Customer Reviews

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

5 star:		(27)
4 star:		(19)
3 star:		(6)
2 star:		(0)
1 star:		(1)

 

 

In "On the waterfront," perhaps the saddest point of the film is where Fr. Barry eulogizes K. O. Duggan, killed off by the mob. But Marc Levinson has located a larger villain, the real force that killed off so many longshoremen's careers: the standardized shipping container. While a highly trained crane operator working today's docks earns $120,000 a year, their numbers are few and few of them are former longshoremen or sons of longshoremen. And cargo handling costs have dropped over 90%. Yet this is only the start. The shipping container reduced spoilage, theft, insurance costs, delays, and the entire cost of going global.

Levinson's well-researched treatment of a seemingly pedestrian subject works effectively to show that the world is not flat. The original dust cover of Friedman's best-selling book shows a tall-masted ship going over the edge of the 'flat' earth, confirming flat earth society members' discarded beliefs but distorting and mischaracterizing globalization. Levinson's rich, detailed, data-filled work shows the stark difference between Levinson's work with The Economist and Friedman's with The New York Times. Levinson uses a thorough, comprehensive economic and technological analysis, while Friedman flies around the world with a consistent "gee whiz" attitude of surprise. Levinson traces multitudes of disparate events and finds common links where Friedman finds common links and illustrates them with cursory events. Levinson is an economist; Friedman is a journalist. Friedman mixes metaphors and hyperbole; Levinson mixes in a wide range of colorful characters and challenges. Levinson is an editor; Friedman needs one. People who want to understand the recent history, impetus and infrastructure of globalization need to read "The box."

Fifty years ago, maverick southern trucker Malcolm McLean devised a method for a quantum leap forward in the handling of cargo in transit. At that time, the process of loading and offloading of ships had not changed much in hundreds of years. Loose cargo, irregular, unpredictable and back-breaking work, light-fingered workers, corrupt stevedores, poor management, and mob-controlled unions were the order of the day and most orders changed on a daily basis. The workers probably suffered the most, but the hidden impact on global trade was severe as well. Some small and expensive products -- whiskey, watches -- could not be shipped reliably and safely when subject to massive pilferage. While containers started as a domestic solution, their global use worked miracles in reducing the costs of getting products thousands of miles, and not just on what came to be huge, fast new ocean sailing ships. Railroads and truckers participated in this transformation. Markets opened up. Ports like Felixstowe (England) and Singapore emerged rapidly, displacing older, intransigent ports. Military shipping in containers from America's west coast for the Vietnam War made return trips with stop offs in Japan a cheap, added source of shipping revenue. Cheap-to-ship Japanese products flooded America. Ports sprung up where investors and governments were willing to build cranes, re-build docks and dredge canals. Corrupt, inefficient labor could be bypassed and eliminated, no matter how powerful the union or onerous the contracts. Free trade multiplied.

Sometimes global revolutionary change is not sexy. It's not even computer-driven. Maybe the computer chip spurred globalization, but it was the container ship that made it possible. The idea is to make trade fast, reliable and inexpensive, not just to make the world flat. Containers are like computer chips; they hold lots of stuff in a well-organized fashion. Without the containers, the global transportation network would be running much slower and more costly than it does today. Levinson catalogs a history of shadowy billionaires, entrepreneurs, and a few enlightened governments (the demise of London and New York City ports under much less enlightened leaders is especially painful) that produced a true global revolution. This book is a greater tale of globalization.

I only wish Levinson had included some photographs and more drawings. Some of the technical and industry-specific language can be dry and hard to visualize through verbal descriptions alone.

The first thing that struck me about the impact of the shipping container was the public policy impact on it. Before the shipping container, shipping, trucking, and railroading were heavily regulated by the ICC. Rates were set not only according to weight and distance, but also according to contents. Thus, the cost of shipping 1000 pounds of tires would be different than, say, 1000 pounds of grain, and not just because of density differences. This apparently goes back to the complaints made by shippers in the late 19th century, and made sense to regulators in that era. Also, prior to the container, shippers were allowed to charge less than truckers because ships took longer. So if a ship already had a stated rate for, say, wheat, between two ports, truckers were not allowed to charge less (or something like that - Levinson didn't attempt to explain the intricacies of ICC regulation). Further, shipping between American ports was restricted to American flagged ships, and international shipping was heavily regulated and subsidized - to qualify for the subsidy, you had to use American built ships, and the subsidy supposedly helped make up for the more expensive American crew. One final government involvement in the era just prior to the shipping container's introduction: many of the ships currently in use in 1956 were WWII surplus ships, built on the cheap and available for next to nothing. It was relatively easy to get into the business, as very little capital was required, and ships could ply from port to port picking up freight as they went.

