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Book Review: The Box

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This is the sixth of a nine part series on the Patterson School Summer Reading List.

1. China’s Trapped Transition, Minxin Pei
2. The End of Poverty, Jeffrey Sachs
3. Illicit, Moises Naim
4. In Spite of the Gods, Edward Luce
5. The Utility of Force, Rupert Smith
6. The Box, Marc Levinson

The Box is about, well, big boxes. In the mid-20th century, the development of the container and of the container ship accompanied a series of changes in international trade that had the effect of transforming the global commercial landscape. Marc Levinson argues that the development and standardization of the container served to radically reduce transport costs and thus to underwrite the full globalization of the international economy. Before the container, dock workers had to move individual pallets and boxes with different goods in and out of ships. This was an extremely slow and costly process, meaning that a ship could not be re-loaded until it was completely unloaded, and complicating the transfer of goods from ships to rail and truck transportation. This mode of transport limited the efficient size of ships, as well, as very large ships simply could not be loaded or unloaded in an economically viable manner. The container changed all that, and cut the price of transport by as much as 90%. This transformation produced big winners and big losers, as firms, unions, and industries had to adjust to a new economic reality.

The conversion to the container required a legal transformation as well as a technological. Levinson details the myriad of different regulations that transport companies faced in the 1950s and 1960s. These regulations served less to protect consumers and workers than to protect businesses that already had a stake in the transport market. Indeed, Levinson’s account of the complexity of the system, and the difficulty with which the initial container companies had in breaking into the market, could serve as a useful antidote to fresh-faced graduates of Econ 200; the free market simply doesn’t exist in any form approaching what an introductory microeconomics text suggests. The first container companies didn’t so much break the regulatory regime as bend it to their own interests and own needs, especially as it became clear that their methods were far cheaper than those of their competitors. As the promise of the container became apparent, government funded dockyards helped restructure the flow of trade on a continental basis, creating a new transport industry in some areas (New Jersey, for example), while utterly destroying it in others (New York City ceased to be a major shipping hub because of the container).

The state abetted the development of the container in another way. After some initial hesitation, the Pentagon fell in love with the container as an efficient way of shipping military supplies to Vietnam. Saigon, the major port in South Vietnam, was dreadfully inefficient and had a restive work force. The Army Corps of Engineers undertook the construction of a new container port at Cam Ranh Bay in order to facilitate the supply of US military operations. This created a captive market for the primary container shipping companies, and underwrote their expansion into the Far East. Container ships would have their entire voyages paid for by the Pentagon, and would stop in Japan on the way back for what amounted to a free ride. Since their costs were already paid, they could undercut other shipping between Japan and the US, and facilitate the construction of the infrastructure necessary for container shipping in the Pacific.

The development of the container devastated the traditional dockyard. The biggest advantage of the container was automation and a reduction in transaction costs. This had the predictable and immediate effect of destroying the market for dockyard labor. The longshoreman occupation in the nineteenth and twentieth centuries had been relatively well-paid, but extremely dangerous, irregular, and organizationally shot through with corruption. For shippers, undercutting the longshoreman unions was a feature, not a bug. The unions that represented longshoremen reacted differently to these developments. On the West Coast, a unified union was able to put together a reasonable deal that protected existing longshoremen and, more or less, eased the union’s way out of existence. In the East, a far more fragmented set of unions failed to negotiate such deals, leading to far more devastating economic consequences. In the United Kingdom, union and other difficulties held up construction of container ports for quite a while, while Dutch unions provided no opposition to the construction of a container port in the Netherlands. I can’t quite do justice in this brief summary to the history of unionized labor, the dock, and the container; indeed, Levinson could have devoted several more chapters to the study.

Although the container is an important part of the tapestry of global trade in the second half of the twentieth century, Levinson allows that other developments had critical impacts on the expansion of trade. The legal environment of transport had to change, as did the attitudes of shippers. Container shipping made no sense if orders were too small to fill an entire container, or inspections too onerous to allow the transport of the full box. Not all early container shipping companies did well, and some did very badly indeed, especially when energy costs rose and international trade stalled in the 1970s. The expansion of container trade also required international action, since much of the appeal of the container was in standardization, and the advantage was lost if every country and company had different container sizes. Indeed, some industries, such as American railroads, failed to take advantage of the container and lost out on crucial early advantages.

This is really an excellent book. Levinson could have devoted an entire volume to the discussion of labor issues, or of regulatory policy in the 1950s and 1960s, or of the use of the container in the Vietnam War. Indeed, I would hope that other journalists and scholars would return to these questions in order to flesh out the history. I’m 95% convinced by Levinson’s case, but I think he may have gone just a touch farther than the evidence warranted by concentrating specifically on the container. The container was a huge part of the transformation, yes, but Levinson’s own account shows that many other factors contributed to the acceleration of trade in the second half of the twentieth century, and that the Box might have failed outside this environment.

…I am remiss in failing to note that M. Gemmill wrote a fine and detailed review of the same book at Duck of Minerva.

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