The Box - Marc Levinson
Fascinating how this innovation has fully transformed how the world is connected. Over the last 100 years, it has become cheaper to ship something 10,000 miles by see than 500 miles by land. Also, one of the main reasons why New York City became the biggest financial center in the world. You can thank the container ship for this. A thorough (and sometimes dry) dive into the history of the shipping container. Full of quirky characters and cut throat business men.
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.
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.
He wouldn’t be able to sit still five minutes, a longtime colleague recalled before McLeans death. You’d either have to play gin rummy with him or discuss business with him. Can’t go quail hunting with Malcom without him betting on the first, the most, the biggest. His inventive brain churned out idea after idea for making money.
Tantlinger was not so certain. Before the Gateway City’s first voyage, on October 4, 1957, he dropped by the F. W. Woolworth store in Newark and purchased all of the stores modeling clay. He cut the clay into small pieces with his pocket knife and wedged several pieces in the narrow spaces between the corners of the top containers and the metal frames of the cells. When the Gateway City docked in Miami three days later, he retrieved the clay to see how much the containers had shifted. The indentations on the clay revealed that they had moved by only of one inch. Proof, at last, that a stack of containers in the hold would not sway dangerously as a containership rolled at sea.
Scale was the holy grail of the maritime industry by the late 1970s. Bigger ships lowered the cost of carrying each container. Bigger ports with bigger cranes lowered the cost of handling each ship. Bigger containers, the 20-foot box, shippers favorite in the early 1970s, was yielding to the 40-footer, cut down on crane movements and reduced the time needed to turn a vessel around in port, making more efficient use of capital. A virtuous circle had developed: lower costs per container permitted lower rates, which drew more freight, which supported yet more investments in order to lower unit costs even more. If ever there was a business in which economies of scale mattered, container shipping was it.
Barbie was conceived as the all-American girl. In truth, she never was: at her inception, in 1959, Mattel Corp. arranged to make her at a factory in Japan. A few years later it added a plant in Taiwan, along with a large cadre of Taiwanese women who sewed Barbies clothes in their homes. By the middle of the 1990s, Barbies citizenship had become even less distinct. Workers in China produced her statuesque figure, using molds from the United States and other machines from Japan and Europe. Her nylon hair was Japanese, the plastic in her body from Taiwan, the pigments American, the cotton clothing from China. Barbie, simple girl though she is, had developed her very own global supply chain.
The economics of containerization have shaped these global supply chains in peculiar ways. Distance matters, but not hugely so. A doubling of the distance cargo is shipped from Hong Kong to Los Angeles, for example, rather than Tokyo to Los Angles raises the shipping cost only 18 percent. Places far from the end market can still be part of an international supply chain, so long as they have well-run ports and a lot of volume.
Yet time still matters. By one estimate, each day seaborne goods spend under way raises the exporters costs by 0.8 percent, which means that a typical 13-day voyage from China to the United States has the same effect as a 10 percent tariff.
The huge increase in long-distance trade that came in the containers wake was foreseen by no one.
Header photo © medium.com
Body photo © amazon.com