How the shipping container revolutionized freight and trade
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If you’ve tried to purchase a back-ordered item or kept up with our retail and trade coverage, you already know about the global supply chain challenges and shipping traffic jams. As of Monday, there were 85 container ships waiting to dock at the ports of Los Angeles and Long Beach.
We’ve been keeping track of this number for our series, “Temporarily Unavailable,” which dives into how stuff moves around the world … or doesn’t.
In our series, we have talked a lot about shipping containers, because 90% of global trade goes by sea.
So how did shipping containers become so important?
About 70 years ago, a truck driver and businessman named Malcolm McLean, who had built one of the biggest American trucking companies of its time, was facing some business challenges.
“He was increasingly concerned in the first half of the 1950s that traffic congestion was delaying his trucks,” said Marc Levinson, economist, historian and author of “Outside the Box: How Globalization Changed From Moving Stuff to Spreading Ideas.”
Looking for more efficient transportation
McLean thought about more efficient ways to transport cargo by sea. But he realized it didn’t make sense to put entire trucks on a ship.
“So why not just take the container off of the trailer and ship the container,” Levinson said.
McLean decided to pursue the idea. He sold his trucking company and bought the Pan-Atlantic Steamship Co., a traditional steamship line based out of Mobile, Alabama.
“The reason for this is that shipping, like other modes of transportation, was quite heavily regulated. One couldn’t simply start a ship line,” Levinson said. “So he bought one that already had the right to sail up and down the East Coast and the Gulf Coast of the United States”
For a while, McLean experimented with ways of loading and unloading trucks. He redesigned truck trailers into two parts: a truck bed on wheels and a container.
“Malcolm McLean had bought this vessel for very little money and had installed a false deck on the top of the tanker on which the containers could be placed,” Levinson said.
The maiden voyage for McLean’s converted oil tanker, called the Ideal X, carried 58 new box trailers or containers from Port Newark, New Jersey, to Houston on April 26,1956.
“That is generally considered to be the start of the modern era of containerized shipping,” said Joseph Bonney, a retired journalist who covered shipping for many years.
But there were a lot of details to work out, like what size containers should be, how ships should be designed for them and how ports should be designed, too.
Standardizing container size
“If you can imagine spending a decade in smoke-filled hotel conference rooms, discussing how thick the end wall of a container should be. That’s what went on here,” said Levinson about the process of standardization. “The participants in these negotiations were overwhelmingly engineers. Some of them worked for ship lines, some of them worked for railroads, some of them were involved in a trucking industry, some were involved in the manufacturing of containers. And each of these parties had its own separate interests.”
Standardization was the key to scaling the container economy, and eventually the industry settled on containers that are 8 feet wide and 20 or 40 feet long.
“Shipping containers revolutionized how trade occurs and made trade costs much, much lower for many goods,” said Teresa Fort, associate professor of business administration at the Tuck School of Business at Dartmouth College. “And made it a lot easier to get lots of different products onto ships, get them off the ships more quickly load them directly onto trucks and trains and then distribute them across the country.”
Fort adds that this allowed businesses to become more competitive — to have lower prices, higher quality and more sophisticated products that they can bring to market.
This really big box that you load stuff into and ship off was key to what we now think of as globalization.
Although containerization revolutionized shipping in functional ways, Bonney, the retired journalist, said it started becoming something people were aware of just recently when it stopped working as smoothly as it had before.
“It’s been interesting this current supply chain crisis and made many people aware for the first time that the role that container shipping plays in our daily lives, and it’s a large essential industry that was hiding in plain sight for a lot of people,” Bonney said.
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