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February 13, 2020

by Jeff Nelligan

Globalization is a big word in a big world. Many would argue its essence is trade and cascading down from trade is an even smaller world – box. Indeed, the most ubiquitous element of today’s supercharged global economy is a quiet leviathan: The container.

As eminent economist Mark Levinson argues, containerized shipping - a new phenomenon in just the last 60 years of 32 centuries of world trade - is perhaps the greatest phenomenon of globalization.

It used to take a village

A modest definition of trade is the movement of goods and services from one place to another, ideally with the lowest cost and highest efficiency. This was as true for the 3000 B.C. journey between Mesopotamia and the Indus Valley in Pakistan as it is today from Shanghai to Scranton. It’s simple when it takes a village – that is, taking goods from one village to the next. But truly transformative commerce and opportunity move beyond that to entertain continent-to-continent treks and the mobilization of millions of individuals in producing and providing hundreds of thousands of products to one another.

Break bulk, back-breaking

As recently as the 1930s, the oceanic shipping of goods between nations was slow, brutish, and difficult. The editors at DiscoverContainers.com paint a colorful scene:  “Goods would be stored a port warehouse until boats were available…these goods would be loaded in sacks and bales, crates and barrels and would be transported from the warehouse to the dock and then to the ship….” The term for this cargo handling was ‘break-bulk’ – all sorts of items inefficiently manhandled by laborers in back-breaking and unsafe conditions. Indeed, it was so inefficient that loading and unloading a ship in a port would sometimes take longer than the sea journey between ports.

Enter the box

In 1937, a young tobacco delivery trucker, Malcolm McLean, drove from his home in Maxton, North Carolina to Hoboken, New Jersey and witnessed first-hand the break-bulk dockside circus. As he said later, he knew there was a better way to manage and store cargo. His epiphany would lay dormant for nearly two decades while he methodically amassed a large trucking company serving the Mid-Atlantic.

In 1956, his epiphany became reality. McLean designed and patented a shipping container, a rectangle iron box, “strong, standardized, easy to load and unload and lockable, which made it theft resistant.”

The same year, he bought and retrofitted a ship to hold the containers and sailed it from Port Newark-Elizabeth Marine Terminal to Houston.  A year later, a ship designed exclusively for his containers travelled from New York to Miami. The revolution had begun.

In 1966, McLean’s firm SeaLand Industries performed its first international trip, from the U.S. to the Netherlands, with 236 of his shipping containers on board.

Two years later, container ships were built that could carry 1,000 containers. Today, the leviathan of container ships, the OOCL Hong Kong, carries 21,413 shipping containers. Indeed, some are fitted with their own refrigeration units (called “reefers”) to keep perishable items fresh during transit.

Today’s container, derived from Mclean’s invention, is known as the TEU, or Twenty-Foot Equivalent Unit. Not only is it standardized for the 5,000 container ships operating on global seas, the TEU is the backbone of truck and train intermodal transport. Why? TEUs, by the tens of millions, can be transferred as a single unit and used across different modes of transport – from ship to rail to truck – without unloading and reloading their cargo.

 

Goodbye village, hello world

Over time, standardized shipping containers led to cheap shipping, which led to a diffused labor force – diffused around the globe. Customer distance from products retreated as cargo transport costs receded.  Chances are the resident of a Togo village today will place an Amazon order of The Village of Waiting – about a Togo village - and have it sail through Togo's Port Lome, the largest container port in Africa with 1,193,800 shipping containers transiting annually.

In fact, container ships sailing over global waters today make 9,000 ports-of-call weekly. 

The humble container

The sheer power and immensity of globalization allows academics and other well-meaning but detached observers to divine elaborate and even incomprehensible theories of causality. But maybe the truth is closer to the reality: Consider: 90 percent of the items you purchase this week will have spent some time in a shipping container. 

The beauty of the box as a simple and overwhelming force for globalization is elegantly summed up by The Economist (May 18, 2013: The humble hero.) “The humble shipping container is a powerful antidote to economic pessimism and fears of slowing innovation. Although only a simple metal box, it has transformed global trade. In fact…the container has been more of a driver of globalization than all trade agreements in the past 50 years taken together.”  

Jeff Nelligan works in Communications, Office of Global Policy and Strategy