A number of people read portions of the manuscript, caught embarrassing errors, pointed me to additional sources, and provided valuable comments. I especially wish to thank Jim Doig, Joshua Freeman, Vincent Grey, Les Harlander, Thomas Kessner, Nelson Lichtenstein, Kathleen McCarthy, Bruce Nelson, and Judith Stein. The material in chapter 5 was presented to the Business History Conference, several of whose members provided insights and suggestions. Portions of chapter 5 appeared in Business History Review,whose anonymous referees made extremely helpful suggestions, and the referees who reviewed the manuscript for Princeton University Press did much to improve it. I would also like to thank my editors at Princeton University Press, Lauren Lepow, who did a superb job of copyediting, and Tim Sullivan, who enthusiastically shared my vision of this book and my belief that the container really did change the world.
August 2005
Chapter 1
The World the Box Made
On April 26, 1956, a crane lifted fifty-eight aluminum truck bodies aboard an aging tanker ship moored in Newark, New Jersey. Five days later, the Ideal-X sailed into Houston, where fifty-eight trucks waited to take on the metal boxes and haul them to their destinations. Such was the beginning of a revolution.
Decades later, when enormous trailer trucks rule the highways and trains hauling nothing but stacks of boxes rumble through the night, it is hard to fathom just how much the container has changed the world. In 1956, China was not the world’s workshop. It was not routine for shoppers to find Brazilian shoes and Mexican vacuum cleaners in stores in the middle of Kansas. Japanese families did not eat beef from cattle raised in Wyoming, and French clothing designers did not have their exclusive apparel cut and sewn in Turkey or Vietnam. Before the container, transporting goods was expensive—so expensive that it did not pay to ship many things halfway across the country, much less halfway around the world.
What is it about the container that is so important? Surely not the thing itself. A soulless aluminum or steel box held together with welds and rivets, with a wooden floor and two enormous doors at one end: the standard container has all the romance of a tin can. The value of this utilitarian object lies not in what it is, but in how it is used. The container is at the core of a highly automated system for moving goods from anywhere, to anywhere, with a minimum of cost and complication on the way.
The container made shipping cheap, and by doing so changed the shape of the world economy. The armies of ill-paid, ill-treated workers who once made their livings loading and unloading ships in every port are no more, their tight-knit waterfront communities now just memories. Cities that had been centers of maritime commerce for centuries, such as New York and Liverpool, saw their waterfronts decline with startling speed, unsuited to the container trade or simply unneeded, and the manufacturers that endured high costs and antiquated urban plants in order to be near their suppliers and their customers have long since moved away. Venerable ship lines with century-old pedigrees were crushed by the enormous cost of adapting to container shipping. Merchant mariners, who had shipped out to see the world, had their traditional days-long shore leave in exotic harbors replaced by a few hours ashore at a remote parking lot for containers, their vessel ready to weigh anchor the instant the high-speed cranes finished putting huge metal boxes off and on the ship.
Even as it helped destroy the old economy, the container helped build a new one. Sleepy harbors such as Busan and Seattle moved into the front ranks of the world’s ports, and massive new ports were built in places like Felixstowe, in England, and Tanjung Pelepas, in Malaysia, where none had been before. Small towns, distant from the great population centers, could take advantage of their cheap land and low wages to entice factories freed from the need to be near a port to enjoy cheap transportation. Sprawling industrial complexes where armies of thousands manufactured products from start to finish gave way to smaller, more specialized plants that shipped components and half-finished goods to one another in ever lengthening supply chains. Poor countries, desperate to climb the rungs of the ladder of economic development, could realistically dream of becoming suppliers to wealthy countries far away. Huge industrial complexes mushroomed in places like Los Angeles and Hong Kong, only because the cost of bringing raw materials in and sending finished goods out had dropped like a stone.1
This new economic geography allowed firms whose ambitions had been purely domestic to become international companies, exporting their products almost as effortlessly as selling them nearby. If they did, though, they soon discovered that cheaper shipping benefited manufacturers in Thailand or Italy just as much. Those who had no wish to go international, who sought only to serve their local clientele, learned that they had no choice: like it or not, they were competing globally because the global market was coming to them. Shipping costs no longer offered shelter to high-cost producers whose great advantage was physical proximity to their customers; even with customs duties and time delays, factories in Malaysia could deliver blouses to Macy’s in Herald Square more cheaply than could blouse manufacturers in the nearby lofts of New York’s garment district. Multinational manufacturers—companies with plants in different countries—transformed themselves into international manufacturers, integrating once isolated factories into networks so that they could choose the cheapest location in which to make a particular item, yet still shift production from one place to another as costs or exchange rates might dictate. In 1956, the world was full of small manufacturers selling locally; by the end of the twentieth century, purely local markets for goods of any sort were few and far between.
