It
is 40 feet long, 8.5 or 9.5 feet high, and eight feet wide. It carries
up to 29 tons in its 2,000 cubic feet of recommended available space –
goods worth roughly $500,000 (or more) when sold at retail. It, and
what it carries, can be transported in a month anywhere in the world
where there are suitable harbors, railways, locomotives, flatcars,
truck tractors, diesel fuel, and roads.
It is the modern cargo container, and it is able to move
non-fragile, non-perishable goods from any modern factory with a
loading dock to any modern warehouse anywhere in the world for about 1%
of retail value. Indeed, it can be transported for a marginal cost of
perhaps $5,000 – less than the price of a first-class airplane ticket,
as Marc Levinson, author of the excellent The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, puts it.
All of this has happened since 1960 or so. Back then, the costs of
international trans-ocean shipment for most commodities could easily
amount to between 10% and 20% of retail value. The cargo container has
changed everything.
When my family bought a German-made washing machine from a warehouse
store in San Leandro, California, more of its cost was absorbed in the
ten minutes the saleswoman spent telling us about it than in the entire
journey from the factory in Schorndorf, Germany, to the loading dock in
San Leandro, or in forklifting it from the loading
dock to its place in the serried ranks of washing machines which
filled that corner of the warehouse. In the end, it cost to us of
getting our washing machine to our front door was about eight times the
cost of the machine’s voyage from the German factory to the warehouse
where we purchased it.
The world is certainly not “flat,” as the New York Times
columnist Thomas Friedman believes. But, in an economic sense, it is
extremely small for non-perishable, non-fragile goods. Every modern
factory with outgoing volume large enough for container traffic and a
suitable loading dock is next door to every modern warehouse with
similar features.
Yet it is not the whole world that is so small, but only that part
of it that is attached to the global container-handling network. Areas
that lack the necessary infrastructure are still far away from the
global trading system that carries high-end German manufactured washing
machines from Westphalian factories to California warehouses for just a
penny a pound.
For example, if your electricity is unreliable, so that you can’t
count on being able to pump the diesel into the truck tractor, you are
not attached to the network. If the volume of your production is too
small to fill 2,000 cubic feet of space headed for a single country,
you are not attached to the network.
Likewise, if the money to fix your roads was embezzled, so that
nobody wants to risk their tractors on them, you are not attached to
the network. If your courts function so badly that few outsiders are
confident that what you say is theirs really is theirs, you are not
attached to the network. If nobody has yet noticed what your workers
can produce, you are not attached to the network. If your entrepreneurs
cannot build organizations at container-scale without attracting
politically well-connected extortionists, you are not attached to the
network.
For any poor segment of the world economy, getting attached to the
global container network is an immense opportunity. But it is an
opportunity that requires that everything – infrastructure, scale,
public administration, governance, and foreign knowledge of your
production capabilities – work just right. And if you have not first
built up the social networks that enable your workers and their bosses
to know what kinds of manufactured goods would generate high demand in
the rich post-industrial core of the world economy, it doesn’t matter
even if you are attached to the global container network.
Many have written about how telecommunications technology is
bringing about the “death of distance.” Indeed, nowadays, you can talk
to anybody, anywhere. But it is the cargo container that appears to
have brought about a more effective and – so far – more significant
“death of distance.” For, in a commercial sense, at least, the goods we
ship across oceans still far outweigh the words we chatter around the
world.
