My day starts with a bong—the deep, insistent pull of Big Ben’s bell toll, waking me courtesy of my smartphone. I haven’t used my bedside alarm clock in years, yet another specialized gadget shunted aside by a jack-of-all-trades iPhone, the clock relegated to collecting dust on my nightstand and not much more.
And so my commute begins before I leave the house. Add 160,000 miles of travel to the tally of my daily journeys. That, at bare minimum, is what it takes to bring an iPhone from origin to customer.
My phone sounds a second alarm (the Dive! Dive! klaxon of a Navy submarine) when it’s time to wake my son for school, then a follow-up alert to remind me to prod him toward the door in case he fell back to sleep. A fourth alarm informs me when it’s time to bring that wake-up cup of coffee to my wife. The fifth and final preset alarm—I choose the iPhone’s annoyingly screechy “Sci-Fi” tone for this one—tells me to give the cat his insulin shot (yes, cats get diabetes). This is not the favorite moment of the day for either of us, but family Morning Person gets veterinary medication duty by default, so both cat and I put up with the unwanted intimacy of the hypodermic pen.
In between the various alarms, the smartphone allows me to peruse several morning newspapers, check e-mails, read news feeds and Twitter lists, attend to online banking or bill pay, and, as I go about my morning routine of coffee making and dog feeding, listen to either National Public Radio or my latest audiobook. Today is also my wedding anniversary: time to check with the florist’s Web site to verify the bouquet I ordered remains on schedule for delivery at Donna’s office later this morning. A little later the phone’s Google Maps app will direct me to the right time and place to catch a bus to a conference in San Pedro on the future of ports. (Hint: that future is both promising and troubled.) After the conference, another handy app will summon a driver from the rideshare service Lyft for the return trip home. Serendipity being what it is, my driver will turn out to be a moonlighting longshoreman with an entirely different view on the future of ports. He sees them as rapidly changing, frequently unsafe, roiled by congestion and labor disputes, but, most of all, as a haven for a vanishing breed in America: a truly financially rewarding path for a blue-collar middle class. His smartphone is his vital link, too, for working in both harbor and rideshare universes.
Such high-tech wonders as the iPhone have extraordinarily complex and far-flung supply chains. The specifics of suppliers and components are often closely held company secrets, but starting in 2012, Apple began publicly disclosing information on its top two hundred suppliers.1 What that in turn reveals: smartphones may have more transportation embedded in their production and distribution than almost any other widely used consumer product other than the modern car, which has more (and far larger) globally sourced parts in its recipe.
Unlike cars, smartphones are also prodigious transportation reducers. They have accelerated the substitution of digital newspapers for physical newsprint, which otherwise would have to be transported by rail and semitruck to the presses, then physically delivered to homes and points of purchase after printing. The energy and carbon footprint of a single copy of a newspaper is roughly the same as driving a car one kilometer2—not much on its own, but it adds up pretty quickly over time and across whole subscriber bases. Phones do the same for the physical media of books and music as well as for paper bills and the physical transportation of the proverbial checks in the mail. In the U.S., about half of smartphone owners bank and pay bills with their phones,3 which amounts to quite a few people going paper-free (and therefore transportation-free) on payday and balance-due day. Of all 243 million adults in the U.S.,4 64 percent own smartphones. For adults under fifty, the smartphone adoption rate is a stunning eight out of ten Americans.5 Put the numbers together and it turns out that 78 million American adults are going paper-free and travel-free when it comes to bills and banks, at least some of the time. That’s a big change from essentially zero in 2007.
Beyond that, smartphones have become the Swiss Army knives of the tech world, displacing a host of specialized devices: music players, alarm clocks, radios, cameras, calculators, tape recorders, GPS navigation devices, calendars, date books, Rolodexes, handheld gaming devices, metronomes, egg timers, flashlights. When smartphones and apps supplant a stand-alone device, that’s not just one less thing we have to carry around personally. It’s one less thing someone else has to carry to us. In short, thanks largely to smartphones, the bottom has fallen out of whole categories of products, business models, and jobs—and their corresponding transportation footprints.