For workers, of course, this has all been a mixed blessing. As consumers, they enjoy infinitely more choices thanks to the global trade the container has stimulated. By one careful study, the United States imported four times as many varieties of goods in 2002 as in 1972, generating a consumer benefit—not counted in official statistics—equal to nearly 3 percent of the entire economy. The competition that came with increased trade has diffused new products with remarkable speed and has held down prices so that average households can partake. The ready availability of inexpensive imported consumer goods has boosted living standards around the world.2
As wage earners, on the other hand, workers have every reason to be ambivalent. In the decades after World War II, wartime devastation created vast demand while low levels of international trade kept competitive forces under control. In this exceptional environment, workers and trade unions in North America, Western Europe, and Japan were able to negotiate nearly continuous improvements in wages and benefits, while government programs provided ever stronger safety nets. The workweek grew shorter, disability pay was made more generous, and retirement at sixty or sixty-two became the norm. The container helped bring an end to that unprecedented advance. Low shipping costs helped make capital even more mobile, increasing the bargaining power of employers against their far less mobile workers. In this highly integrated world economy, the pay of workers in Shenzhen sets limits on wages in South Carolina, and when the French government ordered a shorter workweek with no cut in pay, it discovered that nearly frictionless, nearly costless shipping made it easy for manufacturers to avoid the higher cost by moving abroad.3
A modern containerport is a factory whose scale strains the limits of imagination. At each berth—the world’s biggest ports have dozens—rides a mammoth oceangoing vessel, up to 1,100 feet long and 140 feet across, carrying nothing but metal containers. The deck is crowded with row after row of them, red and blue and green and silver, stacked 15 or 20 abreast and 6 or 7 high. Beneath the deck are yet more containers, stacked 6 or 8 deep in the holds. The structure that houses the crew quarters, topped by the navigation bridge, is toward the stern, barely visible above the stacks of boxes. The crew accommodations are small, but so is the crew. A ship carrying 3,000 40-foot containers, filled with 100,000 tons of shoes and clothes and electronics, may make the three-week transit from Hong Kong around the Cape of Good Hope to Germany with only twenty people on board.4
On the wharf, a row of enormous cranes goes into action almost as soon as the ship ties up. The cranes are huge steel structures, rising 200 feet into the air and weighing more than two million pounds. Their legs stretch 50 feet apart, easily wide enough for several truck lanes or even train tracks to pass beneath. The cranes rest on rails running parallel to the ship’s side, so that they can move forward or aft as required. Each crane extends a boom 115 feet above the dock and long enough to span the width of a ship broader than the Panama Canal.
High up in each crane, an operator controls a trolley able to travel the length of the boom, and from each trolley hangs a spreader, a steel frame designed to lock onto all four top corners of a 40-ton box. As unloading begins, each operator moves his trolley out the boom to a precise location above the ship, lowers the spreader to engage a container, raises the container up toward the trolley, and pulls trolley and container quickly toward the wharf. The trolley stops above a rubber-tired transporter waiting between the crane’s legs, the container is lowered onto the transporter, and the spreader releases its grip. The transporter then moves the container to the adjacent storage yard, while the trolley moves back out over the ship to pick up another box. The process is repeated every two minutes, or even every ninety seconds, each crane moving 30 or 40 boxes an hour from ship to dock. As parts of the ship are cleared of incoming containers, reloading begins, and dockside activity becomes even more frenzied. Each time the crane places an incoming container on one vehicle, it picks up an outbound container from another, simultaneously emptying and filling the ship.
In the yard, a mile-long strip paved with asphalt, the incoming container is driven beneath a stacking crane. The stacker has rubber-tired wheels 50 feet apart, wide enough to span a truck lane and four adjacent stacks of containers. The wheels are linked by a metal structure 70 feet in the air, so that the entire machine can move back and forth above the rows of containers stacked six high. The crane engages the container, lifts it from the transporter, and moves it across the stacks of other containers to its storage location. A few hours later, the process will be reversed, as the stacking crane lifts the container onto a steel chassis pulled by an over-the-road truck. The truck may take the cargo hundreds of miles to its destination or may haul it to a nearby rail yard, where low-slung cars specially designed for containers await loading.
The colorful chaos of the old-time pier is nowhere in evidence at a major container terminal, the brawny longshoremen carrying bags of coffee on their shoulders nowhere to be seen. Terry Malloy, the muscular hero played by Marlon Brando in On the Waterfront, would not be at home. Almost every one of the intricate movements required to service a vessel is choreographed by a computer long before the ship arrives. Computers, and the vessel planners who use them, determine the order in which the containers are to be discharged, to speed the process without destabilizing the ship. The actions of the container cranes and the equipment in the yard all are programmed in advance. The longshoreman who drives each machine faces a screen telling him which container is to be handled next and where it is to be moved—unless the terminal dispenses with longshoremen by using driverless transporters to pick up the containers at shipside and centrally controlled stacker cranes to handle container storage. The computers have determined that the truck picking up incoming container ABLQ 998435 should be summoned to the terminal at 10:45 a.m., and that outgoing container JKFC 119395, a 40-foot box bound for Newark, carrying 56,800 pounds of machinery and currently stacked at yard location A-52- G-6, will be loaded third from the bottom in the fourth slot in the second row of the forward hold. They have ensured that the refrigerated containers are placed in bays with electrical hookups, and that containers with hazardous contents are apart from containers that could increase the risk of explosion. The entire operation runs like clockwork, with no tolerance for error or human foibles. Within twenty-four hours, the ship discharges its thousands of containers, takes on thousands more, and steams on its way.
