Tag Archives: globalisation

The importance of containers, continued

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We just spent a few days in Scotland and spotted this shipping container being used for storage at the harbour in Stonehaven, Aberdeenshire.

Storage container in Stonehaven

Meanwhile, news of the BBC News container: it’s now in its 3rd year of post-shipping existence as a soup kitchen in Kleinvei, South Africa. According to Tim Smith of Breadline Africa: “The Children’s World Kitchen project has benefited enormously when they received this container.  It is three years since this container was received and began serving the need of the community.”

The post-shipping BBC Box in the Cape Flats

My containers correspondent, Captain Thomas Marnane, followed up our previous discussion about the importance of standardisation in shipping with some observations on the environmental benefits of containers – not a standard angle on the globalisation of trade, it must be said. In an email he wrote:

“The conservation of resources by reducing container weight and saving fuel (hauling on land and at sea), increasing cargo weight available, reducing losses, etc. is an example of what I call “closet environmentalism”.  It is not all altruistic.  That is that, in general, I believe environmental improvements and resource conservation is most brought about by individuals and businesses who have  incentives to improve by using and wasting fewer resources to provide a  product or service and  improve either quality of life and/or the bottom line, and for the most part they do it without fanfare or publicity.”

We should add the recycling of containers to other uses as part of his environmental tally.

This whole discussion was of course set off by the container that appeared in my local park, and [amazon_link id=”0691136408″ target=”_blank” ]The Box[/amazon_link] by Marc Levinson.

[amazon_image id=”0691136408″ link=”true” target=”_blank” size=”medium” ]The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (New in Paper)[/amazon_image]

Institutions matter – but not the way we think

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A couple of days ago I tweeted a link to a paper estimating the effect of containerisation on world trade to be far greater than the effects of trade liberalisation and GATT. It tied in with a recent post here prompted by the appearance of a shipping container in the local park. I cited there Marc Levinson’s terrific book about containerisation, [amazon_link id=”0691136408″ target=”_blank” ]The Box[/amazon_link].

It’s always a pleasure when my ramblings here get some feedback, and as it turns out Thomas Marnane, the father-in-law of a friend of mine, had a key role in the containerisation process. He’s kindly given me permission to quote his fascinating email:

“I think the container like the transistor have probably been the largest contributors to trade and communications in the world’s history.

I was fortunate to work at Matson where most of it all started.  Malcolm McLean of Sea-Land actually created the first container to go with his land based trucks.  Matson picked it up from there and the world followed.  Matson’s historic introduction of containerization in the Pacific in 1958 launched the development of a container freight system that became a model for carriers worldwide. Matson’s S.S. Hawaiian Citizen  was the world’s first all-container vessel when it was converted in 1960. Many of Matson’s innovations of that period are still in use today: cellular container ships, intermodal containers, specialized container equipment and container handling equipment.

Matson’s “A-frame” gantry crane reduced ship turnaround time in port from three weeks to 18 hours and became a prototype for the industry.  …. You can see a picture of the first gantry container loading crane.  It was still sitting over in Oakland when I came to Matson.  It took up space and was an eyesore and the company wanted it gone.  I didn’t want to simply destroy it–found no bidders in the US and no museums (Smithsonian or local) that wanted it and eventually sold it to someone in Portugal and have no idea where it is now.

Matson’s A Frame Gantry Crane – where is it now?

I was given pretty free reign in my role as container equipment engineer and procurer at Matson and in partnership with Kiki Shahani, a very good friend and world class transpiration engineer, procured and made dozens of patentable design changes to the containers over the years.  Things like changing material to stainless steel on refrigerated containers, modifications to structure and corners (lifting castings), floors, airflow, side panel shapes, paint systems, auto carriers and handling, appliances (hinges, locks, connectors for refrigeration units, etc.  I say patentable because we only put patent pending on them long enough to get it to market and not have to fear that someone would steal the design, patent it and then ask for royalties.  It usually took two to three years for the industry to pick up the changes through the manufacturers and incorporate them in their own equipment and by then, hopefully, we had done something better to regain a competitive edge.

