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Containerization

An image of The new port of St. Petersburg on Florida's west coast, 1920-1930. Source: Library of Congress

The new port of St. Petersburg on Florida’s west coast, 1920-1930. Source: Library of Congress

History is full of unsung heroes. Consider Samuel Prescott, the Revolutionary colonel who actually completed the midnight ride to warn colonists that the British army was marching towards Concord (Paul Revere was captured). Or Claudette Colvin, an African-American teenager arrested for refusing to give up her seat on a segregated bus nine months before Rosa Parks. Changing history is often a thankless job. In this case, the overlooked agent of change is a deceptively simple invention: the standardized shipping container.

An image of Malcolm McClean at railing, Port Newark, 1957. Source: Maersk Line via Flickr.

Malcolm McClean at railing, Port Newark, 1957. Source: Maersk Line via Flickr.

In the 1950s, Malcolm McLean began looking for a way to make his trucking company bypass East Coast traffic. In the process, he ended up revolutionizing shipping, invigorating international trade and catalyzing rapid globalization in the late twentieth century. As outlined in Marc Levinson’s The Box, McLean was the first to detach trailers full of goods from trucks and load them directly onto ship decks. The container design included cutouts that allowed them to lock into place. Seeing an opportunity to cut costs, other transport companies followed suit and the phenomenon of “containerization” was born.

BackStory sat down with John McLaren, a professor of Economics at the University of Virginia, to talk about how the shipping container changed the world from a modern economics perspective.

Q: What was shipping like before the shipping container was invented?

A: Before the shipping container, you had to load your product from the factory onto a truck and bring it to the harbor, and there was a whole procession of strong guys who would move it, box-by-box, onto the ship.They would pack in as much as they could but all the boxes were different sizes, so it would take days or weeks to load up one ship and all that extra time was added to the cost of getting stuff from A to B. With the shipping container, since the boxes are all standardized, they can be packed once at the factory. Then they don’t have to be opened again until they’re on the other side of the world, wherever their destination is.

Q: So things are pretty different today?

A: The system works so much faster than it ever did. Flatbed trucks are all made to fit these standard containers, so you can use a crane at a factory to put it onto the flatbed truck, take it to the train station where another crane moves it onto a flatbed train car– even stack it up with two tiers, [which] conserves a lot of fuel. Then a bigger crane loads it onto the ship, and these giant ships can be loaded up in a few hours and they’re on their way. And because of the uniform shape of these things and their dimensions, they can be packed very densely.

Q: Did the shipping container have an immediate effect on trade?

Image from U.S. Patent No. 2,853,968 - Apparatus for shipping freight by Sept. 30, 1958 M. P. McLean

Image from U.S. Patent No. 2,853,968 – Apparatus for shipping freight, Sept. 30, 1958 by M. P. McLean

A: Well, you have to spend a lot of  money before your harbor can be used [with standard shipping containers.] You have to have  standardized cranes and all the loading equipment has to be compatible with the system. And in order to use the great big ships that make the system economical, you have to have a deep enough harbor. So you’d have a lot of cases where local governments spent money dredging out the harbor to make it deeper. So, it’s a non-trivial expense. There are people who have collected data on the date that various harbors were able to receive and send containerized cargo, and there’s a lot of time series variation on this– some cities were early adopters and some cities were stragglers– and they found a pretty big effect on the livelihood of cities before and after. The cities systematically grew a lot more rapidly after containerization.

Q: How did that influence manufacturing? And globalization as a whole?

A: I think there’s pretty good evidence that overall world welfare has improved in the last quarter century or so as trade has increased. There are also distributive effects, to the extent that the huge improvements in transport costs from Hong Kong to Singapore to the West Coast of the U.S. have made it easier for the east Asian NICs [newly industrialized countries] and China to become big manufacturing export powers. That has been bad for blue collar workers in the United States who were employed in the manufacturing sector, so that’s a distributive effect that was probably accelerated by containerization.

Q: Does that mean containerization accelerated the shift of manufacturing to east Asia, and indirectly contributed to the fall of manufacturing in the U.S.?

A: That’s probably not the major factor, but they’re probably accelerated by containerization. You know, if you put up a brick wall in the middle of the pacific ocean, maybe put some holes in the bottom so the fish can migrate, you’d completely block all transport between the two countries. That would change things a lot, and we’d potentially have a lot more manufacturing here, which would probably be a positive thing for blue collar workers. We need to have open trade, and get the benefits of that, and we need to have redistribution to help out those who are pushed down by it.

For more on how invention and innovation has transformed America, listen to “A History of Manufacturing in 5 Objects.”


Media Contact:

Diana Williams
BackStory Digital Editor & Strategist
434-924-6894
dianaw@virginia.edu