can all thank Wal-Mart for the form fitting plastic packaging that is impossible to open.  In addition to security improvements, that packaging allows Wal-Mart to put more product in the same amount of space – on the shelves, in the warehouse, and in the container.

This has very real implications for how much container and warehouse space companies need to sell the same amount of goods.  I was speaking with a port official recently and we were talking about the volume of product that a major retailer brought in through his port.  He said that they have significantly increased the amount and value of product they bring in, but decreased the number of containers.  This decrease was brought about from packaging improvements and an overall reduction in product size.  Unfortunately, this meant that the port was making less money (per TEU handling fees) from a client that was bringing more product in through the port.

How will ports cope with this decrease in TEU, but increase in value?  Will we see dock handling fees be calculated on the value handled rather than the number of TEUs handled?  Will the million SF distribution center become a relic in favor of smaller, more flexible facilities?  Stayed tuned to find out…