90% of international trade is transported by sea. Computers from China, T-shirts from Bangladesh, copper from Chile, cars from Japan, tomatoes from Spain and everything, everything you can think of, travels in one of the 20,000 metal boxes that a cargo ship can transport.
A steel box with 548,000 bananas, 55 refrigerators, 400 televisions, 13,000 bottles of rum, or a car.
A humble container.
“Globalization, as we know it today, would not have been possible without the container “, says Marc Levinson, economist, historian, and author of books like “The Box”, where he explains how innovation made possible the expansion of international trade, and “Outside the Box”, where he reflects on the history and future of globalization.
We had paid little attention to containers, until this year the famous supply chain crisis (derived from the covid-19 pandemic) occurred, leaving many of the products that we regularly consume stuck in one of the ports through which the goods transit.
Indeed, we cannot live without them. Although history tells us that this was not always the case.
The first commercially successful container voyage occurred in April 1956 aboard a converted military vessel, the Ideal X, which transported 58 containers from New Jersey to Texas, where 58 trucks were awaiting arrival to move goods.
The architect of the voyage was Malcom McLean, the visionary creator of the modern commercial shipping system with containers.
“Mr. container”, we could call him, recognizing that he invented the logistics system, rather than the metal box itself.
And he became a billionaire.
How did you come up with the idea
Before McLean – a trucking entrepreneur born in 1914 to a North Carolina farming family – used the container as the linchpin of his business empire, shipping was almost a nightmare.
In the 1950s just the logistics of loading and unloading ships was a gigantic challenge.
The stevedores in charge of doing so stacked, for example, barrels of olives and boxes of soap on a wooden pallet.
This was raised with a thick rope and was deposited in the ship’s hold, where other stevedores accommodated each item to optimize space to the maximum and so that the cargo did not move on the high seas.
There used to be cranes and forklifts available, but in the end many of the goods ended up being moved by hand.
It was a much more dangerous job than manufacturing or construction. In the big ports every few weeks there was a fatality.
Loading and unloading a ship took the same number of days as the sea voyage.
There had to be a better way to do it. And that answer was the one McLean found.
The businessman had been in the business of land transport of goods.
He started with a truck during the difficult years of the Great Depression and ended with a fleet of 1,700 when he sold the company in the mid-1950s.
McLean was convinced that the use of containers was the future of international trade, but for that, he required an entire logistics chain that would make the business model viable and convince everyone who participated in the old system that they should transform it.
The first challenge: how to convince others
To begin with, trucking companies, shipping companies and ports could not agree on a common standard for making the containers.
Then there were the powerful unions in the ports, who resisted the idea because most of the longshoremen would lose their jobs.
On the other hand, the authorities regulating heavy cargo in the United States also preferred the status quo.
Different regulations established how much shipping companies and trucking companies had to charge.
Why not allow them to charge what the market dictates? Or allow them to join in and offer an integrated service?
No, the first response was outright opposition to McLean’s ideas.
Despite the difficulties, the businessman continued working on how to manufacture containers that could be adjusted to the requirements of a ship and those of a truck that could transport the same metal box full of products.
Until the day came when he got his big client: the United States Army.
The war in Vietnam
McLean took advantage of a loophole to gain control of a shipping company and a trucking company.
Then, when the longshoremen went on strike, he took advantage of that downtime to match the old ships to the specifications of the new containers.
And he encouraged the Port Authority of New York to create a hub for containers on one side of the city’s dock.
But the most important move happened in 1960, when McLean sold the idea of container shipping to the military.
The army saw in McLean’s idea the solution to its problems to send military equipment to Vietnam.
Container shipping is much more efficient if it is part of a comprehensive logistics system, so the US military was the ideal customer.
In addition, McLean realized that upon returning from Vietnam, his ships could bring in containers full of payload from the world’s fastest growing economy, Japan.
And so the trans-Pacific business relationship began in earnest.
Seven decades of evolution
A relationship precipitated by war that eventually became the foundation of what is now the international trading system.
Today all the management of maritime transport is directed from computers, which control each of the containers that move through a global logistics system.
Refrigerated containers are placed in the hull, where there is electricity and temperature monitors, and the heaviest ones at the bottom.
And while the cranes load the ship, they are unloading it from other containers.
“Of course not everyone is enjoying the benefits of this revolution,” says Tim Harford, one of the authors of the BBC series “50 Things Modern Economics Done.”
Many ports in poorer countries, such as those in Sub-Saharan Africa, resemble New York’s during the 1950s.
However, with these exceptions and for a growing number of destinations, goods can now be transported faster and cheaper.
“And that’s, in large part, thanks to the container,” says Harford.
