Globalization in a box: How big a deal were shipping containers?

The invention and widespread adoption of the standardized shipping container is one of the more underrated technological advances of the 20th century, though it's been getting some more attention in recent years. Containerization dramatically reduced the amount of time cargo ships spent in port and increased the efficiency of the shipping industry. 

Research by U.K.-based economists Daniel Bernhofen, Zouheir al-Sali, and Richard Kneller attempts to measure just how dramatic an impact containerization had on driving the boom in global trade of the late 20th century. By way of historical background, they write:

Before the advent of containerization, the technology for unloading general cargo through the process of break-bulk shipping had hardly changed since the Phoenicians traded along the coast of the Mediterranean. The loading and unloading of individual items in barrels, sacks and wooden crates from land transport to ship and back again on arrival was slow and labor-intensive. Technological advances through the use of ropes for bundling timber and pallets for stacking and transporting bags or sacks yielded some efficiency gains, but the handling of cargo was almost as labor intensive after World War II as it was during the beginning of the Victorian age. 

All this changed following the retrofitting of ports to handle standardized containers, beginning in the United States in the late 1950s:

On January 9, 1959 the world's first purpose-built container crane started to operate and was capable of loading one 40,000-pound box every three minutes. The productivity gains from using this container crane were staggering, as it could handle 400 tons per hours, more than 40 times the average productivity of a longshore gang.12 Investment in larger shipping capacity became now profitable since containerization dramatically reduced a ship's average time in ports.

The authors estimate that containerization increased the average productivity of dock labor from 1.7 tons per hour to 30 tones per hour and cut the amount of capital locked up as inventory in transit in half.

So what was the cummulative impact of this on globalization? The authors find that the impact was far more significant for trade between developed nations -- where adoption of containerization was far more widespread -- than in trade between developed and developing countries, where its spread was slower. Restricting their sample to just "north-north" trade, they find that containerization was responsible for a 700 percent increase in trade in the 20 years following its adoption in 1966. These is a greater impact than free-trade agreements during this period or the adtoption of the Global Agreement on Tariffs and Trade.

Not bad for a big metal box.

Via the new blog Cherokee Gothic