Histoire de la mondialisation: Donnez-moi le container, je vous donnerai la mondialisation! (Looking back at the obscure man behind the container revolution)

The Box (Malcom Mc Lean)A truck parked near a stack of containers at the Port Newark Container Terminal in Newark, N.J., the nation’s second-busiest port, on Oct. 30 2015. Photo by Julio Cortez/Associated Press. Pres. Dwight D. Eisenhower, left, leans over for a word with 7-year-old Malcom McLean, Jr., as the lad touches the 1959 American Legion Merchant Marine Achievement Award during its presentation at the White House, July 29, 1959. Young Malcolm's father accepted the award on behalf of the Pan American Steamship Corp., which he headed. In the group at right are, from left: Rep. Frank Boykin (D-Ala.), Mrs. McLean, Malcolm McLean, Sr., and Nancy McLean, 13. Photo courtesy of Associated Press.Donnez-moi le moulin à vent, je vous donnerai le Moyen-âge, donnez-moi la machine à vapeur, je vous donnerai le capitalisme! Marx
Un homme totalement obsédé par le business et cherchant sans cesse de nouveaux moyens pour gagner plus d’argent … American Magazine

Après les petits vernis, actuellement dans leurs petits souliers, de la Mairie de Paris

Après le retour des bandits de grand chemin qui commencent sérieusement à ternir la réputation de notre cher Père Noël …

Voici, en cette saison finissante d’échange de cadeaux, un petit hommage à quelqu’un sans lequel la tâche déjà herculéenne du bonhomme à la hotte rouge serait tout simplement impossible…

A savoir le plus grand (après l’inventeur du bateau à vapeur Robert Fulton) révolutionnaire du commerce maritime, qui se trouve être aussi… un illustre inconnu!

D’où l’intérêt de cette passionnante série des Echos de juin dernier (par l’historien d’entreprise Tristan Gaston-Breton) sur ces bienfaiteurs souvent ignorés de l’humanité que sont les pionniers de la mondialisation.

Où l’on découvre Malcolm McLean (1913-2001), l’obscur inventeur (même pas une notice wikipedia en français!), au lendemain de la Seconde Guerre mondiale (mais précédé peut-être par le Canadien William David Steadman?), d’une des inventions-clé de la mondialisation et système alors révolutionnaire de conditionnement des marchandises, le « container ».

Abaissant les coûts de manutention de près de 70 %, démultipliant les quantités de marchandises embarquées par les navires, réduisant les temps d’escale de 4 à 5 jours en moyenne à une dizaine d’heures tout au plus et brisant au passage la puissance des dockers, la  » boîte  » divise par trois ou quatre le prix du transport et contribue ainsi, via la normalisation internationale des containers et un petit coup de pouce de la guerre du Vietnam dont le Pentagone lui demande d’assurer l’expédition de matériels militaires (sa compagnie Sea-Land Service sera rachetée par Reynolds Tobacco Company puis Mærsk Lines), à l’explosion du commerce mondial à partir des années 1960.

Malcom McLean
Tristan Gaston-Breton
Les Echos
Le 31/07/07

Inconnu du grand public, Malcom McLean est pourtant l’inventeur, au lendemain de la Seconde Guerre mondiale, d’un système de conditionnement des marchandises qui a révolutionné le commerce international: le container.

Le 26 avril 1956, le  »  » Ideal-X  »  » quitte le port de Newark, dans le New Jersey, et met le cap sur le port de Houston, dans le Texas. A son bord, soigneusement alignées dans les soutes et sur le pont, se trouvent 58  » boîtes  » métalliques d’un genre nouveau. Rectangulaires et longues d’une dizaine de mètres chacune, elles sont remplies de marchandises diverses. Outre l’équipage, une centaine de personnes sont montées à bord du bateau : représentants des autorités portuaires et de l’administration fédérale, industriels, armateurs, entrepreneurs du transport routier, journalistes. Tous écoutent avec attention les explications que leur donne un homme d’une quarantaine d’années au visage avenant : Malcom McLean. A ses invités, celui-ci présente le mode de conditionnement des marchandises qu’il vient d’inventer et qui, affirme-t-il, va bientôt révolutionner le transport maritime : le container. Tandis que l' » Ideal-X  » s’éloigne des quais de Newark, le représentant local de l’Association internationale des dockers, resté à terre, lâche aux journalistes présents :  » Je donnerais cher pour que ce fils de chien coule à pic !  » Il est l’un des premiers à avoir compris l’ampleur des bouleversements que va provoquer le container, notamment sur la très remuante et très puissante population des dockers. De fait, la  » boîte « , comme l’appelle Marc Levinson, qui lui a consacré un livre, va totalement changer le visage de l’économie mondiale…

Cinquante ans après l’épopée de l' » Ideal-X « , près de 12 millions de containers circulent dans le monde. Il s’en construit plus de 1,5 million par an, dont les deux tiers en Chine. Et le marché continue de croître : 12 % en moyenne par an depuis 2000. Aujourd’hui, les containers représentent à eux seuls 80 % de la valeur totale des marchandises transportées par voie maritime. Les bateaux eux-mêmes n’ont cessé de grossir. L' » Ideal-X  » faisait à peine 200 mètres de long. De nos jours, les plus gros porte-containers font près de 400 mètres de long, 40 mètres de large et peuvent embarquer jusqu’à 10.000 containers. A l’origine de cette révolution, il y a donc un homme : Malcom McLean. Avant de se lancer dans le transport maritime, cet inventeur de génie, dont presque personne ne connaît le nom, fut un entrepreneur à succès, fondateur de l’un des principaux groupes de transport routier des Etats-Unis. Né en Caroline du Nord en 1913 dans une famille de la classe moyenne, le futur père du container interrompt ses études en 1931 pour devenir gérant d’une station-service. Son destin bascule en 1934 lorsque l’un de ses clients lui demande de faire livrer, par camion, des bidons d’essence à une centaine de kilomètres de là. Plutôt que de faire appel à un transporteur local, Malcom McLean décide de le faire lui-même. Avec ses économies, il achète un vieux camion et, tout en conservant la gérance de la station-service, crée McLean Trucking Company.