And then there are the travel and mapping smartphone apps that simplify, and thereby encourage, the use of mass transit, ridesharing, biking, and even walking. They don’t shrink transportation per se, but such technology can shift drivers from cars to less wasteful, less energy-intensive options that, among other things, lower demand for parking. This is no small feat. Cities that have studied urban traffic in recent years have found anywhere from 30 to more than 60 percent of drivers on congested city streets are clogging things up because they are searching for parking.6 This is one of the many counterintuitive aspects of moving door to door: the process of taking your car out of traffic can make traffic worse. This rule of the road flips, however, if an app points drivers efficiently and quickly to waiting parking places without all the searching, jockeying, and frustrated braking when an enticing spot turns out to have red paint on the curb. Other apps guide drivers to the least congested routes, which doesn’t shrink miles—it may even add them—but it does shrink time on the road and keeps drivers from making traffic jams worse, thereby easing congestion and gasoline consumption for all.
On the other side of the ledger, the birth of smartphones is an exercise in profligate transportation consumption. Their twenty-first-century materials, along with the routine, even blasé sourcing over vast distances, overturn the methods and economies of the past, which generally shunned distance as an added cost and risk. Not so the iPhone. Its components collectively travel enough miles to circumnavigate the planet at least eight times before the phone receives its first call or sends its inaugural text.
Cracking open my iPhone 6 Plus—Apple’s version of the big-screen “phablet”—reveals not just a marvel of globally sourced miniaturization but also a high-tech road map that touches just about everywhere. Along with the processor and graphics chipset and the rechargeable battery (the most massive internal part), there is a long list of individually sourced components: two cameras, a video recorder, a digital compass, a satellite-navigation system, a barometer, a fingerprint scanner, a high-resolution color display, an LED flashlight, touch sensors, a stereo system, a motion sensor/game controller, encryption circuits, an array of radio transmitters that connect via Wi-Fi, Bluetooth and near-field communication bands, and, last and also least, the guts of a cellular telephone.
At least two dozen primary suppliers on three continents and two islands (Japan and Taiwan) provide these parts.
The transportation complexity is magnified further because many components do not move in a simple path from supplier to final assembly. Some go on a hopscotching world tour from one country to the next and back again as one piece is joined to another to create an assembly, which is then moved elsewhere in the world for another part to be inserted or attached. The phone’s innards are put together much as a cook assembles ingredients for a dish that becomes, in turn, a component of another chef’s course, which is then incorporated by someone else into a larger meal. Ingredients move back and forth from high-tech equivalents of refrigerator, cutting board, stove, and plate.
The fingerprint sensor embedded in the iPhone’s home button—Apple’s Touch ID system, which allows a fingerprint scan to replace a typed password—is a good example of this sort of Top Chef supply itinerary.
The home button journey begins in Hunan province, China, at a company called Lens Technology, Ltd., in the city of Changsha, where superhard transparent artificial sapphire crystal is fashioned into the button cover. This is the part of the button an iPhone user physically touches, made of the same synthetic sapphire used in high-end watches, avionics displays, and missile systems because of its near–diamond-like hardness, durability, and scratch resistance. The sapphire cover is then bonded to a metal trim ring brought 550 miles from the LY Technology factory in Jiangsu province, and then shipped 1,000 miles to the Dutch-owned NXP Semiconductors assembly and testing plant in Kaohsiung, Taiwan. There the sapphire-metal ring combo is married to a driver chip imported from a Shanghai factory (another 600 miles) and a Touch ID sensor chip from an NXP silicon wafer fabrication plant in Europe, which tacks 5,000 more miles onto the itinerary.
