How the Shipping Container Came to be

Today, we take the oh-so-boring shipping container for granted. Yes, that “corrugated steel box, 8 feet wide, 8.5 feet high and 40 feet long”. In his book, Fifty Things that Made the Modern Economy, Tim Harford tells the story behind making it the standard way to transport things. The key word there is “standard” because boy, was there opposition to any standardization:

1)      The trucking companies, the shipping companies and the ports couldn’t agree on a standard. Why? Some wanted them big, others small. No one size suited them all.

2)     Dock workers felt threatened by standardized sizes. After all, the ease and speed that comes with standardization would almost certainly result in “fewer jobs to go around”.

3)     Regulators who defined the rules and pricing policies feared they’d lose their power. And jobs.

No wonder then that the idea of a standardized shipping container too so long. The man credited with it today is the man who “navigated this maze of hazards”, Malcom McLean. Put differently, he is recognized as the founder because of “his political savvy and his daring”.

Back then in the US, regulators didn’t want the same entity providing both shipping and trucking services. Yet, McLean managed to gain control of a company of each type “at the same time”.

When dock workers went on strike and shut down the ports in 1956, McLean used the opportunity to “refit old ships to new container specifications”. That, of course, took a lot of money (debt), which brought him precariously close to bankruptcy. But, “he pulled through”. Barely.

McLean’s was now close to being an integrated logistical system. And he found the perfect customer for the efficiencies that such an integrated system brought: the US military, who at the time were “faced with an unholy logistical nightmare in trying to ship equipment to Vietnam”. Beyond the obvious benefits, McLean had a bonus from this arrangement:

“On the way back from Vietnam, his empty container ships could collect payloads from the world’s fastest growing economy, Japan.”

It also meant trans-Pacific trade was getting used to standardized containers. And soon it became the de facto standard worldover.

This standardization of the shipping container has meant that shipping costs have fallen, as has loading/unloading time. That in turn meant manufacturers were no longer particular about being close to their customers or their suppliers. That in turn was a big factor in how China could become the manufacturing hub of the world. And it has ultimately given us customers the “greatest possible range of the cheapest possible products – toys, phones, clothes, anything”.