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shipping container modular construction

Is This Box More Valuable Than Its Contents?

Developers use shipping containers to design modular, flexible space

Buildings are inherently inflexible. They can not easily be moved, structurally changed or taken down. But the best use of real estate is always being pushed and pulled by local and global forces. One of the forces that has changed how we utilize our space is the increase in global trade thanks to the standardized metal boxes that we call shipping containers. Containers eliminated the need for goods to be unpacked at local warehouses which brought about massive industrial conversions in places like Manhattan’s upper west side.

But while these containers helped flatten the world and they too have become a bit of a burden. Due to trade imbalances containers end up in certain ports with no outbound use. The amount of space these containers take up is amazing.

Here is a visualization of how big the yearly shipping container traffic for the U.S. compares to one of our biggest structures, the Empire State Building.

If even a fraction of these don’t get used every year then it can take up a massive amount of valuable port space. In Southern California, for example, there are roughly 15,000 unwanted shipping containers after Hanjin Shipping Co failed to secure a loan and went bankrupt.

Well, it turns out that these robust blocks might just be able to revolutionize the real estate much like it did for the shipping industry. Containers are being used in all types of construction, much more than just one-off sheds that they are known for. I talked to Paul Galvin, Chairman and CEO of SG Blocks, a premier designer, innovator and fabricator of container-based structures to try to better understand the advantages of using these repurposed structures. “It makes financial sense to build with shipping containers,” he said. “You are starting with an already-built product that is also recycled, which can be largely prefabricated off-site, so you will see your construction costs reduced by approximately 50%.”

Cost reductions like that are an obvious benefit but for income-generating properties there might even be a bigger upside. Galvin explained, “The speed-to-market is also much quicker than traditional construction since you are already starting with a module and just need to repurpose it. Since we prefabricate much of the work offsite, onsite construction is also much quicker and causes less disturbance. Overall, it is an extremely efficient form of construction.” SG Blocks does only about 10% of the construction on-site, making some projects completable in just one day. This reduces the quality variance of using different contractors in the field and insulates the process from particularly expensive labor markets.

Starbucks made from containers
This South Salt Lake drive-through is built with recycled shipping containers.

Since these components are inherently standardized and modular, they can be easily added as needed. “Containers are engineered to be stackable up to nine units high, which we leverage for vertical construction and multi-story or mid-rise buildings,” Galvin said. This gives the ability to create more space, both vertically and horizontally, a quality that traditional buildings do not share. “You can design your building to expand in the future to match your needs.”

On a design and construction level shipping containers make a lot of sense but if you zoom out of the business analysis and look at the larger social and environmental impact this trend has an even greater impact. Global trade has helped us create the global economic landscape that we have today and the rise of e-commerce will likely only increase its importance. Shipping containers serve an important position in the world’s trade but can become costly when the entire lifecycle is taken into consideration. Now they can be given a second act. They can become the hardware for a new style of construction that is more efficient and more flexible.

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