It was 11:30 am on a sunny Tuesday in mid-April, and the Hong Kong Express had
been docked at Hamburg’sContainer Terminal Altenwerder for exactly 33
hours. Already, the ship was halfempty. Cargo from Asia was stacked in
neat rows of shipping containers on thedock.
Standing in its shadow, it’s hard toappreciate just how big the Hong Kong Express is.From
stem to stern, it’s 1,200 feet, nearly a quarter of a mile; from side
toside it’s 157 feet, about as wide as some mega yachts are long. Fully
loaded,it can carry 13,167 20-foot-longcontainers,
the standard box used in commerce around the world. Laidend to end,
that many boxes—each one containing anything from T-shirts to TVsto
truck parts—would stretch for 50 miles.
As the spring sun
climbed higher, glinting off the placid Elbe River, somecranes nestled
containers into towering metal racks on the ship’s deck whileothers
lifted boxes out. At full tilt, Altenwerder’s custom-built cranes
cansimultaneously load and unload more than 150 containers per hour.
Already, fullracks of Asia-bound cargo towered 50 feet above the deck,
corrugated steelcontainers stacked like Lego blocks six deep. Still more
hid unseen within thebehemoth’s matte crimson hull.
Before Wednesday dawned, the Hong Kong Express wouldbe
underway once more, sailing 70 miles down the Elbe to its mouth on the
NorthSea. Once it edged away from the Hamburg dock, its progress amounts
to asnapshot of global commerce: first a brief westward sail to the
English port ofSouthampton, then nearly a month chugging at 25 miles per
hour to Singapore.
After a brief stop, the
vessel worked its way north. By early June, itwould edge into Busan,
South Korea. Next stop, China: first Shanghai, then toNingbo bordering
Hangzhou Bay, and finally to the megacity of Shenzhen. Itwould return
once more to Singapore before wheeling about and heading backtoward
Europe.
In less than two months the Hong Kong Express called
at 11 ports and traveledmore than 12,500 miles. Circling the world four
or five times a year, it canmove 1.4 million tons of cargo annually.
That’s the equivalent of 1.8 billioniPads. The ship is a link in a long,
complicated, and precise global supplychain made possible by the humble
boxes on board.
More than any other singleinnovation, the shipping container—there are millions out there, all just likethe ones stacked on the Hong Kong Express butfor
a coat of paint and a serial number—epitomizes the
enormity,sophistication, and importance of our modern transportation
system. Invisibleto most people, they’re fundamental to how practically
everything in ourconsumer-driven lives works.
Think of the shipping container asthe Internet of things.
Just as your email isdisassembled into discrete bundles of data the
minute you hit send, thenre-assembled in your recipient’s inbox later,
the uniform, ubiquitous boxes aredesigned to be interchangeable, their
contents irrelevant.
Once they enter the stream of global
shipping, the boxes are shifted androuted by sophisticated computer
systems that determine their arrangement onboard and plot the most
efficient route to get them from point to point. Theexact placement of
each box is a critical part of the equation: Ships make manystops, and a
box scheduled to be unloaded late in the journey can’t be placedabove
one slated for offloading early. Imagine a block of 14,000
interlockedLego bricks—now imagine trying to pull one out from the
middle.
The container’s efficiency has provento
be an irresistible economic force. Last year the world’s container
portsmoved 560 million 20-foot containers—nearly 1.5 billion tons of
cargoaltogether. Though commodities like petroleum, steel ore, and coal
still movein specially designed bulk cargo ships, more than 90 percent
of therest—everything from clothes to cars to computers—now travels
inside
shipping containers.
“Reefer” containers, insulated andequipped with cooling units, carry
refrigerated cargo and are plugged intopower sources on ships or at
dockside. Because the containers are allidentical, any ship can move
them.
Those already huge numbers areexpected to grow.
Increasingly, cargo companies are looking for ways to movebulk cargo in
containers, fitting the steel boxes with bladders to transportliquid
chemicals or cleaning them and using polypropylene liners to
moveanything from soy, corn, and wheat to salt and
sugar.
Andrew Curry
Imagine a block of 14,000 interlocked Lego bricks—now imagine trying to pull one out from the middle.
Even
cars and trucks—known in the trade as “RoRo,” or “roll-on,roll-off”
cargo—are increasingly being loaded into containers rather
thanspecialized ships. “Containers are just a lot easier,” says James
Rice, deputydirector of the Center for Transportation and Logistics at
MIT. “A box is abox. All you need is a vessel, a berth, and a place to
put the container on theground.”
By driving the cost of
shipping internationally way down and the speedof global commerce way
up, containers made the globalization of manufacturingpossible. Yet for
all the concept’s seeming simplicity, the actual process isfiendishly
complex.
To get a sense of how the systemworks, imagine one of the containers aboard the Hong KongExpress,
which is owned by German shipping giant Hapag-Lloyd. Askedto trace a
product through a typical container voyage, Hapag-Lloyd spokesmanRainer
Horn suggests a T-shirt sewn at a factory near Beijing, the kind
youmight buy at H&M.
Tagged, folded, and boxed, the
T-shirt would be “stuffed” into acontainer with 33,999 identical shirts
at the factory. Once sealed with aplastic tag and listed on a
computerized manifest, the merchandise could passthrough nearly three
dozen steps before arriving at a discount clothingretailer’s
distribution center near Munich. There’s the trucker who moves thebox to
a waiting ship in Xinjiang, the feeder ship that moves it to
Singaporeto be loaded onto a bigger Europe-bound freighter, the crane
operator inHamburg, customs officials, train engineers, and more.
Yet
the container’s uniformity smooths each step of the way. Trucks
andtrains are fitted to haul the identical boxes; cranes are designed to
lift thesame thing over and over. The total time in transit for a
typical box from aChinese factory to a customer in Europe might be as
little as 35 days. Cost pershirt? “Less than one U.S. cent,” Horn says.
“It doesn’t matter anymore whereyou produce something now, because
transport costs aren’t important.”
Though containers
today seem ubiquitous—so much a part of the modernlandscape that they’re
used for cheap housing on the outskirts of Berlin, snowremoval in
Helsinki, and disaster relief in Haiti—the steel boxes are actuallya
fairly recent phenomenon. Hamburg has been a major European port for
nearly amillennium, going back to the days of the Hanseatic League, a
federation offree ports around the North and Baltic Seas that thrived in
the Middle Ages.For nearly all of that time, shipping was essentially
the same: Each vessel waslaboriously loaded and unloaded by hand, a
process that could take weeks.Longshoremen laid hands on each piece of
cargo that went into a ship’s hold,packing bags of grain, wood crates,
and pallets into “breakbulk” ships piecemeal.It was a difficult,
dangerous job, with unpredictable results; theft, breakage,and delays
were common.
Shippers and manufacturers
actedaccordingly: “So long as cargo was handled one item at a time, with
long delaysat the docks and complicated interchanges between trucks,
trains, planes, andships, freight transportation was too unpredictable
for manufacturers to takethe risk that supplies from faraway places
would arrive on time,” writes MarcLevinson in his definitive history of
the container, The Box: How the ShippingContainer Made the World Smaller and the World Economy Bigger.Parts were sourced locally, or purchased far in advance and stockpiled inwarehouses until needed.
“A box is a box. All you need is avessel, a berth, and a place to put the container on the ground,” says Rice.
It
took a pugnacious North Carolinian named Malcom McLean to launch
thecontainer revolution. An ambitious truck-company owner with little
experiencewhen it came to shipping, McLean—who had made a fortune in
trucking in the boomyears after WWII—was looking for a way to move goods
up and down the EastCoast’s traffic-choked highways faster and more
cheaply.
His inspired idea: Put truck trailers on ships
and bypass the roadsaltogether. Trucks could roll their trailers onto
ships in North Carolina; thetrailers would be unloaded in New York and
hitched to trucks, then driven therest of the way to their destinations.
