Burnt toast

Malcolm McLean was the first to successfully commercialize the standardized shipping container, over 75 years ago. Prior to McLean, most ship cargo was unloaded manually by longshoremen.

Accordingly to Smithsonian magazine, a typical ship might house over 200,000 separate crates, bags, and barrels. Wikipedia notes that hand-loading a ship cost almost $6 per ton in 1956. And, of course, a merchant incurred those costs on both ends of the journey. As a result, it could run 15-20% or more of the total value of goods to ship them internationally.

Introducing standardized shipping containers cut loading costs to just $0.16 per ton.

A leap in efficiency of that magnitude has the potential to redraw entire industries. And, that’s exactly what happened. The standardized shipping container revolutionized logistics.

Merchants could ship goods farther distances at cheaper prices than ever before. This made it economically viable to trade in more goods across broader geographies. And this, of course, helped fuel the rapid expansion of international trade.

On the other hand, labors needs at ports dropped substantially. In the 1950s, there were well over 50,000 longshoremen in New York, then the busiest port in the world. By the mid-1960s there were fewer than half that number.

The impacts across the board were substantial, until a new equilibrium was reached. The standardized shipping container became ubiquitous and taken for granted. Its use is presumed and we rarely give them a second thought. A shipping company could scarcely compete without them, and no one wins in the market because of them.

Like standardized shipping containers, there are plenty of technological innovations in today’s world that promise substantial cost savings and/or efficiency gains. Mobile devices, IoT sensors, AI, and cloud computing are just a few.

If the history of the shipping container is any guide, yesterday’s revolutionary technology – no matter how transformative – will be tomorrow’s baseline status quo. And, the window to gain advantage and any advantage conveyed may be smaller and narrower than anticipated.

“In the long run, everything is a toaster.”

Bruce Greenwald

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