C’est le début d’une étonnante aventure ! 1 camion en 1934, 3 en 1935, 30 en 1940, 620 en 1950, près de 2.000 en 1953 ! Comme tous les transporteurs, Malcom McLean profite d’abord de la formidable croissance que connaissent les Etats-Unis au lendemain de la crise des années 1930 et de la Seconde Guerre mondiale. S’y ajoutent également quelques  » recettes maison « . Et d’abord un contrôle très strict des coûts qui le pousse notamment – il est le premier – à faire installer des moteurs Diesel sur ses camions. A une époque où la Commission sur le commerce entre Etats (Interstate Commerce Commission), afin de réguler la concurrence et de protéger les compagnies ferroviaires, limite le nombre de lignes que chaque entreprise de transport routier peut exploiter, cette rigueur financière permet à Malcom McLean de racheter méthodiquement les droits d’exploitation de ses concurrents et d’être ainsi présent sur une grande partie du territoire américain. En 1953, vingt ans à peine après sa création, McLean Trucking Company est déjà le deuxième groupe de transport routier des Etats-Unis.

C’est alors que Malcom McLean,  » un homme totalement obsédé par le business et cherchant sans cesse de nouveaux moyens pour gagner plus d’argent « , comme l’écrit l' » American Magazine  » au début des années 1950, a une idée de génie…

Elle lui vient en 1953 alors que, frappé par les bouchons de plus en plus importants qui se produisent sur les autoroutes reliant les différents ports de la côte Ouest, il réfléchit à un moyen de gagner du temps. Pourquoi, se dit-il alors, ne pas embarquer directement les remorques des camions sur des bateaux qui se chargeraient du trafic d’un port à l’autre sans qu’il soit besoin, à chaque fois, de décharger et de recharger les camions ? A cet effet, des terminaux pourraient être construits sur le front de mer où seraient effectués les opérations de transbordement des remorques. L’idée, à dire vrai, n’est pas tout à fait nouvelle. Au début du siècle déjà, en France, en Angleterre et aux Etats-Unis, les compagnies de chemin de fer avaient mis au point des containers en bois, chargés directement au départ des usines. Mais l’expérience avait été abandonnée faute de trafic suffisant sur chaque destination proposée. Plus tard, des expériences d’embarquement de camions complets, cette fois sur des navires, avaient été tentées. Mais elles avaient également été abandonnées en raison des bouchons provoqués par les véhicules sur les quais et de la place occupée en pure perte par les roues et les essieux des camions.

Si elle n’est donc pas tout à fait nouvelle, l’idée de Malcom McLean innove en ce qu’elle cherche à optimiser l’occupation de l’espace en n’embarquant que les remorques, et non plus les camions complets, sur les navires. Mais sa concrétisation bute sur un obstacle juridique : entrepreneur de transport routier, McLean ne peut en effet, aux termes de l’Interstate Commerce Commission, se lancer dans le transport maritime. Convaincu du bien-fondé de son projet et décidé à le mener lui-même, il décide alors, en 1955, de vendre McLean Trucking Company et, avec l’argent gagné (25 millions de dollars), d’acheter une petite compagnie de transport maritime, Pan-Atlantic Steamship Company, qu’il rebaptise un peu plus tard Sea-Land Service. Quelques mois plus tard, en janvier 1956, il souscrit un emprunt de 22 millions de dollars et achète deux tankers datant de la Seconde Guerre mondiale. En menant ses premières expériences dans le port de Newark, Malcom McLean ne tarde pas à remarquer que son idée d’origine ne règle pas tous les problèmes de place perdue. Si le camion reste à quai, les remorques sont embarquées avec leur châssis, ce qui rend difficile l’exploitation rationnelle de l’espace à bord du navire. La solution est vite trouvée : il suffit de retirer le châssis pour n’embarquer que la partie supérieure de la remorque, soit la  » boîte  » elle-même ! Idée simple mais lumineuse, et que personne avant lui n’a eue. C’est cette idée que l’entrepreneur présente à ses invités à bord de l' » Ideal-X « , le 26 avril 1956.

