REGIONAL EFFECTS OF CONTAINERIZATION

Container technology was introduced in the late 1950s with the purpose of replacing the maritime waterfront labor forces with machines. Containerization so successfully increased the efficiency of maritime operations that within 10 years all land modes of cargo transportation had adapted to it. By the late 1960s, the entire United States was served by containers.;Port development has always required a large investment. This investment, traditionally, has been undertaken by port cities on the assumption that port development produces a stream of economic benefits far greater than the present value of the required capital outlay. The objective of this dissertation is to test whether this criterion for port development, which may have been valid under break-bulk technology, is also applicable to container port development.;This dissertation explains how, under break-bulk technology, businesses were situated near ports to avoid the high cost of cargo handling, along with cargo pilferage and damage, both of which increase directly with distance. To the port region this meant economic benefits through employment and economic multiplier effects, which supposedly brought the benefit/cost ratio of port investment well above one.;Containerization brought about radical changes in port operations and port competition. Container cargo moves faster and more safely than break-bulk cargo. The labor expense and cost of pilferage and damage that characterized break-bulk technology all but disappeared with the advent of the container. This, plus land transfer shipping rates, meant that businesses were no longer compelled to locate in the port, but were free to choose their location based on their individual objectives. Thus, this dissertation asks whether relocation of firms from port to inland regions occurred with the change of technology. It asks further whether employment and economic benefits decreased in port regions and increased in inland regions. If these occurred, container port development would have primarily benefited the inland rather than port residents.;The transition from break-bulk to container technology meant a change from labor to capital intensive operations throughout the transportation industry. However, the primary capital investment required for the development of a container transportation system occurs in port cities. Container port development requires a large investment that only the public sector is willing or able to undertake, via municipal general obligation bonds, municipal revenue bonds, and/or direct taxation. This means that port residents carry a large share of the cost of financing and operating a national container transportation system.;This dissertation demonstrates that these changes are consistent with classical location theory as well as with the concepts of industry agglomeration and footlooseness. Also, they are consistent with the economic changes that have occurred in the United States between 1954 and 1972, as the analysis of the United States Business Census indicates.;Port residents are subsidizing ship owners and foreign businesses owing to the structure and policies of port authorities which underprice port services. Foreign businesses benefit because they pass port charges to United States consumers, owing to the inelasticity of local demand for foreign goods. Since port charges are below cost, port jurisdictions, rather than United States consumers in general, absorb most of the expense of port operations.;The evidence supports the hypothesis that container port development benefits inland residents, ship owners, and foreign business, and that port residents pay for a technology that primarily benefits someone else, while hurting their own economies by facilitating the relocation of businesses and jobs away from port areas.