Enter the shipping container, 1956.

But wait: the container requires different infrastructure. The story of the shipping container is also the story of ports where governments chose to support the companies investing in the container. In New York City, the story is governed by the decisions of the Port of New York Authority (now the Port Authority of New York), which was looking to expand its bureaucratic territory. The piers on the New York side had all the business they could want and politicians to defend that turf. The only reason they remained viable was the fact that the ICC required railroads to charge the same for freight delivered on either side of the port, in effect a requirement to throw in the trans-Hudson part of the journey for free. That was not trivial, since it involved either removing freight from trains and loading it on barges, crossing, and then re-loading into warehouses to wait for a ship.

Much of the history revolves around boy genius Malcom (not Malcolm, he dropped the second l to differentiate from his father) McLean, who started in the trucking business. Shipping something from a factory via truck to a railroad and then (via truck again) to a port, loading it on a ship, and reversing the process at the far end cost plenty. It cost time in transit, storage, and management; it cost labor at each change of mode; it was extremely expensive because of pilferage and breakage because of the frequent handling and the subsequent insurance; and of course the shipping cost money. Malcom realized the problem and the potential money to be made from rationalizing the shipping process.

The first container ships required their own cranes because standard dock cranes were not capable of lifting the containers, much less taking advantage of their standardization and the potential savings in ship loading times. Thereafter, however, the cranes became part of the port infrastructure, along with rail sidings, truck terminals, deeper and wider ports, and computer controls. The industry, in other words, became more capital intensive, and some of that capital came from state and local governments. Those who made the commitment, such as the Port Authority in New Jersey and Port Elizabeth, became the winners, while those who didn't, such as New York City, did not.

The government did not only take sides in the wars between technologies and shipping companies. As it became clear that automation was going to cost not only cushy jobs, but real ones too, the various unions found themselves at odds not only with shippers, but with governments as well. The City of Los Angeles chose sides when longshoreman at first refused to unload Matson's shipping container ships; the city threatened to take over the port and make their jobs civil service, prevented by law from striking. The Federal government stepped in repeatedly on the side of shippers against the East Coast union strikes. Eventually, the Longshoreman's unions on both coasts struck deals with shippers, trading generous contributions to retirement and unemployment funds in return for acceptance of the technology and more productive work rules. I'm not sure which side I come down on in that dispute: yes, there were aspects of the trade that sound cushy, such as rules that allowed each of the two teams working a ship to take a half day off with pay, and the day laborer aspect meant that senior union members could work or take the day off as they desired. On the other hand, the corrupt day labor culture enabled organized crime and allowed rampant pilferage to persist, not to mention the fact that jobs were described as incredibly dangerous and literally back breaking. In the old paradigm, workers had to live in slums near the docks to make themselves available; today, the crane operators are guaranteed a regular 40-hour-per-week job, and can afford to live anywhere, but have to get permission to take off. In any event, government was neither impartial referee nor friend of labor in these struggles.

So this ends up being a very complex story in which government starts out standing against change in the status quo that had persisted since roughly the 1920s, and then steps in to tip the playing field toward the shipping container. Levinson argues that the shipping container may not have been the only factor, but it certainly was *a* factor in accelerating the globalization of the economy. Before the shipping container, it was extraordinarily expensive to ship anything overseas; today, it may be less expensive to ship goods overseas by rail and ship than across the state by truck. Remove time and distance as factors or advantages, and suddenly labor costs become the more important factor.

Two final factors radically altered the trajectory of shipping. The first was Viet Nam. The Army suddenly found itself in a situation where it needed lots of supplies shipped in to a place with no infrastructure or railroads. McLean was the man on the spot, winning the contract by offering to build all of the necessary port infrastructure. The remarkable increase in efficiency forced the federal government into the pro-container camp, but also had an unexpected effect. With the Army picking up the ship's entire journey, westbound and eastbound, but only shipping freight west, this left Malcom with a *pure* profit opportunity: ships returning from Asia in the late 1960s with no cargo. A stop in Japan for loads of televisions and automobiles solved that "problem". Incidentally, by rationalizing shipping by making it predictable and fast, the container contributed to the development of the inventory-free manufacturing method of Just In Time.

The other final factor was the phasing out of the WWII surplus ships and the phasing in of dedicated container ships in the middle of the first oil embargo era. The shipping industry thus completed the transition from labor-intensive to capital-intensive. The enormous ships, some of which no longer fit in the Panama Canal, have to keep moving just to keep paying for their own financing. The cost of shipping plummeted, and the size of ships continues to expand. The Molucca Straits have overtaken the Panama Canal as the limiting factor on size.