He soon refined the concept evenfurther, doing away with the trailer
wheels and axles, which couldn’t bestacked, and settling for just the
trailer body. On April 26, 1956, McLean’sfirst container ship—a
military-surplus WWII tanker—sailed from Newark toHouston loaded with
containers custom-built for his company, Pan-Atlantic.
Around
the same time, other companies began introducing their ownprimitive
containers—as much a response to theft and breakage as toinefficiency.
The boxes came in all shapes and sizes, from 4.5-foot-widesteel-framed
crates with plywood sides to steel boxes 15 feet long. Some weredesigned
to be lifted in and out of ship holds using cranes, others
withforklifts. Cranes belonging to Grace Lines couldn’t unload
containers belongingto Pan-Atlantic.
To
fulfill their potential, dozens of players—from shipping companies
torailroads and truck chassis manufacturers—had to agree on a standard.
Years ofdebate, overseen by a little-known government agency called the
United StatesMaritime Administration, resulted in a 1961 agreement that
only ships built tocarry boxes 10, 20, 30, and 40 feet long would be
eligible for federalsubsidies. A few years later, the International
Standards Organization agreedon a common design for corner fittings,
making it possible to standardizecranes, too. The resulting steel
rectangle—20 feet long, 8 feet wide and about8 feet tall—became known as
a TEU, or 20-foot equivalent unit. The TEU quicklybecame the yardstick
of global commerce.
The first trans-Atlantic container
ships set sail in 1966, filled withwhiskey headed to the U.S. and guns
on their way to Europe. Liquor bottles weretraditionally a target for
light-fingered longshoremen, and Scotch exporterswere quickly sold on
container-sized tanks that allowed them to ship theirproduct in bulk and
bottle it in the U.S. On the eastbound voyage, nearly everyberth was
filled with U.S. military cargo destined for the 250,000
Americansoldiers stationed in West Germany.
McLean’s
idea set a revolution in motion. “The early trans-Atlanticcontainer
ships could be unloaded and reloaded more quickly, so
containershipsspent less time at the dock than breakbulk ships,” says
Levinson.“Consequently, each one could make more voyages in the course
of a year.”
In the decade that followed, container shipping
overcame its rivals withthe inevitability of a rising tide. “From
whiskey distillers in Scotland toapple growers in Australia, major users
of international shipping abandonedbreakbulk freight as soon as regular
container shipping was able to meet theirneeds,” Levinson writes. By
the mid-’80s, the cost of shipping goods from Asiato North America had
fallen by more than 50 percent.
Since then, container
traffic has continued its steady climb. The Portof Los Angeles,
America’s busiest container port, handled 476,000 TEUs in 1981.Thirty
years later, 7.9 million 20-foot containers—almost all of themcontaining
goods on their way from factories in Asia—moved through the port,
a16-fold increase. Hamburg’s four container terminals loaded and
unloaded 8.9million
TEUs in 2012.
On the long list of global container ports,Hamburg and Los Angeles are
middleweights: Shanghai, the world’s largestcontainer port, moves 31
million TEUs each year.
As the idea gathered
steam, it brought with it unintentional rippleeffects. Some are hard to
gauge, like the environmental impact of containershipping. The boxes
themselves are simply storage; the pollution involved within
transporting them depends on how they’re moved. Mile for mile,
transportinga single TEU using a modern container ship produces just a
third of the CO2 it would take to move that same container
witha truck. But the fact that containers have led to globalized
production andmultiple international supply chains means that far more
cargo is being movedtoday than in the days of breakbulk.
Other
effects are easier to pin down, like the loss of many dockworkers’jobs
and the death of waterfronts around the world as cargo moves
toincreasingly automated facilities on or beyond city limits. New York
is a greatcase study: Levinson estimates that in 1951, nearly 13 percent
of jobs in NewYork City depended on the city’s ports. Three decades
later, nearly all ofthose jobs were gone. In some cases, urban
waterfronts are now being reclaimedas prettified public spaces, half a
century later.
