Most U.S. imports from Asia arrive in giant 40-foot shipping containers on the decks of massive ocean-going vessels. As such, the containers are powerful symbols of globalization, and the economics of using them has contributed to both the rapid growth of large U.S. retailers and the explosion of Chinese imports.
This paper reports on the advantage that large importers have in ensuring that shipping containers are packed to capacity. Proliferation of product varieties and short order cycles have led importers to combine various kinds of products, often from different suppliers, to completely fill containers. Our analysis of detailed data on millions of import containers reveals significant scale economies in shipping.
To the extent that such scale economies are important, policies that limit or impede the growth of large firms may be undesirable for society.