On Containerization

It is such a horrible sounding word, containerization. But you’d be amazed at the change it has brought about in the world:

The number of goods carried by containers skyrocketed from 102 million metric tons in 1980 to about 1.83 billion metric tons as of 2017.


What is containerization? Well, simply put, it is what has made international trade in goods so much more cheaper than before.

Prior to the standardization of shipping containers between the 1960s and 1970s, most goods were stowed aboard cargo ships in individually counted units known as “break-bulk cargo.” Longshoremen, in crews of up to 25 men at a time, would manually load and unload cargo by hand in a time-consuming and laborious process that would take days. Ships would sit idle at port for far longer than they would be sailing at sea, making ocean shipping impractical, costly, and unreliable. Thus, most consumer goods were manufactured regionally and shipped by truck or rail; imports were rather limited and expensive.
It was not until 1956 that a trucking company owner named Malcolm McLean converted two old World War II oil tankers into the world’s first container ships. McLean, with the assistance of engineer Keith Tantlinger, designed a 33-foot steel intermodal container that could be easily lifted by cranes, placed snugly on the back of trucks and train cars, and locked to reduce theft. It would take only a few hours to unload a ship as opposed to days. Typically, the cost of hand-loading a ship would be about $5.86 per ton. With McLean’s new system, the price dropped to only 16 cents per ton.

https://prospect.org/economy/hidden-costs-of-containerization/ (Emphasis added)

By the way, the Wikipedia article on McLean is fascinating. If you want to understand what “backward integration” means in practice, it is highly recommended.

An excellent place to begin to learn more about containerization is this excellent podcast episode by Tim Harford. That page also points us to a book which serves as an excellent introduction to the subject – the book is simply called “The Box”.

The last chapter in that book helps us understand the inevitable march towards increased efficiency at all costs, culminating in what happened in the Suez Canal last year:

Today, the average ship is capable of carrying over 20,000 containers at any given time. Many ships are absurdly gargantuan, with some as long as the length of the Empire State Building. Between 1980 and 2020, the deadweight tonnage of container ships has grown from about 11 million metric tons to around 275 million metric tons.


The article I’ve been quoting from (I came across it via The Browser) is a good exploration into some of the more problematic aspects of how the shipping industry has evolved over time, and speaks empathetically about the plight of those who work on board these ships. Cost cutting, long wait times, flags of convenience, changes to sea side towns/cities, the impact on local ecology and much else is described therein, and is worth a read.

The part that fascinated me the most was this:

Prior to the 1980s, the Shipping Act of 1916 regulated the relatively modest ocean carrier industry like a public utility. Prices were transparent and there were no exclusive agreements for volume shippers; anyone wanting to ship cargo could access the same rates. The United States Shipping Board, later the Federal Maritime Commission (FMC), regulated prices and practices, and subsidies assisted domestic shipbuilding. The act enabled smaller companies to enter ocean shipping with stable prices to weather downturns.
But the Shipping Act of 1984, and later the Ocean Shipping Reform Act of 1998, took down this architecture. It allowed shipping companies to consolidate, and eliminated price transparency, facilitating secret deals with importers and exporters. The FMC was defanged as a regulator. Almost immediately, containerization took off. The number of goods carried by containers skyrocketed from 102 million metric tons in 1980 to about 1.83 billion metric tons as of 2017.


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