The quiet revolution of a shipping container

What comes to mind, when you think about crucial inventions of the twentieth century? First to pop up are: nuclear power, personal computers/smartphones, antibiotics, automobiles, airplanes or the Internet. But that’s just the tip of the iceberg of human creativity. Each invention changed our lives altogether. Most people understand their obvious significance and probably could explain their impact. Lately, I learned about an invention that seems to be barely noticed by most people and yet has a huge influence on us even if we don’t notice it on daily basis. I am talking about the shipping container, which probably sounds boring at first, but becomes fascinating when you learn a bit more about this amazing innovation. This post is inspired by Marc Levinson’s great book - The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger.

Boxes, boxes everywhere!

Cargo at its best

Transporting stuff is a logistical nightmare. We might not see it that way nowadays, with an excess of shipping options based on both sea, land and air vehicles. It is relatively cheap to send anything even across the globe, delivery companies are reliable and with the help of ubiquitous QR codes and GPS tracking, missing shipments are becoming more and more a rarity. Marvelous innovations are slowly becoming a standard in the cargo industry with the adoption of drone delivery by Amazon which could reduce shipping time from days to hours or even minutes and significantly limit the number of delivery trucks on our roads while mitigating traffic congestion in bigger cities. Even the delivery trucks are changing in a remarkable way and soon our highways might look way more futuristic. In 2020 a fully electric battery-powered trailer truck by Tesla called Semi will enter production and leveraging custom autopilot software will allow it for semi-autonomous driving on highways.

When it comes to heavyweight shipping, the world is ruled by container ports. These shipping factories are a miracle of optimization and efficiency. At their berths, they serve dozens of ships daily, while loading and unloading the container cargo using rows of enormous cranes which can rise over 130 meters and which work with relentless repeatability to pick and drop the metal boxes onto the ships over and over again. The cranes and ships are just a part of complex transport system used in the container ports which also utilizes shuttle carriers, laser scanners, QR detection systems and trucks. Those ships I mentioned are of course not your regular ships. They are more like a 400 meters long, over 70 meters high and almost 60 meters wide steel behemoths which can carry over 20 000 TEU (twenty-foot equivalent unit which stands for a single 6.1 meters long steel container). The maximum gross mass of a TEU is 24 000 kilograms which means that a single ship nowadays is able to carry over 500 000 tonnes of cargo on a regular trip. Yep, that’s a lot of stuff. All those numbers look really astonishing but they don’t answer the main question. Why exactly are the containers used for transporting goods?

Thinking outside the box

People have always transported cargo in some kind of container. It could be either wooden crate of metal parts, barrel full of whiskey or a sack of flour. The revolutionary approach of using metal boxes for shipping is a result of two innovative processes: optimization and standardization.

The way the cargo is transported is almost always through roads and highways at some point during the journey. This requires a truck or lorry to carry the load. With containers, there is no need for additional loading or unloading stuff from the ship onto the ground before packing it on the truck. Using cranes, it is possible to place the metal container straight onto the truck’s chassis. This means that the cargo doesn’t have to wait in the port but can be send straight to the destination place. This idea of moving freight straight from ship to the truck was the main incentive of using containers but not the only one. Once people agreed to use the metal box and set standards regarding container’s length, width and mass as well as established processes of optimal loading and unloading, it was easy to put those rules to work all over the world. This meant that any ship could carry containers made by different manufacturers while being sure that they have the standard dimensions and that any port with infrastructure would handle the cargo in the same effective manner. This standardization meant it was convenient, fast and as a result cheap to transport goods using metal box. If it wasn’t enough, containers were usually sealed off once filled with goods and the insides remained untouched until the arrival at destination. This meant there was no room for theft or contamination of cargo. Containers were and still are the optimal, cheapest and most secure way of transporting goods. But it wasn’t always like that.

Not your average ship.

The old way

Before mass adoption of containers shipping was hard and by hard I mean expensive and time-consuming. Lack of any loading machines and special infrastructure meant that the whole work of loading cargo onto the ships was done solely by hard-working stevedores (now called dockers) that could rely only on their physical strength. The goods were usually transported in wooden crates, barrels or sacks which meant that stevedores needed to pick up each an every one of the items (like 100 kilograms sugar bags), get on the ship using accommodation ladder, place the goods, walk back and repeat those actions over and over again. When transporting bigger packages it was possible to use small cranes and maneuver the cargo using ropes and hooks. Still, it was a tedious job.

Because of all that labor, ships were often stuck for days in the port while waiting for the loading or unloading to finish. Longer time in the port meant that the transport ship spent less time in the sea earning money for the shipping companies. This all led to a really high cost of maritime transport. In fact, the cost of transporting goods to longer distances by ocean was so high that it almost didn’t make sense to do it. According to American Association of Port Authority, when shipping one truckload of cargo from US to France in 1960, the ocean shipping cost were almost 25% of total transport cost and port cost could be as high as 50% of the total estimated cost. Land transport using trucks and trailers was a lot cheaper and a lot faster.