The design changes were primarily to reduce damage and weight and in the case of the refrigerated containers increase temperature reliability.  We were able through the growing capability of the computer to do finite element analysis and testing and determine where we needed  more or less strength.  The result over several years was that we achieved a reduction of about 20% in container weight and 50% in maintenance and repair.  For a forty foot long dry cargo container at 8375 lbs this is a savings of 1675lbs (.2x8375lbs=1675lbs).  Multiply the 1675 times any number of containers you want and you can see that the increase in load you can add to the container and thus reduction in number of containers needed and the reduced weight that ships, trucks, trains, etc have to carry is significant (cost savings, fuel savings in transporting, product damage, etc).  All of this was part of my recent recognition by the University of Rhode Island for my work in resource conservation.    

And just think, just like when I was a kid and loved to play with blocks, when I got to be a big boy I got to play with containers which are just really big blocks.  What more could a guy want.

As you can see I still have a love affair with containers and cranes (they let me design and build cranes also with help from one great electrical engineer, Al Siver, one great mechanical engineer, Ed Stephens and a world class crane designer from Liftech, Michael Jordan–I got to travel the world with those guys and still talk with them frequently).”

And in a follow up email, having looked at the summary of the Levinson book, he added:

“I note Harry Bridges on the summary in Amazon.  He is something of a legend in San Francisco (the area around the Ferry Building is called Harry Bridges Plaza) and it is still not fun to negotiate with the Longshore Union even though their numbers, as a result of containers and the handling thereof, are down by 80-90%.  

Matson also had the first semi-automated system for container handling at Terminal Island, CA.  It was finally abandoned because it was technically difficult to maintain and the equipment got out of date and was a big expense to replace (the business is highly capital intensive now vice labor).  Some European terminals are automated (as I recall Rotterdam, Hamburg, Amsterdam and one UK Port  that I cannot remember, perhaps Southampton–it has been awhile since I visited–were the leaders) and Rotterdam was the best.  I got to visit them all and have exchange visits, even got the Hamburg guys to get in my hot tub!!.  In the US American President Lines paved the way for intermodal (sea, truck, rail) shipping across the U.S and got us to “double stack” trains by working out routes that had overpasses, tunnels etc. in place or modified to handle the heights.  I got to play with trains too when we went to moving our cargo from Seattle to Portland by train instead of having a ship come into Portland every week (the Willamette River is long and slow). We moved the cargo down from Seattle to Portland by a weekly double stack train which had to have cars modified to fit the route (some places “humping” of cars through their connections was a problem, etc.).

…. Don’t hold me too tight to the reduced container weights because it has been a while but it was at a minimum a 15% reduction and we worked on it ever year for every type of container and chassis when we placed our new container orders.  Refrigerated containers got heavier with the stainless steel but the damage was reduced by more than half and the combination of less damage and subsequent less product loss was substantial. Prototype testing in Korea with Hyundai was also a lot of fun–we tried to break new designs of containers with some interesting test gear. That and leading in automating our refrigeration equipment really kept us in the game  We ended up buying most containers in China–they become a commodity … as their price came down,  and some of the weight reduction was the result of good thought by Chinese container engineers.  Surprisingly every person in charge of container engineering in the companies we purchased from were women and they could work the drawings from behind their eyeballs vice on paper because they know their business so well.”

The close-up account is fascinating. It has also led me to reflect on what economists mean when we say – as we do all the time these days – that ‘institutions matter’ for growth. Probably most of us have institutions like trade rules and agreements in mind, but it may well be that the setting of standards and engineering principles – as in containerisation – matter much more.

 

Containers

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A shipping container has appeared in the local park:

Container

These containers have become multip-purpose. The first non-shipping use I came across was their conversion into phone boxes in Africa, equipped by entrepreneurs with several mobile phones:

Phone shop in South Africa

The history of the shipping container is strangely fascinating – Marc Levinson’s book [amazon_link id=”0691136408″ target=”_blank” ]The Box[/amazon_link] is a terrific account of how it came to be standardised and what the consequences were for world trade.

[amazon_image id=”0691136408″ link=”true” target=”_blank” size=”medium” ]The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (New in Paper)[/amazon_image]

After its publication, the BBC tracked a container for a year, the reports getting under the abstraction of ‘globalisation’.

I think out local box is storing tools but who knows?

