A Gamble That Changed the World

Fifty years ago April 26, a trucker from rural North Carolina ran an experiment here that forever altered international trade and the global economy.

While many scoffed, Malcolm McLean hired a crane to hoist 58 trailer-sized steel cargo boxes onto a Texas-bound freighter. It was an alternative to the then-ubiquitous “break-bulk” shipping, the costly, pilferage-prone method dramatized in the film “On the Waterfront.”

It was a revolutionary idea in shipping and a huge business risk for McLean.

He sold off the trucking firm it had taken him 20 years to build, in compliance with the era’s antitrust regulations. And he retrofitted an old oil tanker ship, the Ideal X, with a reinforced flat deck specially designed with grooves to secure the containers in place for the maiden voyage down the Eastern Seaboard and into the Gulf of Mexico.

By the time the ship docked at Houston six days later, McLean’s Sea-Land Services was taking orders to ship containers back north. Transoceanic shipping eventually followed, ushering in what observers call the biggest change in freight transport since steam engines replaced sails.

“There are few instances in history where innovation has had such a dramatic impact,” Anthony Coscia, chairman of the Port Authority of New York and New Jersey, said Friday. “Malcolm McLean gave birth to a way of moving goods around the world that promoted global economic development that has been very positive for New Jersey and the U.S. economy.”

Break-bulk, which is still used for true “bulk” commodities such as construction materials, involved armies of stevedores loading individual crates from a dock to a cargo sling. It was hoisted up and then lowered into a ship’s hold, to be unloaded and positioned there.

Now, shipping everything from clothing to razor blades to electronics in secured metal containers is the norm. Breakage and theft have been dramatically curtailed, and average shipping costs have fallen from 15% of retail value to less than 1%. At the Port Authority of New York and New Jersey’s facilities in Newark, N.J. and Elizabeth, N.J., containerization accounts for 94% of the cargo, with break bulk about 1%; automobiles account for the remainder.

Over the years, that development set the foundation for big-box stores crammed with inexpensive items, allowing shopping to morph from necessity to entertainment. The advent of refrigerated containers meant no matter the season, grocers could offer fresh produce grown half a world away for reasonable prices.

“Products that couldn’t move because of the export packaging and damage and so forth move freely now throughout the world,” said Paul F. Richardson, a shipping consultant who worked side by side with McLean for Sea-Land’s first 20 years. “It was a huge breakthrough.”

McLean died in May 2001 at 87, two years after selling Sea-Land, then the world’s seventh-largest shipper, to Denmark’s Maersk for $800 million.

“I’m not sure if he graduated from high school, but he was brilliant,” Richardson said. “He could do compound math in his head. He wasn’t afraid of risk. In fact, I think he thrived on it.”

But the container revolution, like many efficiency-creating innovations, also spelled the end to countless well-paying jobs in shipping and in manufacturing.

“It used to be if you took a ship with five cargo holds, it would take two shifts a day of up to 20 longshoremen for a week to unload it,” said Arthur Donovan, a former history professor at the U.S. Merchant Marine Academy in Long Island, and co-author of “The Box That Changed the World.” Today, a comparable job would take about 10 hours with three or four container cranes, employing fewer than 20 workers, he said.

“It makes the whole world like a slick surface: you can slide anywhere at almost no cost,” Donovan said.

The result is a generation of American consumers weaned on superstores. Wal-Mart Stores Inc. is the leading user of shipping containers, followed closely by Target Corp., IKEA and Home Depot Inc., Donovan said.

“It’s transformed retailing,” he added. “The big box experience is a product of containerization.”