Ideal-X and McLean
It’s not every day that a trucker gets to change the world. Yet that’s exactly what Malcolm P. McLean of Red Springs, NC did back in 1956, when he took a relatively simple concept and figured out how to put it into practice. McLean, who died May 25 at the age of 87, came up with the concept called ‘containerization,’ which forever changed how freight is shipped both in the U.S. and around the world.
Before 1956, almost all maritime freight was moved piece by piece in a process called ‘break bulk’ shipping. Boxes were loaded one by one onto a truck or train, which then drove to a port. At the dock, each box would be individually unloaded and then hoisted into the hold of the ship. At the ship’s port of destination, the boxes were unloaded one by one and put on a truck or train for delivery.
Not only was such ‘break bulk’ freight handling slow, piece-meal and repetitive, the cargo was exposed to potential damage and theft. McLean found the whole process ridiculous – one that wasted a lot of time and money, too.
“I don’t have much nostalgia for anything that loses money,” is one of his more famous quotes, and it explains why he drove so hard to find a way to replace the break-bulk method of shipping freight.
McLean was not an idealistic dreamer, either. He and his sister, Clara McLean, and brother, Jim McLean, founded their family trucking business – named, unsurprisingly, McLean Trucking Co. – in 1934, during the depths of the Great Depression. Based out of Winston-Salem, NC, McLean Trucking started out hauling empty tobacco barrels – with Malcolm as one of the drivers. Yet by the 1960s, McLean Trucking was the fifth largest trucking company in the U.S., owed in large part to Malcolm’s hard-nosed business philosophy.
The idea for what later were called ‘intermodal’ containers came to McLean while delivering a load of lumber to a nearby port. He watched the days-long process required to load and unload a ship and reportedly thought to himself, “Wouldn’t it be great if my trailer could simply be lifted up and placed on the ship without its contents being touched?” A trailer carrying numerous boxes could be loaded at the shipper’s door, sealed, sent by truck to the port, lifted off its chassis and simply stored aboard ship. At the destination, the process would be reversed: Simple, fast, and cost-efficient.
The problem was nobody else thought the break-bulk business needed changing.
According to a history compiled by Maersk Sealand, one of the largest container ship operators in the world and a company founded in part by McLean, McLean was told by U.S. railroads that his idea had little merit. Mclean’s efforts were even blocked by the U.S. Government, in the form of the now-defunct Interstate Commerce Commission, which in the 1950s regulated almost all of the American transportation industry. Their action was, in fact, instigated by the national railroads, said Maersk.
Unions were not friendly to his idea, either. They had thousands of members employed just to help make those arduous break-bulk cargo transfers from truck and train to ship and back again. Since containerization would be a form of automation, numerous jobs were bound to be eliminated. Shipping lines realized his idea would require huge investments in new vessels and new equipment, which differed radically from the existing ones. Container ships also needed extensive docking and special shipbuilding and repair facilities, meaning ports would have to pony up new funds, too.
But McLean persevered. He never sought subsidies from the U.S. Government and, instead, he put all his own capital into the new venture. In the early 1950s, he sold his interest in the family trucking business and purchased the Pan Atlantic Steamship Company, buying four ships and investing enough money to build 5,000 of his new ‘intermodal’ trailers.
According to Maersk, its was the administrator of New York Harbor who first recognized the significance of McLean’s efforts and supported the idea of building a new kind of port. This eventually led to construction of the world’s first container port in Port Elizabeth, NJ. On April 26, 1956, McLean’s first container ship – the Ideal X – set sail from Port Elizabeth, NJ to Houston, carrying 58 containers.
Though many ports and longshoreman’s unions continued to fight McLean’s concept, it began to take hold rapidly. The Port of Oakland, CA, invested over $600,000 in new container ship facilities because it realized that containerization would revolutionize trade with Asia – trade that would flow through its location. In 1962, when it opened new facilities, McLean came and spoke at the dedication, outlining the ‘why’ behind his containerization efforts.
“This marks a new milestone in low-cost ship transportation,” he said. “Through the use of sealed trailers, we are able to load and unload a vessel in one-sixth the time of conventional ships.”
His concept gained greater ground in the late 1960s and early 1970s during the Vietnam War, when the U.S. military used containerization to re-supply its forces on a much faster basis. In 1970, for example, it took cargo 50 days by ship to travel from Hong Kong to New York City. Thanks to containerization, that same voyage takes just 17 days today.
On McLean’s first trans-Atlantic container run with Sea-Land’s SS Fairland, the cargo arrived in Europe four weeks faster than its equivalent had before, according to Maersk.
Loading and unloading ships are now extremely fast, too. Previously, it took a crew of 20 longshoremen to load 20 tons per hour into a ship’s hold, said Maersk. Now with containers and specialized ‘gantry’ cranes, a crew of just 10 can load twice as much in a matter of minutes.
Today, it is estimated that 90% of the world’s trade moves by containers, traveling in 100 million container loads a year on a fleet totaling some 5,000 container ships
McLean, however, remained a restless businessman. He named his shipping company Sea-Land Service Inc. and it quickly grew into one of the largest container shipping companies in the world. Yet he sold it in 1969 to tobacco conglomerate R. J. Reynolds for $160 million to pursue other interests. Railroad giant CSX Corp. bought it in 1987 and later sold it to shipping giant Maersk in 1999 – for $800 million.
McLean re-entered the shipping business in 1978 with the purchase of United States Lines, which he built up to rival Sea-Land in size and scope. However, though his ships were the most fuel-efficient on the water, falling cargo rates hurt the bottom line and U.S. Lines went bankrupt in the late 1980s.
In 1991, McLean – then in his late seventies – became head of Trailer Bridge Inc., a company that specialized in container transport between the U.S. and Puerto Rico. He remained the head of Trailer Bridge until his death.
Transportation historians put the impact of McLean’s containerization effort on par with the changeover from sailing ships to steam and from wooden ships to ones made from steel.
“When Malcolm McLean began loading truck containers on ships in the late 1950s, few people realized he was going to revolutionize international shipping,” said congressmen James Oberstar (D-MN) in a 1999 speech. “No longer would ships be in ports for days while their cargoes were unloaded at finger piers one pallet at a time. Now gantry cranes could unload a whole container, put it on a truck chassis, and the truck could immediately begin its inland movement.”
McLean was named by the International Maritime Hall of Fame as the ‘Man of the Century” for containerization. Fortune magazine named him to its Hall of Fame in 1982, and Forbes magazine called him, “one of the few men who changed the world.”
Despite his age and increasing ill health – he coped with heart problems during the last decade of his life – McLean never stopped his contemplation and pursuit of new business ventures.
“He still had as many ideas as he did the day he founded Sea-Land,” said John Clancey, former president and CEO of Sea-Land. “Even after he sold it to R. J. Reynolds, becoming their largest shareholder, he went on to do another dozen things. Every time I spoke to him he had a new investment or project on line.”