The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (7 page)

All over the world, the main methods for handling containers in the years after World War II offered few advantages over loose freight. “Cargo containers have been more of a hindrance than a help,” a leading steamship executive complained in 1955. Many containers had metal eyes on top of each corner, requiring longshoremen to climb atop them to attach hooks before they could be lifted. The lack of weight limits meant that lifting could prove dangerous. Moving them with forklifts instead of winches, though, often damaged the containers. Large, expensive longshore gangs were still required to stow containers alongside loose freight in the holds of ships, where the boxes had to be maneuvered past built-in posts and ladders. “[I]t is certain that the goods would occupy far less space if they were stowed individually instead of in containers,” the head of the French stevedores’ association acknowledged in 1954. “This wasted space is quite considerable—probably over 10%.” Ten percent of the ship’s volume sailing empty amounted to a huge penalty for carrying cargo in containers.

For international shipments, customs authorities often charged duties on the container as well as the contents. And then there was the cost of sending emptied boxes back where they had come from, which “has always been a heavy handicap to container transport,” Jean Levy, director of the French National Railway, admitted in 1948. Shipping food from a depot in Pennsylvania to an air base in Labrador cost 10 percent more using containers than with conventional methods, a 1956 study found—if the container was left in Labrador. When the cost of returning it empty to Pennsylvania was figured in, container shipping was 75 percent more expensive than loose freight.
²⁸

T
ABLE
2
Cargo Aboard the
Warrior

By the early 1950s, there was little dispute that freight terminals were a transportation choke point. An unusual government-sponsored study, conducted in 1954, laid bare just how backward cargo handling was. The subject was the
Warrior
, a fairly typical C-2-type cargo ship, owned by Waterman Steamship Corp. The ship was chartered to the U.S. military, but on its run from Brooklyn to Bremerhaven, Germany, in March 1954, it carried a mix of cargo typical of merchant vessels, and was loaded and unloaded by civilian longshoremen. With government consent, the researchers had access to unusually detailed information about the cargo and the voyage.

The
Warrior
was loaded with 5,015 long tons of cargo, mainly food, merchandise for sale in post exchanges, household goods, mail, and parts for machines and vehicles. It also carried 53 vehicles. The cargo comprised an astonishing 194,582 individual items of every size and description.

These goods arrived in Brooklyn in 1,156 separate shipments from 151 different U.S. cities, with the first shipment arriving at the dock more than a month before the vessel sailed. Each item was placed on a pallet prior to storage in the transit shed. Longshoremen loaded the ship by lowering the pallets into the hold, where the men physically removed each item from its pallet and stowed it, using $5,031.69 worth of lumber and rope to hold everything in place. The longshoremen worked one eight-hour shift per day, excluding Sunday, and required 6 calendar days (including a day lost to a strike) to load the ship. Steaming across the Atlantic took 10½ days, and unloading at the German end, where longshoremen worked around the clock, took 4 days. In sum, the ship spent half the total duration of the voyage docked in port. The last of its cargo arrived at its ultimate destination 33 days after the
Warrior
docked at Bremerhaven, 44 days after it departed New York, and 95 days after the first Europe-bound cargo was dispatched from its U.S. point of origin.

The total cost of moving the goods carried by the
Warrior
came to $237,577, not counting the cost of the vessel’s return to New York or interest on the inventory while in transit. Of that amount, the sea voyage itself accounted for only 11.5 percent. Cargo handling at both ends of the voyage accounted for 36.8 percent of the outlay. This was less than the 50 percent or more often cited by shipping executives—but only because Germany’s “economic miracle” had yet to drive up longshore wages; the authors noted that port costs would have been much higher were it not for the fact that German longshoremen earned less than one-fifth the wages of U.S. longshoremen. Their conclusion was that reducing the costs of receiving, storing, and loading the outbound cargo in the U.S. port offered the best method of reducing the total cost of shipping. The authors went beyond the normal admonitions to improve longshoremen’s productivity and eliminate inefficient work rules, and urged a fundamental rethinking of the entire process. “[P]erhaps the remedy lies in discovering ways of packaging, moving and stowing cargo in such a manner that breakbulk is avoided,” they wrote.
²⁹

Interest in such a remedy was widespread. Shippers wanted cheaper transport, less pilferage, less damage, and lower insurance rates. Shipowners wanted to build bigger vessels, but only if they could spend more time at sea, earning revenue, and less time in port. Truckers wanted to be able to deliver to and pick up from the docks without hour upon hour of waiting. Business interests in port cities were praying for almost anything that would boost traffic through their harbors. Yet despite all the demands for change, and despite much experimentation, most of the industry’s efforts to improve productivity centered on such timeworn ideas as making drafts heavier so that longshoremen would have to work harder. No one had found a better way to ease the gridlock on the docks. The solution came from an outsider who had no experience with ships.
³⁰

T
he U.S. economy boomed
in the years just after World War II. The maritime industry did not. The entire merchant fleet had been commandeered by the government when the United States entered the war, and many ships did not revert to private control until July 1947, almost two years after the war ended. Coastal shipping had been all but closed down after German submarines sank several ships, and after 1945 coastwise traffic remained well below prewar levels. Trucks grabbed market share in domestic transportation, but the need to spend days painstakingly handling cargo each time a ship steamed into port kept the maritime industry from reducing costs enough to compete. “Until cargo handling costs can be reduced, there is little hope for coastwise revival,” warned a California State Senate committee in 1951.
¹

Yet while the larger American ship lines were not particularly profitable, they were relatively sheltered. Foreign lines were barred from coastal service and routes to island territories, and a new American-owned competitor could not enter a domestic route without proving to the ICC that its entry would not harm other ship lines. Competition was also limited on international routes, where almost all ship lines belonged to cartels, known as conferences, that set uniform rates for each commodity. The U.S.-flag international lines received government subsidies to cover the higher wages of American crews, and both domestic and international lines—for regulatory reasons, international services were run by separate companies—had access to war-surplus ships. Inefficient though it was, the maritime industry thus felt little immediate pressure for change. Reshaping the business of shipping was left to an outsider with no maritime experience whatsoever, a self-made trucking magnate named Malcom Purcell McLean.

