Cities

Shipping containers and world trade


This article was written by Garry Peterson in January 2009. This month we're showcasing some of our best, in celebration of four years of WorldChanging Canada.

The BBC is planning to follow and report on the progress of a container around the world for a year. They have painted a container and bolted a GPS transmitter to allow is readers to follow its progress around the world on their map [as of the end of October 2008, this container is in Shanghai, containing whisky].

The BBC named their project "The Box" after The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, an interesting book on the history of containerization, and its effect on globalization, by Marc Levinson. (Here is a book review from Ethan Zuckerman and an essay by Witold Rybczynski).

I read the book earlier this year and enjoyed it. I would have liked more economic history and statistics in the book, but the main problem was that people mocked me when I told them I was reading a book about containers. However, containers have become an essential part of global trade and of its rapid growth.

Trends in world trade of total merchandise, intermediate goods and other commercial services, from 1988-2006 (100=1988).  From WTO\'s World Trade Report 2008.

Trends in world trade of total merchandise, intermediate goods and other commercial services, from 1988-2006 (100=1988). From the WTO’s World Trade Report 2008.



Below are some maps of parts of global trade. They give a bit of an idea of where such a container is likely to move between.

Structure of world trade of between 28 OECD countries in 1992. The size of the nodes gives the volume of flows  in dollars (imports and exports) for each country . The size of the links stands for the volume of trade between any two countries. Colors give the regional respectively memberships in different trade organisations: EC countries (yellow), EFTA countries (green), USA and Canada (blue), Japan (red), East Asian Countries (pink), Oceania (Australia , New Zealand) (black).  From Max Planck Institute for the Study of Societies.

Structure of world trade of between 28 OECD countries in 1992. The size of the nodes gives the volume of flows in dollars (imports and exports) for each country . The size of the links stands for the volume of trade between any two countries. Colors give the regional respectively memberships in different trade organisations: EC countries (yellow), EFTA countries (green), USA and Canada (blue), Japan (red), East Asian Countries (pink), Oceania (Australia , New Zealand) (black).
(From Max Planck Institute for the Study of Societies).

World trade imbalance web for the years 1960 and 2000. Directed network of merchandize trade imbalances between world countries. Each country appears as a node and the direction of the arrow follows that of the net flow of money.  (Serrano et al 2007).

World trade imbalance web for the years 1960 and 2000. Directed network of merchandise trade imbalances between world countries. Each country appears as a node and the direction of the arrow follows that of the net flow of money. (Serrano et al 2007).



The book—The Box—includes lots of interesting history of the container system, and how as a system it lead to innovations, efficiencies, and had many unintended consequences. One example is that it made many old ports obsolete, while reshaping many city centres (over decades). Also, the creation of new ports—and the changes in container ships they triggered—caused ongoing shifts in global trade patterns.

One key cycle of change was a positive feedback between ship size and port attributes. Because the fuel consumption of a ship does not increase proportionately to the number of containers a ship can carry—containers ships have become bigger and bigger—which has had the effect of focusing trade into ports that can handle the large ships and the trade volume. These big ports then lead to the construction of more of these bigger ships. Wikipedia lists the world’s busiest container ports. The busiest are Singapore, Shanghai, Hong Kong, Shenzen, and Busan. This concentration of big ships in big ports has had the effect of making world trade unexpectedly (for economic theory) “lumpy.” Paul Krugmann explains:

[Economic theory suggests] a country like China should export a wider range of products to a small country, like Ecuador, than it does to a big country, like the US. Why? Because Ecuador, being small, probably has fewer industries that are cost-competitive with Chinese exports. In fact, however, China seems to export a wider range of stuff to bigger economies.

A possible explanation is the lumpiness of transport costs: there are more container ships heading from China to US ports than to Ecuadorian ports, so that it’s worth sending over a bigger range of stuff. It’s like the reason there are fewer food choices in supermarkets on St. Croix (where we spent our last vacation) than in New Jersey—there’s just one boat with groceries coming over every once in a while, so you can’t keep, um, arugula in stock.

Reading the Box also makes it clear that while higher fuel prices will reshape trade patterns and probably boat designs, neither global trade patterns nor transportation costs will return to those of the 1960s or 1970s. This is due to huge improvements in logistics that have radically dropped the labour cost for shipping goods long distances, and this has also decreased fuel costs.

The rapid expansion of skills in logistics is a hidden environmental efficiency of the moden world economy—in that it allows things to be moved around for less cost than earlier in history. However as occurs with most increases in efficiency, modern society undoes the environmental advantages of efficiency by using the cost saving to simply move more stuff for the same amount of money.

Logistics makes at least parts of the world “flatter.” And the ease of making these connections appears to make it easier to spread tools and ideas as well as goods. The World Bank claims that countries with the most predictable, efficient, and best-run transportation routes and trade procedures are also the most likely to take advantage of technological advances, economic liberalization, and access to international markets. Countries with higher logistics costs are more likely to miss the opportunities of globalization. The World Bank ranks countries using a logistics performance index which measures the ease with which the country connects to the global economy. Singapore, Netherlands, and Germany are at the top as the most accessible; while Rwanada, East Timor, and Afghanistan are at the bottom of the rankings.

Of course, novel solutions also produce novel problems. Discarded containers litter landscapes worldwide (finding uses for them has become a standard architecture project), container ports are centres of environmental and biotic pollution, and the ease of using containers is also useful for smuggling.

And at least my impression from reading The Box, was that containerization has not finished transforming the world economy.

P.S. Ethan Zuckerman also has a long post Mapping a connected world discussing containers and world trade.

This article by WorldChanging Canada writer Garry Peterson was originally published on Resilience Science.

For more great articles by Garry Peterson, see: