| The shipping container is an underappreciated technological innovation of the second half of the twentieth century. After decades of failed experiments with various types of containers, the modern intermodal container came into use in the United States in 1956. Its initial economic consequences were felt most strongly in New York City, where the displacement of breakbulk shipping by container shipping through an entirely new port complex in New Jersey caused substantial job loss among longshoremen and contributed to the decline of manufacturing. Containerization came into international use across the North Atlantic in 1966, and was adopted in trans-Pacific trade following its successful use to supply U.S. troops in the Vietnam War. Containerization caused large shifts in port activity, as previously obscure ports, such as Oakland, California, and Felixstowe, England, displaced traditional maritime centers that lacked the space and transport connections to function efficiently as container ports, such as San Francisco and London. Starting in the late 1970s, regulatory changes, especially in the United States, permitted motor carriers, railroads, and ship lines to offer coordinated services based on confidential contracts covering rates and terms of service, leading to reductions in shippers' costs in return for volume guarantees that permitted carriers to make more efficient use of assets. These changes improved service reliability while making freight transport a less significant factor in firms' decision-making. The ability to ship goods in a single container from origin to destination, under a contract specifying equipment availability, delivery times, and rates, dramatically lowered the cost of shipping manufactured goods internationally. Manufacturers and retailers were then able to locate facilities and make sourcing arrangements in order to minimize other costs, such as labor and taxes. Containerization was a necessary but not sufficient condition for the subsequent shift of manufacturing activity from high-wage to low-wage countries and the creation of long-distance supply chains to assure the timely delivery of goods to market. These are important aspects of the phenomenon now termed "globalization," and would not have been possible without containerization. |
