The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

by Marc Levinson

  The Box

  How the Shipping Container

  Made the World Smaller and the

  World Economy Bigger

  With a new preface by the author

  Marc Levinson

  PRINCETON UNIVERSITY PRESS

  PRINCETON AND OXFORD

  Copyright © 2006 by Princeton University Press

  Published by Princeton University Press, 41 William Street,

  Princeton, New Jersey 08540

  In the United Kingdom: Princeton University Press,

  3 Market Place, Woodstock, Oxfordshire OX20 1SY

  All Rights Reserved

  Ninth printing, and first paperback printing, with a new preface by the author, 2008

  Paperback ISBN: 978–0-691–13640-0

  The Library of Congress has cataloged the cloth edition of this book as follows

  Levinson, Marc.

  The box: how the shipping container made the world smaller and

  the world economy bigger/Marc Levinson.

  p. cm.

  Includes bibliographical references and index.

  ISBN-13: 978–0-691–12324-0 (hardcover: alk. paper)

  ISBN-10: 0–691-12324–1 (hardcover)

  1. Containerization—History. 2. McLean, Malcolm Purcell, 1913–2001. I. Title.

  TA1215.L47 2006

  387.5’442—dc22 2005030021

  British Library Cataloging-in-Publication Data is available

  This book has been composed in Janson text with Clarendon Family Display

  Printed on acid-free paper. ∞

  press.princeton.edu

  Printed in the United States of America

  10 9

  To Aaron, Rebecca, and Deborah

  Contents

  Preface to the Paperback Edition

  Acknowledgments

  Chapter 1

  The World the Box Made

  Chapter 2

  Gridlock on the Docks

  Chapter 3

  The Trucker

  Chapter 4

  The System

  Chapter 5

  The Battle for New York’s Port

  Chapter 6

  Union Disunion

  Chapter 7

  Setting the Standard

  Chapter 8

  Takeoff

  Chapter 9

  Vietnam

  Chapter 10

  Ports in a Storm

  Chapter 11

  Boom and Bust

  Chapter 12

  The Bigness Complex

  Chapter 13

  The Shippers’ Revenge

  Chapter 14

  Just in Time

  Abbreviations

  Notes

  Bibliography

  Index

  Preface to the Paperback Edition

  Writing a book is usually a solitary venture, but The Box was a more private project than most. This was not entirely my choice. Early on in my work, when acquaintances would ask what I’d been doing, I would proudly tell them I was writing a history of the shipping container. The result of this disclosure was invariably stunned silence, as my interlocutors tried to think of something to say about a boring metal box. Eventually, I stopped talking about the book altogether, simply to avoid the embarrassment that every mention of the topic would bring.

  The response to the book’s publication in the spring of 2006, then, caught me by surprise. I knew that the history of containerization would show itself to be a far more absorbing topic than readers could imagine, and I figured that economists and logistics specialists might be intrigued by my argument that tumbling transport costs were critical in opening the way to what we now call globalization. I had not the slightest clue, however, that the container was on its way to becoming something trendy. Then the invitations began to arrive. In New York, I shared a platform with architects using con tainers to design office buildings and apartments. In Genoa, I spoke alongside an entrepreneur who turned containers into temporary art galleries, while in Santa Barbara, California, the local museum joined forces with a university to promote a series of public events on ramifications of the container that I had never considered. The by millions of boxes with undetermined contents; the environmental damage caused by massive movement of cargo: all of these issues came to the fore in reviews and critical articles.

  Then business executives weighed in. A leading computer manufacturer embraced The Box as a metaphor for modular products, announcing a “data center in a box.” A major oil company drew insights from the container that helped it cut the cost of exploration in the Canadian Arctic. Several consulting firms applied lessons from containerization to a variety of business problems having nothing to do with freight transportation. A software house developed the notion of a computer system that passed “containerized” pieces of data from one location to the next, an extension of containerization well beyond any I had imagined.

  Academics drew on The Box to open some new lines of intellectual inquiry. There has been, as I discovered in the course of my research, very little serious study of the container and its consequences, except in the area of labor relations. That neglect is partly due to lack of data: chapter 13 lays out the obstacles to developing reliable estimates of how the container has changed transport costs since the 1950s. The reluctance of academics to cross traditional boundaries also has inhibited exploration of the container’s impact. One expert on logistics, for example, was quite familiar with containerships but told me he had never considered the container’s impact on shore. Mainly, however, I think academics have ignored the container be cause it seems so prosaic. A noted economic historian, a reader informed me, had long proclaimed to students that while the container was an important development, it was too simple to be worth much study. The book may at least have knocked down that last objection. It seems to have provided fodder for a variety of conferences and symposia, stimulating a new intellectual dialogue about the role of transportation in economic change.

