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

Call this an examination of how the right innovation at the right time can have a catalytic impact, as a cadre of determined businessman (most notably one Malcom McLean of the United States) sought to wring profits from a stagnant industry and helped to unleash a revolution. The question is unanswerable whether the box begot globalization or whether globalization would have called forth some comparable innovation, but it is certainly now the symbol of the global world economic order. If Levinson does nothing else he reminds one of the deep inefficiencies represented by the world of manually-loaded tramp steamers, the stagnant communities that served the industry, and the out-date regulations that constrained trade. While one can show more denounce the spirit of deregulation now run rampant, it's good to be reminded that this spirit had real justification a generation ago. The question that Levinson can't answer is whether this revolution has so refined itself that it is now set for its own unforeseen systemic failure. show less

The Box deserves all of its accolades. The shipping container is one of the least romantic objects imaginable, a 40' by 8' by 8' steel and wood box full of, well, everything and anything. The basic idea behind containerization is that it takes about the same amount of time to move a box, no matter the size, and putting everything in one box enables goods to move from ship to train to truck at minimum cost, accelerating commerce everywhere. But while the idea seems simple, it took decades to make it a reality.

Levinson gets at both the creation and destruction in this account. The creation primarily follows Malcom McLean, a North Carolina trucking magnate who's relentless desire to cut costs and boldness to steer away from the way things show more were done created the first workable modern container system, using a pair of World War 2 vintage converted tankers. McLean was a lonely visionary at first, with other shipping lines taking decades to see the benefits of containers, even at 400% improvements in cost per ton of cargo moved. Containerization necessarily required massive capital investments in new ships and specialized loading gear, harmonization of international and cross-sector regulations across a multiple cartels, and new shipping practices from customers. A major turning point was the use of containers to ease a crisis in military logistics during the Vietnam War. With McLean's expenses covered by the Department of Defense, everything shipped back from Japan was pure profit. We've all benefited from reliability and cheapness of container shipped materials and goods.

But there was also plenty of destruction. Longshoremen unions were hit hardest. Longshoremen loaded and unloaded ships in a manner that their medieval predecessors would have understood, muscling goods between dock and hold only slightly aided by advances like the pallet, forklift, and powered crane. Being a longshoreman was a dangerous trade, injury rates were substantially higher than for other manual labor, but the tens of thousands of longshoremen were a unique community. They were also heavily involved with organized crime, pilferage, and while I'm generally on board with a "fuck all the bosses" stance, deliberate inefficiency in work just barely short of sabotage. Containers required far fewer men than break-bulk loading, and it kicked the foundations out from under longshoremen.

A second set of victims were traditional port cities, primarily New York and London. With 19th century infrastructure and labor practices, these cities were unable to adapt to containers. When shipping had been a substantial cost, factories were close to markets and docks. New intermodal models meant that factories could chase efficiencies worldwide, leading to the lost decades for both cities in the 1970s as they shifted from industry to finance, and rippling Rust Belts as factories and jobs moved from America and Europe to Asia. Ports able to make bold bets on new technologies flourished, like Newark, Rotterdam, Singapore, and Dubai, while others failed based on the harsh economic logic of new integrated supply chains.

Malcom McLean himself hit some of the destruction. He made further bold bets into very fast ships that sunk his company when the 1973 oil embargo drove fuel costs up. A second bet on large round-the-world service hit the opposite problem when oil prices crashed. He was still a rich man, but he never again achieved that flashing acme of success.

This is a detailed, extensive history. Where there are gaps, such as on good pricing data for shipping over time, Levinson makes the case that such data is probably unrecoverable, due to shifting exchange rates, complex per-cargo rates, and under the table kickbacks to major shippers. show less

FYI, 58% of this book is the book, the rest is notes, bibliography, and index. I checked it out from my library, yay libraries!

Although the author goes into the kind of detail my brain will never retain, and although I did skim and even skip several chapters because of that, I did get the sort of overall understanding I was looking for, so that's a win. I'd thought the process from breakbulk shipping to streamlining in large containers was less fraught than it turned out to have been. Well, humans will human; we want prosperity, but we get in each other's and our own way more often than not.

The McDonaldization of Freight: Containerization and the New Dynamics of Trade Flows
While economic integration and its influence in trade and financial flows have long been objects of research and analysis, there seems to be a remarkable lack of accessible studies pertaining to certain key components of the global economy. Levinson’s absorbing study of containerization sheds new light on the complexities of a system whose broad framework is well known to businesspeople and economists, but is essentially an undistinguished, unremarkable part of the relentless march towards global economic ‘entente’. By forcing an otherwise implausibly intimate interaction amongst shipping lines, trucking firms, and railroads, containerization of show more freight transport and the consequent intermodalism in moving goods resulted in a sharp drop in freight costs, which in turn encouraged the emergence of highly extended supply chains, allowed ambitious companies to access global markets, and facilitated an extraordinary upsurge in trade.

