The Box that Changed the World

Society tends to overlook the importance of routine inventions. Take the plastic container for example. I bet 99.9% of you (me included) don’t know who masterminded this integral part of our lifestyle (it was Earl Tupper). Yet, this affects the average human a lot more than say landing a rover on Mars. I agree, it’s not exciting dinner table conversation to discuss who invented the box your take-out comes in. But even the boring can be made exciting if written right. In this article I am going to take that chance and re-write the story of another box. A box that made having fresh avocado toast in the middle of an Arabian desert a reality.

The shipping container is probably the most forgotten invention in history and I don’t blame you for that. Looking at that big metal box, one would never imagine its fascinating backstory and the fact that it’s an invention that has had one of the most far-reaching impacts across industries. If the internet made information accessible across borders, shipping containers made goods accessible to all parts of the world. Today, over 65% of the worlds cargo is transported using containers. To put a number to it - 1.85 billion tons. So how did it all start and how did we transport goods before the container was invented ? To answer that, let’s go back in time to the Second World War.

History of Containers

The concept of containers had been around since the early twentieth century. The main mode of transport they were used for was rail and road. Demountable containers were first seen in Ohio in 1918 where they were interchangeably used between rail and road. Yet, this concept remained alien for sea transport. Thousands of pieces of cargo, sometimes individual boxes, were still loaded manually by dock workers into ships. This process sometimes took 7 days and then an equal amount of time to offload making shipping an unviable mode of transport for most goods.

The first real time a container was developed to be used for sea was in the Second World War. Officers, during and after the war, were often posted in areas far away from America. Usually whenever they were sent on duty, household items followed. Because resources were scarce, this was turning out to be a logistical nightmare for the Transportation Corps as household items consisted of various things of different sizes. To solve this problem, in 1947, they developed the Transporter - a corrugated steel container with a 4,100 Kgs carrying capacity. It had double doors on one end and had lifting rings on the top four corners (like the modern container). This made it possible for all household items to be loaded into the box and shipped together.

This solution proved to be so effective that during the Korean War, the Transporter (rebranded to CONEX) was used for moving sensitive military equipment. The added benefit of using a metal box was that it was more secure and theft went down drastically. The use of such containers was still restricted only to the military until a trucker from North Carolina decided otherwise.

Invention of the Shipping Container

Malcolm McLean owned one of the largest trucking companies in America. After the war, due to the increase in activity, roads were severely congested. This hampered transportation and increased Mclean’s running costs. To save money he thought of an idea. Put entire trucks onto a ship and move them from port to port.

At the time, trucking and shipping were two distinct operations that never overlapped. Even by law, in America, you weren’t allowed to own a shipping and trucking business simultaneously. What McLean was proposing broke the norms of the industry.

Coastal shipping was going through a major lull because of the restrictions placed on them during the war and frequent strikes by dock-workers. Cargo movements were shifted to road and remained there even after things went back to normal. Most companies were in the doldrums and here McLean found an opportunity.

His belief in this idea was so strong that to make it a reality he gave up ownership of his trucking company and with some ingenious financial maneuvering took over Waterman Steamship in May, 1955, for a whopping $42 million ($476 million today!). A subsidiary of Waterman, later rebranded as Sea-Land became the container division. The take-over was entirely funded by the erstwhile Nation City Bank (now Citibank) and became the first leveraged buyout in history!

During the course of the takeover, the idea of loading entire trucks was shelved because of the space taken by the non-revenue generating wheels of the truck! The idea instead was removing the trailer from the truck and placing it onto a ship. To turn this idea into a reality, McLean met with Keith Tantlinger, chief engineer at Brown Industries. Together, they came up with a design that would serve as the first iteration of the modern-day container. The container was 35 feet long and made of aluminium. Sold on the design, McLean forced Tantlinger to join him and tasked him with getting this design approved by the American Bureau of Shipping.

Like any approval process, this took time. Objections were received from railroad operators and clearances were needed from the Coast Guard. Finally after receiving all approvals, on April 26th, 1956 Ideal-X set sail from Newark to Houston carrying 58 containers. It took only 8 hours to load all containers (as opposed to 7 days) and reduced the cost of transport from $5.83 per ton to $0.15 per ton or by 3,800%! This validated that container shipping had a future.

Looking back, what worked in McLean’s favour was that he was a newcomer in the ocean shipping business. For truckers, space utilisation is of primary importance and bringing those ideas to shipping seemed logical to him. This allowed him to take seemingly risky bets with relative ease and paved the way for container shipping.