Avec le container, Malcom McLean souhaitait au départ simplifier les liaisons d’un port à l’autre. En fait, son invention bouleverse en profondeur l’économie mondiale. Pour comprendre l’impact que va très vite avoir la  » boîte  » sur les échanges mondiaux, il faut se représenter la manière dont est organisé, avant 1956, le commerce maritime. Dans tous les grands ports de la planète – et notamment à New York -, les opérations de chargement et de déchargement s’effectuent de manière traditionnelle même si, un peu partout, des systèmes en continu – notamment des tapis-roulants – ont été installés. A l’embarquement, les marchandises, livrées par train ou camion et conditionnées en caisses, cartons et sacs de contenances diverses sont hissées à bord des bateaux, une à une ou par lots. L’opération s’effectue soit manuellement, soit au moyen de grues. Une fois à bord, les marchandises doivent être rangées en soute en fonction de leur taille afin d’optimiser au mieux l’espace, tâche qui mobilise là encore un personnel considérable. Même chose lors du débarquement. Longues – le chargement comme le déchargement d’un gros cargo peut prendre plusieurs jours -, ces opérations sont d’autant plus coûteuses qu’elles exigent une main-d’oeuvre très importante. Une main-d’oeuvre qu’il faut en outre manier avec précaution ! Dans tous les ports du monde, les dockers règnent en effet en maîtres, défendus par des syndicats extrêmement actifs qui n’hésitent jamais, lorsque les intérêts de leurs adhérents sont en cause, à paralyser le trafic. A New York, les organisations représentant les dockers sont en outre totalement corrompues, noyautées qu’elles sont par la mafia. A ce tableau déjà peu reluisant s’ajoutent les bouchons déments provoqués, à l’entrée comme à la sortie des ports, par les norias de camions et de trains transportant les marchandises. Afin de réduire au maximum les coûts de manutention, les entreprises qui dépendent du commerce maritime ont installé leurs entrepôts ou leurs usines le plus près possible des quais, ajoutant encore aux problèmes de circulation et de transit et alourdissant les coûts d’expédition vers les grands centres de consommation. Avec ses 50.000 dockers, ses 5.000 entrepôts et installations industrielles, ses 20.000 emplois associés et ses centaines de kilomètres de voies routières et ferrées, le port de New York est ainsi une véritable ville dans la ville…

En imaginant un conditionnement utilisable par différents modes de transport sans manipulation intermédiaire – ce que l’on appelle la multimodalité -, Malcom McLean jette à bas ce système. Parce qu’il permet de décharger d’un coup et très vite – quelques heures – des centaines, voire des milliers de marchandises, et qu’il ne nécessite plus pour cela qu’une poignée de manoeuvres, la  » boîte  » inventée par Malcom McLean abaisse dans des proportions phénoménales (près de 70 %) les coûts de manutention, brisant au passage la puissance des dockers. Du coup, les entreprises peuvent quitter les ports, où les prix des terrains sont prohibitifs et où la place manque, pour s’installer loin à l’intérieur des terres, plus près des grands bassins de consommation, où les containers leur sont directement livrés, par train ou camion. Une nouvelle géographie industrielle se met ainsi en place qui, aux Etats-Unis par exemple, plongera le port de New York dans une crise dont il mettra des années à se remettre. Mieux ! En raison du caractère inadapté des ports traditionnels, de nouvelles installations portuaires équipées de techniques de manutention très modernes et entièrement dédiées à la préparation des containers voient le jour. La première de ces installations est Port Elizabeth, dans le New-Jersey, que Malcom McLean aménage en 1964. D’autres surgiront un peu partout dans le monde, jusqu’à une date récente, comme en témoigne entre autres l’inauguration au Havre, au début des années 2000, des installations  » Port 2000 « . Mais le container a également, et peut-être surtout, des conséquences sur le coût du transport maritime. En démultipliant les quantités de marchandises qu’un seul navire peut embarquer et en réduisant les temps d’escale de 4 à 5 jours en moyenne à une dizaine d’heures tout au plus, la  » boîte  » divise par trois ou quatre le prix du transport. Ce faisant, le container contribue à l’explosion du commerce mondial à partir des années 1960.

Plus qu’un simple mode de conditionnement, c’est donc un véritable système que Malcom McLean invente en 1956. Un système qui met une dizaine d’années à peine avant de se répandre dans le monde. Dans l’affaire, deux événements jouent un rôle clef : c’est d’abord la normalisation internationale des containers, dont Malcom MccLean a compris qu’elle détermine en grande partie leur développement à l’échelle mondiale, et pour laquelle il milite ardemment. Il l’obtient en 1961, l’ISO fixant cette année-là à 20, 30 et 40 pieds les dimensions standard des containers. C’est ensuite la guerre du Vietnam. En confiant en 1967 à Sea-Land Service l’expédition de matériels militaires vers l’Asie du Sud-Est, le Pentagone fait en effet beaucoup pour imposer le container dans les milieux de l’armement maritime. Invention géniale en raison de son impact sur le commerce mondial, le container échappe alors très vite à son concepteur. En 1969, confronté à la concurrence de nouveaux opérateurs, Malcom McLean vend Sea-Land Service au groupe américain Reynolds Tobacco Company. Resté membre du conseil d’administration, il en démissionne en 1977 et se lance à nouveau dans le transport maritime en achetant la compagnie United States Lines. Lorsque celle-ci fait faillite en 1987, il trouve encore l’énergie de fonder une troisième compagnie, Trailer Bridge Inc, qui opère toujours entre les Etats-Unis et Porto Rico. Lorsqu’il meurt en mai 2001, à l’âge de quatre-vingt-huit ans, tous les porte-containers alors en mer abaissent leur pavillon pour lui rendre hommage. Depuis 1999, Sea-Land Service fait partie du groupe Mærsk Lines.

Voir aussi:

The Magic Box: The Real History of Shipping Containers
Lloyd Alter
Reading Toronto
2006 05 14

One just has to look at the Toronto Harbour to see the changes that the shipping container has wrought. Back in the late fifties and early sixties the Harbour was on the cusp of a boom- the St Lawrence seaway was going to make Toronto a major international port and the Harbour Commissioners, with as much vision and foresight then as they have now, rushed to build the Outer Harbour to accommodate the increasing demand.