Overall, the container profoundlychanged
the way we shop and work. Reliable, cheap transport made possible
anexplosion in global commerce. That, in turn, had more
far-reachingconsequences. When the cost of shipping American cotton to
China, having itsewn into shirts there, and shipped back to Wal-Marts in
the U.S. sank tonearly nothing, for example, the bottom fell out of the
American textileindustry. A host of other industries followed—leading
to the ongoingoutsourcing boom—as containers made geography nearly
irrelevant. Americanmanufacturing—which represented nearly a quarter of
U.S. GDP in 1970—makes upjust
over 10 percent today.
Containers
also changed the manufacturing process itself. Thereliability of
containerized shipping spawned a new field in business schoolsaround the
world, namely supply chain management. In the 1980s, “inventory”became a
dirty word. Instead, everyone from carmakers to clothing
retailersadopted a “just in time” philosophy, minimizing the time parts
sat in thewarehouse before being assembled and sold.
That
depended on the precise planningand efficiency that identical,
interchangeable containers made possible. “WhenI started in the merchant
marine, on a four-month trip to India we’d usuallycome back two months
late and nobody noticed,” says Gerhardt Muller, a retiredprofessor at
the U.S. Merchant Marine Academy and author of Intermodal Freight Transportation, an industrystandard. “Now everybody jumps up and down if you’re two hours late.”
When
the cost of shipping American cottonto China, having it sewn into
shirts there, and shipped back to Wal-Marts inthe U.S. sank to nearly
nothing, the bottom fell out of the American textileindustry.
Once
shipments became predictable enough to build production and
salesschedules around, managers started treating containers like
warehouses inmotion. By precisely timing the arrival of components,
manufacturers could moveitems from containers directly onto assembly
lines or store shelves, bypassingwarehouses entirely. “In the ’80s,
people realized the container wasn’t just abox for shipping,” says
Muller. “Containers were no longer about shipping—theybecame about
logistics.”
They may grease the wheels of global
commerce, but those millions ofanonymous, identical containers also make
for a very long, very vulnerablesupply chain. Experts like to talk
about “resilience”—how well a system canrecover when it’s rocked by a
disaster or unexpected failure. Like a precisionwatch grinding to a halt
thanks to a grain of sand, small setbacks can have bigconsequences. The
American power grid, for example, is notorious for its lackof
resilience: A tripped generator in Ohio plunged most of the Eastern
seaboardinto darkness in 2003, affecting 45 million people.
Could
the same thing happen to global shipping? With the timely arrivalof
each container dependent on dozens of things going right, there’s a lot
thatcan go wrong. “Right now, we’ve got too many eggs in too few
baskets,” saysMuller. In the U.S., two adjacent ports—Los Angeles and
Long Beach—handlenearly half of the nation’s container traffic.
MIT’s
Rice recently set about calculating the capacity of U.S. ports,and set
up an online utility, called Port Mapper, to help operators figure
outhow to respond if a port were taken out of commission. The nightmare
scenario:an earthquake, a terror attack, or a labor strike in southern
California. “Ifsomething bad happens in L.A. [including Long Beach],
every other containerport in America would have to have approximately 25
percent extra capacity toabsorb all those containers,” Rice says. “That
could not be done.” Delays asships were re-routed to ports in Canada
and the Gulf Coast of the U.S. mighthold up cargo for weeks.
It’s
already happened, on a small scale. In 2002, labor disputes led toa
10-day port lockout on the West Coast. Auto plants in California,
accustomedto “just in time” deliveries of parts from Japan, found
themselves charteringplanes to bring in parts they otherwise would have
had shipped, at a cost of$600 per car. When Hurricane Katrina closed
ports in and around Louisiana thathandle a significant share of
America’s food imports and exports, food pricesticked up 3 percent and
stayed there for six months as the system struggled toadjust. And
Hurricane Sandy closed terminals in Newark and New York for days,forcing
shippers to route their cargo to ports elsewhere on the East Coast.
