Containerisation and global supply chains

It was in 1937, when waiting to drop off a load of wool at port in Hoboken, New Jersey, that Malcolm McLean is said to have conceived an idea that transformed the transport of goods.

McLean, a lifelong entrepreneur, had to wait most of the day to deliver the wool bales in his truck. He sat watching stevedores unloading trucks, putting bales into slings and hoisting them piece by piece on to vessels.

It would be much simpler, he reasoned, to take off the rear half of his truck and put that on the ship. “It struck me that I was looking at a lot of wasted time and money,” he recalled later.

The epiphany prompted McLean to found Sea-Land, the world’s first container shipping line, to carry boxes by sea without loading or unloading them at port. The first ship, the Ideal X, set off in April 1956, carrying 58 containers and a load of oil from Port Elizabeth, New Jersey, to Houston, Texas. According to industry legend, the heavy regulation of the trucking sector meant the trip cost the same as driving a single truck to Houston.

The effects would transform the business of moving manufactured and semi-finished goods. Ships could load and unload within hours rather than days or weeks. Quicker loading made larger ships possible but required bigger ports downriver from city centres.

However, the technology’s most lasting legacy stems from Sea-Land’s contract to containerise US military logistics during the Vietnam war. Sea-Land took to dropping off empty containers in Japan on the way back across the Pacific. The resulting opening-up of the US electronics market to cheap, Japanese-made goods was a key step towards the integration of Asian manufacturers into a globalised world economy.

Yet it is only now that shipping lines are achieving the full efficiency benefits of McLean’s innovation. This year, Denmark’s Maersk Line will take delivery of the first of 20 ships capable of carrying 18,000 containers – more than twice as many as the largest ships 10 years ago.

Last decade’s Asian export boom led to overordering of ships and a slump in vessel earnings, but those conditions show no sign of halting the wider adoption of McLean’s simple but world-transforming idea.

Robert Wright