Today is world Maritime Day. A shipping container does not mean much to many who sees it as an obstacle for traffic movement on roads. But almost 95 percent of consumer goods/ finished products, refrigerated food/medicine etc. move around the world on a 20 foot box (or its double) on the innovation made in 1956 by Malcom McLean, an American trucking magnate who revolutionised world trade.
The Uniform metal containers known as the “box” at first glance may just appear to be humble metal boxes. But containers can be easily moved between lorry, train and ship and have reshaped global trade and logistics over the past few decades creating millions of dollars of wealth and jobs across the world.
How did containers boost trade?
Before the box was invented, goods were shipped as they had been for centuries. Crammed in to the hold of a ship, loose cargo in wooden crates would be loaded and unloaded by vast crews of dockworkers.
The process was unwieldy, unreliable and so slow that ships often spent longer docked than they did at sea.
Theft of transported goods was rampant: as an old joke put it, dock workers used to earn “$20 a day and all the Scotch you could carry home.” All this meant low speed and high cost!
Containers revolutionized global trade
In an article published in “economist” it says with the container…
Quote: “The price of everything fell, starting with the cost of loading and unloading. When McLean looked at the costs of his first container ship, he found that it cost $0.16 per tonne to load compared with $5.83 per tonne for loose cargo. Between 1965 and 1970 the amount of capital locked up per tonne of inventory in transit between Hamburg to Sydney fell by half. Because containers were packed and sealed at the factory, losses to theft plummeted, which in turn drastically reduced insurance costs.
More could also be loaded: in 1965 dock labour could move only 1.7 tonnes per hour onto a cargo ship; five years later they could load 30 tonnes in an hour. As a consequence, ships could get bigger and more efficient while still spending less time in port. As containers made inland distribution by train and lorry easier, ports became bigger and fewer in number (In 1965 there were 11 loading ports in Europe; by 1970 there were three). This, along with increased productivity, meant fewer dockworkers were needed, undermining their bargaining power and reducing the number of strikes.”
Not bad for a box of 20 feet or its double
In 2006, container shipping celebrated its 50th anniversary as an innovation that had a tremendous impact on the geography of production and distribution. Production became globalized by a better usage of comparative advantages while distribution systems were able to interact more efficiently
A World Trade Organisation (WTO) Paper published in 2013 cleverly disentangles the impact of trade deals from that of containers. It says “Looking at 22 industrialized countries, it finds that containerisation is associated with a 320 percent increase in bilateral trade over the first five years and 790 percent over 20 years. A bilateral free-trade agreement, by contrast, boosts trade by 45 percent over 20 years, and membership of GATT raises it by 285 percent. In other words, containers have boosted globalisation more than all trade agreements in the past 50 years put together”.
Today as the scale increases in vessels and terminals and a clear productivity increase in container handling and greater competition the industry is facing new challenges and opportunities such as expanding markets in Asia and Africa and imbalance of trade, rapidly fluctuating bunker cost etc.
The container was an innovation initially applied for maritime transport but now it has entered in to new heights as the twenty foot box or its double have made great inroads into global supply chains and the business of logistics over inland freight distribution systems etc.
The 20 foot box that goes around the world connecting economies /people and increasing wealth of nations will continue to play a major role in trade development and help maritime economies of many nations to prosper.
The UN observed world maritime day of IMO celebrates many aspects of the maritime industry and in particular in 2015 the theme is “maritime education and training”. The maritime industry is a promising area where Sri Lanka can alleviate to the next level in economic prosperity if managed professionally.
(The writer is the CEO of Shippers’ Academy Colombo, an economics graduate from the Connecticut State University USA, and immediate past secretary general of the Asian Shippers’ Council)
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