Stop for a moment and look around you. In front of your nose might be the aroma of coffee from Sumatra steaming inside a mug made in China. The table you are sitting at may be from South America or Canada. Your clothes could be made of Egyptian cotton. What do all of these things have in common, other than your life? Nearly all of them spent some time in a metal box, 20 feet by 8 feet by 9 and a half feet tall – a Twenty foot Equivalent Unit (TEU).
Containerized cargo has changed the world more than any other technology over the last 30 years, maybe or maybe not excluding the internet. Yet few people stop to consider this phenom and what it means
The idea is simple– rather than load irregular crates into the hold of a ship, simply make everything square and standard so it can be done with industrial efficiency and a very large crane – saving labor and time that could be spent at sea moving goods. Every culture since ancient times has had a somewhat standardized shipping container. The idea of a worldwide standard didn’t take off until it started to become necessary in the 1960s as global trade dramatically increased.
By 1980, there were about 10 million shipments of the Twenty-Foot Equivalent (TEU) box, described above, around the world. The real benefit of these boxes wasn’t just that they were easy to load into ships, either. They can be moved directly onto flatbed trains, stacked two containers high, or onto flatbed trucks for more local shipping. Once you pack the unit it can move door to door with minimal handling in one seamless operation, anywhere in the world. It is a brilliant, if simple concept.
Today, there are 200 million of them moving around the world per year. By 2020 that is expected to hit 370 million TEU, about 95% of all cargo traversing the planet.
It’s almost impossible to quantify the cost savings that have been realized internationally by this tremendous standardization because trade, as we know it, would probably not exist without them. There is simply nothing to compare it to. Nearly everything in your life from a long distance was probably shipped by container because there is no other way to make this incredible amount of trade possible.
The ships that move these goods have become almost impossibly large as the scale of international trade continues to increase. The limiting factor for many years has been the Panama Canal, making it the standard in ship size – a “Panamax” no more than 950 feet long and 106 feet wide. That canal is being expanded at a cost of $5.3 billion so that it can handle “New Panamax” ships 1,400 feet by 180 feet. Beyond that, the next constraint is in the Straits of Malacca in Indonesia, linking the Pacific with the Indian Ocean. That size, the “Malaccamax”, is 1540 feet long and 200 feet wide – gargantuan vessels that rival most warships.
But the effect has been felt far further inland as well. Currently, 70% of railroad shipments in the US are done by container, most of them “double stacked” or two units high. The Canadian Pacific Railroad in particular has been a leader in this shipping, modifying their lines so that they can run nearly the entire length of the nation with double-stacked containers (except on the Short Line through Saint Paul, where the bridges do not have clearance). Highway bridges are now designed with 16 feet of clearance, taller than the old standard of 14 feet, largely to make sure that the 9.5 foot tall containers on top of a flatbed have plenty of room to make it under safely. Everything in shipping is now designed around the global standard TEU container, and it drives a lot of our infrastructure development.
Through the tremendous investment in ships, port facilities, bridge clearances and rail stock nearly every nation in the world has transformed itself into an efficient transportation network where just about anything can be shipped anywhere else at the absolute minimum cost in time and money. Containerized cargo has linked the world in a way that it never has been before.
Globalism as we know it has been made possible by a number of systems that have come into place in the last 30 years. Some of these are highly glamorized, such as the internet communications systems and financial markets that share information instantly via satellites anywhere in the world. But none of it would transform the world economy unless, at some point, goods are shipped from one market to the other as efficiently as the information and money moves.
Containerization is not as sexy as the internet, but it is at least as important for making our world what it is. For better or worse, we are one market that is joined with everyone else scratching to make a living. The implications of these developments are constantly rippling through world economies in ways that we will only gradually understand. And it is all thanks to a standardized metal box.