the engines of globalisation

We've been talking about factor endowments and differences in production technologies as fundamental causes of trade, but have only briefly remarked upon the fact that for trade to be efficient it has to overcome transportation costs. Globalization of trade has been driven as much by revolutions in transport technologies as anything else.

Today's Financial Times has an interesting story on secretive Danish shipping giant Maersk, which the article informs us has annual revenues close to that of Microsoft. Many of us have had only scant knowledge of this company, but as the article points out:

As the largest company in the sector, Maersk is a key driver of the reduction of the costs of ocean shipping that has been under way since the container was invented in 1956. The process has been crucial to making globalisation possible and has driven costs down so far that it often now costs more to ship a container by road 100 miles from a port to its final destination than it does to move the container by sea from China to Europe.

The article also mentions Maersk's latest secretive project to build the worlds largest ship, which at "397 metres long and 56 metres wide, it is a virtual floating island" [that's longer than the Empire State Building is Tall]. The company will not divulge how many containers this ship will carry.

The story of the "How the Shipping Container Made the World Smaller and the World Economy Bigger" has been told in several places, including in a book with that title by Marc Levinson. Wikipedia pulls together several other strands in the story onto one page.