False Economy - Alan Beattie [107]
The economies of scale and the elimination of waste more than offset the higher cost of refrigeration and Swift's considerable telegraphic bill. By 1880 he had twelve branches in New England; by 1884 his was the second-biggest meatpacking firm in the United States; by 1903, after a series of mergers, G. E Swift was the biggest meatpacking firm in the world. Before Swift started up, New York did the most slaughtering of any of the U.S. states, because that was where the consumers were. Afterward, slaughtering was concentrated in the trade hub of Chicago. The city on Lake Michigan became what the poet Carl Sandburg in 1916 celebrated, with gusto if not meter and rhyme, as a city
Laughing the stormy, husky, brawling laughter of Youth, half-naked, sweating, proud to be Hog Butcher, Tool Maker, Stacker of Wheat, Player with Railroads and Freight Handler to the Nation.
Technology mattered, of course, but it would have been worthless without good management using information to increase speed, volume, and efficiency. It also needed a government prepared to support the system, or at least not get in its way. The eastern wholesale butchers tried to protect their cozy monopoly. They called for laws requiring official inspection of cattle in the state in which the beef was to be eaten, to be conducted less than twenty-four hours before slaughter. Such a regime would, of course, have destroyed the high-volume hub in Chicago. In 1890, the Supreme Court declared such laws a violation of interstate commerce, and the market in chilled beef continued with the support of the highest court in the land.
Even when most companies will benefit from a new process, coordinating their adoption of it can be more difficult than it would appear. In the case of the Keralan mobiles, it was relatively easy: no one had a particularly strong vested interest in keeping the status quo, and any market or fishing boat beginning to use a mobile phone would find itself at an immediate competitive advantage. But when a new system can work only if everyone adopts it, overcoming the "collective action problem" can be a problem. Frequently, to unleash the power of technology and entrepreneurship to forge supply chains, governments need to allow competition, or indeed to actively create the circumstances for it.
Before the days of the Internet, one of the most rapid changes in the global economy and trade was wrought by something so blatantly useful that it is hard to imagine a struggle to get it adopted: the shipping container. Today's international shipping business is a resolutely unglamor-ous affair. Once it took a romantic struggle of sweating sailors and straining dockers to bring goods from Asia to Europe or from tropical zones to temperate. Nowadays it's become a cold-eyed, computerized business of mechanically shifting stacks of identical eight-by-eight-by-twenty-foot metal boxes around the world, dehumanized by that unpoetic word which made it into the lexicon of our Liberian graffiti artist, "logistics."
Dull it may be, but it is also ruthlessly efficient. In the early 1960s, before the standard container became ubiquitous, freight costs were 10 percent of the value of U.S. imports, about the same barrier to trade as the average official government import tariff. Yet in a journey that went halfway round the world, 50 percent of those costs could be incurred in two ten-mile movements through the ports at either end. The predominant "break-bulk" method, in which each shipment was individually split up into loads that could be handled by a team of dockers, was vastly complex and labor-intensive. Ships could take weeks or months to load, as a huge variety of cargoes of different weights, shapes, and sizes had to be stacked together by hand. And with valuable shipments passing through so many hands, pilferage was understood as an unofficial