563. How the Container Changed the World feat. Marc Levinson
unSILOed with Greg LaBlanc
The Unforeseen Costs of Containerization
This chapter explores the unexpected consequences of globalization and containerization, revealing how expert predictions often fall short. Using a case study from 1959, it highlights the impact on industries, labor unions, and the ongoing hesitancy surrounding globalization.
It may be not much to look at, but the unassuming shipping container has had a massive impact on the global economy since its invention in the 1950s. The story of its rise as the dominant form of shipping is filled with dramatic turns and insights into the explosion of globalization.
Marc Levinson is a journalist, economist, and a former senior fellow of the Council on Foreign Relations. His books like, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger and Outside the Box: How Globalization Changed from Moving Stuff to Spreading Ideas explore the complex economic history and unexpected impact of how goods make their way around the world.
Marc and Greg discuss the labor-intensive nature of shipping before containerization, the union battles, regulatory hurdles, and the economic implications of adopting a standardized container. They also examine the unforeseen consequences of global supply chains and the evolving power dynamics between shippers and transporters.
*unSILOed Podcast is produced by University FM.*
Episode Quotes:
The hidden globalization behind modern trade
47:48: The value of international trade of exports and imports is really based on transactions. Okay? One party is selling something to another party, and there is a price for that transaction. But what happens when you're looking at something on the internet? You're not paying any money to do that. You're just sitting at your computer. You do not know that the server that's offering you that page on the internet is actually based in a different country. That's an international exchange. It's not—there's not a transaction. This is not recorded as international trade, but it is. It's quite common now within large companies to have research operations in several countries. The researchers talk to one another all the time. They send each other emails all the time. And those ideas have economic benefit, but they do not have value that can be captured by national statistics. So we're having a much harder time keeping track of what is going on.
The unsung heroes behind global trade
28:27: The real heroes in the container story, I think, are the engineers from the ship lines and the container manufacturers and other companies who spent 10 years literally sitting in smoke-filled rooms, negotiating over things like: How many supports should there be inside the container? How thick should the end walls be? What should the door hinges look like? All of this seems really trivial, but economically, it made a big difference to the different companies...It made a difference to the cost of the container.
How companies are rethinking trade risk
41:08: I think companies have really devoted a lot more effort in the past couple of years to understanding how their supply chains work and looking for vulnerabilities. There are a couple of basic choices that they have got. One is that they can just keep more inventory, keep more stuff in the warehouse here in the States. Well, that is costly. First, you have to pay for it, and then you have to pay to store it. And it may go out of date depending upon what business you are in. But that is one way of reducing this risk
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