Because of the plummet in shipping costs, the resulting increase in dependence on shipping, the pressures of the oil embargoes, and the changes in finance and capital requirements, the shipping industries were "deregulated" in the late 1970s. That deregulation was, of course, not complete. Levinson notes some exceptions, and I found that some of the rules were still in effect when I tried to ship something to Hawai'i a few years back.

Marc Levinson cites W. W. Rostow's "Stages of Development" argument early in the book regarding the importance of the railroad to American and English development, noting that the container is a modern equivalent in global development. Rostow in fact made two claims: one, that the railroad was essential, and two, that government investments were also crucial. Levinson's history of the shipping container would seem to support Rostow's claim. Many of the Asian Tiger economies - Japan, South Korea, Hong Kong, Singapore - invested heavily in port infrastructure to bring the shipping container to their shores; they were literal cargo cults. To the extent that it worked, they have reaped the benefits.

But Levinson provides some counterexamples. England adapted to the shipping container very poorly, and to the extent that they did, it was because of a private port at Felixstowe; England has arguably done quite well for itself in the past 30 years despite missing both of the Rostovian requirements. Further, much of the investment in American ports was private, though government has also played a role. Finally, the Rostow argument only makes sense when you accept that people are unequivocally better off when they adopt capital intensity. Yes, the increase in measurable wealth is notable, but I am curious about the intangibles and the change in quality of life, pace, direct control of one's life that result from acceptance of the modern.

This book hits somewhere in between detailed Fogelian economic history and story-telling, so I gave it 4 rather than 5 stars. It is certainly more accessible than a dry investigation of the numbers, but does manage to highlight many aspects of the technical, cultural, social, economic, and political issues at the nexus of which was The Box.

It's hard now to imagine a world without marine shipping containers, but the first one was loaded onto a ship, the Ideal-X, just 50 years ago. Precisely, on April 26, 1956, in Newark, N.J.
It turned the world upside down. It probably had as much to do with the success of Waikiki as the jet airliner, introduced in 1960.
The story has a hero, Malcom McLean, and it plays out, for him and for many others, as tragedy.
In "The Box," Marc Levinson makes business history read like a novel. Well, almost.
Like many simple, everyday things, the shipping container is more complicated than it looks. Just how do you design a steel box that can hold 20 tons but also has to be picked up without being touched by human hands and moved from ship to truck in less than a minute?
McLean, a North Carolina boy who founded a trucking empire in the days of heavy regulation in order to save $3, took the plunger's approach. In the Pacific, Matson Navigation Co. was also interested in converting from expensive breakbulk cargo handling, but it took the systems approach.
McLean beat Matson by two years, but Matson is still around (as the principal subsidiary of Alexander & Baldwin Inc.), while McLean's SeaLand survives today only as a subsidiary (a very large one) of a Danish business that didn't exist until 1973.
McLean did not imagine he was going to restructure the world economy, but his idea did that, which is why this book deserves a wider audience than business histories usually get.
The container killed off New York and London as important shipping ports. New York City now handles only a little more cargo each year than Tanjung Pelepas, Malaysia, which did not exist in 1990. Most of Britain's international trade now moves through Felixstowe.
Since most of the cost of moving a container comes while it's passing through a port, shipping costs are not materially affected no matter how long the at-sea leg is made. Hence, globalization.
The cheap labor of China was always there, it just wasn't accessible before McLean.
Although "The Box" barely refers to Hawaii, it is an obvious conclusion that a resort like Waikiki, which imports nearly everything except aloha, could not have offered cheap vacations to middle class American families if ocean transportation costs had remained as high as they were in the '50s.
Besides different business approaches on the Atlantic and the Pacific coasts, the two oceans featured vastly different reactions by unions to the problem of adopting dock labor to containers.
In the Atlantic, the International Longshoreman's Association was antagonistic. The approach was suicidal, for its members and for their communities.
In the Pacific, commie bogeyman Harry Bridges forced conciliation on his reluctant membership, saving the International Longshoremen's and Warehousemen's Union and opening the gates to a boom in Southern California.
Bridges, long dead, remains a name that American rightwingers use to scare the children into good behavior. If Republicans understood economics, they'd have built a statue to him in every port (except San Francisco, which did not benefit from containers because of its awkward railroad connections) in western America and Canada.
Levinson, a one-time journalist, knows how to write a book that can be read with pleasure. And profit.

