Imagine 82,880 T-shirts in this box:
Before the container, t-shirts, flour, and bananas were packed in barrels or bags or crates. Transported by truckers to waterfront docks, it could have taken weeks to load them onto ships.
Then, Malcom Mclean invented the container.
Transport Costs
During the first half of the 20th century, it made sense to make a whole phone in one place. Vertically integrated, a single complex in Chicago manufactured telephone handsets for the whole country.
Now, one iPhone needs 43 countries. Moving from raw materials to assembly, one iPhone could have started its journey in Brazil, stopped at Vietnam and South Korea, and wound up with a slew of other components in a Chinese assembly plant.
Typical for countless commodities, you can see that it all adds up to a lot of miles:
At the same time that distance soared, transport costs plunged:
Our Bottom Line: Boxes and Air Freight
In 1956, Malcom McLean, rigged an oil tanker with 58 of his trailer trucks. Not the whole truck, but just the cargo containers were placed in slots on the vessel in Newark N.J. When they arrived in Houston, again, just the containers were unloaded, hoisted onto “running gear,” and shipped to stores and warehouses by rail or truck.
Leaping to 2015, we have just one container ship carrying 39,000 cars, 117 million pairs of sneakers, or a whopping 900 million cans of dog food. Whereas moving your cargo 1,000 feet from the street to a ship could have taken as long as an entire ocean trip, instead plummeting time and cost have revolutionized contemporary shipping:
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And then, adding the economies of air freight through which cost dropped tenfold to containerization, we wind up with an innovation ripple that included larger ships, better refrigeration, and port automation. So yes, as we said in our title, the box was a big deal.
You can see why economists encourage trade and oppose tariffs.
My sources and more: Seeing this paper, I realized it was time to return to the box. to transport costs, and the book that tells the whole story.