  The media have undertaken a similar reconsideration. Since the late 1980s, commentators have filled columns and airwaves with glib chatter about globalization, as if it were merely a matter of bits and bytes and corporate cost-cutting. Since The Box appeared, however, many news stories and articles have acknowledged that, digital communication notwithstanding, the integration of the world economy depends less on call centers and trans-Pacific exports of technical services than on the ability to move goods cheaply from here to there. The Box, I hope, has contributed to public understanding that inadequate port, road, and rail infrastructure can cause economic harm by raising the cost of moving freight.

  Many aspects of the response to The Box were startling, but perhaps the most unexpected concerns a widespread stereotype about innovation. In his later years, Malcom McLean, the former trucker whose audacious scheme to create the first containership line is re counted in chapter 3, was frequently asked how he came up with the idea of the container. He responded with a tale about how, after spending hours in late 1937 queuing at a Jersey City pier to unload his truck, he realized that it would be quicker simply to hoist the entire truck body on board. From this incident, we are meant to believe, came his decision eighteen years later to buy a war-surplus tanker and equip it to carry 33-foot-long containers.

  The story of this “Aha!” moment does not appear in The Box,because I believe the event never occurred. There is certainly no contemporaneous evidence for it. I suspect that the story of McLean’s stroke of genius took on a life of its own as, d
ecades later, well-meaning people asked McLean where the container came from. As I show in chapter 2, ship lines and railroads had been experimenting with containers for half a century before Malcom McLean’s trip to Jersey City, and containers were already in wide use in North America and Europe when McLean’s first ship set sail in 1956.

  Malcom McLean’s real contribution to the development of containerization, in my view, had to do not with a metal box or a ship, but with a managerial insight. McLean understood that transport companies’ true business was moving freight rather than operating ships or trains. That understanding helped his version of containerization succeed where so many others had failed. To my consternation, though, I quickly learned that many people quite fancy the tale of McLean’s dockside epiphany. The idea of a single moment of inspiration, of the apple landing on young Isaac Newton’s head, stirs the soul, even if it turns out to be apocryphal. In contrast, the idea that innovation occurs in fits and starts, with one person adapting a concept already in use and another figuring out how to make a profit from it, has little appeal. The world likes heroes, even if the worshipful story of one person’s heroic effort is rarely an accurate representation of the complex path of technological advance.

  How innovation really works is certainly one of the lessons of The Box, but for me there is another that looms even larger: the role of unintended consequences. Economists, myself included, are in the business of predicting events; we like to think that we can analyze what has happened and draw insight into what will occur in the days to come. Business school students take a similar approach, learning to apply quantitative analysis to historical data in order to draw conclusions about the future. In the business world, this way of looking at the world through a spreadsheet is treated as modern management thinking. It’s the bread and butter of some of the world’s most famous, and expensive, consulting firms.

  The story of containerization attests to the limits of this sort of rational analysis, for the developments recounted in The Box turned out not at all as expected. Containerization, after all, began as a means of shaving a few dollars off the cost of sending Malcom McLean’s trucks between New York and North Carolina. At best, it was regarded as a minor innovation, “an expedient,” as one leading naval architect opined in 1958. Perhaps, the experts thought, containers might capture a small share of America’s declining coastal shipping business. They were deemed impractical for most types of cargo and for shipments to distant places, such as Asia.

  Absolutely no one anticipated that containerization would open the way to vast changes in where and how goods are manufactured, that it would provide a major impetus to transport deregulation, or that it would help integrate East Asia into a world economy that previously had centered on the North Atlantic. That containerization would eliminate the jobs of dockworkers was clear from the start, but no one imagined that it would cause massive job loss among workers in manufacturing and wholesaling whose employment had long been tied to the presence of nearby docks. Political leaders, trade unionists, and corporate executives made costly mistakes because they failed to apprehend the container’s influence. U.S. railroads fought containerization tooth and nail in the 1960s and 1970s, convinced that it would destroy their traditional boxcar business, never imagining that early in the twenty-first century they would be carrying 12 million containers every year. Many shipping magnates—including, eventually, McLean himself—led their ship lines to failure by misjudging how the container business would develop. And certainly, no one in the early days of container shipping foresaw that this American-born industry would come to be dominated by European and Asian firms, as the U.S.-flag ship lines, burdened by a legacy of protected markets and heavy regulation, proved unable to compete in a fast-changing world.

  And, of course, no one involved with the container’s development imagined that metal boxes would come to be regarded as a major security threat. Improved security, ironically, was originally one of the container’s big selling points: cargo packed inside a locked container was far less susceptible to theft and damage than cargo handled loose. Ship lines and border-control officials were taken by surprise in the 1980s, when smugglers figured out that the relative secrecy, anonymity, and reliability of container shipping made it ideal for transporting drugs and undocumented migrants as well. In those days, enclosing container yards with fences and locked gates was thought adequate to solve the problem.

