I like to think in metaphors. Comparative exercises don’t always stick but it’s an interesting to consider “what if…”. This entry will layout the grounds for a potential metaphor. Some later entry will consider the parallels with my day job.
Somewhere I heard about this book “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” (the Discovery channel perhaps). Hmmm… I thought, what are the chances that Windows Installer packages and the distribution ecosystem it integrates with the evolutionary effects of the container on shipping.
When I saw the book in the MS Library, I pinged a few friends to see if anyone had read it. One had and said ‘great book but expect to get funny looks when you start trying to tell people about how cool it was.’ After reading it, it turns out it was a great book, and so it’s time try and tell the story.
Won’t be the first time I get funny looks ;^).
Chapter 1: The World the Box Made
If you’ve read “The World is Flat” the premise of this chapter is nothing new. For myself, I’ve grown up in Seattle, a big container port, so I’d always just taken containers for granted. Even after reading Flat and growing up next to a big container port, I had no idea of these details.
This chapter mixes the books two strong elements, the high risk, high stakes narratives with tons of data to back up the story. This mix is somewhere to the data side of “The Tipping Point” and “Freakeconomics”. The weight of the data is right to make the weight of the story sink in. This data is measured where these other two book were more statistical exercises that economists like to play.
While this chapter describes today, it does a lot of work to foreshadow the intrigue and narrative to come. This chapter alone is not enough to set the hook the way Flat, Tipping, and Freak does but you can see this is going to be much deeper run at this story. There are so many different ties to contemporary issues it soberly dares you to read on.
Chapter 2: Gridlock on the Docs
Enter the hapless antagonist: I thought the seedy world of the longshoreman and unions were just a Hollywood exaggeration. With the minimal education and teaming masses of immigrants ready to take any job, this economic class had little to defend itself other than to unionize. At some point, not clear where, the abused turned into the abusers.
To be fair, the work was hard, took expertise, and had a relatively high risk of injury and death. The entire business was transient so abuses from any number of the transient players was all but certain. What was lost on labor while defending their life and livelihood, there was still intrinsic problem to the industry: the cost of freight handling.
The author starts to sink the hook here by positioning the solution to the cost of freight handling problems was known to just about everybody and their sister. Evidence was everywhere that better packaging changes the cost of handling. Unfortunately the methods and modes were so widely varied it would have been difficult to pick out the pattern and the intrinsic value in the without a relatively unique view.
Chapter 3: The Trucker
Enter the hero: Malcom McLean. Funny thing is that his heroism isn’t that much different that Microsoft founders; Bill Gates and Paul Allen. A son from a reasonably well off family uses a bit of entrepreneurial spirit to put together the parts of the system where innovations will thrive.
The other protagonist here is the regulatory authorities. The Interstate Commerce Commission has a constitutional authority to govern interstate commerce. To protect the national need for a viable interstate transportation system, they regulated rates (relative to costs) and regulated point to point routes (relative to providers).
So to finally set the hook to this story, the author drops the intermodal idea. Due to world war II surplus, ships were free but domestic port to port shipping was irrational for break bulk handling. McLean’s insight was to imagine the cost savings if you strapped trailers to the deck of the otherwise free boats and ran them down the coast rather than down the east coast highway.
Chapter 4: The System
In my vocabulary, this chapter would be called the method. First, the hero wasn’t the only one measuring costs and leveraging innovations to drive up volume. Second, the others had different techniques but they were all tweaking the numbers to optimize for their business. Third, when times get challenging, grow through acquisitions, innovations, and further leverage.
Chapter 5: The Battle For New York’s Port
As striking a story of the hero, the story of the hapless decline of New York as a world transportation hub. First, there must have been a lack of understanding of the factors that made New York vital as well as where it’s liabilities lie. Second, there was hubris all men’s minds that they had the market in their palm so they overplayed their positions. Third, the container enters from Jersey to finish ‘em off.
Chapter 6: Union Disunion
With the previous balance between ports, shippers, and longshoreman now disturbed, the downward spiral of the unions was evident to their leadership. On the east coast, they fought all comers, even when the wiser views would have passed on at least a few of those fights. On the west coast, the pragmatics and protectionism (for the remaining good jobs), the Mechanization and Modernization Agreement was the watershed moment in turning the equations.
Chapter 7: Setting the Standard
With labor on board, more or less with the Mechanization and Modernization Agreement, the next gatekeeper was that shippers would not use the same standard. The vision to go from truck to train to ship across land and sea requires the world to agree to the same format. If you’re a policy wonk like me, these standardization games are fascinating.
Chapter 8: Takeoff
So with labor and transport companies having agreements in place, capital needed to shift their positions world wide. Domestic runs had proven the profitability of containerization so internal runs, unprotected by the United States government, was the next. For some reason, the Atlantic seems to inspire pursuit of retrenching countermeasures while the Pacific seems to inspire cooperation for everyone’s net benefit.
Chapter 9: Vietnam
When our country is at war, capital is no object. Half a world away, Vietnam required massive logistical efforts to get supplies to the front. Blame who you want for the failures, but Mr. McLean was the logistic hero of Vietnam.
Three game changing pivots came from this war. First, the government upped the scale of the game buy paying for massive ships, historically unheard of in the industry and ones that could have never been paid for by private capital. Second, the ships were coming home empty and paid for so anything that could get carried home was pure profit. Third, McLean showed he could build a container port on just about any piece of land a government would make available to him.
Chapter 10: Ports in a Storm
Previously minor ports, having seen increased the traffic of the Vietnam war, started to compete for full time container tenants. Capital was able to off load the costs of building container terminals to the ports that wanted to keep the traffic. Old break bulk ports that could not convert to container ports went the same way as New York. New ports sometimes took business from each other but they all grew.
Chapter 11: Boom and Bust
With everybody in the game and more clamoring to get in, the supply outstripped demand and the market crashed. Our hero, Mr McLean, had the vision to get out early. Overcapacity drove down prices and made freight trivially cheap. The pivot here is that goods from anywhere now had almost a free ride.
Chapter 12: The Bigness Complex
With a very low price point and very high volume, the market had to shift to figure out how to maintain those points without hemorrhaging money. The only solution is to get bigger and bigger. The new bigger sizes ended up obsolescing ports that couldn’t scale up and those ports were relegated to what they called feeder ports.
Chapter 13: The Shippers’ Revenge
It wasn’t until intermodal containerization had been around for a decade until the shippers figured out how to play the system correctly. Prior to the end of the 70’s, only the large carriers and shippers could figure out whether taking a container across a continent via train was cheaper than taking it thorough the panama canal. Come the late 70’s everyone started to figure it out and the game changed.
Chapter 14: Just In Time
Now that everybody figured out the global trade-offs, the only remaining element to squeeze out was the capital held up in inventory. With shipping time and manufacturing time now heavily measured and mastered, smart capital squeezed the inventory time from transport. I believe the author intended this to be the glorious end of the story because it had the tone that every last drop of waste out of the system.
Finishing the story here because was sadly disappointing for me because I know of at least two more chapters: a longshoreman’s strike that almost stole Christmas and the strike insurance warehouses that are being built across farm fields in western Washington to create a buffer so the longshoreman can’t do it again.