Then the standardized ISO shipping container hit the scene and Halifax and Vancouver became Toronto’s deepwater ports, and the CP and CN rail yards in Etobicoke and Concord became our real ports of call for goods from around the world, Bringing them to this city on CN and CP’s “Land Bridge” of rails.

On Friday The National Post picked up a wire service article on the “Birthday of the box”, celebrating 50 years of shipping containers, based on Marc Levinson’s book The Box: How the Shipping Container Made the World Smaller and the Economy Bigger. Levinson makes the case that Malcom Mclean invented the shipping container and built the first container ship. Bruce Mau said the same thing in his “Massive Change” exhibition.

Too bad that it is not true- the White Pass and Yukon company was shipping them to Whitehorse in 1953. It was the first full intermodal international transport system- moving containers from the shipper’s Vancouver warehouse by ship to Skagway, Alaska, then overland by truck and rail. “after loading, the containers are locked, sealed for customs, and shipped to the Yukon without further handling until they are opened by Yukon consignees”

The first real container ship went into service in 1955, again, two years before Sea-Land (McLean’s company) started service to Puerto Rico with oddly sized (35’) boxes.

At first the advance of containers was held back by the difficulty of getting the boxes off the trucks- there was not yet the infrastructure of cranes at rail yards to get the boxes off trailers. A Canadian company (Steadman Industries) was at the forefront of development of handling equipment to move containers from train to truck, and from truck to end user. They worked with visionary Canadian electronics manufacturer, Electrohome of Kitchener, to develop a practical system, which CN and CP saw as the solution. Once the worldwide ISO standard dimensions were agreed to in 1964 the rail lines could start building the world’s first coast to coast container capable network.

In the absence of the massive cranes used today, they used modified trailers and rail cars developed by Steadman Industries. My father, Gabriel Alter, was president, and Peter Hunter, who wrote “The Magic Box” – A history of Containerization 13 years before Marc Levinson, worked for him.

They had a lot of fun and did some remarkable things- when everybody thinks that making buildings out of containers is a new thing, they were building warehouses in the Arctic where goods were shipped north in containers which were lined up in two rows, special end and roof panels stuck on the top and ends, and workers could just open up the boxes and work in comfort. In the spring they would close up the boxes and take the building away.

Ultimately the industry became too big for Steadman Industries. It had morphed into Interpool, one of the first container leasing companies, which bought boxes all over the world. The head offices moved from Toronto to New York and it eventually was sold to European interests and survives to this day. The sold-off Steadman operation on Belfield road eventually went bankrupt.

But nothing changes the fact that Gabriel Alter and Peter Hunter of Steadman helped Ron Lawless of CN and Don Francis of CP built one of the first and best container transport systems in the world, a direct descendant of the White Pass and Yukon Route of 1953, when Malcom Mclean was still a North Carolina truck driver.

Happy 53rd birthday, Magic Box!

COMPLEMENT (2009):

The Epic Story of Container Shipping

Ribbonfarm.com
July 7, 2009

 

If you read only one book about globalization, make it The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, by Marc Levinson (2006). If your expectations in this space have been set to “low” by the mostly obvious, lightweight and mildly entertaining stuff from the likes of Tom Friedman, be prepared to be blown away.  Levinson is a heavyweight (former finance and economics editor at the Economist), and the book has won a bagful of prizes. And with good reason: the story of an unsung star of globalization, the shipping container, is an extraordinarily gripping one, and it is practically a crime that it wasn’t properly told till 2006.

(From Wikimedia Commons, GFDL license)

There are no strained metaphors (like Friedman’s “Flat”) or attempts to dazzle with overworked, right-brained high concepts (Gladwell’s books come to mind). This is an  important story of the modern world, painstakingly researched, and masterfully narrated with the sort of balanced and detached passion one would expect from an Economist writer.  It isn’t a narrow tale though. Even though the Internet revolution, spaceflight, GPS and biotechnology don’t feature in this book, the story teases out the DNA of globalization in a way grand sweeping syntheses never could. Think of the container story as the radioactive tracer in the body politic of globalization.

The Big Story

(Note: I’ve tried to make this more than a book review/summary, so a BIG thank-you is due to @otoburb, aka Davison Avery, a dazzlingly well-informed regular reader who provided me with a lot of the additional material for this piece.)

What is amazing about The Box is that despite being told from a finance/economics perspective, the story has an edge-of-the-seat quality of excitement to it. This book could (in fact, should) become a movie; a cinematic uber-human counterpoint to Brando’s On the Waterfront. The tale would definitely be one of epic proportions, larger than any one character; comparable to How the West Was Won, or Lord of the Rings. The Box Movie could serve as the origin-myth for the world that Syriana captured with impressionistic strokes.

The movie would probably begin with a montage of views of containerships sounding their whistles in h0mage around the world on the morning of May 30, 2001. That was the morning of the funeral of the colorful character at the center of this story, Malcolm McLean. McLean was a hard-driving self-made American trucking magnate who charged into the world of shipping in the 1950s, knowing nothing about the industry, and proceeded, over the course of four decades, to turn that world upside down. He did that by relentlessly envisioning and driving through an agenda that made ships, railroads and trucks subservient to the intermodal container, and in the process, made globalization possible. In doing so, he destroyed not only an old economic order while creating a new one, he also destroyed a backward-looking schoolboy romanticism anchored in ships, trucks and steam engines. In its place, he created a new, adult romanticism, based on an aesthetic of networks, boxes, speed and scale. Reading this story was a revelation: McLean clearly belongs in the top five list of the true titans of the second half of the twentieth century. Easily ahead of the likes of Bill Gates or even Jack Welch.

