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

by Marc Levinson

  Abbreviations

  The following abbreviations are used in the endnotes.

  COHP Containerization Oral History Project, National Museum of American History, Smithsonian Institution, Washington, DC

  ICC United States Interstate Commerce Commission

  ILA International Longshoremen’s Association

  ILWU International Longshoremen’s and Warehousemen’s Union

  JOC Journal of Commerce

  Marad United States Maritime Administration

  NACP National Archives at College Park, MD

  NBER National Bureau of Economic Research

  NYMA New York Municipal Archives

  NYT New York Times

  OAB/NHC Operational Archives Branch, Naval Historical Center, Washington, DC

  OECD Organisation for Economic Co-operation and Development

  PANYNJ Port Authority of New York and New Jersey

  PNYA Port of New York Authority

  ROHP Regional Oral History Program, Bancroft Library, University of California at Berkeley, Berkeley, CA

  UNCTAD United Nations Conference on Trade and Development

  VVA Virtual Vietnam Archive, Texas Tech University, Lubbock, TX, on-line at http://www.vietnam.ttu.edu/virtualarchive/

  Notes

  Chapter 1

  The World the Box Made

  1. Steven P. Erie, Globalizing L.A.: Trade, Infrastructure, and Regional Development (Stanford, 2004).

  2. Christian Broda and David E. Weinstein, “Globalization and the Gains from Variety,” Working Paper 10314, NBER, February 2004.

  3. As Jefferson Cowie shows in a definitive case study, the relocation of capital in search of lower production costs is not a new phenomenon; see Capital Moves: RCA’s Seventy-Year Quest for Cheap Labor (New York, 1999). The argument of this book is not that containerization initiated the geographic shift of industrial production, but rather that it greatly increased the range of goods that can be manufactured economically at a distance from where they are consumed, the distances across which those products can feasibly be shipped, the punctuality with which that movement occurs, and the ability of manufacturers to combine inputs from widely dispersed sources to make finished products.

  4. For a description of life aboard a modern containership, see Richard Pollak, The Colombo Bay (New York, 2004).

  5. Former U.S. Coast Guard commander Stephen E. Flynn estimated in 2004 that it takes 5 agents 3 hours to completely inspect a loaded 40- foot container, so physically inspecting every box imported through Los Angeles and Long Beach on the average day would require 270,000 man-hours. This equates to approximately 35,000 customs inspectors for those two ports alone. See the thorough discussion of ways to improve the security of container shipping in his America the Vulnerable: How the U.S. Has Failed to Secure the Homeland and Protect Its People from Terror (New York, 2004), chap. 5.

  6. Several factors make freight-cost data particularly treacherous. Average costs are greatly affected by the mix of cargo; the now defunct ICC used to report the average cost per ton-mile of rail freight, but year-to-year changes in the average depended mainly upon demand for coal, which traveled at much lower rates per ton than manufactured goods. Second, most historical cost information concerns a single aspect of the process—the ocean voyage between two ports—rather than the total door-to-door cost of a shipment. Third, a proper measure of freight costs over time would have to account for changes in service quality, such as faster ocean transit and reduced cargo theft, and no freight cost index does this. Fourth, a large number of freight shipments occur either within a large company or at prices privately negotiated between the shipper and transportation carriers, so the information required to measure costs economywide often is not publicly available. Edward L. Glaeser and Janet E. Kohlhase, “Cities, Regions, and the Decline of Transport Costs,” Working Paper 9886, NBER, July 2003, p. 4.

  7. U.S. Congress, Joint Economic Committee, Discriminatory Ocean Freight Rates and the Balance of Payments, November 19, 1963 (Washington, DC, 1964), p. 333; John L. Eyre, “Shipping Containers in the Americas,” in Pan American Union, “Recent Developments in the Use and Handling of Unitized Cargoes” (Washington, DC, 1964), pp. 38–42. Eyre’s data were developed by the American Association of Port Authorities.

  8. Estimate of freight rates reaching 25 percent of value is in Douglas C. MacMillan and T. B. Westfall, “Competitive General Cargo Ships,” Transactions of the Society of Naval Architects and Marine Engineers 68 (1970): 843. Ocean freight rates for pipe and refrigerators are in Joint Economic Committee, Discriminatory Ocean Freight Rates, p. 342. Trade shares are taken from U.S. Bureau of the Census, Historical Statistics of the United States(Washington, DC, 1975), p. 887.