Next, a button switch imported from a Panasonic subsidiary is brought in 1,500 miles from Japan, along with the springlike plastic component called a “stiffener” from a Shanghai factory (another 600-plus miles) owned by the American company Molex. These pieces are combined at another Taiwanese manufacturer, Mektec, which adds in its own part, called the flex circuit.
Mektec then ships this assembly 1,500 miles back to Japan, where a plant run by technology giant Sharp laser-welds all the pieces into a sealed and functional Touch ID module. The completed assembly ships about 1,300 miles to the Foxconn plant in Zhengzhou, China, a virtual high-tech city of 128,439 factory workers where the iPhone’s final assembly7 takes place (and where allegations about bad working conditions—some accurate, others fabricated—sparked a media sensation in 2012).8 The finished iPhones are shipped to customers and retail locations in the U.S. and around the world to stores, cell phone service providers, and other outlets using virtually every transportation method known to man. Most of the U.S.-bound phones move by air freight through Hong Kong and Alaska, where UPS and Federal Express have major hubs. (The curvature of the earth makes Alaska a direct and ideal transshipment and fueling stop for air cargo moving from Asia to the U.S.)
This is the partial origin story of a collection of parts commonly known as the phone’s home button, with about 12,000 miles required to get it to the place where the iPhone is assembled. All that is for one button, perhaps the least sexy part of a smartphone. And this triptych is just a partial accounting, because it does not include the movement of raw materials for individual components, nor their packaging, nor the movement of energy, water, and workers at the various factories, all of which could easily double or triple the mileage on that little button below the phone’s touch screen.
Similarly epic journeys are attached to other parts of the iPhone: a barometric sensor and accelerometer from Germany; the Corning “Gorilla Glass” from Kentucky; the five different power amplifiers from California, Massachusetts, Colorado, North Carolina, and Pennsylvania manufacturers; the motion processors from Silicon Valley; the near field communication controller chip from the Netherlands; and many other components from Japan, Taiwan, Korea, and China.9 The production of the Apple-branded A8 processor semiconductor chip is split between the world’s largest contract chip fabricator, TSMC in Taiwan, and Samsung’s immense new chip plant in Austin, Texas—a $9 billion investment by the South Korean technology company to make computer chips in the U.S. Samsung is offshoring to America.
Those parts, along with the Touch ID components, combine for that 160,000-mile commute embedded in the iPhone—two-thirds of the distance to the moon. And even that is still only part of the story. The movement of these components does not include the mining, processing, and shipping of the rare earth elements that are so vital to so much of our twenty-first-century technology, or the movement of the vast quantities of energy and water needed to obtain them.10
These materials, most with unpronounceable names that sound like minor Greek gods, are difficult to mine and pricey to extract from raw ore. Once refined, they can be worth many times their weight in gold. In recent years, China has dominated this rare earth market that the U.S. once led, though suppliers in California and Australia have been reclaiming market share of late. These “rare” materials—which are actually quite plentiful in the earth’s crust, but rarely in sufficient concentrations to make mining practical—have almost magical magnetic, phosphorescent, and catalytic properties even in minute quantities. They are essential ingredients in everything from giant wind turbines and electric cars, to miniature electric motors, semiconductors, and rechargeable batteries of all stripes: phone-size, Tesla-size, and utility-scale–size. The iPhone contains a chorus of eight rare earth elements: neodymium, praseodymium, dysprosium, terbium, gadolinium, europium, lanthanum, and yttrium. These are not households names, but they are everywhere in the modern household, unseen yet invaluable. These elements can be found in a smartphone’s color screen, various parts of the phone circuitry, the speakers, and the mechanism that causes a phone to vibrate when it receives a message or call.
Then there are the better-known precious metals inside each iPhone—a couple bucks’ worth of gold, silver, platinum, and copper11—and the anodized aluminum enclosures. Together, the mining, refining, and transport of these materials—and all the chemical agents and systems needed to produce them—could easily double that 160,000-mile footprint on the iPhone (and any other high-tech product), as the precious metals, aluminum, and rare earths must be shipped from the sources to refineries and processors and then to the individual component makers around the world.
