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On April 26, 1956, a ship named Ideal X set out from Port Newark bound for Houston. This voyage inaugurated the age of container shipping. Two new books recognize the 50th anniversary of this event by telling the story of container ships and their impact on the world.
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
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The crucial individual in the development of container ships is Malcom McLean, who founded the Sea-Land Corporation that developed the Ideal X. The story goes that in 1937, a young McLean grew frustrated at the time it took for his truck to be unloaded and wondered why his trailer couldn't just be loaded onto the ship. Twenty years later, the first container ship debuted.
Marc Levinson's The Box and Brian Cudahy's Box Boats both begin with McLean and the Sea-Land Corporation, but they take very different paths from this common origin. The Box traces the development of container technology and its impact on labor relations, urban structure, manufacturing, and trade. It is easily accessible to a general audience and opens a fascinating window into the infrastructure of the modern world. Box Boats is written for someone who appreciates ships—the nautical equivalent of a trainspotter. The ideal reader appreciates detailed lists of ship names and dimensions, and is excited by a company adopting a livery and color scheme "wonderfully reminiscent of the letters 'PA' that once adorned ships of the Pan-Atlantic Steamship Company, and the 'SL' that was long carried on the bow of Sea-Land vessels." (I would have preferred an approach like that of Noel Mostert in Supership, in which the author used various features of modern ships or ports as starting points for descriptions of how they developed from previous features.)
The maiden voyage of the Ideal X was an instant revolution. The costs of loading the cargo were $0.158 per ton, compared with $5.83 per ton for the typical cargo ship. These cost savings came along with extreme time savings, as the ship was loaded in fewer than eight hours, as compared with the days a standard ship required.
Despite the dramatic improvement offered by containers, they were not instantly adopted. One reason for the delay is that unions resisted their introduction, fearing that their members would be displaced. This is a typical, and typically futile, response to technological change. The answer provided by economic theory is that in such a situation, those that gain from the new technology are able to share some of the benefits with those that are harmed, thus leaving everyone better off than before. Unusually, the shipping lines and the dockworkers unions were able to craft such a solution, in which long-term dockworkers were compensated from a fund created by the operators of container ships.
Box Boats: How Container Ships Changed the World
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A second reason for the delay in adoption of containers is that they required a change in the entire supply chain, not just a change in the configuration of cargo capacity on ships. Until trucks and railroads—and their government regulators—were able to embrace containers, their full potential was not reached. However, once it was possible to seamlessly ship on a predictable timetable, the possibilities for massive trade were realized.
The market economy is based on mutually beneficial exchanges of goods and services. Any voluntary exchange moves resources to a higher valued use. The difference in value between what one is willing to pay to obtain something and the price one actually pays is called "consumer surplus" by economists. If the consumer surplus is large enough, it will cover transport costs, taxes, and other transaction costs. Conversely, transaction costs that exceed the surplus will prevent potentially mutually beneficial trades from taking place.
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