Estimating the effects of the container revolution on world trade

Richard Kneller, Daniel Bernhofen and Zouheir El-Sahli

If you were to ask the man or woman on the street what have been the technologies that have done most to shape the world economy over the last 50 years they would probably answer that it is something glamorous like the internet, or the jet engine. They are fairly unlikely to say it was the container. But should they? Before the advent of containerization in the late 1960s, the technology for unloading general cargo through the process of break-bulk shipping had hardly changed since the Phoenicians traded along the coast of the Mediterranean. The loading and unloading of individual items in barrels, sacks and wooden crates from land transport to ship and back again on arrival was slow and labor-intensive. The container revolutionalised this process; dock workers became an occupation now virtually extinct; while the closure of historic ports such as London and New York and the opening and growth of many new ones (Felixstowe, Singapore, Ningbo) shaped the destiny of cities and countries for centuries.

In this Nottingham School of Economics research paper, published in the Journal of International Economics, Richard Kneller, along with former colleague Daniel Bernhofen (now American University) and their former PhD student Zouheir El-Sahli (now University of Lund), provide for the first time a method to estimate the effects of the container revolution on world trade. Drawing on the historical accounts of the creation of the container technology in the US as well as its adoption around the world they create a new dataset on countries’ first adoption of container facilities and product-level measures of containerizability and container usage. Applying these container variables to a dataset of international trade flows for the period 1962-1990, their estimates suggest economically large concurrent and cumulative effects of containerization and lend support for the view of containerization being a driver of 20th century economic globalization.

Forthcoming Journal of International Economics, “Estimating the effects of the container revolution on world trade”, by Richard Kneller, Daniel Bernhofen and Zouheir El-Sahli

http://dx.doi.org/10.1016/j.jinteco.2015.09.001

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