In the end, the iPhone has a transportation footprint at least as great as a 240,000-mile trip to the moon, and most or all of the way back. The wonder of this is compounded by the fact that this transportation intensity is a strategy to increase efficiency and lower cost.
On the face of it, that seems absurd. Yes, entrepreneurs and empires have traded goods across long distances for thousands of years: the ancient seafaring peoples of the Mediterranean, the merchants on the Silk Road, the classical Romans with their empire-wide network of paved highways larger than the U.S. Interstate Highway System. But back then, every mile added cost and risk. So only certain goods—rare fabrics, wine, art, jewelry, exotic foods, and bulk goods that simply could not be sourced locally—were worth global trading. Peppercorns were the original “black gold,” not petroleum, and were once so rare and valuable that they stopped being merely prized goods and were used as currency, collateral, and even ransom in the ancient world.
The customer base for global goods in centuries past was almost as rare as the goods themselves. The vast majority of people until very recently consumed local and regional goods for most if not all of their needs. Sourcing everyday apparel, food, or common tools from distant locations—routine today—was out of the question and would have been outside the budget of all but a wealthy few. As much as such devices as the iPhone are the result of advanced design and engineering, they are also creatures of a supply chain that could only be imagined and afforded in this unique era of logistics and outsourcing in which traveling great distances for choice parts and processes is no longer a barrier. The real breakthrough that makes the iPhone possible—along with most of today’s consumer goods, right down to the cheapest pair of boxers in your drawer or the salt-and-pepper shakers (and their contents) on your table—is a breakthrough of transportation.
It has not been this way very long. The dominant technology company of its era, the Radio Corporation of America, operated very differently. For decades after World War I, RCA defined the consumer electronic business with category-dominating products: radio, phonographs, and television (both as a manufacturer and a broadcaster). The company’s labs also played a pivotal role in developing such other important technologies as radar, color television, the electron microscope, liquid crystal displays, and early computer systems. RCA grew to become one of the most recognizable brands and valuable companies in the world, investing its profits by scarfing up other companies and brands, including Random House publishing, Hertz car rental, and Banquet frozen foods (investments so far outside RCA’s core competence that this “conglomerate strategy” eventually helped bring the company down). A promotional film, The Reason Why, details in classic 1959 newsreel deadpan how and why an RCA still at the top if its game made nearly every part of a television set in-house. RCA designed, prototyped, tested, and mass-produced all the major components for that era’s most prized home technology: its vacuum tubes, the printed circuits, the cathode ray tube that formed the TV display, the tuners, the speakers, and even the finely finished, furniture-grade wooden cabinets that were the hallmarks of old-school TVs. In RCA’s era the vertically integrated company—which controlled its supplies and components and thereby avoided paying another company’s markup and the added cost of time, distance. and shipping—held a distinct advantage in the technology and consumer electronics sector.
A major competitor of RCA’s, Motorola, pursued a similar strategy and was well-known for its early use of solid state components in place of vacuum tubes, culminating with its space-age-named “Quasar” line of TVs—an expertise that led to a new business: making computer microprocessors. Motorola, which designed the communications system used by astronaut Neil Armstrong to phone home from the moon, provided the processor cores for Apple’s early computers as well. And Apple itself was much more vertically integrated in the past, sourcing components from other manufacturers (as the personal computer industry has done since its formative years) but also operating its own factories in the U.S.
