A container load of reasons to celebrate 2015

A container load of reasons to celebrate 2015
File photo of a shipping port

As everyone knows, 2015 is a big year for anniversaries in Singapore. It's not just SG50 either, to mark Singapore's 50th year of independence. The Straits Times is 170 years old this year and the National University of Singapore is 110. Given the importance of SG50 and of these two institutions, it is not surprising that another important anniversary has received little attention.

That's too bad, because few developments have been more important to Singapore's economic development than one dating from 1955-56, when a little-known American trucking entrepreneur named Malcom P. McLean bought a shipping company. In short order, he revolutionised ocean transport by successfully operationalising the process known today as containerisation - that is, shipping via the use of standardised cargo containers.

This innovation, which on the surface seems rather quotidian, is anything but. Indeed, many economic historians and historians of technology would rank it among the most important innovations of the 20th century, and certainly one of the most significant contributors to the wave of globalisation we are still immersed in.

Despite the fact that containerisation is not much remarked upon, no one living in Singapore can miss its presence. Indeed, even visitors sense the importance of containerisation in Singapore as they pass the Tanjong Pagar ship terminal, full of containers piled high and neat like Lego blocks, on their way into the city from Changi Airport.

And the numbers back them up. Currently, Singapore is the world's second-busiest port, just behind Shanghai. It is the world's largest bunkering port, and Singapore is near the top in terms of ship registries. As Mr Andrew Tan, chief executive of the Maritime and Port Authority of Singapore, pointed out recently, the maritime sector contributes 6 per cent to 7 per cent to the nation's gross domestic product (GDP) and 170,000 jobs.

The job figure would have been much larger in the absence of containerisation, of course, which drastically reduced the amount of labour necessary in port terminals. Prior to containerisation, cargo had to be loaded and unloaded crate by crate, which entailed massive work forces at port side, long stays in port, and high ratios of labour costs to total shipping costs.

With containerisation - usually defined as an "intermodal" method of shipping freight using standardised, sealed, stackable boxes - the need for stevedores and longshoremen, and other related workers, shrank drastically.

Once loaded, a box was "good to go", and could be transferred directly - without any additional unloading or loading - onto/off a flat-bed railroad car or onto/off a flat-bed truck. These changes significantly reduced the cost of ocean shipping (in both time and money), and, in so doing, rendered the global economy more integrated and more efficient.

For every longshoreman who lost his job because of containerisation, many more gained from jobs created by the dollars "freed" by the labour thereby saved.

Moreover, containerisation reshaped global port geography. Many ports were slow to adapt and sank in importance as a result. Singapore, however, quickly took the bit, with the Port of Singapore Authority (PSA) making the momentous decision in 1966 to build a container port.

This decision, in retrospect, seems quite prescient, but was quite risky at the time, as no shipping lines had yet built container vessels for Europe-Asia routes. By June 1972, however, when the first container berths opened in Tanjong Pagar, containers were increasingly seen as the way to go.

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