Two Wrongs Don’t Make a Right, But Three Rights Make a Left: Containers, Interstates and a Few Book Reviews

Two Wrongs Dont Make a Right

Over the years I have espoused one of the things making the USA economically successful was the ease of transportation of goods. Driving around Atlanta I frequently see containers on trucks being shuttled either from a train yard or from the Port of Savannah to a near-by distribution center. Any student pursuing APICS CLTD certification will appreciate the need to understand transportation concepts and some finer details around container shipping. For example,

Land Bridges:

‘An intermodal strategy ‘optimizes sea, road, and rail transport modes to provide alternatives for long distance shippers. Land bridges also minimize issues of immense ships too large for canals or straits. A mini land bridge combines ocean and rail carriers for reaching destinations across a country. A micro land bridge involves a combination of ocean and rail carriers for reaching an inland destination’

[CLTD Version 1.0, 2017 Edition, Pg5-140]

Panamax / Suezmax

‘Ocean ships are measured by their ability to move through the locks of Panama and Suez canals. Ships that can move through the Panama Canal (Panamax ships) must have a deadweight of 75,000 long tons; those that can move through the Suez Canal (Suezmax ships) must have a maximum deadweight of 200,000 metric tons.’ Ships larger are too long to too wide to move through these canals (Post-Panamax/Post-Suezmax)

[CLTD Version 1.0, 2017 Edition, Pg5-106]

 

Roll On, Roll Off (RORO)

‘Basically large ferries. The carrier drives automobiles and other motor vehicles directly onto the ship using built-in ramps and then drives or tows the vehicles off the ship at the cargo’s destination’

[CLTD Version 1.0, 2017 Edition, Pg5-106]

The APICS Dictionary, 15th edition, defines the following key terms

Twenty Foot Equivalent Unit (TEU)

‘a measurement used to describe the carrying capacity of a cargo ship or terminal’s handling capacity. One TEU equals a standard 20 foot x 8 foot x 8 foot (length x width x height) shipping container’

Intermodal Transport

‘1) Shipments moved by different types of equipment combining the best features of each mode. 2) The use of two or more different carrier modes in the through movement of a shipment’

As I reviewed these and other APICS CLTD content I became more curious on the history of containerization, the US interstate system and the evolution of our e-commerce society. Following is insight into what I uncovered and a couple short book reviews.

On April 26, 1956 the first converted ship tanker set sail from Port Newark-Elizabeth Marine Terminal, New Jersey headed from the Port of Houston, Texas with fifty-eight 35-foot Trailer Vans. This was the first commercial use of using containers to mass ship break-bulk product overseas. Already a successful transportation business magnet, Malcolm McLean went on to change the face of global trade.

On June 29, 1956 the (US) Federal-Aid Highway Act of 1956 was signed by President Dwight D. Eisenhower paving the way (pun intended) for what is now officially known as the Dwight D. Eisenhower National System of Interstate and Defense Highways. While many groups and municipalities across the country were working locally to improve road conditions, with the signing of the Federal-Aid Highway Act, a strategy and funds were in place to drive a coordinated effort of standardization across the states.

While it took decades for containerization and interstates to evolve to mass success (the first standard TEU container ship started sailing in 1968; officially 1992 is the completion of the original Interstate plan) my thesis is both events formally occurring around the same time is a key factor in the integral success of both systems. As an example, container ships were in more demand as trucks could more easily get to and access ports, and more trucks and associated highways grew in demand to get containers from ports to inland distribution points.

Following is a brief summary of a few books you can reference for additional context:

The Big Roads: The Untold Story of the Engineers, Visionaries, and Trailblazers Who Created the American Superhighways. Earl Swift

Big Roads starts in the late 1800’s with Carl Fisher and his role in driving change by going from selling bicycles to starting and building the Indianapolis 500. Along the way the author discusses the history of major roadway projects such as the Lincoln Highway and the Dixie Highway, the many inputs into the inter-connected roads concepts leading up to the 1956 signing of the Federal-Aid Highway Act, and the consistency of Thomas Macdonald leading the design and implementation of the interstate plan for 34 years under 7 different US Presidents.

Biggest lesson learned, while the name is officially ‘Dwight D. Eisenhower National System of Interstate and Defense Highways’ as with most things political, Dwight Eisenhower was in the right place at the right time and was responsible for formally signing the 1956 Act kicking off formal federal leadership of the project. There were several other visionaries and leaders more responsible for the interstate system than President Eisenhower.

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Marc Levinson

My key take away from reading The Box was the significant disruption the introduction of container shipping had on the entire shipping industry. Today we frequently talk about technology disruption, for example the taxi industry (Uber/Lyft) or smart phones disrupting multiple industries (music, photography, land phone lines).

“In 1963-64, Manhattan (NY) employers used 1.4 million days of longshore labor. [as container shipping grew] Hirings slid below a million in 1967-68, breached 350,000 in 1970-71, and dropped to 127,041 in 1975-76 – a 91 percent decline in longshore employment in twelve years. Brooklyn’s (NY) followed, dropping from 2.3 million hirings in 1965-66 to 1.6 million in 1970-71 and to just 930,000 in 1975-76. Employment had fallen 78 percent in a decade. Brooklyn’s once mighty cargo-handling industry was just a shadow of its former self.”

