Over the last few decades, global trade has grown exponentially and continues to grow each year. What’s been the cause of this growth? You might think changing geopolitical relations, improved technology or cheaper manufacturing.
True, that’s part of the reason. But really, trade began to grow when the shipping container was invented.
That’s right, the invention of those rectangular metal boxes – which have the ability to be easily transferred from a ship to a truck to train – have been an underlying reason for global trade growth. How, you might ask?
To answer that, you’d have to take a look at how goods were shipped before the container was invented.
A Simple Invention That Shaped Global Trade
In 1956, an American trucking entrepreneur named Malcolm McLean invented the first shipping container prototype. Until that point, overseas shipping was a laborious, costly and dangerous process.
First, it took a lot longer to pack and unload ships. Goods were stuffed into wooden crates and ships were filled to the brim with these crates. When a ship docked, hundreds of longshoremen would unload each ship one item at a time. The process was so slow that ships might take weeks or even months to unload, sometimes longer than they spent at sea.
Global trade began to grow because metal shipping containers revolutionized the loading/unloading process. Containers made shipping faster, cheaper and safer.
For example, the cost to unload a container ship was significantly cheaper compared to the wooden crate alternative. In fact, McLean found the cost to unload his first container ship was just $0.16. Traditionally, the process had averaged $5.83 per ton, according to a report in The Economist. In other words, shipping containers cut more than 97% off the cost of cargo handling.
Shipping containers, though, weren’t just cheaper to unload. They also enabled more goods to be packed onto each ship, they reduced theft because the containers were packed and locked at the manufacturing facility, and they resulted in a 300% increase in the number of tons of cargo that could be unloaded each hour.
Previously, shipping costs made overseas trade cost-ineffective. With the advent of the shipping container, things started to change.
The Ocean Highway: Increasing Container Transport
Today, about 90,000 container ships are responsible for transporting almost 10 billion tons of cargo around the world. In fact, almost 90 percent of the world’s shipped goods and food – from cars to bananas – travel to port on a container ship.
To meet the world’s growing trade demand, boats have gotten bigger – much bigger.
Most container ships can carry upwards of 10,000 standard-sized 20-foot ISO containers, and these superliners are traveling longer distances. A single ship might traverse the world multiple times per year. According to Nautilus, a ship called the Hong Kong Express typically moves more than 1 million tons of cargo each year and makes about 5 round-trips of the world.
Thanks to the increasing ship sizes and faster delivery speeds, global trade has benefitted greatly.
The cost of shipping goods has been driven significantly down in the last four decades. Plus, goods can roll off the production line overseas and onto the sales floor in a fraction of the time. One estimate found that T-shirts produced in China could be sold in a store in Germany in a little over one month.
Why the Shipping Container?
Ultimately, the reason the shipping container has been so successful in globalization comes down to its dimensions and construction.
Shipping containers, for the most part, come in similar sizes and shapes – typically 20 or 40 feet in length and about 8 to 8.5 feet tall. That makes it easy to standardize equipment for moving each container. Therefore, although a container from China to Germany might go through a dozen different steps, each step is faster thanks to the universality of the container. Trucks can be fitted to haul them and cranes in ports around the world can move hundreds of containers per hour.
Because moving each box has become more efficient, ports around the world can move them faster than ever. For instance, in one month, the Port of Baltimore handles more than 30,000 containers, or about 1,000 containers per day.
Global Container Shipping’s Continued Growth
As you can see, containers have revolutionized global shipping. And the growth in shipping traffic is only expected to increase. According to World Bank stats, the world’s ports handled the equivalent to 428 million 20-foot containers in 2009; in 2014, the last year of available data, the numbers had skyrocketed to more than 600 million.
All of this thanks to the humble metal container. So next time you see a container on the highway, a train or in port, you’ll know the real reason the global trade is booming.