The
solution, Rice says, would be more ports operating below their
peakcapability to create a buffer in case of disaster or unexpected
delays. Butport operators have no interest in building inefficiency into
the system,essentially paying for space and equipment they’re not using
just in case of anemergency. “There’s an incentive to work at maximum
capacity,” Rice says. “Youknow port operators aren’t working at 50
percent.”
Indeed, the system is getting more intricate, not less.
The port of thefuture is eerily quiet and empty. At Altenwerder, there’s
none of the noiseyou’d expect at a busy container port. Instead of
shouting longshoremen,beeping trucks, honking horns, and growling
engines, there’s just the faintsound of gentle waves against the hulls
of the ships and low horns of boatsmaking their way along the Elbe.
As the Hong Kong Express takes
on its Asia-bound load,the only human being nearby is a lone crane
operator in a glass box 20 storiesabove the water. The crane slides on
rails back and forth over the massiveship, manipulating a specially
designed “spreader” claw to lift and shiftcontainer after container onto
curious, truncated trucks. Seemingly nothing butwheels and chassis, the
trucks are missing a key element: drivers.
It turns out
Altenwerder is one of the world’s few automated portfacilities.
Underneath the terminal’s blacktop, a grid of 19,000 sensors helpguide
driverless robot trucks—AGVs, or “Automated Guided Vehicles”—along
routesselected for maximum efficiency. The trucks are programmed to move
containersfrom the shipside cranes to another set of cranes, which
stack them accordingto when they’re scheduled to be picked up by trucks
or loaded onto trains.“It’s all done by software,” says Karl Olaf
Petters, a spokesman for HamburgerHafen und Logistik AG (HHLA), the
company that runs Altenwerder and most ofHamburg’s other cargo
terminals.
Ports and shipping companies are working to
squeeze still moreefficiencies out of an already mature system.
Beginning last year, “dual-cycle”algorithms help Altenwerder’s cranes
and AGVs load and unload shipssimultaneously, reducing time in port to a
minimum. The roustabouts,stevedores, and longshoremen who once
populated the world’s docks and harborshave given way to engineers and
computer specialists; HHLA employs more than100 people in its IT
department.
The port of the future is eerily quiet and empty.
In the name of energy efficiency, the freighters of the future will makethe mighty Hong Kong Express look
modest.A Danish shipper, Maersk, is at work on what it calls the
“Triple-E” class. Thevessels are 1,300 feet long, and capable of
carrying 18,000 containers at atime, the equivalent of 111 million pairs of sneakers—27percent more cargo than the Hong Kong Express,currently
one of the largest container ships in the world. This latestgeneration
of freighters, under construction now, is slated to enter servicesome
time in the next year.
Andrew Curry
Muller
says Maersk’s new behemoths may be pushing the envelope
towardsdiminishing returns. The issue isn’t the size of ships, but the
infrastructurerequired to load and unload them. Fully unloaded and laid
end-to-end, the18,000 containers aboard one of Maersk’s new ships would
stretch for 68 miles.That sheer volume threatens to choke even the
largest ports. “Where are yougoing to put all those containers?” Muller
asks. “Ships lose money when they’resitting alongside the pier.
Companies are facing a tug-of-war betweenefficiency and flexibility.”
Ironically,
while ports shave minutesand hours off of their operations, elsewhere
the container industry is actuallyslowing down. In the past few years,
container ships—the largest of which nowcarry 16,000 20-foot containers—have
dropped their average speed 3 milesper hour, down to a stately 25 miles
per hour, saving up to 30 percent on fuelcosts and reducing CO2 and sulfur emissions.
With
nearly 20 million containers constantly in motion around the world,the
humble container has become an integral part of our lives: The number
of20-foot equivalent units moved is the most important measure of
economicwell-being you’ve never heard of. So the next time a truck
towing a metal boxedges alongside you on the freeway, give a thought to
the changes it’swrought—and the possibilities that still lie in the
future.
