Initially, the title of this book--"The Box"--leaves you hanging: "Hmm, is this about product packaging? Is it about some Claus Oldenburg sculpture that I don't know about?". However, it all becomes clear when you read its subtitle: "How the Shipping Container Made the World Smaller and the World Economy Bigger." Written by Marc Levinson in 2006, the book went on to become a minor classic, being short-listed for the 2006 Financial Times/Goldman Sachs Business Book of the year and winning the 2007 Anderson Medal from the Society for Nautical Research.
It argues that the creation of the standardized shipping container played a major role in driving down global shipping costs and increasing shipping speed--or, as The Economist puts it, "Without the container, there would be no globalization." And, by the end of the book, you're absolutely convinced that that's true. By drawing on a variety of disciplines--economics, business history, maritime history, and regional planning--and peppering the story with biographical vignettes, Levinson offers a highly readable account of how shipping containers have made $7 T-shirts from China a commonplace thing.
The catalyst for this change was a maverick named Malcolm McLean, a trucking company owner who won business by monitoring and cutting costs, a rarity in a business run more by rule of thumb in the 1940's and 50's. McLean Trucking was the first major trucking company to use diesel engines in its trucks; to keep insurance costs and repair bills to a minimum, the company had senior drivers train new drivers, and if the new driver made it through the first year without an accident, the senior driver received a bonus of one month's salary.
In the early 1950's, McLean was worried that his coastal trucking business would suffer from competition from shipping lines, so he put in motion a plan to buy his own ships and set up terminals that would quickly transfer truck trailers to and from the ships. However, it was easier said than done: such tight integration between trucking companies and shipping lines was in direct violation of the Interstate Commerce Commission's rules at the time. Nevertheless, McLean soldiered on, using a variety of legal machinations to get around the ICC rules and depending on an up-and-coming banker (Walter Wriston, who eventually went on to run Citibank) to loan him money.
Thus began container shipping in 1955, with the Ideal-X container ship sailing from Newark, NJ to Houston, TX. At the end of the Ideal-X's arrival in Houston, McLean did the numbers and realized he was onto a goldmine: Loading loose cargo onto a medium-size ship cost $5.83 per ton; McLean was able to load containers onto the Ideal-X for $0.15 per ton.
However, once the economics was proven, a whole new infrastructure had to fall into place to make containerization pervasive: for example, new cranes had to be invented, standard container sizes (and methods of container construction) had to be agreed upon, longshoreman contracts had to be renegotiated, and container-centric ports had to be constructed. Nevertheless, it's now a high-speed, high-volume business. Given that there are only 365 days in a year, it's pretty impressive that the port of Hong Kong handles 20.8 million containers a year and Singapore handles 18.4 million (2003 numbers).
If you read the book, you'll learn all kinds of interesting tidbits:
- In 1959, the port with the first purpose-built container crane (Almeda, near San Francisco) could handle 400 tons of cargo an hour, a forty-fold improvement over the average productivity of a longshore gang.
- How upstart ports such as Newark, NJ; Oakland, CA; and Felixstowe, UK used containerization to steal business from their rivals (New York, San Francisco, and London) and ultimately surpass them.
- How the Vietnam War changed containerization from a fledgling technology into a standard way of doing business.
Highly recommended if you want to read a non-IT-oriented book on globalization and standards setting.