  9. Eyre, “Shipping Containers in the Americas,” p. 40.

  10. Paul Krugman, “Growing World Trade: Causes and Consequences,” Brookings Papers in Economic Activity 1995, no. 1 (1995): 341; World Trade Organization, World Trade Report 2004 (Geneva, 2005), pp. 114–129.

  11. Robert Greenhalgh Albion, The Rise of New York Port (New York, 1939; reprint, 1971), pp. 145–146; Peter L. Bernstein, Wedding of the Waters: The Erie Canal and the Making of a Great Nation (New York, 2005); Douglass North, “Ocean Freight Rates and Economic Development 1750 1913,” Journal of Economic History 18 (1958): 537–555. W. W. Rostow, among many others, argues that railroads were essential to the “take off” of U.S. growth in the 1840s and 1850s; see his Stages of Economic Growth (Cambridge, UK, 1960), pp. 38–55. Alfred D. Chandler, Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, MA, 1977), also assigns a critical role to railroads, although for very different reasons. Robert William Fogel, Railroads and American Economic Growth (Baltimore, 1964), rejects the Rostow view, asserting that “the railroad did not make an overwhelming contribution to the productive potential of the economy,” p. 235. Albert Fishlow also rejects Rostow’s claim that railroad construction was essential in stimulating American manufacturing, but contends that cheaper freight transportation had important effects on agriculture and led to a reorientation of regional economic relationships; see American Railroads and the Transformation of the Ante-Bellum Economy (Cambridge, MA, 1965) as well as “Antebellum Regional Trade Reconsidered,” American Economic Review (1965 supplement): 352–364. On the role of railroads in Chicago’s rise, see William Cronon, Nature’s Metropolis: Chicago and the Great West (New York, 1991), and Mary Yeager Kujovich, “The Refrigerator Car and the Growth of the American Dressed Beef Industry,” Business History Review 44 (1970): 460–482. For an example from Britain, see Wray Vamplew, “Railways and the Transformation of the Scottish Economy,” Economic History Review 24 (1971): 54. On transportation and urban development, see James Heilbrun, Urban Economics and Public Policy (New York, 1974), p. 32, and Edwin S. Mills and Luan Sendé, “Inner Cities,” Journal of Economic Literature 35 (1997): 731. On aviation, see Caroline Isard and Walter Isard, “Economic Implications of Aircraft,” Quarterly Journal of Economics 59 (1945): 145–169.

  12. The seminal article along this line was Robert Solow, “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics 39, no. 2 (1957): 65–94. On the problems of innovation, see Joel Mokyr, “Technological Inertia in Economic History,” Journal of Economic History 52 (1992): 325–338; Nathan Rosenberg, “On Technological Expectations,” Economic Journal 86, no. 343 (1976): 528; and Erik Brynjolfsson and Lorin M. Hitt, “Beyond Computation: Information Technology, Organizational Transformation, and Business Performance,” Journal of Economic Perspectives 14, no. 4 (2000): 24. Electricity was first used in manufacturing in 1883; for discussion of its relatively slow acceptance in manufacturing, see Warren D. Devine, Jr., “From Shafts to Wires: Historical Perspective on Electrification,” Journal of Economic History 43 (1983): 347–372. Examples of the debate over computers include Paul A. David, “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox,” American Economic Rev
iew 80 (1990): 355–361; Stephen D. Oliner and Daniel E. Sichel, “The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?” Journal of Economic Perspectives 14, no. 4 (2000): 3–22; and Dale W. Jorgenson and Kevin J. Stiroh, “Information Technology and Growth,” American Economic Review 89, no. 2 (1999): 109–115.

  13. Paul M. Romer, “Why, Indeed, in America? Theory, History, and the Origins of Modern Economic Growth,” Working Paper 5443, NBER, January 1996.

  14. David Ricardo, The Principles of Political Economy and Taxation (London, 1821; reprint, New York, 1965), pp. 77–97. Richard E. Caves and Ronald W. Jones point out that the widely taught Heckscher-Ohlin model, which shows that a country has a comparative advantage in producing goods that make more intensive uses of its more abundant factor of production, assumes that transport costs will not affect trade; see their World Trade and Payments: An Introduction, 2nd ed. (New York, 1977). More typically, Miltiades Chacholiades, Principles of International Economics (New York, 1981), p. 333, describes international market equilibrium under the unstated assumption that trade is costless.

