Innovators & Troublemakers: the box that revolutionized global trade

August 22, 2019 James Hayward

Have you ever watched a ship unloaded at a port? It’s a fascinating process with those mighty cranes shifting all those neatly stacked containers onto land. It all happens quickly and seamlessly, meaning container ships spend as little time in port as possible.

It wasn’t always like this. Step back to the mid-20th century: seaports were chaotic places, filled with dock workers shifting goods stored in sacks, barrels and crates by hand from hundreds of little ships. It was a painfully slow, risky, inefficient, expensive, and dangerous process. 

This all changed thanks to Malcom McLean, the inventor of the intermodal shipping container. His creation transformed the centuries-old shipping businesses by slashing the cost of international trade and making it much more efficient. Some even argue that McLean and containerization laid the foundations for globalization to flourish. 

The age of containerization

The genesis of McLean’s revolutionary idea came one dreary day in 1937. McLean, the owner of a small trucking company, was sitting in his truck outside a port in Hoboken, New Jersey, waiting for dock workers to unload his cargo. As the hours passed, he began to think about how inefficient the whole process was and how much money, time and effort was wasted. 

It wasn't until 19 years later when a series of weight restrictions and levying fees on haulage companies put pressure on his business that he sought a more efficient way to move goods. He realized that shipping goods could be quicker and more cost-effective than land haulage. The only problems were the capacity of ships and the slow and ineffective loading and unloading process.     

Together with engineer Keith Tantlinger, he created the intermodal shipping container to solve this. Key to the design is the reinforced corner posts, which make containers extremely strong and stackable. The simple but elegant solution allows ships to transport more cargo and makes the loading and unloading process much quicker. 

To put his creation into action, McLean gambled millions by giving up his successful haulage business and started a shipping line. And on April 1956, his first container ship, the Ideal X, departed Port Newark, New Jersey, headed for Houston.

Calls for standardization

McLean led the way with intermodal containers but others were quick to follow. All had different takes on the container, especially around their size. McLean favored the 33-foot container while his main rival, Matson’s, used 24ft containers. The inconsistency in size caused many issues around stacking containers and designing the equipment to move them.  

The US Army was keen for standardization to support their efforts in Vietnam and pressured McLean and Matson to figure something out. This led McLean to work with the army and his competitors to agree on standards and led him to release his container patent. 

That work helped containerization spread around the world. Today, there are five standard sizes of shipping containers (20 foot, 40 foot, 45 foot, 48 foot, 53 foot). 

Containerization by the numbers
In 1956, cargo cost $5.86 per ton to load, while now it only costs around $0.16 per ton.
In 1966, around 1% of countries had container ports, but this rose to 90% by 1983.
Pre-containers, cargo could be loaded at around 1.3 tons per hour. This increased to over 30 tons per hour by 1970.
A sweater can now travel 3,000 miles for 2.5 cents by sea.

Source: https://www.discovercontainers.com/a-complete-history-of-the-shipping-container/

The challenges of change

For all the benefits containerization brought, the movement wasn’t without pain. Most notably, it killed off many common jobs at ports as fewer people were needed to manage the unloading and loading of ships. This led to protests, strikes and trade union challenges in many countries around the world. 

In some cases, containerization had a detrimental impact on whole regions. Take London’s east end, for example. For a long time it was the jewel in the capital’s crown and the main trading port of the British Empire. Containerization changed this completely as ships became too large to navigate the narrow River Thames. As a result, London's role as a port city was over, the docks closed down, and the east end fell into disrepair until its more recent regeneration.

Legacy lives on

Despite these issues, you’ll find few people who’d argue containerization isn’t a great thing. Containerization has played a crucial role in building the modern world.

McLean died in 2001 at the age of 85 but his legacy as one of the world’s great innovators and as the father of containerization live on. 

About the Author

James Hayward

James is Tradeshift's Editorial Manager and a Content Writer obsessed with storytelling and providing finance professionals with insights and advice on how to take their finance function to the next level.

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