Every day at every major port, thousands of containers arrive and depart by truck and train. Loaded trucks stream through the gates, where scanners read the unique number on each container and computers compare it against ships’ manifests before the trucker is told where to drop his load. Tractor units arrive to hook up chassis and haul away containers that have just come off the ship. Trains carrying nothing but double-stacked containers roll into an intermodal terminal close to the dock, where giant cranes straddle the entire train, working their way along as they remove one container after another. Outbound container trains, destined for a rail yard two thousand miles away with only the briefest of stops en route, are assembled on the same tracks and loaded by the same cranes.
The result of all this hectic activity is a nearly seamless system for shipping freight around the world. A 25-ton container of coffeemakers can leave a factory in Malaysia, be loaded aboard a ship, and cover the 9,000 miles to Los Angeles in 16 days. A day later, the container is on a unit train to Chicago, where it is transferred immediately to a truck headed for Cincinnati. The 11,000-mile trip from the factory gate to the Ohio warehouse can take as little as 22 days, a rate of 500 miles per day, at a cost lower than that of a single first-class air ticket. More than likely, no one has touched the contents, or even opened the container, along the way.
This high-efficiency transportation machine is a blessing for exporters and importers, but it has become a curse for customs inspectors and security officials. Each container is accompanied by a manifest listing its contents, but neither ship lines nor ports can vouch that what is on the manifest corresponds to what is inside. Nor is there any easy way to check: opening the doors at the end of the box normally reveals only a wall of paperboard cartons. With a single ship able to disgorge 3,000 40-foot-long containers in a matter of hours, and with a port such as Long Beach or Tokyo handling perhaps 10,000 loaded containers on the average workday, and with each container itself holding row after row of boxes stacked floor to ceiling, not even the most careful examiners have a remote prospect of inspecting it all. Containers can be just as efficient for smuggling undeclared merchandise, illegal drugs, undocumented immigrants, and terrorist bombs as for moving legitimate cargo.5
Getting from the Ideal-X to a system that moves tens of millions of boxes each year was not an easy voyage. Both the container’s promoters and its opponents sensed from the very beginning that this was an invention that could change the way the world works. That first container voyage of 1956, an idea turned into reality by the ceaseless drive of an entrepreneur who knew nothing about ships, unleashed more than a decade of battle around the world. Many titans of the transportation industry sought to stifle the container. Powerful labor leaders pulled out all the stops to block its ascent, triggering strikes in dozens of harbors. Some ports spent heavily to promote it, while others spent huge sums for traditional piers and warehouses in the vain hope that the container would prove a passing fad. Governments reacted with confusion, trying to figure out how to capture its benefits without disturbing the profits, jobs, and social arrangements that were tied to the status quo. Even seemingly simple matters, such as the design of the steel fitting that allows almost any crane in any port to lift almost any container, were settled only after years of contention. In the end, it took a major war, the United States’ painful campaign in Vietnam, to prove the merit of this revolutionary approach to moving freight.
How much the container matters to the world economy is impossible to quantify. In the ideal world, we would like to know how much it cost to send one thousand men’s shirts from Bangkok to Geneva in 1955, and to track how that cost changed as containerization came into use. Such data do not exist, but it seems clear that the container brought sweeping reductions in the cost of moving freight. From a tiny tanker laden with a few dozen containers that would not fit on any other vessel, container shipping matured into a highly automated, highly standardized industry on a global scale. An enormous containership can be loaded with a minute fract
ion of the labor and time required to handle a small conventional ship half a century ago. A few crew members can manage an oceangoing vessel longer than three football fields. A trucker can deposit a trailer at a customer’s loading dock, hook up another trailer, and drive on immediately, rather than watching his expensive rig stand idle while the contents are removed. All of those changes are consequences of the container revolution. Transportation has become so efficient that for many purposes, freight costs do not much effect economic decisions. As economists Edward L. Glaeser and Janet E. Kohlhase suggest, “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.6
In 1961, before the container was in international use, ocean freight costs alone accounted for 12 percent of the value of U.S. exports and 10 percent of the value of U.S. imports. “These costs are more significant in many cases than governmental trade barriers,” the staff of the Joint Economic Committee of Congress advised, noting that the average U.S. import tariff was 7 percent. And ocean freight, dear as it was, represented only a fraction of the total cost of moving goods from one country to another. A pharmaceutical company would have paid approximately $2,400 to ship a truck-load of medicines from the U.S. Midwest to an interior city in Europe in 1960. This might have included payments to a dozen different vendors: a local trucker in Chicago, the railroad that carried the truck trailer on a flatcar to New York or Baltimore, a local trucker in the port city, a port warehouse, a steamship company, a warehouse and a trucking company in Europe, an insurer, a European customs service, and the freight forwarder who put all the pieces of this complicated journey together. Half the total outlay went for port costs.7
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger Page 2