In 1957 it was estimated container shipping cost 39-74 percent less per ton than conventional shipping.  Additionally, loading standard containers significantly increased ship turn-around from weeks to days, typically single digit days. Both of these factored into making long distance out-sourcing of production economically viable.

Overall this is a good quick read with a detailed history or Malcolm McLean, the evolution of container standards and a brief look into the current state of container ports around the world.

Door to Door: The Magnificent, Maddening, Mysterious World of Transportation. Edward Humes

Door to Door briefly discussed both the container and interstate evolution, but put more emphasis on the impact of containerization on domestic companies unable (or unwilling) to adapt to an off-shoring model and the future states of transportation in global trade with a strong hint toward the ageing (and in some places failing) US transportation infrastructure. For my interest, the book started and ended strong allowing me to quickly skim the middle information. Key points I picked up:

  • “’Your kids will never go hungry if they have degrees in global,’ says he head of UPS for the American West. ‘But we have to leave them a transportation system that works.’” [pg16] As an employee in the supply chain technology space, and the father of a near term college student, I found this point exceptionally interesting.
  • “But then came the big breakthrough, a world-changing invention that would be both boom and disaster, making most of our modern and common products, not the least smartphone, possible. It was not some new ship design or propulsion system that launched the revolution, nor the advent of some new exciting high technology or manufacturing process. The breakthrough was a low-tech as could be: a steel box or, as American longshoreman call it ‘the can.’ It’s best known away from the docks as the shipping container.” [pg29]
  • “Manufacturing jobs come and go, but the logistics field just keeps growing – 32 percent growth even during the Great Recession, while all other fields grew by a collective average of 1 percent. Some say logistics is the new manufacturing.” [pg39]
  • Aluminum (or more specifically bauxite) is an awesome reusable material and something we should all be recycling. For example, an aluminum beverage can has become the global poster child for recycling, the one “single-use” product that gets recycled more than it gets landfilled. Much of the aluminum extracted from the earth since the 1880’s is still in play, some of it recycled dozens or even hundreds of times. Aluminum is a shining example in the “cradle-to-cradle” reuse economy. American beverage cans on average are 70 percent recycled metal, 30 percent primary aluminum.
  • One of my life philosophies “two wrongs don’t make a right, but three rights make a left” has been validated by UPS. UPS implemented a no-left-turn policy in 2004 driven by their new route optimization tool, ORION. Through detailed analysis, engineers realized turning against traffic resulted in long waits in left-hand turn lanes wasting both time and fuel, and left turns also lead to a disproportionate number of accidents. Since implementing the tool UPS estimates the following benefits:
    • Reduce 100 million miles driven annually
    • Save $300-400 million annually
    • Cut greenhouse emissions by 100,000 metric tons annually. The equivalent of removing 21,000 cars from the road

Click here to learn more about UPS ORION.

  • “The single most common product type shipped by UPS is – perhaps unsurprisingly in this age of e-commerce – the consumer retail product category. The next most common in order are car parts, medical supplies and drugs, professional services (mostly legal and real estate documents) and industrial supplies and products.” [pg247]
  • The US transportation infrastructure is showing its age and in many ways has outgrown its use. However, there are five important trends that may bring change and relief to our crumbling roads and bridges.
  1. China is transforming from a low-wage factory sweatshop economy into a true economic powerhouse where workers are getting better wages, benefits and work conditions.
  2. Higher wages in China make off-shoring of jobs and manufacturing less attractive to companies. Re-shoring – a resurgence of manufacturing jobs back to the US is happening.
  3. The emergence of 3-D printing as a viable solution is one of the major disruptive technologies on the horizon. The “factory-in-a-box” technology provides the ability to manufacturer products locally at a competitive cost, and in small quantities.
  4. The ridesharing world of traffic apps are driving cultural changes in car ownership
  5. The driverless car will disrupt transportation as much if not more than the invention of the car.

Which brings me to the end of the book where I found a compelling view into the future of car ownership:

“Open an app on your smartphone and summon a driverless car to your house. The app consults the latest crowdsourced traffic data and informs you the car will pick you up forty-five minutes before your meeting starts to ensure you arrive on time. At the appointed time, your phone buzzes: the car is outside your house. It takes you to your meeting, its route selected based on current traffic data; it drops you off at the curb and then takes off to pick up another passenger. During the ride you were free to do other work. Drive time has become productive time. Neither you nor the autonomous car has to worry about parking at the end of the trip – a process that, in once congested metro areas, used to be both time-consuming and expensive. Space once set aside for parking cars is now used more productively, in the forms of protected bike lanes, outdoor cafes, open space and mini-parks. At the end of your meeting you use your app to schedule a pick up to return you for the day.”

While the above scenario is in practice today, the next evolution is removing the human driver from the equation. Driverless cars are projected to not only be more efficient but much safer by removing human error and human ego. This will significantly reduce and possibly eliminate the 35,000 deaths, and 2.5 million trips to the Emergency Room associated to the 5 million auto collisions a year.

Advertisements