cargoshipping

How Shipping Containers Revolutionized The Global Economy

Intermodal shipping containers have emerged as one of the most important drivers of the post-WWII global economy.

Mundane as they may seem today, shipping containers play a crucial role in making the global economy go round. Without them, manufacturers worldwide would be lost at sea. In some cases, shipping containers can also signal  the health of the  global economy.

Just how key are they?

According to the New York Times and the World Trade Organization, over $13 trillion worth of goods are shipped via maritime shipping containers each year–that accounts for 70 percent of total freight.

To support such a behemoth amount of trade, shippers have at their disposal about 17 million different containers, five to six million of which are in transit and being used to ship goods around the world.

From a cargo perspective, things get even more exponential. Just one standard 20 foot shipping container can store anywhere between 24 to 30 tons of finished goods–that’s the equivalent to about 12 to 15 average size cars.

When the global economy is booming, demand for containers is high, as are shipping costs. In a slowing or stagnant economy, shipping costs are less, as measured by the Harpex index for container shipping, and the Baltic Dry Index for bulk shipping (commodities like oil, iron, etc).

Since the inception of the modular shipping container in 1956, the speed and efficiency of maritime shipping has also exploded.

Before 1956, shippers used the “break bulk” system in which ships were loaded with goods by hand, then unloaded by hand again, The process was expensive, costly and slow. it used take up to a week to unload a ship using a large team of longshoremen.

Now only takes 6 longhorsemen just 48 hours, by moving about two dozen containers per hour.

The ships

The containers aren’t the only pieces of hardware stitching global trade together; the ships transporting them are in many respects just as key.

Like the containers, cargo freighters have gone through a drastic evolution in the past 50 years.

The most advanced cargo ships, which used to only pack about 1,000 20 foot containers in 1970, can now carry a payload of about 18,000 containers.

Now, ships like the famous Seawise Giant have been built big enough to sustain a mind-blowing 556,000 of deadweight tonnage (the total weight of cargo, fuel, fresh water, ballast water, provisions, passengers, and crew).

To put it in perspective, that’s about 180,000 more tons than the entire weight of the Empire State Building.

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One of the world’s largest commercially operating cargo ships, Maersk’s Triple-E, is capable of carrying 18,000 TEU’s (twenty-foot equivalent unit) and displaces so much water that it can’t even fit into the Panama Canal or dock in any port in North or South America.

While container shipping has many benefits, some maintain that too many ships have been built, resulting in an unhealthy overcapacity for the shipping industry.  Overcapacity, coupled with declining global economic conditions, caused commodity shipping prices to crash in early 2016, dropping to historic lows and creating  “zombie fleets“.

The takeaway

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When it comes to global trade, shipping containers and the vessels that transport them remain one of the most crucial inventions of the last century.

They interconnect world economies from Tokyo to New York, and everywhere in between, and makeup the backbone of a dependable and efficient system of trade.

Updated

 

James Pero