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April 6th, 2006 at 12:00 am

50th Anniversary of the Shipping Container

The city of Busan, South Korea’s largest port,
feels like a room crammed with oversize furniture. Apartment buildings
and hotels crowd into a narrow strip between steep hills and a deep
harbor.

There is no view of the water from the claustrophobic main
street, even though it follows the harbor’s edge, because the road is
blocked on both sides by steel shipping containers in basic red, green
and blue, stacked two or three high like children’s blocks.

One’s
car is surrounded by tractor-trailers hauling containers, and
occasionally traffic grinds to a halt as long railway trains creep
across an intersection hauling—you guessed it—still more containers.

The image “http://www.morbridgeinternational.com/img/morbridgecontainerdoors.jpg” cannot be displayed, because it contains errors.In
Busan (population: 4.7 million), there’s not much question about what
rules trade: the Box, as they call it, is king. The city’s livelihoods
depend on the 24/7 conveyor belt that in 2004 handled 11.4 million
TEUs—"twenty-foot equivalent units," the basic unit of measurement in
the container trade—up from 2.3 million in 1990. That makes Busan the
world’s fifth largest port by volume, and earlier this year it opened a
state-of-the-art terminal 52 kilometers to the west, hoping to siphon a
majority of the container traffic away from the strained city center.

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For
its total devotion to the Box, Busan is an apt place to ponder the rise
of container shipping, which celebrates its 50th anniversary this
month, as a vital and increasingly controversial cornerstone of global
commerce. With roughly 20 million containers moving around the world
today, carrying as much as 95 percent of goods coming into America,
containers have become the essential baggage compartment of modern
life. Economist (and former NEWSWEEK writer) Marc Levinson, author of
"The Box: How the Shipping Container Made the World Smaller and the
Economy Bigger," argues that this simple innovation "made globalization
possible."

Indeed,
it is hard to imagine how world trade could have grown so
fast—quintupling in the last two decades—without the "intermodal
shipping container," to use the technical term. The invention of a
standard-size steel box that can be easily moved from a truck to a ship
to a railroad car, without ever passing through human hands, cut down
on the work and vastly increased the speed of shipping. It represented
an entirely new system, not just a new product. The dark side is that
these steel containers are by definition black boxes, invisible to
casual inspection, and the more of them authorities open for
inspection, the more they undermine the smooth functioning of the
system.

So
containers have become a perfect vessel for the smuggling of just about
anything, from counterfeit goods and currency to people and even
nuclear weapons—a fear that underlay the recent furor over a Dubai
company’s bid to take over terminal operations at several U.S. ports.
Security experts have warned repeatedly that a container carrying a
"dirty" nuclear weapon would make the ultimate "poor man’s missile,"
and nations the world over are now searching for new technology capable
of searching every single box that crosses their borders. The Bush
administration’s Container Security Initiative aims to enlist the help
of other countries in identifying suspicious containers in ports of
origin before they’re loaded onto ships bound for the United States. "A
hidden revolution has been going on," says maritime-security expert
Stephen Flynn. "And now we’ve become so dependent upon it that it’s
like the air we breathe. We don’t notice it until it’s not there. The image “http://www.sjonescontainers.co.uk/images/p01.jpg” cannot be displayed, because it contains errors.Then
you notice it big time."

It’s
impossible to miss now. The recently busted nuclear smuggling network
run by top Pakistani scientist A.Q. Khan shipped all of its goods
inside containers, notes former U.S. State Department official David
Asher. And there was the famous case, in early 2002, when Italian
officials opened up a container being shipped from Egypt to Canada only
to discover a man named Amid Farid Rizk, traveling with all the
conveniences that a presumed terrorist could want: a laptop computer, a
satellite phone—and several airport-security passes.

Ironically,
anonymity was originally a key selling point. Back in the 1950s, when
an American trucking magnate named Malcolm McLean first dreamed up the
Box, ports were messy, chaotic places—far from today’s smoothly
geometrical container terminals. Stevedores used cranes to lift
individual loads of all shapes, sizes and packagings out of ships, then
placed them in dockside warehouses until they could be trucked away. It
was usually impossible to calculate how long the process would take, or
how many of the goods would be stolen along the way. McLean realized
that standardized containers would increase efficiency, and thwart
thieves. Crafting new containers was just a start. McLean built new
ships and trucks specially designed to handle the boxes, launching the
modern industry of business "logistics," a term that had previously
been used exclusively by armies, says Levinson.

McLean’s
first container ship sailed in 1956, but the idea didn’t begin to catch
on for another decade. The impetus came from the Pentagon, which needed
to speed the movement of war matériel to U.S. forces in Vietnam.
Profits were impressive, but McLean realized that many of his
containers were making the trip back to the United States empty. So he
began scheduling stops in Japan, then the world’s most rapidly
expanding economy, where businessmen were exporting increasingly large
numbers of transistor radios, calculators and cars to America.

The image “http://www.multicargo.ie/shipport2.jpg” cannot be displayed, because it contains errors.As
the container caught on, costs plummeted. In 1959, by Levinson’s
estimate, freight could make up as much as 25 percent of a product’s
cost. Today shipping costs are a neglible fraction of the total. In
2006 the cost of shipping a standard 40-foot box from China to the
United States, complete with up to 32 tons of cargo, can run as low as
$2,000. That "makes the postage stamp seem overpriced," notes Flynn.

By
lowering shipping costs, McLean had neutralized the advantage of
geographic proximity, and set the stage for Asia’s "tiger" exporters,
and later China’s rapid rise as factory to the world. There were other
trade-offs, too. As Levinson notes, container shipping "assisted the
rapid economic growth of Korea while offering precious little to
[landlocked] Paraguay."

By Christian Caryl
msnbc.msn.com

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