Until the 1970s and 1980s, this strategy remained the norm for American industries. International trade of consumer goods was minuscule by today’s standards,12 often more trouble and expense than it was worth. The direct monetary cost of shipping, far higher in that era in real dollars, was just one barrier. Arrival times were unreliable, communication and tracking atrocious, and moving goods in and out of ports was notoriously slow and costly. Large gangs of longshoremen were needed to take cargo on and off every ship, with forklifts and nets but also by hand, in a painstaking style of cargo management known as “break-bulk” shipping, which differed little from the methods employed by ancient traders aeons ago. Cargo holds were loaded as a vacationer would pack a car trunk with suitcases, cramming in the various shapes and sizes of boxes and crates in vast jumbles. This was labor-intensive in both directions, slow, inefficient, and costly: a ship could spend ten days docked just to unload and reload. Combined with tariffs, breakage, and rampant cargo pilferage owing to so many loose items floating around holds and docks, international trade easily added 25 percent or more to the costs of consumer goods.
But then came the big breakthrough, a world-changing invention that would be both boon and disaster, making most of our modern and common products, not least the smartphone, possible. It was not some new ship design or propulsion system that launched the revolution, nor the advent of some exciting new high technology or manufacturing process. The breakthrough was as low-tech as could be: a steel box or, as American longshoremen call it, “the can.” It’s best known away from the docks as the shipping container.
In retrospect, the idea seems so simple, so obvious: Put everything in identical big metal boxes the size of semitrailers, stackable and uniform, each marked with a universal ID number. Make the containers the same everywhere in the world, design ships and docks specifically to accommodate them, and then sit back and watch the world change.
Simple or not, that innovation transformed—and exploded—global trade.13 And it doomed companies such as RCA that could not adapt.
A big part of the magic was the fact that containers could be packed with anything and everything—televisions, furniture, coffee beans—before the ship that would carry them away even reached dock. The loaded containers could sit there and wait for the ship to come, not even requiring a warehouse to protect them from the elements: they are watertight. They could be sealed and locked to deter theft as well, the actual cargo never touched until the container arrived at the customer’s doorstep to be unsealed. Tons of “containerized” goods could be piled on and off ships in one move, with a crane operator and a small ground crew instead of large gangs of longshoremen marching on and off ships, carrying a box at a time. Containers could then be placed right on semitrucks with empty chassis, with the already-packed container becoming the trailer. Or they could be stacked on flatbed rail stock: instant boxcars, fully loaded. Instead of spending more time docked while being loaded and unloaded than they spent sailing, the new breed of container ships were moving in and out of ports in a fraction of the time. Ships in motion make money. Ships sitting in port lose money. The value in time and money was apparent from the first.
In 1966, one of the first true container ships—the Fairland, owned by now-defunct America-based shipping giant Sea-Land—completed the first international container ship delivery, launching a successful weekly service between Port Elizabeth, New Jersey, and Rotterdam. The Fairland’s capacity of 236 containers was a tiny fraction of what modern container ships now carry, but it sparked the revolution nonetheless. The ships have grown spectacularly in size ever since.
The era of containerization coincided with a global movement to reduce tariffs to encourage free trade, and suddenly a $700 TV or a ton of iron ore cost only $10 to move halfway around the world. A $150 vacuum cleaner: $1. A $50 bottle of Scotch: 15 cents.14 Containerization also came to air freight, and competition—in the air and on the ocean—drove down the cost of flying goods, particularly small ones, by an order of magnitude. This kind of pricing nullified the home-court advantage that companies such as RCA had enjoyed for so long by building the whole widget. The value of having a garment district in New York City or a tuna cannery in Los Angeles, a TV factory in Indiana or a vertically integrated car-making operation in Detroit, no longer seemed so compelling simply because it was close to the market for a product. The allure of low-wage workers eager for factory jobs in developing nations with little or no environmental regulation now seemed much more compelling as a source for car parts and computers and pretty much everything else. Although it was neither intended nor anticipated, the advent of containerization didn’t just make shipping lines more efficient and profitable. Containers ushered in and made possible—perhaps inevitable—the modern era of offshoring.