McLean was born in 1913 near the tiny town of Maxton, deep in the swamp country of southeastern North Carolina. Maxton, once called Shoe Heel, had been populated by Scottish Highlanders in the late eighteenth century. The local newspaper was the
Scottish Chief
, and local lore had it that Shoe Heel was renamed Maxton when a rail passenger shouted, “Hello, Mac!” from a train window and ten men responded. At the time of McLean’s birth, Maxton Township, with about thirty-five hundred residents, was very rural and very poor. Electric lighting had arrived in Robeson County only in 1901. The town of Maxton, with about thirteen hundred inhabitants, had telephone service, but the surrounding area did not; as late as 1907, residents of Lumberton, the county’s largest town, had to ride the train to Maxton to make long-distance calls.
²

In later years, McLean took to portraying his life as a Horatio Alger story, in which his mother taught him business by giving him eggs to sell, on commission, from a crate at the side of the road. The reality was not quite so harsh. Although the family was far from wealthy, it was not without resources. McLean’s father, also Malcolm P. McLean,
^*
was “a member of a prominent and widely connected family,” according to an obituary published in 1942. An 1884 county map shows half a dozen McLeans farming near Shoe Heel, and several other McLeans farmed or practiced law in Lumberton. Angus Wilton McLean, probably a cousin—his mother, like Malcom’s, was a Purcell—started a bank and a railroad in Lumberton, served as assistant secretary of the United States Treasury in 1920–21, and was governor of North Carolina from 1925 to 1929. Family ties may have helped the senior McLean obtain a job as a rural mail carrier in 1904 to supplement his income from farming. Upon young Malcom’s graduation from high school in 1931, in the depths of the Great Depression, family ties got him work stocking shelves at a local grocery. Those local connections helped once more when an oil company needed a gas station manager in the nearby town of Red Springs, as a family friend lent McLean the money to buy his first load of gasoline.
³

As recounted by McLean in the
American Magazine
in 1950, his rise began when he learned that a trucker earned five dollars for bringing the station’s oil from Fayetteville, twenty-eight miles away. McLean proposed to do it himself. The station owner let him use an old trailer that had been rusting in the yard. McLean Trucking Company opened for business in March 1934, with McLean, still running the service station, as the sole driver. Soon after, family ties helped once more when a local man agreed to sell McLean a used dump truck on installments of three dollars a week. With the truck, McLean won a contract to haul dirt for the Works Progress Administration, a federal public-works program that at one point employed more than eleven hundred people in Robeson County. Even after hiring a driver, McLean earned enough to buy a new truck to haul vegetables from local farms. According to a much repeated tale, one trip found McLean so poor that he couldn’t afford to pay the toll at a bridge along the way; he left a wrench with the toll collector as a deposit, redeeming it after selling his load in New York.
⁴

This rags-to-riches tale fails to do justice to McLean’s immense ambition. By 1935, at twenty-two years of age and with just one year of experience as a trucker, McLean owned 2 trucks and 1 tractor trailer, employed nine drivers who owned their own rigs, and had already hauled steel drums from North Carolina to New Jersey and cotton yarn to mills in New England. By 1940, as preparations for war revived the economy, six-year-old McLean Trucking owned 30 trucks and grossed $230,000. McLean built his operations during the war, gaining additional routes. A massive merger among seven of his competitors, which he opposed unsuccessfully all the way to the U.S. Supreme Court, barely affected the truck line. At the war’s end in 1945, Malcom McLean controlled a thriving business with 162 trucks, mainly hauling textiles and cigarettes from North Carolina to Philadelphia, New York, and southern New England. Revenues in 1946 were $2.2 million, nearly ten times the level of 1940. McLean, already wealthy at age thirty-four, viewed this as just a beginning. As he wrote a few years later, “I saw that my only opportunity was to build and build and build, make a big trucking company out of a relatively small one.”
⁵

The economy of the late 1940s provided ample opportunity for a small trucking company to grow. As railway freight volumes languished, long-distance truck traffic more than doubled between 1946 and 1950. Getting a larger piece of the action, though, required the support of the Interstate Commerce Commission. The federal Motor Carrier Act of 1935 had brought interstate trucking under the authority of the ICC, which had regulated railroads since 1887. The ICC controlled almost every aspect of the business of common carriers—truckers whose services were on offer to the public. A common carrier could haul only commodities the ICC allowed it to haul, over ICC-approved routes, at ICC-approved rates. If a new firm wanted to begin service, or if an existing one wanted to serve a new route or carry a new commodity, it had to hire lawyers to plead its case at the commission. Any major change required hearings at which other truck lines and railroads had the opportunity to object. Regulation made trucking hugely inefficient; a trucker authorized to haul paper between Nashville and Philadelphia could not simply pick up a few tires or drums of chemicals to fill a half-empty truck, and might have to return home empty if authorized cargo were not available for the backhaul. The ICC’s concern was not efficiency but order. Regulation protected the interests of established truck lines by limiting competition, and it protected the railroads by forcing truck lines to charge much more than railroad companies. More than anything else, the ICC wanted to keep the transportation industry stable.
⁶