I have always been fascinated by simple inventions that have changed the world in ways no one would have thought about when first devised. Barbed wire is one such invention. In 1874 John Glidden invented a machine to produce the rather simple product and began mass producing it for the Barb Fence Company he started with a partner. Before Glidden’s invention, there was no way to fence in property on the great plains and cattle was herded openly on private lands. The invention of an inexpensive way to keep unwanted people and animals off of private property funneled cattle herders into organized routes. These routes began sprouting towns due to the uniformity of traffic and eventually, the entire face of the Great Plains was painted due to Mr. Glidden’s wire. I am sure he did not intend the consequences of his machine which mass produced a simple product but it is the reason that the Western United States evolved the way it did. Simple invention, complicated results.
And so it is with the shipping container. A simple metal box that totally revolutionized the shipping business and the world. While Glidden’s simple invention set the formation of the America West, the shipping container has changed the face of the world. A good argument could be made that the onset of the shopping container has had more of an impact on the world than the internet. It is one I would subscribe to.
Prior to the invention and adoption of a standardized shipping container, boats were loaded and unloaded by hand, merchandise was often damaged in transit, stolen and the process of moving product was expensive, unpredictable and time consuming. With the shipping container, however, it could be packed to make the product safe, sealed to safeguard it from theft and because it could be stacked on ships and then easily taken off by a crane operator and placed on truck frames or rail cars for the last mile, shipping suddenly became relatively inexpensive, predicable, safe from theft and much quicker.
As shipping became easier, cheaper and more predictable, there was no need to site manufacturing plants near the consumer. Plants could be anywhere. Manufacturing swiftly relocated to places where labor was cheap, human rights laws were lax or non-existent and environmental oversight was something that happened elsewhere. Thus, jobs shifted and in America, once a manufacturing mecca, that entire swath of jobs moved offshore. In American and many other countries, manufacturing could not compete with countries where labor is far cheaper such as China. Before the advent of the shipping container there was little real competition offshore because delivery of goods was so spotty and unpredictable. Metal box. Problem solved.
On the other side of the equation, products became cheaper and people around the world were able to afford items that heretofore were out of their economic reach. That demand supercharged manufacturing and made the world more reliant on shipping.
The ease of shipping, and the consequent predictability, led to what is known as just-in-time delivery. No longer did companies have to maintain huge warehouses full of stock because they could rely upon a steady flow of product on a predictable schedule. Take the automobile industry for instance. Car companies used to warehouse huge amounts of parts to build their cars to in order to ensure that the assembly lines could be fed. With the onset of just-in-time delivery, spurred by predictable shipping, they generally keep parts to run the lines for a week to ten days. This led to great savings but also greater security vulnerability. After 9/11, when ports were closed, it did not take long before the U.S. automobile industry was in panic because of the lack of the parts they needed to keep assembly lines moving.
And speaking of 9/11, another harrowing outgrowth of the shipping container is that no one really knows what is in them. Sure, the shipping company reports what is supposed to be in them but who really knows? After 9/11, Homeland Security spent billions of dollars to shore up its knowledge of what is in them but short of unpacking each container, no one knows what is in the box. We have a better idea than we did before 9/11 but if tomorrow a terrorist organization announced that it has placed ten small nuclear devices in shipping container headed for the U.S., we could never be sure that they weren’t correct. In short, the shipping container has done many things. One of them is to make us more vulnerable.
This type of supply-chain vulnerability has become more and more critical. Phenomena such as global warming has led to extreme weather patterns which interrupt shipping of products. Global pandemics can interrupt manufacturing that has become clustered in certain areas of the world. Prior to the shipping container, manufacturing was very decentralized. Now it has become very concentrated. That was illustrated in a very harrowing way with the PPE shortage brought on by the COVID-19 pandemic.
No one paid much attention to the fact that much of the PPE was manufactured in China, very near to what became ground-zero for the global pandemic. When it hit, manufacturing plants shut, raw materials became scarce, shipping was disrupted and product became nearly impossible to obtain. Prices shot up, transporting the product became extremely costly and a worldwide surge for the equipment led to total chaos in the PPE market place and medical world. Lives were lost because essential protective equipment was simply not available. There were no warehouses full of the product where needed because just-in-time delivery had dispensed with their existence.
Therein lies the problem. We have come to rely on critical goods that are manufactured far from our shores and shipped to us in a manner that has become more and more complicated. The worldwide supply chain, to which we have become wholly subservient, has serious limitations. It lacks sufficient redundancy and itself has become more and more vulnerable, thus making the world less safe. For this, we can blame the shipping container but simply laying the blame will not help us.
The most recent manifestation of supply chain vulnerability is as simple as the steel box that sparked its growth. The Suez Canal links the Mediterranean Sea to the Red Sea. In much the same way that the Panama Canal saves ships from having to sail around the entire land mass of South America in order to reach the eastern shores of the United States, The Suez Canal permits ships to cut approximately two weeks sailing time by not having to sail around the Cape of Good Hope when traveling to Europe. Approximately 13% of the worlds maritime trade passes through the Canal including much of the world’s oil. Last year approximately 1.2 billion tons of cargo on some 19,000 ships passed through the narrow Suez passage. Approximately 50 cargo ships a day navigate its waters.
With the advent of the shipping container and all it has engendered, ships carrying containers have become larger and larger. The ships became so large that the Bayonne Bridge, a structure under which these cargo super ships have to pass under to reach the In the Port of New Jersey, had to be raised at a cost of $1.7 Billion, for them to fit under so that the port would remain competitive.
March 23, a cargo 1,300-foot cargo ship carrying more than 18,000 containers was blown sideways according to reports, dug itself into one bank of the Suez Canal and totally cut off navigability to the passage. This has created a maritime traffic jam as bad as any that Los Angeles drivers face on the worst of days. More than 300 ships now sit and wait. Some are transporting livestock and reports have circulated that those ships do not have enough food for the animals who ay perish due to the delay. Other ships have been diverted to the two-week journey around the Cape of Good Hope and one maritime insurance expert estimated that this blockage at the Suez Canal could reduce global trade by as much as $10 billion per week.
All of this points up the fragility of a system that the entire world has come to rely upon. The costs are in the billions and it will have a ripple effect on manufacturing plants that are waiting for parts which they do not warehouse, possibly forcing them to curtail output or close altogether. Prices of merchandise may rise to offset the costs engendered by this accident and once again, supply chain experts see yet another vulnerability to a critical component of the world economy.
The answers to the supply chain dilemma are not easy and any changes will be extremely costly. Certainly, a delay in Pokémon cards or stuffed animals creates no more than an inconvenience. However, the loss of livestock, parts that drive auto and other plants, and critical medicines or other equipment pose a far more critical problem that needs to be solved. A ship getting stuck in a canal at first blush seems comical. However, the downstream effects from the blockage of a major choke-point for international shipping is a joke that is costing billions of dollars and rising by the day. It is a traffic jam that the world can do without, must learn from and not replicate.
Oh, what the simple metal box has wrought.