The people’s car

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Who would have thought that a history of the VW Beetle could be such a good yarn? Bernhard Rieger’s [amazon_link id=”0674050916″ target=”_blank” ]The People’s Car[/amazon_link] (out on 5th April) has been ideal for a couple of days of travelling. It weaves together the separate strands contributing to the commercial and cultural success of this iconic automobile, bringing them together in a fascinating story spanning more than seven decades altogether.

[amazon_image id=”0674050916″ link=”true” target=”_blank” size=”medium” ]The People’s Car: A Global History of the Volkswagen Beetle: A Global History of the Volkswagen Bettle[/amazon_image]

One strand is the role of historical accident. The original design by Ferdinand Porsche was commissioned as a grand project by Hitler, the concept of the ‘people’s car’ playing both a populist role in embedding National Socialism and an ideological role, claiming modernity, much as the Italian Fascists did. However, Porsche put a higher priority on technical excellence than on cost, and the pre-war models were unaffordable. Very few Germans bought one. The brand new factory and city in Wolfsburg were turned to the production of military vehicles, using forced labour. After the war, the plant fell into the British occupied sector. Having considered removing the factory to Britain as a part of reparations, and rejecting the idea because it would pose too big a threat to incumbent UK car makers, the occupying forces instead put in a manager, Ivan Hirst, who was rather competent. The rocky process of ‘de-Nazification’ led to a German manager and, ultimately, a fresh start for VW and the Beetle as the symbol of the German post-war economic miracle and of Cold War ‘freedom’.

A second strand was the early introduction of Fordist production techniques, adopted after visits to Ford’s River Rouge factory before the war, and cemented by the appointment of ex-GM and Opel manager Heinrich Nordoff as VW’s post-war General Director. Although the huge success of the Beetle led to a failure to invest in new models through the 1960s, until that time the production techniques and management approach – mimicking Ford’s insistence on the importance of a well-paid workforce – allowed the cars to be produced at huge scale, so affordable price, and high quality. Britain’s auto-manufacturers never achieved that combination.

The third strand is the cultural. Rieger cites Roland Barthe’s wonderful essay in [amazon_link id=”0099529750″ target=”_blank” ]Mythologies [/amazon_link]on the Citroen DS, about the extraordinary cultural role of some cars. What’s interesting about the VW is how different it was in different countries, combining globalized production with distinct national experiences. The Beetle was the mass vehicle in Germany, was never very successful in the UK because of its Nazi origins, became a niche (often 2nd) vehicle for the American liberal suburbs and counterculture, and – news to me – was iconic and massively successful in Mexico and Brazil. VW was one of the main drivers of West Germany’s post-war export miracle. It was an export machine, and also an early example of a huge multinational producing in key markets. The book has a fascinating section on the part played by advertising agency Doyle Dane Bernach from 1959. The agency’s innovative campaigns contrasted with the macho boasting of the American Big 3, emphasising honesty and reliability by making (seemingly) modest claims about technical reliability and service quality, and successfully creating an image of a plucky, friendly, characterful little vehicle – the character picked up in the movie Herbie.

The Beetle now has an afterlife as a “postmodern retro” vehicle, as the Epilogue puts it: “Designed in California with the intention of reviving Volkswagen of America, developed in Wolfsburg, and produced in Puebla by workers on comparatively low wages,” the New Beetle was launched in 1998, although  production ended in 2003. The book ends with a hint – is it wishful thinking? – that this does not mark the end either. Another relaunch seems unlikely but even so, the Beetle certainly deserves to be labelled ‘iconic’.

The Great Rebalancing

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Chapter 1 of [amazon_link id=”0691158681″ target=”_blank” ]The Great Rebalancing: Trade, Conflict and the Perilous Road Ahead for the World Economy[/amazon_link] by Michael Pettis is available to read for free online at the Princeton University Press website.

It isn’t often that I bill anything as a must-read, but this really is, for anybody who wants to understand what has been happening in the world economy in the past decades, the causes and consequences of global imbalances. As another recent comment on my previous post on this book puts it, this book is a game changer. Click through and read the sample chapter!

[amazon_image id=”0691158681″ link=”true” target=”_blank” size=”medium” ]The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy[/amazon_image]