You rarely see it mentioned in the popular press, but the container played a huge part in allowing today's global economy to come of age. Today it doesn't matter where a manufacturer is located: as long as they can build the product cheaper - and have ready access to a containership port, they can ship their products anywhere for pennies.

The shipping container has a surprisingly long history, but "The Box" is the story of the vision of Malcom McLean who saw that the box - the shipping container - was only a part of a solution. The entire solution was a seamless shipping environment: boats, trains and trucks.

Levinson recounts the modern history of maritime trade. How freighters - breakbulk boats in the parlance of the trade - were expensive to load using longshoremen and with the boats having to spend days in each port. The cost of getting cargo to the boat was high. Every item had to be loaded and stowed in the hold individually.

As a result, according to Levinson, manufacturers stayed close to ports and international trade was held back.

McLean's vision was that a container could be packed anywhere, put on a truck or a railroad flatcar and taken to a containership port where it would be loaded within minutes. It took almost two decades - a short time, in reality - for McLean's vision to change the world.

Old ports, like New York and London, hobbled by unions and unimaginative old style ship owners were replaced by aggressive combinations of public and private capital that risked huge amounts on container ports and containerships, respectively.

The payoff is that in 2006, ships capable of carrying 4,000 containers ply the world's oceans. Manufacturers in Asia are able to leverage the low local labor rates and sell their products in Europe and America because shipping adds practically nothing to the cost - a far cry from the way things used to be. (By way of example, Levinson tells of how products delivered for pennies per ton to South Africa cost over $200 per ton to be trucked just 200 miles from the port.)

The container and containership made possible just-in-time manufacturing on a global scale, reducing costs tremendously while vastly increasing productivity.

Levinson's style is a bit on the dry side, but always clear. A major deficiency is the lack of illustrations or pictures. It would be helpful to see, for example, the various ships he is describing.

Other than those quibbles, it's an excellent book for anyone interested in this under-explored area of commerce and invention.

Jerry

The Box by Marc Levinson (no relation, despite the fact he too writes books on transportation) is a new book on the history of container shipping. It is a fascinating account of this method of shipping's birth in multiple places, but primarily fostered by Malcom McLean, through its growth and expansion, driving the evolution of both the ships that containers sail on as well as the ports at which they are transferred.

The book covers topics ranging from labor union issues with automation, the politics of New York as container shipping moved to New Jersey, through the politics of competing standard setting processes that determined the size of containers, and the Vietnam War as the military turned to standardized containers to untangle the shipping mess found in Southeast Asia in the 1960s.

It is an exceedingly well-written book that I would recommend to anyone interested in history of technology, transportation, economics, or 20th century American history. It is well researched, with over 85 pages of notes and references (for 278 pages of text).

The book, penned by an economist, (in fact, by a writer for The Economist) clearly points out the tradeoffs between fixed and variable costs of moving to this incredibly capital intensive mode, and of the increasing scale of container ships and ports.

The conflicts between port uses and other land uses were not brought out as much as it might have been, though the location of new container ports at new sites far from old city centers is an indicator that price of land, as well as institutional legacy, are important costs that central cities impose on trade.

-- dml

The shipping container has stealthily remade the world. It deserves a good history. This one is just okay.

I like the layout - chapters are single subject (unions, the first container ship, the boom, the bust, etc.) and the chapters are ordered by the time that each's subject peaked. But the subjects do overlap in time and I spent a lot of my time paging back to see what happened when. There should be a timeline _somewhere_ in this book.

The book needs other visual aids. There are multiple paragraphs that try to show the importance of the subject by listing dates and numbers. E.g., the first container ship crossed the Pacific on ____, by 19?? there were 10 ships, and by 19?? the number had grown to 30. These should be _graphs_ not paragraphs. I should _see_ the change.

I felt the writing should have be more personal. I would have liked to have a better feel about McLean. The telling of his tragedy didn't affect me at all. Only a few other names are mentioned; mostly the author talks about corporations and ports and unions, not the people who comprise them and certainly not their personalities.

Lastly, as an engineer, I would have like to hear more about the technical aspects of the container itself and the ships, cranes, and system that dealt with it. Other than a few paragraphs about a device to lock stacked containers together (again without a visual!), there was almost nothing technical. Not even for the gigantic boats that are being built.


While I think this book has major flaws, it does do its job. It presents multiple aspects of the container's rise and dominance. The writing is clear. It strives to present as much hard data as it can, given the lost records of bankrupt companies and partial records of those that still exist. Economists will like it, but I wouldn't recommend it to a wider audience.