Levinson is too sophisticated a writer to construct simple-minded origin myths. He is careful not to paint McLean as an original visionary or Biblical patriarch. From an engineering and business point of view, the container was a somewhat obvious idea, and many attempts had been made before McLean to realize some version of the concept. While he did contribute some technological ideas to the mix (marked more by simplicity and daring than technical ingenuity), McLean’s is the central plot line because of his personality. He brought to a tradition-bound, self-romanticizing industry a mix of high-risk, opportunistic drive and a relentless focus on abstractions like cost and utilization. He seems to have simultaneously had a thoroughly bean-counterish side to his personality, and a supremely right-brained sense of design and architecture. Starting with the idea of a single coastal route, McLean navigated and took full advantage of the world of regulated transport, leveraged his company to the hilt, swung multi-million dollar deals risking only tens of thousands of his own money, manipulated New-York-New-Jersey politics like a Judo master and made intermodal shipping a reality. He dealt with the nitty-gritty of crane design, turned the Vietnam war logistical nightmare into a catalyst for organizing the Japan-Pacific coast trade, and finally, sold the company he built, Sea-Land, just in time to escape the first of many slow cyclic shocks to hit container shipping. His encore though, wasn’t as successful (an attempt to make an easterly round-the-world route feasible, to get around the problem of empty westbound container capacity created by trade imbalances). The entire story is one of ready-fire-aim audacity; Kipling would have loved McLean for his ability to repeatedly make a heap of all his winnings and risk it on one turn of pitch-and-toss. He walked away from his first trucking empire to build a shipping empire. And then repeated the move several times.

McLean’s story, spanning a half-century, doesn’t overwhelm the plot though; it merely functions as a spinal cord. A story this complex necessarily has many important subplots, which I’ll cover briefly in a minute, but the overall story (which McLean’s personal story manifests, in a Forrest Gumpish way) also has an overarching shape. On one end, you have four fragmented and heavily regulated industries in post World-War II mode (railroads, trucking, shipping and port operations). It is a world of breakbulk shipping  (mixed discrete cargo), when swaggering, Brando-like longshoremen unloaded trucks packed with an assortment of items, ranging from baskets of fruit and bales of cotton to machine parts and sacks of coffee. These they then transferred to dockside warehouses and again into the holds of ships whose basic geometric design had survived the transitions from sail to steam and steam to diesel. It was a system that was costly, inefficient, almost designed for theft, and mind-numbingly slow, keeping transportation systems stationary and losing money for far too much of their useful lives.

On the other end of the big story (with a climactic moment in the Vietnam war), is the world we now live in: where romantic old-world waterfronts have disappeared and goods move, practically untouched by humans, from anywhere in the world to anywhere else, with an orchestrated elegance that rivals that of the Internet’s packet switching systems. Along the way the container did to distribution what the assembly line had done earlier to manufacturing: it made mass distribution possible. The fortunes of port cities old and new swung wildly, railroads clawed back into prominence, regulation fell apart, and supply chains got globally integrated as manufacturing got distributed. And yes, last but not the least, the vast rivers of material pouring through the world’s container-based plumbing created the quintessential security threat of our age: terror sneaking through security nets struggling to monitor more than a percent or two of the world’s container traffic.

Now if you tell me that isn’t an exciting story, I have to conclude you have no imagination. Let’s sample some of the subplots.

The Top Five Subplots

There are at least a dozen intricate subplots here, and I picked out the top five.

One: The Financial/Business Subplot

At heart, containerization is a financial story, and nothing illustrates this better than some stark numbers. At the beginning of the story, total port costs ate up a whopping 48% (or $1163 of $2386) of an illustrative shipment of one truckload of medicine from Chicago to Nancy, France, in 1960. In more comprehensible terms, an expert quoted in the book explains: “a four thousand mile shipment might consume 50 percent of its costs in covering just the two ten-mile movements through two ports.” For many goods then, shipping accounted for nearly 25% of total cost for a product sold beyond its local market. Fast forward to today: the book quotes economists Edward Glaeser and Janet Kohlhase: “It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.” At this moment in time, this is almost literally true: due to the recession. These sort of odd dynamics  are due to the fact that world shipping infrastructure changes very slowly but inexorably (and cyclically) towards higher, more aggregated capacity, and lower costs. This is due to the highly capital-intensive nature of the business, and the extreme economies of scale (leading to successively larger ships in every generation). Ships, though they are moving vehicles, are better thought of as somewhere between pieces of civic infrastructure (due to the large legacy impact of government regulation and subsidies) and fabs in the semiconductor industry (which, like shipping, undergoes a serious extinction event and consolidation with every trough in the business cycle). Currently the top 10 companies pretty much account for 100% of the capacity, as this visualization from from gcaptain.com shows, which tells us that today there are over 6048 container ships afloat, with a total capacity of around 13 million TEU (twenty-foot equivalent).

container-shipping-companies

The mortgaging and financial arrangements dictate that ships absolutely must be kept moving at all costs, so long as the revenue can at least make up port costs and service debt.  As the most financially constrained part of the system, ships dominate the equation over trains and trucks.  One tidbit about the gradual consolidation: as of the book’s writing, McLean’s original company, Sea-Land, is now part of Maersk.