  15. The seminal article in this field was Paul Krugman, “Increasing Returns and Economic Geography,” Journal of Political Economy 99, no. 3 (1991): 483–499. The impact of changing transportation costs is further developed in Krugman and Anthony J. Venables, “Globalization and the Inequality of Nations,” Quarterly Journal of Economics 110, no. 4 (1995): 857–880, and in Masahisa Fujita, Paul Krugman, and Anthony J. Venables, The Spatial Economy: Cities, Regions, and International Trade (Cambridge, MA, 1999).

  16. David Hummels, “Have International Transportation Costs Declined?” Working Paper, University of Chicago Graduate School of Business, 1999, and the International Monetary Fund, World Economic Outlook, September 2002, p. 116, contend that the cost of sea freight has not fallen significantly in recent decades. James E. Anderson and Eric van Wincoop, “Trade Costs,” Journal of Economic Literature 42 (September 2004): 691 751, and Céline Carrere and Maurice Schiff, “On the Geography of Trade: Distance Is Alive and Well,” World Bank Policy Research Working Paper 3206, February 2004, are among those arguing the continued significance of transport costs in determining trade flows. David Coe and three coauthors offer a technical critique of those arguments and conclude that long-distance international trade has in fact increased, implying that lower transport costs may have encouraged globalization; see “The Missing Globalization Puzzle,” International Monetary Fund Working Paper WP/02/171, October 2002.

  17. The closest approximation to a general history of the container is Theodore O. Wallin, “The Development, Economics, and Impact of Technological Change in Transportation: The Case of Containerization” (Ph.D. diss., Cornell University, 1974).

  Chapter 2

  Gridlock on the Docks

  1. Dramatic photos of cargo-handling operations on the West Coast, which were similar to those on the New York docks, can be found in Otto Hagel and Louis Goldblatt, Men and Machines: A Story about Longshoring on the West Coast Waterfront (San Francisco, 1963). Description of coffee handling is from Debra Bernhardt interview with Brooklyn longshoreman Peter Bell, August 29, 1981, New Yorkers at Work Oral History Project, Robert F. Wagner Labor Archive, New York University, Tape 10A. See also recollection of former longshoreman Jock McDougal in Ian McDougall, Voices of Leith Dockers (Edinburgh, 2001), p. 28; of former San Francisco longshoreman Bill Ward in the ILWU oral history collection, viewed July 5, 2004, at http://www.ilwu.org/history/oral-histories/bill-ward.cfm?renderforprint=1. Grace Line anecdote from interview with Andrew Gibson, Box AC NMAH 639, COHP.

  2. Alfred Pacini and Dominique Pons, Docker à Marseille (Paris, 1996), p. 174; T. S. Simey, ed., The Dock Worker: An Analysis of Conditions of Employment in the Port of Manchester (Liverpool, 1956), p. 199; New York Shipping Association, “Annual Accident Report Port of Greater New York and Vicinity,” January 15, 1951, in Jensen Papers, Collection 4067, Box 13, Folder “Accidents-Longshore Ind.”

  3. Charles R. Cushing, “The Development of Cargo Ships in the United States and Canada in the Last Fifty Years” (manuscript, January 8, 1992); Peter Elphick, Liberty: The Ships That Won the War (London, 2001), p. 403.

  4. Ward interview, ILWU; interview with former longshoreman George Baxter in McDougall, Voices of Leith Dockers, p. 44.

  5. See the colorful descriptions of unloading in Pacini and Pons, Docker à Marseille, p. 137.

  6. U.S. Department of Commerce, Bureau of Economic Analysis, “Estimates of Non-Residential Fixed Assets, Detailed Industry by Detailed Cost,” available at http://www.bea.gov/bea/dn/faweb/Details/Index.html; Andrew Gibson interview; Paul Richardson interview, July 1, 1997, COHP, Box ACNMAH 639. Cost estimate of merchant ships appears in testimony of Geoffrey V. Azoy, Chemical Bank, in U.S. House of Representatives, Committee on Merchant Marine and Fisheries, Hearings on HR 8637, To Facilitate Private Financing of New Ship Construction, April 27, 1954, p. 54. MacMillan and Westfall estimated that cargo handling and port expenses accounted for 51.8 percent of the total cost of a short voyage on a C2 freighter in 1958 and 35.9 percent of the total cost of a long voyage. “Competitive General Cargo Ships,” p. 837.

