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Thursday, May 9, 2013

The Shipping Container's Effect on the World

Marc Levinson explains that the shipping container has radically changed the world in his book "The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger." Chapter one sums up the effects:

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 fraction 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.

The idea is that while we don't have precise data on the matter - for example we cannot compare shipping costs of a particular material from 1950 to now - it is clear that the container has revolutionized the way we ship things. From a laborious process on small ships that took many men to load, unload, and crew, we now have an efficient and automated process that requires as few as 20 men on a ship to reach the other side of the earth. In addition, unloading is simply a matter of moving the containers off of the ship - a feat easily accomplished by massive cranes in ports.

The author uses this as a large part of his argument for how globalization has taken hold. With such efficiency, we can assume that transportation costs are nearly zero. Items can reach the other side of the earth in as little as two weeks at less than the cost of a round-trip airline ticket - and that's thousands of tons of goods! With buyers and sellers able to find the area with the cheapest production cost, global competition is fostered and trade is encouraged.

As far as gaining and losing, I feel that larger companies are more apt to gain in this situation - they are already large market-share holders and have massive economies of scale and scope to start, while small businesses aren't able to outsource their labor and get supplies outside of local markets as easily, and they then must raise their prices above those sold by larger firms.

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