How the lowly shipping container changed the world

First of a one-part series on the power of the box

“Beneath those stars is a universe of gliding monsters.” –Herman Melville

I spent part of my holiday as I’m sure most red-blooded Americans spent theirs, reading a history of the shipping container. 

Titled The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Marc Levinson’s deeply researched narrative delivered more presents than an Amazon Prime van on Christmas Eve. Though the second edition came out in 2015, long before pandemic, it helped me better understand why our industry is plagued with shipping delays and to more appreciate the abundance to which we have grown accustomed.

Just before Christmas, my oldest daughter lamented the fact that her local Panera’s had run out of bagels by 10:30 in the morning. I understand the frustration, but I was also struck by the fact that for most of human history, acute shortages have been common, even pervasive. How impossible it must be to bake just the right numbers of bagels in all of the flavors or types on offer? 

Fresh bagels are baked just in time, and so are most manufactured goods the world over. But JIT wasn’t possible before the lowly shipping container changed the transportation industry in the late 1960s and 1970s. The first container of the sort that is ubiquitous today shipped in 1956. 

The conceptual father of the container, Malcom McLean astutely understood that as a trucking company, he was in the business of moving stuff around, not the trucking business. He understood that the ocean-going break bulk ships were in the very same business, not a separate endeavor. It is this insight and a vision of scale and speed that led to containerization. While the containers as foundational building block of global trade might seem obvious today, it was anything but in the 1950s. Think unions, stevedores and the port in Hoboken, N.J., depicted in On the Waterfront, which came out in 1954 and won eight Oscars.    

Similarly, had newspapers realized they were in the information business rather than seeing themselves as competing in the newspaper business or the display advertising business, they might have staved off extinction wrought by the shift to digital. 

By this same big picture method, furniture companies are wise to see themselves in the business of enabling people to furnish their worlds and to live better lives, not merely making or selling furniture, because the same discretionary dollar can be spent any number of non-home furnishings-related ways.

But back to the box.

Containerization eventually re-made the ships themselves, as well as the ports, cranes, storage facilities, trucks, trains, and the labor forces of each and every aspect of the global shipping business. Like fresh bagels, we take all of this for granted today, but the low costs and relative speeds of bringing goods to market and into homes were hard won and fiercely resisted. With pandemic disrupting the supply chain from beginning to end, these previously taken-for-granted norms are at risk. Shortages are back.

North Carolina connections

One of Levinson’s many contributions is using McLean’s story as the through-line for the larger history of global shipping. Beginning in Maxton, N.C., before re-locating to Winston-Salem, then basically operating from all over the world, McLean punctuates most of the big moments of the container revolution. And while the book doesn’t mention furniture even once, McLean’s story is intertwined with that of furniture’s. 

Though far from a household name, McLean deserves the recognition afforded to the likes of Henry Ford, Lee Iacocca, and Richard Branson. More than any other individual, McLean pushed the inter-related but profoundly self-interested, disparate links in the global supply chain to consider and eventually accept what we take for granted today as the basic building block of intermodal shipping, the container. It is not hyperbole to say that his various companies, beginning with a regional trucking company and culminating in one of the world’s largest shipping conglomerates, created the circumstances for JIT and logistics practices the world over. And McLean’s vision for containerization almost won a war.

Based on Levinson’s history, the tipping point for containerization seemed to be exigencies created by U.S. involvement in the Vietnam war, particularly that of supplying ground forces that swelled at a rate of 17,000 per month in 1965. According to Levinson’s research, for each 830-man infantry battalion, the U.S. Army needed 451 tons of supplies and equipment. And they needed them fast. By 1969, the U.S. military was feeding, housing, and equipping 540,000 infantry, sailors, marines and air force personnel.

McLean’s oceanic shipping company at the time, Sea-Land, won a $70 million contract from the Army in March 1967 to provide seven container ships to supply the war effort. Sea-Land installed shore-based cranes at Cam Ranh Bay, showing the world what a modern containerport might look like. Only three shipping lines, including Sea-Land, offered container service from the United States in the spring of 1966. By June 1967, 60 companies were on board. Logistics would never be the same again.

As for McLean, he cashed out in 1977, spending $9 million of his liquidated stock to acquire the Pinehurst Resort golf resort in North Carolina. You might remember Kindel’s licensed Pinehurst furniture collection launched in 2018 and Drexel Heritage’s version back in the late 1990s. What you likely don’t remember is RJR’s half-billion dollar investment in McLean’s shipping company, emblematic of the cash-rich tobacco industry of the 1970s, or before that industry’s reckoning in 1998. I sure had no recollection of this, even though at the time I lived and worked in the Triad, where both RJR and McLean were based.

Size and speed

Before he left the business of moving freight, however, the maritime industry had embraced his vision of scale. McLean knew size matters, and he knew our oceans could be used just as interstate highways are. 

Big Panamax ships 1,000 feet long and 110 feet wide, enormous port complexes built just for these super freighters, and retro-fitted canals in Panama and elsewhere brought shipping costs to the functional equivalent of a vanishing point. Levinson quotes economists Edward L. Glasser and Janet E. Kohlhase as saying, “It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.” 

But the container needed a partner to pull off its revolution of scale and speed: The computer. That’s right, another box. 

The scale that McLean saw when no one else did brought with it tremendous complexity, and that growing complexity required technology to master. From the gritty longshoremen depicted in movies such as that 1954 classic, On the Waterfront, to the computer-controlled robots of Rotterdam seen briefly in The Wire, Season 2, the container revolution also is a computing revolution. 

Speaking of Season 2, this story needs a sequel. Look for another column that takes a closer look at the ports, where a lot of Asian-made furniture for the U.S. market is parked right now awaiting those big gantry cranes to pluck and pop.