The Concept Emerges Elsewhere

McLean wasn’t the only one thinking about containers. In 1954, a family owned conglomerate, Matson Navigation was looking at ways to reduce their transportation costs. Their approach, polar opposite to that of McLean’s, was through academic research. They established an in-house research department and recruited Foster Weldon, a professor at John Hopkins University, to lead it.

Matson’s primary business was shipping goods to Hawaii from America. After his initial study, Weldon realised that most of the cargo being moved will benefit from the use of containers. The final users were often small stores in Hawaii and if smaller containers were used, an entire load could be assigned to one shop making it more efficient. Calculations revealed that a size smaller than 20 feet would increase the loading time and size larger than 25 feet would be left with excess space. Finally, 24 feet was the size arrived on. Matson’s first container vessel, the Hawaiian Merchant sailed on January 9th, 1959. A few years after McLean’s Ideal X.

Another important contribution Matson made was the development of land-based cranes. To shift containers from ship to port, McLean had installed cranes onboard the ship. Operation of this was risky, prone to accidents and put the safety of the ship in danger. Matson thought of fitting a crane in the port that would span the width of the entire ship. The operator would control a lifting beam that would life containers from the ship and place them in the port. The first shipping terminal of this kind was completed in May, 1960. This design was a precursor to the modern day cranes we see in ports today.

Seeing the benefits, one expected that container shipping would take off immediately. But, there were still a few hurdles in the way.

Standardising the Shipping Container

The advantages of shipping by containers was there for everyone to see. But in order for them to scale, every port and every shipping company in the world needed to agree on the sizes and construction of the container.

The standardisation process took many years and involved a lot of people. A brief timeline -

Growth of Container Shipping

Finally by 1967, common standards were agreed on and container shipping was poised to take take off. For containerisation to grow, trans-atlantic trade between Europe and USA had to develop. This involved venturing into an unproven trade lane. Once again, it was Malcolm McLean and Sea Land taking large bets to push the industry forward. Again through ingenious financial engineering, McLean managed to generate enough cash to bring 26 new containerships into the market and started weekly services from Newark and Baltimore to Rotterdam and Bremerhaven. The first few voyages were a big hit and containers were filled with military cargo from America and returned with whiskey. Soon other companies followed and by the start of the next year, 10 container ships were sailing every week from America to Europe!

Looking at the growth of container shipping, ports started investing in infrastructure needed to operate container ships. Container terminals were set up in Japan, Australia, Malaysia and Singapore. Trade prospered and the demand for containers continued to increase by double digits year on year. American roads were full of Japanese cars, shopping malls in Australia had American brands, Scottish whiskey became a staple in American households. Containers had started unleashing the power of globalisation.

In 1977, container shipping reached a landmark as a service was introduced between South Africa and Europe, the last route dominated by bulk ships. In a short 10 year span, container shipping went from being an experiment to taking over world trade.

The Period After

As the dominance of containers rose, so did the number of companies. Everyone wanted to cash in on the latest fad. Supply overshot demand and operating container ships profitably became increasingly difficult. In the next 20 years, a number of companies went bust and there were many mergers of industry leaders. During this period McLean sold his beloved Sea-Land, left shipping and started farming, returned to buy U.S. Lines (Sea-Land’s biggest competitor) and then went bust, proving how difficult surviving in this industry was.

But, after that period, globalisation spread much faster with the emergence of China. This breathed new life into the container industry as demand, once again, outpaced supply. New leaders like Maersk and MSC emerged from the ashes and today continue to lead the container shipping industry.

An Ode to Containers

When asked to compare containers to something, I couldn’t look beyond the tomato. On its own, it looks pretty useless and uninspiring. But as you delve deeper, you realise that it forms the base layer of almost everything you eat (at least for us, Indians!). Similarly, containers today, form the base layer of almost every item we use.

Today, the global container fleet stands at over 50 million with more than 50,000 ships transporting cargo across the globe. The first container ship carried 58 containers. Today, the largest container ship, longer than the Empire State Building, can carry an unbelievable 24,346 20 feet containers. The impact this seemingly mundane box has had on the world is unimaginable. A small example - assembling an iPhone requires the battery to come from China, the camera from Japan, the gyroscope from Switzerland, the screen from America and the accelerometer from Germany. Not to mention the hundred smaller parts coming from various other countries. Container shipping has made this possible.

As we move towards a world where borders continue to blur, the ability of the container to make the remotest connections in the world accessible will become important. The importance of this was felt even more during the recent Covid-19 pandemic. Containers played a crucial role in ensuring all our basic necessities were satisfied while we remained protected at home. It served as a reminder that it’s the innocuous things that keep the world running and at times they too deserve the limelight.

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