Sunday, July 15, 2007

Big Big Steel Boxes!

Rob Farley has reviewed a book I've just been rereading, Marc Levinson's The Box. It's a history of containerisation and how it had a massive impact on the economy - Levinson argues that port and cargo handling costs were so great pre-containers that containerisation itself was enough to bring about a huge reorganisation of world trade. I think he makes a strong case, although it's hard to judge as (as he points out) historical data on shipping costs is surprisingly troublesome.

What interests me, though, is the when. When Sea-Land's first container ship, SS Ideal-X, sailed from Newark, New Jersey, for Houston in 1956, containers weren't new. There had been a trade association promoting them for twenty years, issuing possibly the dullest periodical in the history of journalism (Containers). It had been formed by a consortium of European railways. In the late 20s, the London, Midland, and Scottish Railway had a fleet of three thousand boxes in use.

Postwar, other shipping lines and railways were at it too. There was no particular technical change that either required, or made possible, inter-modal container shipping. Levinson offers a lot of the credit to Malcolm McLean, the founder of Sea-Land, for envisaging it as a whole system. (So does everyone else - when he died, container ships around the world sounded their sirens to mark the moment.) But it's also very interesting that, well, Sea-Land and later US Lines went bust. The world's biggest container line is AP Möller-Maersk, owners of M/V Emma Maersk, which missed the boat on containers and didn't own a single box or ship until 1973. First mover advantage? Don't make me laugh.

The only people who did indeed experience an advantage from moving first were ports, rather than shipping lines. Because the relative location of the port and the final customer was less important, the ships tended to go where the cargo was, and where the cranes were. Hence, unless you got started and began handling boxes, the ships would go elsewhere; and there wouldn't be the cash to build a container terminal later to win them back. No scope to wait and see. The shipping lines, though, were considerably more able to adapt. This remains a serious problem for most of Africa - without a reasonable promise of a load, nobody will build a terminal, and if you do, they won't call. And without good shipping, there is unlikely to be much to ship..

Containers have been likened to packets in telecommunications. Certainly, containerisation has similarities with IP networking; the point of IP is that you only need to agree that you are going to exchange data in a particular way in order to internetwork. If you agree that you're going to handle boxes of sizes 10/20/30/40" by 8" by 8" with ISO standard twist locks, it doesn't matter how they are transported or by what route, as long as they are. (This doesn't mean, however, that standardising them was easy. Pas du tout.) Equally, it makes no sense to charge differential rates according to the contents of a container, and it didn't take off until the shipping lines stopped trying to do this and just charged per box.

The Net Neutrality analogy is pretty obvious. Like the US telcos, they also fought bitterly about it, and lost out to those carriers who didn't pry in the boxes.

McLean is also an interesting character. A classic example of those canny, obnoxious people from obscure bits of America who the mid-century boom and the great compression unleashed - like Richard Feynman, John Paul Vann, Steve Cropper, and more according to taste - he started off in trucking, and considered Ro-Ro shipping as a way of gaming the regulations, before realising it would be better to ship just the box body of the truck, not the chassis. Having made it with Sea-Land and a variety of distinctly funny financing, he decided to buy a huge swath of the North Carolina backwoods where he grew up and create a vast agricultural development, including a monster, super-industrialised pig farm and a scheme to strip the peat and process it to methanol.

Fortunately for all, he ran into a new trend on its way up - environmentalism, which forced him to leave the peat unstripped. Not long after that, US Lines went bankrupt after betting the company on one of McLean's big ideas for a second time. The first time, in the late 60s, Sea-Land had ordered a new class of unprecedentedly huge container ships, the SL-7s. These were built to make 33 knots on passage, positively blistering speed for a freighter (not bad for a modern destroyer, in fact), and to provide a round-the-world service that would provide a daily sailing from each major port.

Naturally, making a giant container ship do 33 knots takes a shitload of bunker fuel, and the ships were ready just in time for the '73 oil shock. Whoops. He was back, though, with another class of even bigger slow ships intended to save fuel - but he was still obsessed with the idea of a round-the-world service. Its failure brought US Lines low, and tripped him into a depression he only left by starting yet a third shipping line at the age of 72. It's interesting that, having launched a brilliant piece of evolutionary technology, he was always unable to get away from the technocratic vision of an endless belt of ships circling the planet.

1 comment:

Philip Hunt said...

"containers weren't new. There had been a trade association promoting them for twenty years, issuing possibly the dullest periodical in the history of journalism (Containers). It had been formed by a consortium of European railways. In the late 20s, the London, Midland, and Scottish Railway had a fleet of three thousand boxes in use."

That's news to me -- I thought containers were a post-WW2 technology.

I wonder if WW2 would have gone differently if containers had been more widely used, particularly by the Axis powers. The Germans had serious logistic difficulties in Russia. So did the German/Italian army in North Africa; one problem was that ports such as Tobruk, Bardia and Benghazi had very limited unloading capacity. Maybe with containers they could have unloaded more.

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