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

🚀 The Book in 3 Sentences

This book contains the story of the container. It describes how it was first implemented, why it worked, and how the different actors behaved about the new innovation. The container shaped international trade more than anything else in the 20th century, and this is the story of how it came to be.

🎨 Impressions

I got very surprised about how many things had to go right for the container to be implemented. On one side, it looked like an inevitable solution to the problem of unloading cargo, as that was one of the biggest challenges before the introduction of the container. The container basically exterminated the longshoremen from the harbors, and the remaining stevedores went from being hired for a day's work to beome a smaller group of professionals using cranes to unload cargo.

A stevedore is one that takes contracts to load or unload a vessel. A head foreman, however, is sometimes called a stevedore. The longshoreman is the workman hired to handle the cargo under the direction of a foreman.

How I Discovered It

I discovered it when I was browsing through books on the maritime industry and how logistics work.

Who Should Read It?

People who take particular interest in logistics and the history of logistics.

☘️ How the Book Changed Me

I was particularly astonished by the fact that the longshoremen union was such a powerful force in America in the 50s and 60s. Many of them got good pensions due to negotiations with the shipping industry. Furthermore, I was super surprised to see how much governmental regulation there was in the logistics sector, with governmental departments dictating prices for trucking, trains, etc.

✍️ My Top Quotes

“It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.” Before the container, such a statement was unimaginable.
Ndearly 3,000 U.S. merchant ships survived and were available for merchant service by 1946. Among them were more than 2,400 of the Liberty Ships that U.S. shipyards had turned out between 1941 and 1945. Designed as convoy vessels and built in fewer than 70 days from prefabricated parts, the Liberty Ships were very slow and cheap enough to be expendable
The significant cost item was the wages of longshore gangs, which could eat up half the total expense of an ocean voyage.
“60 to 75 percent of the cost of transporting cargo by sea is accounted for by what takes place while the ship is at the dock and not by steaming time,” two analysts concluded in 1959.
Among Portland longshoremen, the most common paternal occupation was longshoreman. In Antwerp, 58 percent of dockworkers were the sons of dock-workers. The ratio in Manchester was three-quarters, and many of the rest had entered the docks with the help of their in-laws after marrying a dockworker’s daughter.
T]he dockers are such difficult people, just the fathers and the sons, the uncles and nephews. So like the House of Lords, hereditary and no intelligence required.”
An eleven-nation study found that dockworkers, along with miners and seafarers, lost more workdays to labor disputes than any other professions.
This history of antagonistic labor-management relations gave rise to two problems that plagued the shipping industry around the world. One was theft. Theft had always been a problem on the waterfront, and the growth of trade in higher-value products after World War II caused it to reach epidemic proportions.
The second problem arising from dockworkers’ intense suspicion of employers was resistance to anything that might eliminate jobs.
After four months of hearings in 1931, the commission ruled weight-based rates illegal. Although it found the container to be “a commendable piece of equipment,” the commission said that the railroads could not charge less to carry a container than to carry the equivalent weight of the most expensive commodity inside the container. With that ruling, containers no longer made economic sense on the rails.
The entire merchant fleet had been commandeered by the government when the United States entered the war, and many ships did not revert to private control until July 1947, almost two years after the war ended.
Loading loose cargo on a medium-size cargo ship cost $5.83 per ton in 1956. McLean’s experts pegged the cost of loading the Ideal-X at 15.8 cents per ton. With numbers like that, the container seemed to have a future.
Malcom McLean’s fundamental insight, commonplace today but quite radical in the 1950s, was that the shipping industry’s business was moving cargo, not sailing ships.
It offered to eliminate one or two longshoremen from each gang. In return, it sought a six-hour workday and a requirement that every container, whatever its origin, be “stripped and stuffed”—that is, emptied and then reloaded—by ILA members on the pier. Stripping and stuffing, of course, were entirely make-work, and would have eliminated any cost savings from containerization.
The United States Maritime Administration decided in 1958 to put an end to this incipient anarchy. Marad, as it was known, was an obscure government agency, but it held enormous power over the maritime industry.
As Matson executive vice president Norman Scott explained, “In the economics of transportation, there is no magic in mathematical symmetry.”
Piggyback, like almost every innovation in transportation during that era, faced a very large obstacle: the Interstate Commerce Commission.
The costliest merchant ships ever built were also the thirstiest, each burning five hundred tons of fuel per day. At full speed, they consumed three times as much fuel per container as competitors’ vessels.
When American President Lines studied the matter a few years later, it concluded that freight rates from Asia to North America had fallen 40 to 60 percent because of the container.
In 2004, nonfarm inventories in the United States were about $1 trillion lower than they would have been had they stayed at the level of the 1980s, relative to sales. Assume that the money needed to finance those inventories would have to be borrowed at 8 or 9 percent, and inventory reductions are saving U.S. businesses $80-$90 billion per year.
Conversely, African countries with inefficient ports and little containership service are at such a transport-cost disadvantage that even rock-bottom labor costs will not attract investment in manufacturing.
When New York longshore leader Teddy Gleason warned in 1959 that the container would eliminate 30 percent of his union’s jobs in New York, he was simply wrong: between 1963 and 1976, longshore hours worked in New York City fell by three-quarters.