I find it grounding to think about the physical world when working in technology. For example, it’s a good reminder that much of the information that travels to connect the world, moves through physical fiber cables anchored on the seabed.
Underwater Fiber Optic Cable On Ocean Floor Getty Images
Or in New York City, where I live, I think about the tunnels full of conduit that internet providers rent from Verizon to run their internet cables beneath the footfall of Manhattan.
And then there’s shipping, the industry which brings the physical world to our doorstep; every Amazon purchase, every car part, and close to 60% of global produce.
Maersk, the largest shipping container company in the world, had revenues last year of $61.8 Billion. And each of its over 700 container ships travels the equivalent of 3/4 of the way to the moon and back in one year.1
90% of what we interact with on a daily basis arrives to us via large container ships as Rose George outlines in the book “90% of Everything.” This globalization was made possible by the shipping container which transformed the industry beginning in the 1960’s. Shipping containers allowed for the standardization of how ships were loaded, quicker unloading times, and most importantly, inter modality. Shipping containers could move seamlessly from train, to truck, to crane, to ship. But this innovation did not arrive without friction.
Ships were made to be much larger, with deeper draughts, to hold more containers and goods
Deeper and wider ports had to be be built
And “Dockers in particular were furious. [The inventor of the shipping container] claimed his box system reduced labor by two thirds, cutting dockers’ workload, salary, and power.”2
“Before containers, transport costs ate up to 25 percent of the value of whatever was being shipped.”3 And much of this cost was in labor. It used to take as long as two weeks to unload a ship full of break bulk cargo (made up of barrels, boxes, crates, and drums).
Dock stevedore at the Fulton Fish Market moving a barrel of codfish. Heritage Art/Heritage Images/via Getty Images
Today with intermodal containers, a ship can be unloaded in hours, not weeks. And a sweater can now travel three thousand miles for 2.5 cents. A can of beer can travel that same distance for 1 cent.
Consumers ultimately benefited from this. But workers in the industry saw their hours and their collective power decrease. As a result dockers in the International Longshoremen and Warehousemen’s Union fought back by striking in 1971 to secure increased pay and medical benefits. Today, the over 7,000 longshoremen represented through the International Longshore and Warehouse Union (ILWU) that work at the Southern California port are paid over $100,000 a year and receive free health insurance and full pensions, according to a book from The Wall Street Journal's Christopher Mims, "Arriving Today”
And today shipping containers are common.
Large container ships today can transport more than 18,000 shipping containers on each voyage. As a result, a modern crew rarely knows what is even on their ship “aside from the refrigerated boxes and flammable or toxic items so they can put out fires if necessary.”4
A triple E-Class Container Ship capable of carrying 18,000 containers, Maersk
Today only 1 to 3 percent of containers in Europe are physically inspected. Worldwide the rate is thought to be between 2 and 10 percent.”
“U.S.” ports receive 17 million containers a year. And physically inspect 5 percent of them”5
Sixty years after shipping containers revolutionized global trade, as volume increases to new highs, and visibility decreases, we need a new set of innovations to make the industry safer and more traceable.
Which is why we were compelled to lead the Seed round for Transmute in 2020. Transmute, which just recently raised its second round of institutional capital, is digitizing the documentation trail for sensitive goods along the supply chain. Transmute uses cutting edge cryptography to create a digital chain of custody with time stamps, high data integrity, and where any tampering or interference would be immediately evident. Transmute has already found success working with clients in industries where traceability is incredibly important like steel, defense, semiconductors, and the software supply chain. Initial clients include the U.S. Department of Homeland Security and clients shipping steel.
To highlight just how little visibility there has been in container shipping in the last two decades:
In 2003, NBC news shipped depleted uranium from Jakarta to Los Angeles in an attempt to expose the weaknesses in port barriers.”6
And in 2007 when a single ship was inspected for accuracy against its manifest “in 20% of the containers the contents and weights were wrong. The difference was sometimes as much as three tons”7
We feel documentation and blockchain-enabled traceability are the next steps for the logistics industry. Maintaining a digital chain of custody can lead to a safer logistics industry and TMV is proud to be backing a leader in the space.
Rose George, “Ninety Percent of Everything” 23
Rose George, “Ninety Percent of Everything,” 47
Ibid
Rose George, “Ninety Percent of Everything,” 48
Rose George, “Ninety Percent of Everything,” 49
Rose George, “Ninety Percent of Everything,” 51
Rose George, “Ninety Percent of Everything,” 49