How this came to be is the most important (though not the most fun) subplot. Things didn’t proceed smoothly, as you might expect. All sorts of forces, from regulation, to misguided attempts to mix breakbulk and containers, to irrationallities and tariffs deliberately engineered in to keep longshoremen employed, held back the emergence of the true efficiencies of containerization. But finally, by the mid-seventies, today’s business dynamics had been created.

Two: The Technology Subplot

If the dollar figures and percentages tell the financial story, the heart of the technology action is in the operations research. While McLean and Sea-Land were improvising on the East Coast, a West Coast pioneer, Matson, involved primarily in the 60s Hawaii-California trade, drove this storyline forward. The cautious company hired university researchers to throw operations research at the problem, to figure out optimal container sizes and other system parameters, based on a careful analysis of goods mixes on their routes. Today, container shipping, technically speaking, is primarily this sort of operations research domain, where systems are so optimized that an added second of delay in handling a container can translate to tens of thousands of dollars lost per ship per year.

If you are wondering how port operations involving longshore labor could have been that expensive before containerization, the book provides an illuminating sample manifest from a 1954 voyage of a C-2 type cargo ship, the S. S. Warrior. The contents: 74,903 cases, 71,726 cartons, 24,0336 bags, 10,671 boxes, 2,880 bundles, 2,877 packages, 2,634 pieces, 1,538 drums, 888 cans, 815 barrels, 53 wheeled vehicles, 21 crates, 10 transporters, 5 reels and 1,525 “undetermined.” That’s a total of 194,582 pieces, each of which had to be manually handled! The total was just 5,015 long tons of cargo (about 5,095 metric tons). By contrast,  the gigantic MSC Daniela, which made its maiden voyage in 2009, carries 13,800 containers, with a deadweight tonnage of 165,000 tons. That’s a 30x improvement in tonnage and a 15x reduction in number of pieces for a single port call. Or in other words, a change from 0.02 tons (20 kg) per “handling” to about 12 tons per “handling”, or a 465X improvement in handling efficiency (somebody check my arithmetic… but I think I did this right). And of course, every movement in the MSC Daniela’s world is precisely choreographed and monitered by computer. Back in 1954, Brando time, experienced longshoremen decided how to pack a hold, and if they got it wrong, loading and unloading would take vastly longer. And of course there was no end-to-end coordination, let alone global coordination.

That’s not to say the mechanical engineering part of the story is uninteresting. The plain big box itself is simple: thin corrugated sheet aluminum with load-bearing corner posts capable of supporting a stack about 6-containers high (not sure of this figure), with locking mechanisms to link the boxes. But this arrangement teems with subtleties, from questions of swing control of ship-straddling cranes, to path-planning for automated port transporters, to the problem of ensuring the stability of a 6-high stack of containers in high seas, with the ship pitching and rolling violently up to 30 degrees away from the vertical. Here is a picture of the “twist-lock” mechanism that holds containers together and to the ship/train/truck-bed and endures enormous stresses, to makes this magic possible:

Twistlock mechanism

I am probably a little biased in my interest here, since I am fascinated by the blend of OR, planning and mechanical engineering (particularly stability and control) problems represented by container handling operations. I actually wrote a little simulator for my students to use as the basis for their term project when I taught a graduate course on complex engineering systems at Cornell in 2006 (it is basically a Matlab visualization and domain model with swinging cranes and stacking logic; if you are interested, email me and I’ll send you the code). But if you are interested in this aspect, try to get hold of the Rotterdam and Singapore port episodes of the National Geographic Channel Megastructures show.

There is a third thread to this subplot, that is probably the dullest part of the book: the story of how American and International standards bodies under heavy pressure from various business and political interests struggled and eventually reached a set of compromises that allowed the container to reach its full potential as an interoperability mechanism. The story was probably a lot more interesting than Levinson was able to make it sound, but that’s probably because it would take an engineering eye, rather than an economist’s eye, to bring out the richness underneath the apparently dull deliberations of standards bodies. There are also less important, but entertaining threads that have to do with the technical challenges of getting containers on and off trains and trucks, the sideshow battle between trucking and railroads, the design of “cells” in the ships themselves, the relationship between a ship’s speed/capacity tradeoffs and oil prices, and so forth.

Three: The Labor and Politics Subplot

This is the subplot that most of us would instinctively associate with the story of shipping, thanks to Marlon Brando. The big picture has a story with two big swings. First, in the early part of the century, dock labor was a truly Darwinian world of competition, since there were spikes of demand for longshore labor followed by long periods of no work. Since it was a low-skill job, requiring little formal education and a lot of muscle, there was a huge oversupply of willing labor. Stevedoring companies — general contractors for port operations —  picked crews for loading and unloading operations through a highly corrupt system of mustering, favors, bribes, kickbacks and loansharking. The longshoremen, for their part, formed close brotherhoods, usually along ethnic lines (Irish, Italian, Black in the US) that systematically kept out outsiders, and maintained a tightly territorial system of controls over individual piers. This capitalist exploitation system then gave way to organized labor, but a very different sort of labor movement than in other industries. Where other workers fought for steady work and regular hours and pay, longshoremen fought to keep their free-agent/social-network driven labor model alive, and resist systematization. This local, highly clannish and tribal labor movement had a very different kind of DNA from that of the inland labor movements, and as containerization proceeded, the two sides fought each other as much as they fought management, politicians and automation. Though longshore labor is at the center of this subplot, it is important not to forget the labor movements in the railroad and trucking worlds. Those stories played out equally messily.