  7. For examinations of dockworkers’ conditions in many countries, see Sam Davies et al., eds., Dock Workers: International Explorations in Comparative Labour History, 1790–1970 (Aldershot, UK, 2000).

  8. U.S. Bureau of the Census and Bureau of Old-Age and Survivors Insurance, County Business Patterns, First Quarter, 1951 (Washington, DC, 1953), p. 56; George Baxter interview in McDougall, Voices of Leith Dockers, p. 44; unnamed longshoreman quoted in William W. Pilcher, The Portland Longshoremen: A Dispersed Urban Community (New York, 1972), p. 41); Pacini and Pons, Docker à Marseille, p. 46; Paul T. Hartman, Collective Bargaining and Productivity (Berkeley, 1969), p. 26; David F. Wilson, Dockers: The Impact of Industrial Change (London, 1972), p. 23.

  9. Many of the problems on the docks were eloquently discussed in the 1951 report of a New York State Board of Inquiry into waterfront conditions; for a summary, see “Employment Conditions in the Longshore Industry,” New York State Department of Labor Industrial Bulletin 31, no. 2 (1952): 7. ILA president Joseph P. Ryan, who eventually lost his post owing to charges of corruption, proposed in 1951 that employers should offer loans to his men to give them an alternative to loan sharks; see “Ryan Message to Members 1951” in Jensen Papers, Collection 4067, Box 13, Folder “Bibliography—Longshoremen Study Outlines,” and Waterfront Commission of New York Harbor, Annual Report, various years. Mullman’s testimony is reported in “Newark Kickback Inquiry,” NYT, December 16, 1954. On mandatory betting, see Paul Trilling, “Memorandum and Recommendations on the New York Waterfront,” December 14, 1951, in Jensen Papers, Collection 4067, Box 12, Folder “Appendix Materials.” Information on New Orleans taken from Eric Arnesen, Waterfront Workers of New Orleans: Race, Class, and Politics 1863–1923 (New York, 1991), p. 254.

  10. Some of these schemes are reviewed in Peter Turnbull, “Contesting Globalization on the Waterfront,” Politics and Society 28, no. 3 (2000): 367–391, and in Vernon H. Jensen, Hiring of Dock Workers and Employment Practices in the Ports of New York, Liverpool, London, Rotterdam, and Marseilles (Cambridge, MA, 1964), pp. 153, 200, and 227. On Rotterdam, see also Erik Nijhof, “Des journaliers respectables: les dockers de Rotterdam et leurs syndicates 1880–1965,” in Dockers de la Méditerranée à la Mer du Nord (Avignon, 1999), p. 121.

  11. Wilson, Dockers, p. 34.

  12. In Amsterdam and Rotterdam, most dockworkers were in the direct employ of stevedoring firms, and most dockers who were not in full-time employment received guarantees of 80 percent of regular pay if they reported to the hiring center twice daily; on average, they received 39 hours’ wages and 9 hours of guarantee per 48-hour workweek. See untitled typescript from Scheefvaart Vereeniging Noord dated May 1, 1953, in Jensen Papers, Collection 4067, Box 13, Folder “Reports on Foreign Dock Workers.” On the UK pension scheme, see Wilson, Dockers, p. 118
. On Hamburg, see Klaus Weinhauer, “Dock Labour in Hamburg: The Labour Movement and Industrial Relations, 1880s-1960s,” in Davies et al., Dock Workers, 2:501.

  13. Raymond Charles Miller, “The Dockworker Subculture and Some Problems in Cross-Cultural and Cross-Time Generalizations,” Comparative Studies in Society and History 11, no. 3 (1969): 302–314. For belief that it did not pay to work well and quickly, see Horst Jürgen Helle, “Der Hafenarbeiter zwischen Segelschiff und Vollbeschäftigung,” Economisch en Sociaal Tijdschrift 19, no. 4 (1965): 270. Oregon comments in Pilcher, The Portland Longshoremen, p. 22. Marseilles dockers went on strike in 1955 to demand regular shifts. See Pacini and Pons, Docker à Marseille, p. 118. According to data from the British Ministry of Labour, the base weekly pay of a full-time docker before World War II was 30–40 percent above the corresponding pay in construction and heavy manufacturing; dockers’ average weekly earnings, however, were only 10 percent higher than in those other sectors, because dockers’ work was more sporadic. See Wilson, Dockers, p. 19.