How The Shipping Container Changed the World

I found this story very interesting and timely given that I just moved to Singapore, so I thought I'd share it as a "Sunday Educational Post" with my readers.

Quote from a  report on the Channel Register:

Keith Tantlinger has just died. He's someone you almost certainly haven't heard of and someone who – along with Malcolm McLean (no, not McLaren) – changed our world to the extent that it would have been almost unrecognisable to our forefathers. They also – if you want to squint at it – made the European Union redundant six months before it even started.

They did this by inventing the shipping container. Shipping stuff around in boxes had been done before, of course, but Tantlinger's contribution was in the connecting and locking mechanisms which enables you to easily stack them, stick 'em on trucks and railway flatbeds, pile them up on ships' decks and so on. McLean was the trucking baron who wanted to be able to use sea transport to get his customers' stuff around by sea: far cheaper per tonne-mile than land transport, which is still the case now and has been for millennia.

The end result of this system is that we don't really have a geography-based system of trade any more, at least not in the manner we used to have. Or perhaps the geography which shapes our trade is now different.

Time was, plain old “how many miles away?” geography shaped trade networks. That didn't really last all that long, only until ships were invented and economic or trade geography became a thing of shipping routes. A millennia BC and Phoenicians were getting tin from Cornwall while people in Somerset weren't all that sure that Cornwall existed (a little extreme, yes, but not much). We're all aware of how the Portuguese navigators changed the spice trade, cutting out the various grasping hands in the Middle East looking for a slice, but the continuing superiority in cost of sea freight over land, even with railways, can astonish. It certainly astonished me to find that in the 1860s, getting wheat from Chicago to New York cost 17 per cent of the Chicago wheat value, while getting it from New York to London only cost 12 per cent of that Chicago value of wheat.

What the shipping container has done is just about entirely take away geographical distance as a determinant of freight costs. It really doesn't cost much more to ship something from China to Europe than it does to ship something inside Europe. Beijing, Brisbane, Brindisi and Birmingham, they're really all just nodes on the container shipping routes and getting from one node to another costs about the same amount, wherever in the world they are.

OK, this is not entirely and strictly true, there are slight differences in shipping costs, but near enough as to make no difference. It's near impossible to pay more than $5,000 to get 40 tonnes in a container from any one node to any one other. it costs $125 a tonne to get stuff from Shenzhen to Sheffield or from Santiago to Savannah.

The flip side of this is that if you're not on the network, not able to plug into one of those nodes, then in economic terms you're pretty much screwed. If you're on a Pacific Island on a shipping route, say Fiji, then you can export bottled water (as they do) and compete with any other company for the custom of the crazed loons who won't drink tap water. If you're on a Pacific Island off a shipping route (Tuvalu say) then you're just not going to get much of anything exported nor imported. As they don't in fact get much in or out. A village on the Trans-Siberian where you can load a container is plugged in. One 30 miles away without the paved road necessary to get the lorry to the railhead might as well be 500 miles away.

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