East and West coast labor reacted and responded differently, as did other parts of the world, but ultimately, the forces were much too large for labor to handle. Still, the labor movement won possibly its most significant victory in this industry, and came to be viewed as a model by labor movements in other industries.

The labor story is essentially a human one, and it has to be read in detail to be appreciated, for all its drama. The story has its bizarre moments (at one point, West Coast labor had to actual fight management to advocate faster mechanization and containerization, for reasons too complex to go into in this post), and is overall the part that will interest the most people. It is important though, not to lose sight of the grand epic story, within which labor was just one thread.

The other big part of this subplot, inextricably intertwined with the labor thread, is the politics thread. And here I mean primarily the politics of regulation and deregulation, not local/urban. To those of us who have no rich memory of regulated economies, the labyrinthine complexities of regulation-era industrial organization are simply incomprehensible. The star of this thread was the all-powerful Interstate Commerce Commission of the US (ICC), and its sidekicks, the government-legitimized price-fixing cartels of shipping lines on major routes. The ICC controlled the world of transport at a bizarre level of detail, ranging from commodity-level pricing, to dictating route-level access, to carefully managing competition between rail, road and sea, to keep each sector viable and stable.  And of course, there was a massive money-chest of subsidies, loans and direct government infrastructure investment in ports to be fought over.  The half-century long story can in fact be read as the McLean bull in the china shop of brittle and insane ICC regulations, simultaneously smashing the system to pieces, and taking advantage of it.

Four: The Urban Geography and History Subplot

This is the subplot that interested me the most. Containerization represented a technological force that old-style manual-labor-intensive ports and their cities simply were not capable of handling.  The case of New York vs. Newark/Elizabeth is instructive. New York, the greatest port of the previous era of shipping, was an economy that practically lived off shipping, with hundreds of thousands employed directly or indirectly by the sector. Other industries ranging from garments to meatpacking inhabited New York primarily because the inefficiencies of shipping made it crucial to gain any possible efficiency through close location.

Containerization changed all that. While New York local politics around ports was struggling with irrelevant issues, it was about to be blindsided by containers. The bistate Port Authority, finding itself cut out of New York power games, saw an opportunity when McLean shipping was looking to build the first northeastern container handling wharf. This required clean sheet design (parallel parking wharfs instead of piers perpendicular to shore), and plenty of room for stacking and cranes. While nominally supposed to work towards the interests of both states, the Port Authority essentially bet on Newark, and later, the first modern container port at Elizabeth. The result was drastic: New York cargo traffic collapsed over just a decade, while Newark went from nothing to gigantic. Today, you can see signs of this: if you ever fly into Newark, look out the window at the enormous maze of rail, truck and sea traffic. The story repeated itself around the US and the world. Famous old ports like London, Liverpool and San Francisco declined. In their place arose fewer and far larger ports in oddball places: Felixstowe in the UK, Rotterdam, Seattle, Charleston, Singapore, and so forth.

This geographic churn had a pattern. Not only did old displace new, but there were far fewer new ports, and they were far larger and with a different texture. Since container ports are efficient, industry didn’t need to locate near them, and they became vast box parking lots in otherwise empty areas. The “left-behind” cities not only faced a loss of their port-based economies, but also saw their industrial base flee to the hinterland. Cities like New York and San Francisco had to rethink their entire raison d’etre, figure out what to do with abandoned shorelines, and reinvent themselves as centers of culture and information work.

There is a historical texture here: the rise of Japan, Vietnam, the Suez Crisis, oil shocks, and the Panama Canal all played a role. Just one example: McLean, through his Vietnam contract, found himself with fully-paid up, return-trip empty containers making their way back across the Pacific. Anything he could fill his boxes with was pure profit, and Japan provided the contents. With that, the stage was set for the Western US to rapidly outpace the East Coast in shipping. Entire country-sized economies had their histories shaped by big bets on container shipping (Singapore being the most obvious example). At the time the book was written, 3 of the top 5 ports (Hong Kong, Singapore, Shanghai, Shenzen and Busan, Korea) were in China. Los Angeles had displaced Newark/New York as the top port in the US. London and Liverpool, the heart of the great maritime empire of the Colonial British, did not make the top 20 list.

Five: The Broad Impact Subplot

Let’s wrap up by looking at how the narrow world of container shipping ended up disrupting the rest of the world. The big insight here is not just that shipping costs dropped precipitously, but that shipping became vastly more reliable and simple as a consequence. The 25% transportation fraction of global goods in 1960 is almost certainly an understatement because most producers simply could not ship long distances at all: stuff got broken, stolen and lost, and it took nightmarish levels of effort to even make that happen. Instead of end-to-end shipping with central consolidation, you had shipping departments orchestrating ad hoc journeys, dealing with dozens of carriers, forwarding agents, transport lines and border controls.

Today, shipping has gotten to a level of point-to-point packet-switched efficiency, where the shipper needs to do a hundredth of the work and can expect vastly higher reliability, on-time performance, far lower insurance costs, and lower inventories. That means a qualitatively new level of thinking, one driven by the axiom that realistically, the entire world is your market, no matter what you make. The dependability of the container-plumbing makes you rethink every business.

In short, container shipping, through its efficiency, was a big cause of the disaggregation of vertically integrated industry structures and the globalization of supply chains along Toyota-like just-in-time models. Just as the Web (1.0 and 2.0) sparked a whole new world of business models, container shipping did as well.

