The Shipping Container - More Important Than You Think

When thinking of inventions that shaped the modern world, one such innovation that escapes most people’s thoughts is the shipping container. Yes, the big, steel, rectangular behemoths that are used to transport goods around the world. While they may seem mundane and are often overlooked, they played a huge role in improving quality of life for many people. Before the advent of these containers, boxes were often shipped separately. It took a huge amount of time to get them on the ship and an equally huge amount of time to take them off. It was said that the dock workers wages were “twenty dollars a day and all the Scotch you could carry home,” because theft was so widespread.

Before this invention, nearly all the world’s cargo was transported in a diverse assortment of barrels, boxes, bags, crates and drums. It wasn’t uncommon for a typical cargo ship in the per-container era to have as many as 200,000 individual pieces of cargo that were loaded on by hand. The time it took to load and unload the cargo often equaled the time that the ship needed to sail between ports. Not only was this slow but it kept the cost of shipping very high.

Manufacturers would load these boxes onto the ship, then no hands would touch the merchandise until the container was delivered. The container was designed in such a way that it could be stacked on top of each other so more of it could be loaded onto the ship.

This started with a truck driver named Malcom McLean. In 1937, McLean made a routine delivery to a port in North Carolina for shipment to New Jersey. Since he couldn’t leave until his cargo had been loaded onto the ship, he sat for hours watching dozens of dock workers load thousands of packages onto the ship. He realized this process wasted huge amounts of time and money, and wondered if there could be a better alternative.

Then he came up with a simple, yet revolutionary idea. Put the boxes into a container and load the container directly onto the ship. This connected the manufacturer straight to the end buyer.

When McLean first released his product, he offered transport prices that were 25 percent lower than those of his competitor as well as the ability to lock the containers in order to prevent cargo theft, which also appealed to many new customers. In 1956, hand-loading loose cargo onto a ship in a U.S. port cost $5.86 per ton ($65.50 in 2023 money). However, thanks to McLean’s new containers, the price reduced to just 16 cents per ton ($1.79 in 2023). This dramatic reduction in shipping costs boosted international trade. That means that consumers now have access to goods from around the world at a price lower than was previously thought possible. Similarly, reduced shipping costs have helped to boost the living standards of hundreds of millions of people in export-oriented developing countries over the last few decades.

There was also another advantage in speed. The inter-modal container cut shipping time from Europe to Australia down from 70 to 34 days without increasing the speed of the ship itself. Whole cities such as Newark and Oakland were put on the map because their new, larger

ports were needed for the shipping boom. This system also helped create the global economy that we have today - an economy where one car has elements from dozens of countries across the world allowing each country to take advantage of their comparative advantage.

By 1966, McLean launched his first transatlantic service and three years later, McLean had started a transpacific shipping line. As the advantages of McLean’s container system became clear, bigger ships, more sophisticated containers and larger cranes to load cargo were developed. Interestingly, people across the world can’t agree on a plug type, DVD standard, or even a system of measurement.

Yet we can agree on one size of shipping container. Without that box we wouldn’t have our phones from China, our clothes from Bangladesh, or even our oranges from the same country. Freight shipping is the behind the scenes process which made our world into what it is today. Our economy and our lives would not be the same without this innovation.

McLean’s development of standardized shipping containers significantly reduced the cost of transporting cargo across the world. Lower shipping costs significantly boosted international trade which, in turn, helped to lift hundreds of millions of people out of poverty. McLean’s “containerization” remains an important pillar of our interconnected global economy today.