At the same time, the complexity of new technology in the emerging digital age also undermined the RCA style of manufacturing. RCA had built an empire mastering the design and creation of mechanical, analog, and vacuum-tube technology. One of the company’s first signature products, the phonograph, had been an entirely mechanical (and nonelectrical) device for a half century before electronic amplifiers and speakers were added to the hand-cranked devices. Significant parts of early TVs were mechanical as well. The first remote controls for TVs activated a motor that turned the mechanical tuner to another station with a series of impressive and loud ka-chunks.
The economics of making digital technology, however, were different, requiring large investments in highly specialized fabrication equipment to forge processor chips, circuit boards, disk drives, and other complex components. It no longer made sense for a big electronics or technology company to invest in making the whole widget; the market favored factories focused on churning out large quantities of one major component to supply multiple and competing tech companies. The RCA do-it-all in-house style became a liability even as its technology became obsolete.
Soon the market leaders in American television and electronics manufacturing were exiting the business: first Motorola, and then RCA. Hand-polished wooden televisions had become just another plastic-encased commodity. With the magic of containerization ushering in a new era of globalization, Japanese companies took the U.S. electronics market by storm with such iconic products as the Sony Walkman (the iPod of its time) and the Trinitron TV, which set a new standard for image quality and reliability. In 1974, Motorola sold its Quasar brand and television business, once its most profitable endeavor, to Japan’s Matsushita Electric Industrial Company, Ltd., maker of Panasonic electronics, and turned to the semiconductor business, which it later dumped to pursue the emerging cell phone business. The last of the old-school big American TV brands, Zenith, inventor of the modern remote control we all know and despise, sold off control of its brand and assets in 1995 to South Korea’s LG Electronics.
The final piece needed to set the stage for globalization of consumer electronics and other goods was China’s designation in 1979 of a “special economic zone” in a backwater town of 30,000 near the Hong Kong border called Shenzhen. It would be the first of six such zones, and foreign investment poured in, embracing the decision by China’s communist government to make its country’s immense and inexpensive rural workforce invaluable to the capitalist world. China’s leaders had asked themselves a shrewd question: Why try to dominate the world—and bankrupt their country—with millions more men under arms when putting millions of men and women on factory lines and in engineering classes would tame world adversaries far more effectively and make the country rich to boot? Shenzhen today is a city crammed with skyscrapers, factories, and nearly 12 million residents, more than half of them migrant workers living in factory dormitories. Parts and products flowing out of China’s special economic zones are ubiquitous now in America and the world, found on every aisle of every Walmart, every product category on Amazon.com, every device made by Apple, every car on the road, every restaurant, bar, power station, radio station, gas station, and train station; the list is book length itself.
When Apple CEO Steve Jobs hired Tim Cook in 1998 to run the company’s worldwide operations—and eventually succeed him as CEO—it was not because of Cook’s computer genius, but for his transportation acumen, his skills as a supply chain savant. Soon after his arrival at the company’s Cupertino, California, headquarters, Cook proclaimed that Apple had to treat computers—then Apple’s main product—like milk, a commodity that must be transported and sold quickly before it soured. This approach, now widespread, was made possible by the effects of the container revolution. Cook’s goal was to have inventory cleared out in days instead of months, because idle inventory, like an idle cargo ship, is a costly drag on the bottom line. Such a strategy, Cook said, could never succeed with an Apple that owned its own factories. So he orchestrated their closure, along with most of the company’s warehouses. Apple switched to a “just-in-time” manufacturing strategy that could only be achieved through outsourcing components and finishing products just days before they would be sold to Apple customers. The component suppliers, not Apple, would worry about inventory, but as they served many high-volume customers, their inventory cleared out far more quickly, which meant their parts manufacturing costs were lower than Apple’s could ever be. In the era of containerization, the cost of sourcing across greater distances paled in comparison to the savings of manufacturing just in time. When Apple’s most important lines of business shifted from a few million computers a year to tens of millions of iPods, then hundreds of millions of iPhones, this strategy paid off handsomely. Variations on this theme have transformed the entire consumer products industry, from toasters to sneakers to cereal.