I'am very impressed with Mr. Levinson's thoroughness. Invaluable material for innovators and developers. Out-of-the-box thinking (no pun intended) by Mclean and others demostrate that an idea can defeat any apparently stablished rationale to stop the implementation of better systems and products.

Happy fiftieth birthday to the shipping container, that unexciting, unglamorous cog in the wheels of commerce that just so happened to change the world. Most people might have ignored the import of the box during the past half-century, but economist Marc Levinson offers an insightful tale that will help you appreciate this oft-overlooked advancement. If it weren't for the container, Levinson argues persuasively, for good or ill, there could be no Wal-Mart and U.S. manufacturing jobs couldn't have migrated to China. This history lesson recounts the box inventor's quest and offers some subtle perspective for businesspeople struggling to foretell the future. At times, Levinson bogs down in the details of 1950s labor relations, but his work mostly moves quickly through the highs and lows of the container's story. We recommend this revealing tale to anyone in the global economy.

Commonplace objects that go almost un-noticed in daily life often conceal interesting stories. "The Box" by Marc Levinson is a case in point.

All of us have seen shipping containers being trucked along the highways or sitting in some factory, but we pay them little attention. Yet the cheap shoes we wear and the affordable digital cameras we tote around owe their low cost to a global economic revolution driven to a surprising extent by the shipping container.

Levinson tells this remarkable story in his exceptionally readable book. His description of working life on the docks and how break-bulk cargo was handled in pre-container days makes fascinating reading. Traditional waterfront work practices and communities disappeared with remarkable speed once containerisation took over.

The resulting derelict port areas and piers in most major waterfront cities in the world morphed into trendy shopping, eating and entertainment precincts - all due to a revolution wrought by the shipping container.

Industries that once clustered near major ports to minimise high transport costs were then free to spread widely and even globally in search of the lowest business costs.

Levinson writes about the technical and economic aspects of his subject in a very clear manner, fully accessible to the general reader. His explanation of the shipping "rate wars" (my term) of the late 1960's - early 1970's is a gem of clarity.

Not being familiar with the US transportation regulatory regime in the mid-20th century, I was astonished to read that the US ICC regulated routes and freight rates to a degree that seems ludicrous today. To take one example, an American trucking company had to get ICC approval to transport particular goods along defined routes and charge their customers regulated freight rates. Advocates of containerisation had to fight against such entrenched bureaucracies and vested interests.

Some longshore Unions were able to negotiate bizarre contracts to preserve dwindling jobs. In one case, filled containers delivered to a port had to be emptied on the docks and refilled with exactly the same cargo before the containers could be loaded onto a ship. The fact that shippers agreed to such contracts says a lot about relative power on the waterfront at that time.

The book is not only about the shipping container, it is also about the impact of transformative technologies on traditional communities and jobs and it is about how new technologies can re-order the economic landscape.

The book is excellently arranged and progresses through pre-container work practices on the docks, early experiments with containers, the struggles with unions, standard setting, development of dedicated container ports, the frenzy of ship building and resultant collapses and so on.

I was pleased to see virtually no padding in the book. Quite a few books of this genre don't really have enough material to fill a book, so they are padded out with marginally relevant background text.

Disappointingly, there are no photos or diagrams in the book. I wanted to see diagrams of the controversial "corner castings" that took up much time in standard setting meetings. I would also have liked to see photos of some of the historic early containers, cranes and ships - and waterfront life and work before containerisation.

I loved this book. I strongly recommend the book to readers interested in the popular genre of books on commonplace "objects" such as the shipping container. Those working in the shipping, transport and logistics industries may have never given a thought to the history of such a basic tool of their professions. They will also enjoy reading about its history.

This book caught my attention because it was on the list of Ten Best Business Books for 2006 by Business Week and I've been interested in the affect that the container has had on world commerce. The writer does a great job in putting this story together. As you get half way through the book you realize that this box is like the answer to a final exam. It came into being as a result of hard work and compromise and trumped many obstacles by communities and job losses in key sectors. Economics and efficiency prevailed. One very unnoticed point about the box is it represents the culmination of a world wide efort. If we can do this why can't we do so much more? Economics trumps politics here and we could extend this.
Container ports are like magic where if you build it and they will come. This was shown in the case of Singapore and Australia where they went ahead without demand and when Port Elizabeth, NJ was built.
The author misses one major point and that is China. China comes later to the game yet it is the largest player and that is never explained. He shows it in his chart on the last pages but that must be part of this great story. The reason why this is important is that it will probably be China that builds the first major container port on the west coast of Africa and succeeds where the west has failed. We will wonder one day how that happened.