The Shipping Container

Let's look at a brief history
of just how much

the shipping container
has boosted world trade.

What we've learned
from studying the data

is just how much the shipping container
was a big breakthrough,

arguably the big breakthrough,

in the post-World War II
expansion of global trade.

This is a technological innovation

which consumers generally
do not handle directly,

and probably they don't think
very much about,

but it really has been quite significant.

A key feature of the shipping container
is not just the container itself,

but its standardization.

It's made it possible to have
standard operating procedures

for loading materials on and off of boats,

running ports, and facilitating logistics

and this has made trade
much easier to handle.

The hard part about
a lot of international trade

is not shipping the goods
across the ocean,

but rather processing them
when they are being packed up

and processing them again
when they are being unloaded.

A big part of the gains from
shipping containers have been their ability

to support and induce
a coordinated system involving

cranes, ports, and storage,

again, with this key property
of standardization

making it much easier
to load and unload goods.

A primary entrepreneur behind
shipping containers, by the way,

was an American, Malcolm McLean.

He was a trucking magnate
and he first tried out the idea in 1956.

Prior to shipping containers,
which allowed for standardization,

and also machine operated ports
to a greater degree,

a lot of the loading and unloading
was done by dockworkers.

That cost a lot of money,

and it also involved a lot of
management problems,

and coordination and
information problems as well.

You don't actually see
many workers in this picture

and today, quite often,
a port is a pretty quiet place.

This whole idea spread
pretty rapidly and pretty fundamentally.

So in 1966,

just 1% of all countries had ports
which could handle shipping containers.

By 1983, that had gone up to about 90%.

And it's astonishing how much
port-labor productivity rose

in places where shipping containers
were instituted.

So, for instance, in 1965,
we have measurements

of port-labor productivity
being 1.7 tons per hour.

By 1970, a mere 5 years later,

we have measurements where
port-labor productivity is about

30 tons per hour.

Of course, that's a very
significant increase.

The best numerical estimate we have
looks at 22 industrialized countries

and finds that shipping containers explain

a 790% of increase in trade
over the first 20 years of their use.

That estimate is found by comparing places
which had introduced shipping containers

and what their growth and trade was
as compared to places which didn't

or which did only later on.

And even if that's
an estimate on the high side,

scholars are in general agreed
that the technology of shipping containers

has driven a much bigger increase
than say, bilateral free trade agreements

and according to the same measurements,
those bilateral free trade agreements

would account for a 45% increase
in world trade over that same period.

And of course,
that's a much smaller growth

than what we've gotten
from shipping containers.

Above all, I think of
the shipping container story

as a tale of just how subtle,

and indirect, and maybe hard to observe
important innovations can be.

Anyway, for sources to read more,

there's a very good piece
in the magazine The Economist;

this should be online.

The main empirical results discussed here
are taken from this paper,

which is a working paper,
on shipping containers.

There is a whole book, very good to read,
by Marc Levinson, it's called "The Box".

It's basically the history
of the shipping container.

And not so much on shipping containers,

but on trade and transport costs
more generally,

I would recommend
this piece by David Hummels,

and that's available online.