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Ah, the modest freight container. It really is nothing more than a large steel box with a few doors. At any given time, million of containers is stacked on ships sailing on the world’s waterways. Plagued by weather and waves, they are packed with almost everything you can imagine – exotic fruits and vegetables, cheap clothes and electronics, parts for cars and trucks.
“Globalization as we know it today would not have been possible without the container,” says Marc Levinson, an economist, historian and author of two books on shipping containers.
These days, during the corona pandemic, where the holidays are fast approaching, jam-packed container ships are stuck in traffic in ports, suffocating the economy. Delayed containers have become both a symptom of and a contributor to global supply chain problems. But looking back, goods have generally moved easier and cheaper now than they did before these big boxes came around, making them almost indispensable for the global economy.
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Items used to be loaded one by one
Before containers, freight was prohibitively expensive because each piece of cargo had to be loaded on ships separately.
“On a typical vessel in the 1950s, you had maybe 200,000 different items … and then each one had to be taken out of a ship separately when the ship arrived in port,” Levinson says. “So it took a long time to load and unload a ship. There was a lot of cargo that was damaged. There was a lot of cargo that was lost or stolen.”
In 1956, an American entrepreneur named Malcom McLean used the first modern container ship. He owned a trucking company and was looking for ways to avoid congestion on the highways. McLean came up with the idea of taking the containers off his trucks and putting them on ships.
“His first ship was called the Ideal X. It was a tanker that had been built during World War II,” Levinson says. “The tire was essentially a frame in which the containers could be attached.” The tanker had only 58 containers.
Containers went abroad a decade later
The first international container ship voyage was in 1966 between Newark, NJ and Rotterdam in the Netherlands. It changed the shipment dramatically. New trade routes were formed, special cranes were invented for loading and unloading containers, and larger and larger ships were built.
Janet Porter, Editor-in-Chief of Lloyd’s list, a London-based maritime information service, remembers in 1996 seeing what was then the world’s largest container ship – it could carry 6,000 containers.
“And it was seen as absolutely huge. Barriers had been broken,” Porter says. “And now … they’re just tiddlers,” she says, using a British expression of thumbnail. “I mean, the largest ships are about 24,000.”
Now the boxes have additional uses
Containers are now used for more than just shipping. They have been transformed in many parts of the world into makeshift schools, restaurants, clinics and prisons. Architects in richer countries turn them into advanced modular houses.
California-based business Modular boxuses, for example, containers to make affordable multi-family apartments, temporary housing for people experiencing homelessness, and school buildings.
“We procure these empty one-way shipping containers, and then we bring them to our factory in Carson, California,” said Amanda Gattenby, the company’s vice president of development. “We’re transforming them from shipping containers into houses by cutting out the sides, combining them to create larger spaces, adding steel, inserting plumbing and electricity and drywall.”
The finished apartments are fully insulated and contain tiled bathrooms, air conditioning and high ceilings, says Gattenby.
“In the last two years, we have produced 432 beds for homelessness and 81 units for affordable housing, as well as some commercial and educational projects that have converted over 350 shipping containers into state-approved buildings,” she says.
Supply and demand increase costs
Now during the pandemic, people are buying so many more items that it is increasing demand and leading to a shortage of containers, which has caused their prices to rise, according to the Porter of Lloyd’s List.
She says they went from $ 1,500 for a 20-foot container and $ 2,800 for 40-foot by the end of 2019 up to $ 3,000 / $ 5,800 by 2020. Now they are around $ 4,000 / $ 6,400, but she has seen spot deliveries go so high as $ 8,000 / $ 6,000.
She expects prices to fall as the supply chain crisis ebbs.
“The reason there is a shortage is that many of them are stuck on ships waiting outside ports because of this crisis in the supply chain,” says Porter. And not only does it cause delays for companies waiting for goods and parts to arrive, but she adds that “these containers cannot be moved back where they are needed.”
The shipping containers cannot be unloaded at the port fast enough to be shipped back to Asia, where they will be used again to help meet consumer demand.
China, the world’s largest producer of shipping containers, is trying to catch up – companies that produced 300,000 containers in September alone, It reported Reuters.
But no matter how many there are, the supply chain crisis will not be resolved until the containers are unloaded and turned around more quickly.