- Perhaps the defining feature of the global economy
is precisely that it is global. Toys from China, copper from Chile,
T-shirts from Bangladesh, wine from New Zealand, coffee from Ethiopia,
and tomatoes from Spain. Like it or not, globalisation is a fundamental
feature of the modern economy.
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- In the early 1960s, world trade in merchandise was
less than 20% of world economic output, or gross domestic product (GDP).
Now, it is around 50% but not everyone is happy about it. There is
probably no other issue where the anxieties of ordinary people are so in
conflict with the near-unanimous approval of economists. Arguments over
trade tend to frame globalisation as a policy - maybe even an ideology -
fuelled by acronymic trade deals like TRIPS and TTIP. But perhaps the
biggest enabler of globalisation has not been a free trade agreement,
but a simple invention: the shipping container. It is just a corrugated
steel box, 8ft (2.4m) wide, 8ft 6in (2.6m) high, and 40ft (12m) long but
its impact has been huge. Consider how a typical trade journey looked
before its invention.
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- In 1954, an unremarkable cargo ship, the SS Warrior,
carried merchandise from New York to Bremerhaven in Germany. It held
just over 5,000 tonnes of cargo - including food, household goods,
letters and vehicles - which were carried as 194,582 separate items in
1,156 different shipments. Just keeping track of the consignments as
they moved around the dockside warehouses was a nightmare. But the real
challenge was physically loading such ships.
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- The man who navigated this maze of hazards, and who
can fairly be described as the inventor of the modern shipping container
system, was called Malcom McLean. McLean did not know anything about
shipping but he was a trucking entrepreneur. He knew plenty about
trucks, plenty about playing the system, and all there was to know about
saving money. As Marc Levinson explains in his book, The Box, McLean
not only saw the potential of a shipping container that would fit neatly
onto a flat bed truck, he also had the skills and the risk-taking
attitude needed to make it happen.
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- First, McLean cheekily exploited a legal loophole to
gain control of both a shipping company and a trucking company. Then,
when dockers went on strike, he used the idle time to refit old ships to
new container specifications. He repeatedly plunged into debt. He took
on "fat cat" incumbents in Puerto Rico, revitalising the island's
economy by slashing shipping rates to the United States. He cannily
encouraged New York's Port Authority to make the New Jersey side of the
harbour a centre for container shipping. But probably the most striking
coup took place in the late 1960s, when Malcom McLean sold the idea of
container shipping to perhaps the world's most powerful customer: the US
Military.
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- Faced with an unholy logistical nightmare in trying
to ship equipment to Vietnam, the military turned to McLean's container
ships. Containers work much better when they are part of an integrated
logistical system, and the US military was perfectly placed to implement
that. Even better, McLean realised that on the way back from Vietnam,
his empty container ships could collect payloads from the world's
fastest growing economy, Japan. And so trans-Pacific trading began in
earnest.
The opinions expressed herein are the author's and not necessarily those of The OLO News.
Conference
