Listen and Subscribe
Podcast Transcript
Ever since the dawn of human civilization, it has been shaped by the movement of people, goods, and ideas.
Yet, for almost the entirety of that time, transportation was very difficult. In some places, it was extremely difficult.
Transportation of goods has been responsible for cities, civilizations, and much of the modern world.
Learn more about the history of shipping and transportation and how it shaped the world on this episode of Everything Everywhere Daily.
This episode is going to be a bit different.
The genesis of this episode goes back to a quote that I remember from President James Monroe. I recall, and I forgot where I read it, that he once spoke of the ‘tyranny of space’ and the problems with moving people and goods into the American hinterland.
For years, I have tried to find the source of that quote, and I have come up empty. Maybe the Marquis de Lafayette said something similar, but I came up with nothing no matter how much I looked.
I eventually realized that what I thought was the quote was probably an example of the Mandela Effect. Something I thought was true, but wasn’t.
I was putting off an episode on the subject until I could verify the quote, but I eventually realized that, regardless of what James Monroe might or might not have said, what lay behind my fictitious quote was still worth talking about.
That being the importance and difficulty of shipping.
When the first human civilizations arose, almost all were established on riverbanks or along coasts. The primary reason for this was agriculture. These river valleys were extremely fertile, and they offered opportunities for easy irrigation.
However, these locations near the water also had another advantage. Easy transportation and shipping.
Before the industrial age, transportation was governed by one overwhelming economic reality: water transport was far cheaper than land transport. A ship or river barge could carry a load that would require hundreds of pack animals or dozens of wagons.
As a result, most large cities, commercial centers, and manufacturing regions developed beside rivers, natural harbors, or navigable coasts.
Long before written history, people moved goods by carrying them personally, dragging them on sleds, or loading them onto domesticated animals.
The domestication of donkeys, oxen, horses, camels, and llamas expanded the distance and quantity of overland trade. The wheel appeared in Mesopotamia and neighboring regions during the fourth millennium BCE. Wheeled carts increased carrying capacity on firm, level ground, but they did not make land transportation cheap.
Water transport developed at least as early. Dugout canoes, skin boats, reed boats, and simple rafts allowed people to carry much heavier loads along rivers and coastlines. The Nile, Tigris, Euphrates, Indus, and Yellow River served as transportation arteries, connecting agricultural regions and urban centers.
Along the coasts of the Indian Ocean and the Mediterranean, and in East Asia, seafaring trading civilizations arose. There was very little in the way of overland trade.
If you remember back to my episode on the Silk Road, most trade via this route, around 80 to 90%, was by sea, not by land. Camel caravans make for a very romantic image, but a camel can only carry so much, and they require constant maintenance and food.
This was the state of transportation and shipping for thousands of years. Transportation by sail was relatively easy and cheap compared to transportation by land.
Now I want to fast-forward to the early 18th century in Britain. I’m fast-forwarding to this point simply because we have robust data available from this period, and the fundamentals of transportation hadn’t changed from thousands of years earlier.
Around 1700, moving one ton of goods one mile by road cost approximately 1.2 shillings per ton-mile. Moving the same ton one mile on a naturally navigable river cost about 0.12 shillings, or roughly one-tenth as much. Coastal shipping was cheaper still.
This was a 10-fold difference in transportation by land versus by water. For coal shipped from Newcastle to London around 1750, the sea freight charge was approximately 0.02 shillings per ton-mile. Moving the same coal by road would have cost roughly sixty times as much per mile. For the complete journey, sea freight cost about 5.4 shillings per ton, while an estimated road journey would have cost more than 300 shillings.
Terrain, season, cargo, direction of travel, and insurance could change rates considerably over time. Nevertheless, the overall economic difference between land and water transportation was consistent across much of the preindustrial world.
In the late 18th century, it was supposedly the same cost to ship a piece of furniture from London to New York as from New York forty miles inland by wagon.
This made industrialization extremely expensive for any factory without access to cheap waterborne transportation. Oxen and horses couldn’t economically carry enough coal or iron ore.
The first major improvement in overland transportation came through better roads rather than new vehicles.
In Britain, turnpike trusts collected tolls and used the revenue to improve road surfaces, drainage, bridges and gradients. Engineers developed more systematic road-building methods. Thomas Telford used strong stone foundations, while John Loudon McAdam developed carefully graded layers of compacted stone, a process that he called “macadamization.”
Better roads allowed wagons to carry larger loads, travel more days of the year, and use fewer animals. Real British road freight rates fell by roughly 40 percent between the mid-eighteenth century and 1800. Even after that decline, however, roads remained much more expensive than water.
However, what dropped costs even further than good roads was the development of canals. Canals had been around for a long time. China created the enormous Grand Canal, which connected the Yellow and Yangtze Rivers.
Almost 5,000 years ago, Ancient Egypt built the Canal of the Pharaohs, a precursor to the Suez Canal.
A horse walking along a towpath could pull a barge carrying dozens of tons. The same horse might pull only one or two tons on an ordinary road. Locks allowed canals to cross changes in elevation, while aqueducts and cuttings extended water transport into regions without navigable rivers.