In all of the industrial shifts of the twentieth century, there is nothing quite so affecting as the story of containerization. The rise of the container, a “soulless” means of conveyance with “all the romance of a tin can”, was not at all preordained, despite the inescapable logic of transporting cargo through such means. The story of the emergence of container transport as a formidable enabler of economic activity is in large part also the story of Malcom McLean, a trucking entrepreneur from North Carolina who saw containerization’s potential to unlock tremendous economic value. McLean discerned, ahead of everyone else, that the business of shipping was, first and foremost, all about moving cargo. Armed with this insight, and motivated by the prospect of underpricing his competition in the trucking business, McLean thought of putting truck trailers aboard cargo ships plying US coastal routes. He then proceeded to acquire a shipping company, Waterman Steamship Corporation, whose subsidiary, Pan-Atlantic Steamship Corporation, operated four ships plying the Boston-Houston route. (The acquisition itself was an interesting affair; Walter Wriston, who headed Citibank from 1967 to 1984 and who was familiar with the deal, later attested, “[i]n a sense, Waterman was the first LBO.”) Under McLean’s stewardship, Pan-Atlantic, which was rechristened Sea-Land, launched the first container-carrying ship, the SS Ideal-X, in 1956. In its maiden voyage as a container vessel, the Ideal-X carried 58 aluminum boxes from Newark to Houston. Analysis of the cost of loading and haulage later showed that transporting containerized cargo aboard the Ideal-X cost 15.8 cents per ton, a far cry from the cost of loading breakbulk cargo which amounted to $5.83 per ton in 1956.

By the late 1950s, containerization started to take off, with several firms and the US Army participating in the action. But the plethora of container dimensions made true intermodalism impossible: a study conducted in 1959 revealed that nearly three-fourths of privately held container stock in the US measured eight feet or less at the base, while the rest were more than eight feet in width. Setting a container standardization scheme fell under the purview of the US Maritime Administration (Marad), which granted shipbuilding subsidies. Marad was anxious to ensure that ships built using Marad-granted funds yielded profits; if the ships turned out to be dismal business failures, the agency could be forced to foreclose on vessels that would be unable to carry other firms’ containers. Marad therefore had a significant stake in standardizing container sizes and capabilities. After a lot of wheeling and dealing amongst and within Marad, the American Standards Organization, the International Standards Organization and other interested parties, it was decreed in 1964 that the ‘standard’ container would be eight feet in height and width and would have a length of 10, 20, 30, or 40 feet. But further horse-trading ensued, embroiling both the US Congress and Senate, with shipbuilding subsidies for both Sea-Land and its competitor Matson at stake. By 1970, the standardization issue was more or less ironed out.

The war in Vietnam proved to be a momentous catalyst in containerization. From 1965 to 1967, the logistical disarray in Vietnam’s antediluvian ports was so great as to require the attention of luminaries such as US secretary of defense Robert McNamara, who spent much of his time during a visit to Vietnam addressing port-related issues, and Henry Cabot Lodge, who discussed port problems with the prime minister of South Vietnam. The rapid military buildup necessitated a quantum leap in addressing the requirements of the in-country troops. The burden of convincing the armed forces to employ containerization fell to McLean. His determination led to Sea-Land winning a contract in March 1967 to operate a shipping service between the US West Coast and Vietnam ports. By the end of 1968, one-fifth of military cargo in the Pacific has been containerized. Sea-Land’s rapid success in transforming port services in Vietnam in such a short period of time allowed the US Army to declare in 1967 that “[t]he port congestion problem was solved.” In 1970, an analyst observed that the armed forces could have saved $882 million between 1965 and 1968 had it implemented containerization from the very beginning of the troop buildup. As the benefits of cargo unitization through containerization became apparent to the military, the box soon became central to the US armed forces’ logistical needs.

