How Containerization Changed Bulk Commodity Trade in the US

Posted by World Trade Distribution
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Filed Under: Container Freight

The rise of commodity trade between the U.S. and global nations  is due in large part to the ease with which commodity freight can be shipped over land, air, and sea. Once a standard shipping container size, shape, and transfer process was established, the rest is history.

Containerization is the mechanization and standardization of bulk cargo shipping , which was instrumental in the 21st century international commodity trade boom in the United States and across the world.

The history of modern containerization began in England, where tradesmen used (mostly) standard rectangular wooden and later iron boxes as early as the 1820’s. Before a standard size, shape, and weight were established, goods were simply stuffed into any available compartment or vacant spot aboard container ships. Not only were these cargo ships prone to dangerous shifts in weight that could capsize them, the cost of importing and exporting goods was much higher because of  inefficiency.

The Industrial Age

As the industrial age proliferated throughout England, Europe, and the United States, developing international standards for container freight became not just practical, but necessary for cargo bound for international ports.  Steel replaced iron and wood container construction, and the United States  adopted the international standardization specs for containers. With standardized dimensions, managing freight became much less arduous.

Standardized container sizes after World War II prompted eager entrepreneurs to find and import the cheapest commodities straight from the source. Precious metals and raw commodities like iron ore, copper, gold, silver, iridium, rhodium, platinum, and palladium imports are now booming because they can be harvested and imported so inexpensively.

Once here in the U.S., the metals are used to create stainless steel, coat jewelry, and in the manufacturing of microchips and computer hardware.  Of all the metals transported and necessary for container freight shipping, none is more important than steel.

Precious Metal Commodity Prices

Steel Commodities

Although the United States and Europe were responsible for the initial boom in steel manufacturing, higher labor and energy costs in the US prompted the importation of steel from a handful of countries that can manufacture it for the lowest price:  Russia, India, Ukraine, and Brazil.  The combination of low labor and energy costs in this country make it ideal for industrial manufacturing of steel and other commodities.

Although China’s rate of steel production has risen to just above 30% of the global share, median energy costs in China have kept it out of the lowest bidders’ bracket.  However, China’s demand for steel to build bridges, roadways, and buildings continues to increase the percentage it imports from countries that can produce it for less.

In the United States, 2/3 of steel used for consumption comes from domestic recycling efforts. 90% of steel in the United States is used by  a handful of industries: automotive, new construction, shipbuilding,  and oil & gas.

Internationally, all shipping containers are now made of steel.  In an effort to repurpose, reuse, and recycle materials, many counties have seen the construction of the first homes made of shipping containers.

The Future of Commodity Shipping

Containerization has forced even the most reluctant of countries to import commodities from foreign lands that can manufacture or harvest them at a much lower cost.  It’s hard to imagine the future of international commodity trade without container freight at the epicenter.

Technology continues to advance at a dismal rate, and eventually the latest tech booms will hit the shipping industry as well. Containerization will fall into second place behind some  unknown technology, but to which technology and when we have yet to discover. Given the simplicity of the containerization system and standards that govern it internationally, it will probably never be replaced as the default shipping system however low tech it may seem in the future.

Jul 18 2014
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