So there it is: the three big disruptions that transformed the consumer goods industry and made one of the most popular gadgets—and most valuable companies—in history possible, bringing us to the morning of Friday the thirteenth and the sound of Big Ben bonging me awake.
There was the rise of digital technology. There was China’s decision that, on the question of capitalism, it would rather switch than fight. And there was that most unsexy, nontechnological, big, and ugly metal can that spawned a transportation revolution. Of the three, it was the lowly shipping container—and its more spectacular progeny, the colossal container ship—that enabled the other two by turning massive amounts of transportation from a prohibitive cost into a transformative strategy. The container is both means and metaphor for this revolution, as the product it enabled—the signature product of the era, the smartphone—is the ultimate container itself, carrying inside it camera, calendar, navigator, reading library, music collection, transportation summoner—whatever we want it to be. The mundane iron shipping container spawned the supreme digital container, both of them innovations whose true impacts were unknown at the outset and are still evolving.
A defining quality of revolutionary change, however, is that its rewards last only until the next revolution comes along. RCA developed multiple revolutionary products to rule its analog roost for fifty years; now it’s just an empty brand name licensed to makers of discount electronics. The current era of massive transportation footprints and distant outsourcing of nearly everything has also been in progress for fifty years, and once again forces are at work that could lead to profound change and less benefit for off-shoring. Call it . . . Cargogeddon.
The fleets of giant container ships that burn fuel not by the gallon but by the ton pose a growing environmental threat, with cargo vessels contributing about 3 percent of global carbon emissions now and on track to generate up to 14 percent of worldwide greenhouse gases by 2050.15 But beyond their smokestacks, the mega-ships that now dominate cargo movement are threatening the transportation system itself, overloading ports and the networks of rail, road, and trucking that connect them to the rest of the world. The U.S. is running out of capacity at these choke points, with neither the money nor the will to increase it. The rise of online shopping is exacerbating the goods-movement overload, because shipping one product at a time to homes requires many more trips than delivering the same amount of goods en masse to stores. In yet another door-to-door paradox, the phenomenon of next-day and same-day delivery, while personally efficient and seductively convenient for consumers, is grossly inefficient for the transportation system at large.
And yet the impact of embedding ever larger amounts of transportation in products is often minimized in public discussion, even by businesses that have embraced the business case for sustainability. Certainly they are concerned about fuel efficiency in distribution and shipping—that’s just good business—but the transportation footprint of a manufactured product is often a secondary concern at best. That’s because the most common analysis of a consumer product’s life-cycle—an estimate of its greenhouse gas footprint, which is a proxy for its energy costs—will usually find that the distribution of a product is a much smaller factor than its production. In its public disclosures on the footprint of its products, Apple states that transport accounts for only 4 percent of my iPhone 6 Plus’s lifetime greenhouse gas emissions. Production of the device, meanwhile, accounts for 81 percent of its carbon footprint—twenty times the transportation footprint. Even my use of the phone—mostly by recharging it—overshadows shipping in Apple’s life-cycle reckoning, producing 14 percent of its footprint.16 For a glass of milk, shipping produces only 3 percent of the footprint.17 For a bottle of California wine, it’s about 13 percent.18 Transportation accounts for only 1 percent of the carbon footprint of a jacket from eco-conscious Patagonia, Inc., even though it’s made of fabric from China and sewn in Vietnam. Production of its petroleum-based synthetic polyester is said to be the main culprit, accounting for 71 percent of the garment’s carbon emissions.19
These product-by-product analyses are accurate but often incomplete—and in the end, they can distort the reality of the gargantuan impact of the door-to-door system as a whole. Viewed as a sector, the transportation of people and product is second only to generating electricity in terms of energy use and greenhouse-gas emissions (consuming 26 percent of the country’s total energy and fuel supplies,20 while creating 31 percent of total greenhouse gases).21 Transportation has a larger energy and carbon footprint than all the other economic sectors: residential, commercial, and agricultural, as well as the industrial/product manufacturing sector that figures so prominently in those life-cycle analyses.