If one supposes that in 1965, a consultant correctly predicted that total containerized trade volume would reach a certain level in 1995, no consultant or analyst, however erudite, resourceful, and imaginative he or she might have been, would have set that figure in the full, illuminating context of a $35 trillion global economy, growing at an annual rate in excess of 3.5% and facilitating export-led growth. As Levinson asserts, “the extremely sharp drop in freight costs played a major role in increasing the integration of the global economy.” By one estimate, freight rates from Asia to North America had collapsed by as much as 40-60% due to containerization. Although Levinson is careful to note that containerization by itself did not form the foundation of global economic integration, the book betrays his ebullience about the role of the box in shaping the world. While Levinson’s thesis, being a thematic exploration of the history of containerization, leaves some gaps in explaining the current dynamics of container transport, “The Box” does deepen our understanding and appreciation of global trade flows. show less

In economic theory, standardization goes hand in hand with division of labor; Adam Smith's pin factory wouldn't have worked nearly so well without a single pin size. Examples of useful standards are everywhere: the metric system, TCP/IP packets, DIN slots, shoe sizes... some are driven by physical needs, others are arbitrary, but when they were decided, all created winners and losers. Few international standards have created more winners and losers than the shipping container, one of the most important standards of the 20th century, and Marc Levinson transforms what could have been a deadly boring trudge through ISO meeting minutes into a fairly interesting, if somewhat disjointed account of the irresistible force of containerization show more and the not-quite immovable objects of shipping lines, railroads, trucking companies, labor unions, and port authorities trying to hang onto obsolete shares of the inefficient pre-containerization transport landscape. Before The Box, shipping was a torturously slow, expensive, loss- and theft-prone venture dominated by industry cartels and longshoreman's unions, each more concerned with protecting their own high profits and wages than facilitating commerce. Enter self-made transport tycoon Malcom McLean, whose business savvy and early embrace of the container allowed him to exert vast commercial, industrial, and military influence on the country even while remaining fairly obscure. Seemingly minor decisions, like what kind of clasp should be used to seal the container, or how many sizes there should be, had billion-dollar consequences, to say nothing of the shifting flows of wealth from San Fransisco, New York, and London to Oakland, East Rutherford, and Felixstowe. I really liked how Levinson avoided casting anyone in the story as a hero or villain; economics isn't a simple morality play of noble innovators versus evil protectionists, and it's easy to forget that while containerization has created thousands of companies and millions of jobs, there were still costs for the businesses, people, and cities who couldn't adapt, that we measure in empty warehouses, vacant lots, and rusting pylons. Consumer surplus in the form of lower transaction costs does not always create new jobs. I just wish there had been more graphs to clarify the extremely data-rich narrative, which also jumps around in time almost constantly, making it tough to tell exactly what's going on. What a fascinating story of one of the most under-appreciated shapes in the world. show less

Somewhat dry but fascinating story of the tortuous rise of the shipping container. Turns out not to have been inevitable, but happened despite the appalling labour practices in most ports and the short sightedness of almost everyone in the shipping business.

On seeing this book my wife exclaimed “I can’t believe you bought a book about shipping containers!” - which, translated, meant “I can believe you bought a book about shipping containers, and I still wonder daily how it is that we ended up together.” The reason I bought it, of course, is that it sounded like a fascinating and very readable history of the development of container shipping, and the effect this has had on the global economy. Thankfully I was right - it is both fascinating and very readable.

The central thesis is that container shipping - while not in itself a particularly mind-blowing idea - was a necessary precondition for globalisation. The rise of containerised freight brought dramatic increases in efficiency show more and incredible decreases in cost, but it did a lot more than just change the cost of shipping something from point A to point B. Containerisation resulted in a standard unit of bulk freight, and the means of seamlessly transitioning freight between different modes of transportation. With this system in place it becomes possible for a shipper to specify the destination of a container and not have to worry too much about how it gets there. As hard as it is for many of us to imagine these days, this was not always the case.

Much of the book deals with the challenges faced in making containerisation a reality. Despite being a simple idea, there was enormous resistance to begin with. Obstacles included overbearing government regulation on freight of all types, the total dominance of international shipping cartels, and the degree to which labour unions consisting of tens of thousands of dockworkers controlled ports around the world.

However, container shipping turned out to be a transformative technology - with effects far in excess of those predicted by the people who fought to make it a reality. Once the idea was embraced it took force with astonishing rapidity, transforming the waterfronts and economies of many cities around the world and destroying tens of thousands of waterfront labour jobs in the process.

The most important effects had little to do with shipping itself - it turned out that containerised freight provided a massive increase in flexibility, enabling brand new approaches to production and leading to boom in global trade.

The only thing the book is missing is a chapter on the use being made now of containers for purposes other than freight - for example as a means of deploying self-contained datacenters, or as a basic structural element for low-cost modular architecture.

I really enjoyed this book, and found it an excellent treatment of a subject that - let’s be honest - sounds slightly dull. Much of the story focuses on Malcom McLean - a US trucker whose intuitive grasp of the freight business lead him to create the first dedicated container shipping service. This focus helps give the book a biographical narrative which ties it all together very well, and while the book goes into much more detail about circumstances in the US it manages to avoid the trap of pretending that the rest of the world doesn’t exist.

Heartily recommended! show less