  Two decades later, evaluating potential threats after a series of devastating attacks, antiterrorism experts hit upon the possibility that terrorists might cripple world trade by exploding radioactive weapons secreted in containers. The seriousness of that threat was impossible to evaluate, although experience has made clear that terrorists bent on wreaking large-scale devastation can do so with readily available materials—ammonium nitrate fertilizer, propane, explosives embedded with nails—without going to the trouble of building a “dirty bomb.” Nonetheless, containers suddenly came into public consciousness as an urgent threat, one that no government anywhere was equipped to confront. A large-scale spending program inevitably followed, with radiation detectors appearing at port gates and port workers mandated to wear supposedly tamper-proof identity cards. Whether these efforts have improved security remains unclear; tests using satellites to track container shipments from origin to destination have not been promising. The frenetic attempt to bolster security at the ports, however, may have created a risk that may be even more difficult to address: the risk that precipitous government orders to detain vessels or close ports in the face of a real or imagined terrorist action could cause grave damage to economies all around the world.

  The history of the shipping container is humbling. Careful planning and thorough analysis have their place, but they provide little guidance in the face of abrupt changes that alter an industry’s very fundamentals. Flexibility is a virtue in such a situation. Resistance can be a vice, but so can a rush to action. In this kind of situation, “expect the unexpected” may be as good a motto as any.

  Just as no one in the container’s early years dreamed that the world’s ports would soon be handling the arrival of one-and-a-half million 40-foot containers every week, so, too, did no one conceive that steel shipping containers could be turned into houses and sculptures or that abandoned containers would become a serious nuisance. That simple metal box was what we today label a disruptive technology. Even now, more than half a century after it came into use, it continues to affect our world in unexpected ways.

  October 2007

  Acknowledgments

  Container shipping is not ancient history, but much relatively recent source material proved surprisingly difficult to locate. Many relevant corporate records have been destroyed. The early growth of containerization was nurtured by the Port of New York Authority (now the Port Authority of New York and New Jersey), but many of that agency’s records were destroyed in the terrorist attacks on the World Trade Center on September 11, 2001. That this book came to be is a tribute to the work of the many dedicated archivists and librarians who helped me identify extant materials in collections that researchers rarely look at, as well as to private individuals who combed their own files for important records.

  Back in the early 1990s, when I first thought of writing about Malcom McLean, George Stevenson of the North Carolina State Archives came up with hard-to-find material about the McLean family. When I decided to revisit containerization more recently, Kenneth Cobb of the New York Municipal Archives, Doug DiCarlo of the LaGuardia and Wagner Archives at LaGuardia Community College in New York, and Bette M. Epstein of the New Jersey State Archives in Trenton helped me piece together the story of how the container decimated New York’s port.

  The lack of historical material on the International Longshoremen’s Association is a serious impediment to historical work on longshore labor relations. Gail Malmgreen of the Robert F. Wagner Labor Archives at New York University helped me locate documents and oral histories in that remarkable collection.
Patrizia Sione and Melissa Holland of the Kheel Center, Catherwood Library, at the Cornell University School of Industrial and Labor Relations, guided me through the papers of Vernon Jensen, which contain a wealth of detail on the ILA.

  Military history is not my field, but my efforts to learn about the role of container shipping in the Vietnam War benefited from much expert guidance. Gina Akers and Wade Wyckoff of the Operational Archives Branch of the Naval Historical Center, in Washington, helped me with the records of the Military Sea Transportation Service and with the U.S. Navy’s extensive collection of oral histories. Jeannine Swift and Rich Boylan, of the Modern Military Records division of the National Archives in College Park, Maryland, went to great lengths to locate little-used material on Vietnam-era logistics. William Moye, of the U.S. Army Materiel Command Historical Office at Fort Belvoir, Virginia, furnished important information on General Frank S. Besson Jr., who persuaded the U.S. armed forces to embrace containerization.

  Roger Horowitz and Christopher T. Baer, of the Hagley Museum and Library in Wilmington, Delaware, suggested files I would never have thought to investigate in the archives of the Penn Central railroad. Beth Posner of the City University of New York Graduate Center located much obscure material for me. I also drew on resources from the Bancroft Library of the University of California at Berkeley, the Library of Congress, the Cornell University library system, the New York Public Library, and the Seattle Public Library, and I wish to record my appreciation for their assistance.

  The oral histories prepared for the Smithsonian by Arthur Donovan, professor emeritus at the U.S. Merchant Marine Academy, and the late Andrew Gibson are an important source for any researcher on this subject, and Professor Donovan also pointed me to records on container standards. Marilyn Sandifur, Midori Tabata, Jerome Battle, and Mike Beritzhoff of the Port of Oakland were kind enough to guide me around the port and bring my knowledge of terminal management up to date. I owe a particular debt to Jim Doig, who allowed me to use material (now in the New Jersey State Archives) that he compiled in preparing his masterful book on the Port of New York Authority, and to Les Harlander, whose files on the negotiation of container standards are the major source for chapter 7.