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Someone point out where my understanding is incorrect.
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That failed quality does not disqualify their use as living quarters
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Do I understand this correctly?
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The disqualification is on other grounds. If every shipping container were designed from the start to be convertible, the situation might be different.
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Intermodal containers are not strong enough for conversion to underground bunkers without additional bracing, as the walls cannot sustain much lateral pressure and will collapse. Also, the wooden floor of many used containers could contain some fumigation residues, rendering them unsuitable as confined spaces, such as for prison cells or bunkers. Cleaning or replacing the wood floor can make these used containers habitable, with proper attention to such essential issues as ventilation and insulation.https://en.wikipedia.org/wiki/Intermodal_containeren.wikipedia.org/wiki/Intermodal_container
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Interior contamination aside, they share the same failing as a A-frame structure. Accessible from the ends only without major surgery.
Xist's example is more reasonable. Flat-pack pop-ups.
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Permanent or semi-permanent placement of containers for storage is common. A regular forty-foot container has about 4,000 kg (8,818 lb) of steel, which takes 8,000 kWh (28,800 MJ) of energy to melt down. Repurposing used shipping containers is increasingly a practical solution to both social and ecological problems. Wikipedia
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Maybe the best use would be to tear it down to the floor, and use the walls for fencing material.