Introduction of Shipping Containers
Introduction of Shipping Containers
Until the 1960s, shipping had not changed much in decades. Handling cargo was a labor-intensive activity, and transportation costs and times—whether by land or by sea—were huge obstacles to trade, often making transcontinental, let alone global, and trade economically unfeasible. However something happened that changed that. That was the invention of the shipping container. The birth of the shipping container dates back to April 26, 1956 when a crane lifted fifty-eight aluminum truck bodies aboard an a ship called the Ideal-X docked in Newark, New Jersey.
Five days later, the ship sailed in Houston, where fifty- eight trucks waited to take on the metal boxes and take them to their destinations. This heralded the beginning of a new era. Decades have passed since that fateful day which changed the world. Today we live in a globalized world so it is very difficult for us to even imagine the extent to which the container changed the world. In 1956, China was not the world’s workshop. It was not common to find Japanese electronics and cars in the middle of Dhaka. Western apparel brands didn’t have their products manufactured in Bangladesh either.
Before the advent of the container, transporting goods was expensive. So expensive that it did not pay to ship many things halfway across the country, much less halfway around the world. The introduction of the container had an enormous impact upon the world’s economy. The masses of poorly paid workers who once made their livings loading and unloading ships ended up losing their jobs. Cities that had been centers of maritime commerce for ages, such as New York and Liverpool, saw their harbors decline due to them being unsuited to the container trade.
Merchant sailors, who had sailed out to see the world, had their traditional days-long shore leave in exotic harbors replaced by a few hours ashore at a remote parking lot for containers, their vessel ready to weigh anchor the instant the high-speed cranes finished putting huge metal boxes off and on the ship. But even as it helped destroy the old economy, the container helped build a new one. Harbors such as Busan and Seattle moved into the front ranks of the world’s ports, and massive new ports were built in places like Felixstowe, in England, and Tanjung Pelepas, in Malaysia.
Small towns, far away from the cities, could take advantage of their cheap land and low wages to attracted factories freed from the need to be near a port to enjoy cheap transportation. Extensive industrial complexes where thousands of workers manufactured products from start to finish gave way to smaller, more specialized plants that shipped components and half-finished goods to one another in ever lengthening supply chains. Poor countries, desperate for economic development, could realistically dream of becoming suppliers to wealthy countries far away.
Huge industrial complexes were built in places Los Angeles and Hong Kong, only because the cost of bringing raw materials in and sending finished goods dropped extensively. The container made shipping cheap, and by doing so changed the economic geography of the world. It was now easier than ever before to transport goods all over the world. Goods could now be manufactured anywhere and sold anywhere. Thanks to the container the world had become a smaller place.
This new economic geography allowed firms whose ambitions had been purely domestic to become international companies, allowing them to export their products and selling them abroad almost as effortlessly as selling them nearby. Those who had no desire to go international learned that they had no choice. Whether they liked it or not, they were competing globally because the global market was coming to them. High shipping costs no longer offered protection to high-cost producers whose biggest advantage was being geographically close to their customers.
Even with customs duties and time delays, factories in Malaysia could deliver blouses to Macy’s in Herald Square more cheaply than could blouse manufacturers in the nearby lofts of New York’s garment district. The world was full of small manufacturers selling locally in 1956 but by the end of the twentieth century, purely local markets for goods of any sort were extremely rare. The container as useful as it was to facilitating economic growth was not warmly received by the workers. The workers, as consumers gained plenty due to the container. They enjoyed infinitely more choices thanks to the global trade stimulated by the consumer.
The increased trade brought about an increased level of competition which held prices down. Consumers all over the world enjoyed higher living standards due to the ready availability of inexpensive imported consumer goods. However as wage earners the workers weren’t too receptive of containers. In the years after World War II, wartime devastation created vast demand while low levels of international trade kept competitive forces under control.
In this exceptional environment, workers and trade unions in North America, Western Europe, and Japan were able to egotiate nearly continuous improvements in wages and benefits, while government programs provided ever stronger safety nets. The workweek grew shorter, disability pay was made more generous, and retirement at sixty or sixty-two became the norm. The container helped bring an end to that unprecedented advance. Low shipping costs helped make capital even more mobile, increasing the bargaining power of employers against their far less mobile workers. In this highly integrated world economy, the pay of workers in Dhaka sets limits on wages in New York.
For manufacturers it became more preferable to manufacture abroad in underdeveloped countries as pay and work place standards are low in underdeveloped countries. 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 Dhaka to Toronto 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 ship carrying 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 the entire vessel. 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.
All of those changes are consequences of the container revolution. Transportation has become so efficient that for many purposes, freight costs do not much effect economic decisions. Containerization has without a doubt changed the world. It has caused time-space compression that has greatly impacted economic geography. Places far away could now transfer all kinds of goods between them due to shipping containers. In simple words it has made the world a smaller place.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 1 October 2016
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