BUS3103 – LO 2 Case Study

Container shipping and the rise of the global economy

Tuesday 15 July 2014 4:50PM by Keri Phillips

Read the following article and answer the questions. If

you prefer you can listen to an audio report instead of
reading by entering the following link…

http://www.abc.net.au/radionational/programs/rearvision/container-shipping/5483444

The shipping container might seem an unlikely candidate for the most influential invention of the 20th
century, but it has arguably had a bigger impact than the
aeroplane or the microchip.

It’s difficult to believe now, but until the 1970s virtually all goods
were shipped around the world loose—that is, crammed into the
holds of old fashioned cargo ships. While various people had
thought of putting cargo in big boxes, trucking company owner
Malcolm McLean is generally credited with inventing the
shipping container.

McClean bought an old oil tanker in the mid-1950s and began

experimenting with using it to carry trucks. When that idea
didn’t work out, he switched his focus to boxes, enlisting the
help of an engineer, and the ‘intermodal container’ was born. By
eliminating wasted space, it allowed ships to carry many times
more cargo, and cut unloading time by up to three weeks. The
next breakthrough came in 1968.

‘The International Standards Organisation, which is still today the most important agency that tries to
standardise dimensions and features, came to conclusions that imposed on the rest of the world a standard
box,’ says Professor Brian Slack of Montreal’s Concordia University. ‘The box was identified as being eight-
foot high, eight-foot wide and 20-foot long.’

‘In terms of containerisation, which became a global phenomenon, it would have had great difficulty in doing
that were it not for the fact that the boxes that everybody adopted where of fixed dimensions. And the key
to that is that you could design a ship to fit those dimensions of boxes.’

The impact of containerisation was enormous. McLean was named ‘Man of the Century’ by the International
Maritime Hall of Fame and his invention transformed the transport industry. It became apparent that
retrofitting existing boats was impractical, and as a result an entirely new fleet of cargo ships needed to be
built. Many traditional shipping lines went out of business, unable to handle the expense. If containerisation
was difficult for existing firms, it was catastrophic for many ports and the cities and neighbourhoods centred
on them.
BUS3103 – LO 2 Case Study
‘They had to completely rethink their operations,’ says Professor Slack. 'Many started to convert existing
docks, knocking down sheds as much as they could, but these proved not to be as efficient as developing
new terminals on new sites to accommodate the container vessels that were coming in. Ports began to move
out of their traditional locations in the heart of cities, the old docksides of cities, and were moving into what
are called Greenfield sites where new port facilities were built.’

The fact that containers can be put on semi-trailers or trains and transported cheaply and easily away from
the ocean has caused the decline of entire cities. Mediterranean ports declined as shipping companies by-
passed them on the way to Rotterdam’s European container hub. Traditional UK ports like Liverpool,
Glasgow and Bristol found themselves on the wrong side of the country. In the US, east coast ports like
Baltimore and New York declined in favour of western hubs like Oakland.

The other big loser was the dockside workforce. While some dockworkers, like crane operators, managed to
increase their salaries through mechanisation, many more lost their jobs.

Before, groups of labourers working long hours in the port on long shifts resulted in a very large labour force
being required, but with containers, manpower was replaced by cranes and other kinds of dockside
equipment. The result was a significant, very large reduction in the need for manpower.

Workers on ships were similarly affected. Containerisation has completely changed the lives of sailors, who
were already doing a dangerous and physically demanding job. Container ships today are often crewed by
mariners from developing countries, who are less likely to be put off by poor conditions and comparatively
low salaries.

Journalist Rose George travelled from the British port of Felixstowe to Singapore for her book Ninety Percent
of Everything, and says that Filipino sailors can earn three times what they would get for a government job at
home by working on a container ship. It’s a trade-off, though—they virtually never get a chance to rest or to
spend more than a few days on land.

‘All the Filipino crew said to me when I asked them if they enjoyed their job, they said it's dollar for
homesickness. Seafarers often say—that their job is prison with a salary. So it can be good money with a
good company, with a good manning agency it can be good money, and that is why they are at sea, after all,
they are there to earn money.’

‘They have all very, very carefully calculated how long they are going to be there. They've figured out that it's
12 years or 15 years and then they can go home. They are not at sea for the love of being at sea, at least no
one I met was.’

Filipino crew are just one aspect of the globalisation that container shipping has helped to enable. While the
stevedores of Liverpool, Sydney and Baltimore might disagree, container shipping has undoubtedly increased
our standard of living. Today’s level of economic integration and trade would be impossible were it not for
these big steel boxes. China’s rise to economic superpower status has similarly relied on the container.

‘Essentially globalisation could not have existed without containerisation.

‘It goes hand in hand. That is, all the outsourcing, off-shoring of large manufacturing activities in developing
economies could have been made possible because of the container. It's also absolutely incredible what you
can see be put into containers, everything you can think of.’

Ships today carry up to 18,000 containers and can be loaded and unloaded in 24 hours – in comparison old
ship could carry the equivalent of less than 1000 containers and took up to 2 weeks to load or unload.
BUS3103 – LO 2 Case Study
Questions:

1. Research and explain why the massive reduction in loading times has effected goods transportation
and helped globalisation.

2. Research: what are the two main shipping canals in the world? Why did these canals effect global
transportation?

3. “The International Standards Organisation, which is still today the most important agency that tries
to standardise dimensions and features… imposed on the rest of the world a standard box” Why was
this development so important to the rapid rise on containerisation?

4. Containerisation is said to be one of the three main reasons for the rise of globalisation, what were
the other two?

5. Explain the many effects containerisation had on:

A. Country ports

B. Labour

C. Ship design

D. Product availability