Transportation leads all sectors in one unfortunate metric: when it comes to wasting energy, the movement from door to door tops every other human endeavor, squandering 79 percent of the energy and fuel it consumes.22 Finding ways to reduce that waste presents one of the great economic and environmental opportunities of the age.
Wondering if this problem is about the movement of people in cars rather than products on trucks and trains? The simple answer: it’s both. Proportionately, goods movement has the more intense carbon footprint in the transportation space, with transport by rail, truck, ship, and pipeline together generating about a third of the total transportation footprint. Freight trucks alone spew 22.8 percent of all transportation carbon emissions. Passenger cars account for 42.7 percent, while pickup trucks, vans, and SUVs contribute 17 percent. Given that there are fewer than 3 million big-rig freight-hauling trucks in America out of 265 million vehicles total,23 the fossil-fuel-powered movement of goods has a disproportionately immense carbon, energy, and environmental footprint. Miles matter.
The attractions of offshoring are fading for other reasons, too. Conventional wisdom holds that cheap offshore labor is the main draw for American companies to shift operations abroad, but this grows less true each year. As a new middle class and consumer culture of its own emerges in China—one that wants to own iPhones as much as make them—wages have begun rising at a 20 percent annual clip (though admittedly from a low starting point, about $20 a day at suppliers such as Apple’s Foxconn).24 More important, labor costs have become a minor consideration regardless of location in the making of modern consumer electronics such as the iPhone—a tiny fraction of the overall production cost. Chinese labor accounts for only 1.8 percent of the price of an iPhone, researchers at the University of California at Irvine have found. And the total labor costs worldwide, including in the U.S., account for only 5.3 percent of the iPhone’s price—almost inconsequential compared to the 21.9 percent Apple pays for materials to make the iPhone; and the largest piece of the pie, Apple profits, which were 58.5 percent when the study was done.
China, it turns out, makes little off the iPhone, while America—or, rather, an American company—makes a lot.
“Those who decry the decline of U.S. manufacturing too often point at the offshoring of assembly for electronics goods like the iPhone,” the Irvine researchers wrote. “Our analysis makes clear that there is simply little value in electronics assembly.”25
China keeps those jobs now because they have the very expensive facilities—and the engineering talent—to make products such as the iPhone in massive quantities. Silicon Valley is the world leader for designing these products and creating the software that makes them shine, but the Asian electronics powers have made themselves the nearly unassailable world leaders on actually building the stuff. As the previous CEO of Apple, Steve Jobs, told President Obama in 2010, America does not have that capacity. “Those jobs are not coming back,” he said.26
But some of those jobs may disappear or be displaced in time as technology evolves—as the once-powerful RCA could attest, if the company still existed in any recognizable form. The advance of automation in factories, and the advent of 3-D printing as the next big thing in making consumer products, may usher in the next revolution and a new age of re-shoring. The future may belong once again to locally made or even made-at-home products: Buy the code for a pair of sunglasses or salad bowl online, the design is transmitted to a 3-D printer, and your purchase is created on the spot. Time will tell if the costs and capabilities of such technology will make it competitive. The only certainty is that the transportation piece of the puzzle is the one part that will never go away regardless of the tech. The direction of travel may change and miles may be shorn in the consumer goods space, but the transportation need will always be there, whether it is for finished products or the raw materials to make them. Manufacturing jobs come and go, but the logistics field just keeps growing—32 percent growth even during the Great Recession, while all other fields grew by a collective average of 1 percent.27 Some say logistics is the new manufacturing.
Then there are those certain treasured products that will always have to be sourced from afar no matter what, and so always will pose a transportation challenge. One such good ranks among the most valuable and heavily traded commodities on the planet.
It’s time to put down the phone and brew the morning coffee. But that’s not the treasured commodity I touched next on this day in February, this Friday the thirteenth. That would be aluminum.