By about 1790, British canal freight averaged approximately 0.25 shillings per ton-mile in constant 1700 prices, which was an 80% decline compared to 1700 wagon rates. By 1840, canal costs had fallen by about 50% to about 0.12 shillings in the same price terms.
In the early United States, the problem was far more challenging than it was in Britain. It was an entire continent that needed to be accessed. However, compared to every other country in the world, the United States had something going for it. Amazing water transportation networks.
In fact, the United States has three of the best waterways in the world. The first was the Mississippi River basin. As I noted in the episode on the Mississippi River, the Mississippi and its tributaries have more miles of navigable riverways than the rest of the world’s rivers combined.
The Great Lakes were the second, allowing ports as far inland as Duluth, Minnesota, to connect to the Atlantic Ocean once locks were built to handle changes in water elevation.
The third is the Intercoastal Waterway. It is a network of protected coastal rivers, bays, canals, and sounds running along the Atlantic and Gulf coasts of the United States. It extends about 3,000 miles (4,800 km) from Texas up the East Coast.
The Hudson River goes inland from New York City, which has a great natural harbor.
The Erie Canal, completed in 1825, connected the Hudson River with Lake Erie. Freight rates between Buffalo and Albany fell from approximately 1.68 cents per ton-mile after the canal opened to about one cent by the middle of the nineteenth century.
As good as inland waterways were for transportation, they were still limited to areas with water.
The real revolution in inland transportation was in the development of the railroad.
Railroads made it profitable to ship wheat from the continental interior to coastal cities, to develop coal and mineral deposits far from rivers, to create national rather than local markets, and to build factories inland rather than directly beside ports.
How much more affordable did railroads reduce the cost of inland transportation? British railway freight rates were approximately 0.10 shillings per mile per ton by 1865. The 1865 rate was only about one-twelfth of the 1700 wagon rate.
Railroads also opened up vast amounts of otherwise difficult-to-reach land in the Western United States, Canada, Australia, and Siberia.
The topic of railroads is its own episode, but suffice it to say, while rail dramatically reduced the cost of inland transportation, it still wasn’t cheaper than transportation by water.
Also, while railroads did expand where inland transportation could go, it now just made railroad towns instead of river cities.
The advancement which allowed for true inland shipping to anywhere people might live, assuming they have access to a road, was the automobile, or more specifically, the truck.
Detroit carriage builder August Fruehauf is generally credited with building the first practical modern semi-trailer in 1914, after a customer asked him to devise a way to tow a boat behind a Ford automobile. Freight companies soon requested similar vehicles, and Fruehauf established the Fruehauf Trailer Company in 1918.
I’m not going to dwell too much on the trucking industry because I’m going to do a full episode on the subject in the future,
Suffice it to say, improved roads, improved trucks, and improved standardization all drove the cost of inland shipping, now almost anywhere, even lower.
Despite all the developments with railroads and trucking, it was still cheaper to ship by sea. In fact, the greatest innovation in sea transportation in the 20th century was really an innovation in every form of transportation: containerization.
Shipping containers revolutionized everything. Modern containerization began in 1956 when trucking entrepreneur Malcom McLean converted the ship Ideal X to carry detachable truck bodies between Newark and Houston. I had previously done an entire episode on the subject.
Before containerization, dockworkers loaded and unloaded cargo as individual sacks, barrels, crates, and bales. A large break-bulk freighter might remain in port for a week to ten days.
With containerization, cranes could transfer standardized boxes directly between ships, trucks, and trains. Comparable port turnaround could fall to roughly 10 to 24 hours, although very large ships or congested ports may require longer. One study found ship turnaround falling from about eight days to eleven hours, a 94 percent reduction.
Furthermore, a container can be placed on a flatbed trailer for a truck or two on a flatbed car for a train. Whereas the first container ship carried only 58 containers, the largest container ship in the world today can carry over 24,000 containers.
So, what is the ultimate result of all the advancements in shipping that have taken place over the last 300 years?
If you adjust for inflation using historical British data, which is very difficult to do over a 300-year period, the reduction in shipping costs has been astonishing. There are many variables, but the reduction in land shipping costs, comparing an animal-drawn wagon vs. a modern semi, would be close to 95-97% per ton per mile.
The amazing thing is, the cost of shipping by sea has gotten even cheaper. Given the massive cost advantages of container shipping and the incredible efficiencies of the ultra-large ships, costs have dropped by 99%.
Cheap shipping made the modern global economy possible by allowing raw materials, food, fuel, and manufactured goods to move vast distances at low cost. It enabled factories to specialize, companies to build international supply chains, cities to grow far from local food sources, and consumers to buy products made around the world.
It also reduced regional shortages and price differences. Grain, oil, machinery, and medicine could be sent where they were needed rather than consumed near where they were produced. In effect, cheap transportation shrank economic distance, turning separate local markets into a single interconnected world.
Maybe President James Monroe didn’t talk about the ‘tyranny of space,’ but it is a problem we have solved with a vengeance. There are many technological and social advancements which have helped build our modern world, but one of the biggest is one that we seldom think about: the ability to ship stuff cheaply.