The Box, by Marc Levinson

I just finished reading The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, a book I found very helpful, and I can confidently say that this is by far the best history ever written about shipping containers—since it is likely to be the only one (turns out there is at least one other!) and I’m surprised that even this one was written. Pleasantly surprised, though; it is well written and well organized, a fine example of how to trace the economic impact of a technical innovation. If there were a hundred more like it, the average reader might have some hope of understanding how we got from pre-modern to modern times. As it is, we spend our time parroting the economic fables sold to us by those with vested interests, if we spend any time on the subject at all.

The story Levinson tells is specialized enough that I would only recommend it to folks who are not only deeply puzzled about how globalization came about, but have spent some time trying to seach out and fit pieces of that puzzle together. For me the book answered a simple question I’ve had for quite awhile: how and when did shipping costs effectively drop to zero? For this is the way things are now, and as a result many strange and wonderful things have come about.

Briefly, the answer is that shippers figured out that it was more efficient, in terms of both time and labor, to put shipments of goods into large boxes and loading/unloading them with cranes than it was to load the goods piecemeal into a ship’s hold. Now, that sounds so obvious as to be ridiculous—who wouldn’t know that? And, in fact, shippers knew it long before it became a reality. But there were good reasons that the old, piecemeal system existed. Nobody shipped enough stuff to fill a box on their own. Stacked boxes wasted lots of space in oddly spaced cargo holds. Ships made many stops, and it was difficult to figure out how to load the boxes so that they were easily unloadable at the right time. Economies had developed around ports—factories, communities of longshoremen—which had a vested interest in things not changing. And so on.

Each of these obstacles eventually fell, but not in an orderly fashion, and the process resulted in huge amounts of economic disruption, what some economists call “creative destruction.” Although longshoreman unions exerted a surprising amount of power in directing the process—mostly because shipping companies, like all companies, do not object to regulations on principle, but only when they can’t figure out how to game them—some unions made fatal missteps in their negotiations, others saw the writing on the wall and agreed to be bought off, and the rest were bypassed as shippers moved to locations that they didn’t control. Shipping companies redesigned their ships, docks, and warehousing systems to accommodate containers, but had to guess at what changes were needed to make a currently nonexistent system workable—and many went bankrupt as a result of wrong guesses.

Most interesting, changes in the system led to unanticipated benefits, which caused even more disruption as the world of manufacturing changed to take advantage of them. For example, before container shipping and for about twenty years after it was introduced, nearly all shipments involved either raw materials headed for a factory, or finished goods leaving a factory. Shipping was expensive enough that it needed to be minimized, and so it didn’t make sense to make parts in one location and ship them to another; as a result, parts suppliers were located very near their customers. But as shipping prices dropped, manufacturers realized that they could make more money if they simply ignored those costs and conducted each stage of the manufacturing process where it could be done most cheaply. And when manufacturers began shipping partially finished goods, the volume of shipments increased dramatically, leading to further efficiencies of scale, resulting in shipping costs that actually do approach zero (at least in relation to the total cost of a product).

The value of Levinson’s book is that it shows in enough detail exactly how this change came about, and the effects that the change had on the economy at each step along the way. The story of the shipping container is an excellent example of where the modern quest for efficiency takes us, the benefits that are gained and the damage that is done in the process. Levinson’s take on the results are favorable, but his presentation isn’t biased—I don’t think he would even consider the possibility that the results might not be a good thing—and so the facts of the situation are just as available to those of us who are less inclined to see the results as a blessing.

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3 thoughts on “The Box, by Marc Levinson

  1. i haven’t read the book, but i get the gist of it. but one wonders if this system that the we have come up with, could stand a huge energy cost spike. I get a little nervous about a system in which the parts in my refrigerator come from 6 different countries around the world. And nobody makes them here anymore. A war somewhere important, an energy shortage, etc. and this high strung, “efficient” system could start having problems all over the place. I sometimes wonder if the efficiency guru’s aren’t often too clever by half. however those containers could be useful. Imagine, thousands of instant mini- factories and shops! And impossible to break into without a cutting torch. Heh, Heh…. I always wanted a tornado, fire resistant shop……

  2. brierrabbit,

    one wonders if this system that the we have come up with, could stand a huge energy cost spike.

    One of the ironies in Levinson’s tale is that the fellow who pioneered container shipping, Malcom McLean, went bankrupt because he responded to the 70s oil crisis by building extremely efficient, very slow ships that were designed to circle the globe, picking up and dropping off cargo along the way. Then oil prices plunged, and shippers chose speed over savings. Plus the flow of partially finished products changed direction in various ways, causing his round-the-globe routes to incur large stretches where little or no cargo was being carried.

    So even though the market relentlessly pursues efficiency, changing circumstances can change what the market considers to be efficient.

    I sometimes wonder if the efficiency guru’s aren’t often too clever by half. however those containers could be useful.

    Which takes us back to Joseph Tainter’s point that complex societies benefit by wringing inefficiencies out of the system—but those same inefficiencies are what makes the system robust in the face of changing circumstances.

    I always wanted a tornado, fire resistant shop.

    Levinson says that disposing of containers that are no longer usable for shipping is a big problem. I think you can have them for nothing—but then there’s the expense of getting them moved to where you want to use them. (I think they weigh about 5 or 6 tons.)

  3. “I always wanted a tornado, fire resistant shop.”

    A lot of cool buildings have been made out of shipping containers:

    http://en.wikipedia.org/wiki/Shipping_container_architecture

    Sites about “tiny houses” often have examples:

    http://tinyhouseblog.com/pre-fab/shipping-container-homes-in-costa-rica/
    http://thistinyhouse.com/2009/shipping-container-villages/

    And in looking for those links, I found:
    http://container-life.com/

    Very strong and cheap building blocks as a side effect of the way shipping containers have become ubiquitous.

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