By Anant Gupta
Shipping is the lifeline of economic trade. The numbers are staggering – goods comprising 90% of worldwide trade are transported through shipping. Long regarded as a rigid industry with no scope for change, the shipping industry witnessed a complete overhaul in the way it operated in the 20th century– all thanks to one man.
By inventing a simple shipping container to ship goods in bulk, Malcom McLean, revolutionized the way shipping is carried out till date. He made shipping containers the go-to boxes for storing goods! The pioneer of ‘containerization’, he eliminated lengthy and inefficient processes to transport goods from one port to another.
Malcom McLean’s story from a truck-driver to entrepreneur
Born in 1914 to a farming family in North Carolina, Malcom learnt the virtues of hard work and perseverance early on in life. His father was a farmer who supplemented the family’s small income by doubling up as a mail carrier. Malcom followed suit, and was soon ferrying goods in a truck. He slowly built a steady customer base in his village. The business went strong for two years, during which he added 5 trucks and forty drivers to create a strong transport business. However, his fortunes were short-lived. The Great Depression in 1926 snatched most of his clients, and McLean once again found himself behind the wheel, delivering goods all by himself.
The Eureka moment that led to containerization
It was one such delivery that ignited the spark and turned the shipping industry on its head. In 1937, Malcom was supposed to deliver cotton bales from Fayetteville, North Carolina, to Hoboken, New Jersey. However on reaching Hoboken, he learnt that another delivery was scheduled to be unloaded first, and was asked to wait. Seeing the dockworker unload the cargo, Malcom was dismayed at the inefficiency of loading each good separately onto the ship. A dockworker would unload each bag, sling it on his back, and then attach it to the sling of the crane, which would be used to finally load it onto the ship hull. Looking at the trailer truck he had driven, McLean envisaged loading all goods at once into a trailer, and then simply loading the trailer onto the ship. It took McLean nineteen years, and not before he had added over 1500 trailer trucks to his trailer business, to consider the incident from a business perspective.
In 1956, though Mclean’s trailer business was going strong, he was convinced about the power of his idea. Seeing a new business opportunity, McLean converted a trailer into a shipping container by removing the wheels. He strengthened the trailer with steel enforcement and developed a mechanism to load the trailer onto the truck. Additionally, he bought an empty oil tanker and attached the trailer on top to be used as a shipping container. At the same time, McLean also acquired the Pan-Atlantic Steamship Company which was based in Alabama and renamed it SeaLand Industries. The company had shipping and docking rights in prime eastern port cities. This gave him jurisdiction to legally allow his ships to unload his goods at those ports.
Though the platform was set, McLean’s decision to enter the cargo business met with polarizing reactions. While one section of the media praised him as the savior of a fledgling shipping industry, the other chastised him for monopolizing the transport business. Before his first cargo delivery could take place, seven railroads accused him of violating the Interstate Commerce Act if his ship plied the seas. A section of the act rendered any person unable to own two transportation business simultaneously. Being in violation of law, McLean was given an option to choose between his thriving trailer business and his nascent shipping venture.
Laying trust in his instincts, McLean took the plunge and opted for control of the shipping venture. He sold off all shares of his trucking business and started making preparations for his first voyage. His first cargo ship, the Ideal X, set sail from New Jersey to Houston. A closely followed affair, the world watched with bated breath as McLean unlocked the trailer and unloaded the cargo. The cargo was dry, secure and ready to use. It was one of the biggest victories for McLean, and orders had already started coming in thick and fast.
Malcom build a shipping empire out of his nascent venture
After his first voyage, obtaining customers became the least of McLean’s concerns. The costs on the shipping route dropped dramatically from $5.83 per ton in 1956 (when loading loose cargo onto a ship), to just 15.7 cents per ton when loading onto the Ideal X. Also, the steel enforced containers kept the goods safe from weather and pilferage. Through reduction in interstate taxes and bypassing weight-related regulations, McLean brought transporting costs to a fraction of what they once were.
Where customers were rejoicing, unions were stirring up a storm. Afraid of losing their jobs, many dockworkers and labor unions openly protested McLean’s methods as monopolistic and labor-unfriendly. As McLean’s first container ship left Newark harbor, a man asked Freddy Fields, a top official of the International Longshoremen’s Association, “What do you think of that new ship?” Fields replied, “I’d like to sink that sonofab***h.” However, the States could see the future in shipping, and New York gave a major boost to McLean’s plans by constructing a new port which eased loading cargo onto ships like the Ideal X.
And that’s how containers came to be standardized in the shipping industry
Ever the risk-taker, McLean didn’t keep his container specifications to himself. Instead, he released his patented steel-enforced container to the International Standards Organization (ISO) and asked them to treat it as a standard for shipping containers. Through this, he wished to maintain consistency of shipping containers, which would greatly assist in building standard port facilities all across the country.
New York’s acceptance to construct a $300 million container port was a testament to the changing times in the shipping industry. By the end of the 1960s, McLean’s SeaLand had twenty-seven thousand trailer-type containers, thirty-six trailer ships, and access to over thirty port cities. A phenomenal $160 million deal was signed when McLean finally decided to sell off the business and focus on other ventures.
Though he dabbled in healthcare and farming, his love for shipping brought him back to the same business he started. However, this time around, the tides had turned. Strained by rising oil prices and diminishing customer base, Malcom unfortunately could not save the ship. Mired in bankruptcy and other cases, McLean had a quiet end for a man who had contributed so much to the world.
McLean’s idea had a huge impact on economic trade
Very few inventions have created as much of an impact as containerization.
90% of the world’s trade is carried out by shipping. By bringing the shipping prices to a fraction of on-road costs, Malcom has ensured cost savings in billions of dollars for the global economy. With demand and average income at an all-time high, especially in Asian countries, containerization has assumed more importance and value in the present day and age. If not the supplier, the transporter, or the members of the shipping industry, the customers should be grateful to Malcom McLean for every dollar they have saved due to his truly pioneering concept.
Remember the Titans is a weekly ode to the inventors, geniuses, and business pioneers who left the world better than they got it. Check out stories of other Titans here.
Anant Gupta is a writing analyst at Qrius
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