Friday, April 28, 2006

The Box That Changed The World

Happy Birthday to the Box that Changed the World
First Containerized Cargo Shipped 50 Years Ago

Newark, N.J. – April 26, 2006-- It was 50 years ago today that Malcolm P. McLean's Pan-Atlantic Steamship company launched the SS Ideal X from Port Newark. On board: 58 trailers that could be loaded directly onto trucks or railcars when they reached the Port of Houston. In 1961, the International Standards Committee would establish the TEU (twenty-foot-equivalent-unit) standard container measure by which PIERS, leading source of containerized trade data, tracks fluctuating U.S. import-export volumes.

"“Today, close to 95% of U.S. trade by volume is containerized," says Brendan McCahill, PIERS COO, "with the largest vessels capable of carrying over 8,500 TEUS."

According to McCahill, containerized transport's low costs, high speed and relative security transformed cargo contents. "The data shows a transformation in cargoes from commodities, which represented some 40% of U.S. import-export shipments 100 years ago, to manufactured goods, representing over 80% of U.S. international commerce today. The transformation begins mid-century with containerization."

These "boxes" look like the back end of a tractor-trailer truck. And, in fact, they often are. These boxes allow an Italian exporter to load cartons of expensive virgin olive oil directly from his warehouse into the container, sitting on a chassis on the back of the truck, lock it and seal it. The trucker takes the container to the port, where it's loaded on a ship, or to the railyard where it's loaded on a rail flatcar and sent off to the port, where it's loaded on a ship. When the ship arrives at the U.S.--still locked and sealed, we hope!--the container is unloaded from the ship on to the truck chassis or the rail car. Eventually, that container is received at the importers warehouse, still locked and sealed, and it comes to a store near you.

Before Mr. McLean came up with this simple idea, exporters and importers expected to lose 10% of their shipments to theft and breakage. The idea of shipping something valuable--like computers, VCRs, DVDs, i-PODs--was unthinkable because the margin of loss would be too great. Because of containers, the cost of ocean freight is now a fraction of a percent of the retail cost. And manufacturing can now move overseas where labor costs and overhead are a fraction of what they would be in the U.S.

So, on the one hand we're paying much less for products than we would have without containers; on the other, containers have allowed manufacturing jobs to move overseas. While some Americans have lost jobs because of that, the standard of living in many Third World countries has improved as their job prospects have improved.

Global trade weaves a tangled web between producer and consumer and countries. Does this interdependence encourage global peace? Does it encourage global envy and resentment? Is globalization a rising tide or exploitation of the poor and weak by the rich and strong?

The answer to all of the above is "Yes." There is a mix of all of that going on. After all, we're human and only in rare cases are our motives ever pure. Certainly within a group of people (a community, a nation, a corporation, a political party, even a Church) seldom does everyone have the same motive for pursuing a common goal. Overall, I think the effects of globalization are positive. But I remain mindful there are also negative repercussions and those must be mitigated or minimized.