Those specifics of cargo transport meant that it was much better to specialize in local markets. Companies were selling their goods to local customers and international trade was at much lower level. It was unusual for a company from Europe to order something from US since the costs of such a decision were really high. It was better to choose a local supplier that could deliver goods by roads using trucks without the need of a long and costly ocean travel. Then, in the middle of twentieth century a small change begun that later led to drastic cut in the shipping costs and made more than 90% of docker workforce obsolete.

Stevedores in a New York port - 1912

The revolution

The Father of container shipping - Malcolm McLean begun his rise as a cargo transport magnate in 1934 when he opened McLean Trucking Company. In 1945, after the II World War, McLean controlled a booming business with 162 trucks hauling everything from cigarettes to textiles all over the United States. As Marc Levinson writes in his book: An obsessive focus on cutting costs was the key to McLean Trucking’s success. Even though he was already really wealthy, Malcom McLean could not just sit and enjoy his success. That’s why in 1953 in order to find a way how to cut the costs of transport even further, he came to a astounding idea of putting truck trailers on ships and ferrying them up and down the US coast without the need to use highways which at the time were quite costly.

McLean idea turned into reality on April 26, 1956 when a converted World War II oil tanker that has been modified to carry 58 steel boxes completed its first journey from Port Newark in New Jersey to Port of Houston in Texas. This was just the beginning of a long and bumpy road that containers had to complete before the worldwide mass adoption took place. Along the way many remarkable events needed to happen before the cargo industry would acknowledge that containers are the future. One of those events was a slow and painstaking process of setting the first standards for steel containers which made it possible for more ports throughout the world to handle shipments since they could set up similar process of loading and unloading boxes. Soon, it was possible to move the containers from US to such remote places as the Caribbean Islands knowing that there was already infrastructure like cranes and magazines that made the complex transport system complete.

Still, at the beginning of 1970, the majority of the cargo was still shipped the old way not leveraging the brilliant idea of a steel box that was fast to unload, secure and became cheaper and cheaper to handle. One of the decisive events that shaped how the container industry looks like was in fact, the Vietnam War. Transporting massive amounts of food, tools and general supplies for US Army was not a trivial tasks and in the beginning the US Navy decided to go the old way using just the brute force of stevedores. With more and more soldiers coming to Vietnam and more cargo arriving at the ports like Cam Ranh Bay, this approach soon became ineffective with ships stranded in ports for days, cargo being lost and transport costs reaching dangerously high values. By the end of 1960s the US government decided it was time to do something and approached Malcolm McLean with a proposition to establish a shipping contract that would take use of McLean’s container system. Soon, the first shipments from the USA to Vietnam took place. As Marc Levinson writes: The military, hesitant to adopt container technology, became its greatest advocate and containerization became a tool for reform. The army bought their first containerships and invested money in port infrastructure. Soon, cargo was transported cheaply and effectively so the amount of processed shipments could grow exponentially. US army estimated that if it had adopted container system a few years before, it could have save as much as 882 million dollars between 1965 and 1968 in shipping, inventory, port and storage costs.

Asian dominance

In the early 1980s the world began to notice the amazing possibilities that container shipping brought. With more container ports opening that have been specialized in handling only steel box cargo, the centers of world trade have shifted. Instead of the already renowned and established places like London or New York, new ports in Rotterdam, Tokyo or Hong Kong begun to process massive amounts of goods and became transport hubs for their respective regions. Shipping market is really competitive and ports are fighting to grasp the biggest share of the cake, meaning more cargo to handle. As Marc Levinson states: Of the twenty ports handling the greatest number of containers in 2003, seven had seen little or no container traffic in 1990, and three of those seven had not even existed before. Before the container revolution ports in the United States and Europe handled the majority of cargo in the world. Since then, the advantage has shifted almost entirely to Asian ports. Of the 10 biggest ports in terms of container traffic in 2018, 9 are in Asia and 7 of them just in China. The biggest cargo hub in the world is the Port of Shanghai which handled more than 42 million TEU. Compare that to 14 million TEU of the biggest European port in Rotterdam or 9 million TEU in the biggest US based port - Los Angeles. Numbers clearly show that the Pacific Rim has become the center of worldwide shipping and considering Asian dedication to container adoption it is likely to stay that way for the future.

More than 80% of international trade in goods is being carried by sea transport. This complex logistic system works flawlessly day and night and as a result it has never been easier to go to your local shopping center and find bananas from Brazil, personal computers from South Korea or t-shirts made in India. All of them have been shipped in the standard steel box on one of the enormous containerships. Years of innovations in the industry made the maritime transport so cheap and effective that even without realizing it, we depend on it entirely. This post only touches the surface of the containerization but if you want to learn more, I encourage you to check out Marc Levinson book.