The advent of modern shipping and its containerization systems have revolutionized the way business is done, affecting not only how cargo is sent but also what is sent. Modern methods are much safer and reliable, the two factors attributing to the radical change seen in supply chain structures, profit margins, and essentially, the global economy. Now, trillions of dollars shift hands each year as a result of worldwide trading, and transportation systems.
But this wasn’t always the case. While shipping methods haven’t evolved much since the late 19th century, (except the introduction of air shipments), the world of containerization has seen drastic advancements thanks to one man: Malcolm McLean.
Before the mid-20th century, the shipping method was extremely lengthy and potentially dangerous for the cargo, as it involved units constantly being loaded and unloaded separately from trucks, to train, to ships.
The process was also costly, as labor would have to be assigned to the cargo throughout the way, at different points during transit. The units required extensive dismantling, and assembling, to be transported giving rise to numerous technical restrictions. This process was called breakbulk shipping.
Breakbulk shipping had numerous risks associated with it; for the cargo, and the shoremen. Thefts, and misappropriation of perishables, were major risks shippers had to face since cargo was mostly sent out in boxes and crates of different shapes and sizes, or was simply tied together with nets and ropes.
To mitigate these risks, cargo was loaded carefully and ships often spent more time on the dock than in the sea, resulting in the low appeal for shipping items offshore.
In the latter half of the 20th century, the second industrial revolution had pushed the railroad system to its peak. Transporting people from one city to another had become quick and convenient, yet the same couldn’t be said about cargo. This served as a major hindrance for businesses looking to expand, as the slow loading processes would lead to severe backlogs in cargo stations; for both, trains, and ships.
In 1952, Malcolm McLean, the founder of the fifth largest transportation company in the United States, devised what would revolutionize the shipping industry – containerization. To save time, effort, and money, he created a standard-sized trailer that could be loaded on boats and trucks alike. Although he developed numerous different models, he settled for a relatively primitive model that featured no unique qualities, such as fancy designs or locks, but was stackable instead.
The stack-ability of the new containers reduced the danger of theft considerably since these could only be lifted with the help of a crane.
Malcolm McLean bought an oil tanker; the legendary SS Ideal X, and modified it to hold up to 58 containers along with 15,000 tons of petrol. The containers were a huge success, not only in terms of reliability, but also costs; considering that McLean offered a 25% discount against their competitors, on their first dock!
Revolutionizing the Air Freight Industry
While the first airfreight flight was on November 7, 1910, between Daytona and Ohio, it couldn’t gain as much traction as train or ship cargos had, due to a series of accidents that threatened bankruptcy for the operating companies – U.S Airlines, and Airnews. It was only in the 1980s that an entrepreneur named Fred Smith contested the combining of passenger and freight flights (as was the general practice of the time), and believed they should have different routes as well.
In essence, Fred Smith brought airfreight back to the market, promising next-day delivery for cargo – something that no other freight service could offer. He soon claimed exclusive rights to air freight delivery, naming his service the Federal Express (FedEx).
Intermodal is a shipping method that uses two or more different modes to transport cargo, without handling the freight itself.
Traditional intermodal transportation goes as far back as the 18th century, shifting between road and ship transport. After Malcolm’s containerization innovation, the face of intermodal freight changed. In 1977, the U.S transport authority enabled the formation of intermodal companies. One company that rose to be among the largest transport companies in the world due to that was the above-mentioned FedEx.
In the era of globalization, many economies depend largely on trade for overall growth, be it the selling of goods and services, or their purchase. Containerized shipping offers a safer and much more cost-efficient solution for the transportation of all cargo.
To put the impact that the modernization of shipping and containerization has had on the global economy into perspective; consider the fact that in 1956 shipping a ton of loose cargo across the sea cost $5.86 per ton. Today with the help of modern containers and intermodal shipping procedures, this cost has been reduced to merely 16 cents per ton!
The shipping industry owes a lot to Malcolm McLean; the father of containerization. Without his idea, the transportation of cargo would have remained inconvenient and expensive until later on in the century. His standardized containers revolutionized the way economies exchanged with each other and grew. Additionally, the facilitation that cargo shipping now offers has been one of the main contenders in the increase of imports, exports, and variety goods for consumers.