The deepest insight about this is captured in one startling point made in the book. Before container shipping, most cargo transport involved either raw materials or completely finished products. After container shipping, the center of gravity shifted to intermediate (supply chain) goods: parts and subassemblies. Multinationals learned the art of sourcing production in real time to take advantage of supply chain and currency conditions, and moving components for assembly and delivery at the right levels of disaggregation. Thanks to container shipping, manufacturers of things as messy and complicated as refrigerators, computers and airplanes are able to manage their material flows with almost the same level of ease that the power sector manages power flows on the electric grid through near real-time commodity trading and load-balancing.

My clever-phrase-coinage of the day. The container did not only make just-in-time possible. It made just-in-place possible.

Conclusion: Towards Box: The Movie

I wasn’t kidding: I think this story deserves a big, epic-scale movie.  Not some schmaltzy piece-of-crap story about a single longshoreman facing down adversity and succeeding or failing in the container world, but one that tells the tale in all its austere, beyond-human grandeur; one that acknowledges and celebrates the drama of forces far larger than any individual human.

COMPLEMENT (2017):

The North Carolina Trucker Who Brought the World to America in a Box

How Malcom McLean’s Shipping Containers Conquered the Global Economy by Land and Sea

 

On April 26, 1956, a crane lifted 58 aluminum truck bodies onto the deck of an aging tanker ship moored in Newark, New Jersey. Five days later, the Ideal-X sailed into Houston, Texas, where waiting trucks collected the containers for delivery to local factories and warehouses. From that modest beginning, the shipping container would become such a familiar part of the landscape that Americans would not think twice when they passed one on the highway, or saw one at the loading dock of the neighborhood grocery.

The intermodal shipping container—really, little more than a simple metal box—helped transform the world economy, stimulating international trade on a scale no one could have imagined and opening the way to what we now refer to as globalization.

It all sprang from the mind of a North Carolina truck driver named Malcom McLean—a man who had no experience in the maritime industry but proceeded to turn it upside down.

McLean, born in the tiny cotton center of Maxton in 1913, was a compulsive entrepreneur, a man who was always thinking about business. As a child, he sold eggs from the side of the road. Graduating high school in 1931, in the midst of the Great Depression, he stocked shelves in a grocery store and then managed a gas station. He bought a used truck and opened McLean Trucking in 1934, serving as the sole driver while still selling gasoline. Armed with boundless ambition, he quickly built McLean Trucking into one of the nation’s largest trucking companies. McLean Trucking hauled textiles, cigarettes, and other goods up and down the East Coast. The Interstate Commerce Commission, a powerful federal agency, closely regulated trucking in that era, requiring that rates be based on the cost of providing service. Malcom McLean was known for innovative ideas that lowered his company’s costs, such as crenellating the sides of trailers to reduce wind resistance and improve fuel efficiency, so that regulators would allow his company to reduce rates and take market share from its competitors.

By the early 1950s, U.S. auto sales were booming and highways were becoming heavily congested. The Interstate Highway system was still years in the future. McLean, concerned that traffic jams were delaying his drivers and raising his company’s costs, conceived of waterfront terminals at which trucks would drive up ramps and deposit their trailers aboard ships. He envisioned the vessels moving between North Carolina, New York, and Rhode Island, circumventing the heavy traffic and innumerable stop lights on highways that also served as main streets up and down the East Coast.

The industry McLean proposed to enter was more than a little antiquated. A typical oceangoing ship in the 1950s carried around 200,000 separate crates, bags, barrels, and bales. They would arrive at the dock in hundreds of separate shipments. Each item had to be removed from a truck or rail car and moved into a warehouse. When it was time to load the vessel, the individual pieces of cargo were moved out of the warehouse, placed on the dock, and assembled onto pallets that were lifted by a winch into the ship’s hold. There, dockworkers removed each item from the pallet and stowed it.

Unloading at the end of the voyage meant reversing this labor-intensive process. In consequence, moving goods across the ocean often cost 15 or even 20 percent of their value, a price so steep that many goods were not worth trading internationally. Putting truck trailers aboard ships, in theory, would cut out many of those laborious steps—and, in turn, slash costs. But the idea also had an obvious disadvantage: Trailers would take up precious and expensive shipboard space, undercutting potential savings.

McLean pondered the problem and proposed detaching the trailer bodies from their chassis and wheels and putting only the bodies—that is, metal containers—aboard the ships. This would introduce some complications, such as the need for cranes to lift the containers off truck chassis, transfer them to departing ships, and then reverse the operation when a vessel arrived at its destination. On the other hand, containers, unlike truck trailers, could be stacked, allowing each ship to carry far more cargo. Since the vessel was easily the most expensive part of the operation, the more containers that could go aboard each vessel, the less it would cost to carry each one.

The obstacles to McLean’s concept were daunting. Suitable containers, cranes, and ships did not exist; McLean hired engineers and naval architects and set them loose to solve the problems. Federal regulations barred trucking companies from owning ships, so in 1955 McLean sold his highly profitable truck line and then purchased a marginally profitable ship line he could use to test out his ideas. The potential demand for container shipping was unknown, but McLean bet everything on the venture he christened Sea-Land Service. Asked later whether he had considered ways to shelter his trucking wealth from the risks of an unproven business, McLean was unequivocal. “You’ve got to be totally committed,” he said.

Many in the shipping industry regarded containerization as a concept with little potential … For his part, McLean thought the U.S. maritime industry was obsessed with its ships rather than its potential customers.

Many in the shipping industry regarded containerization as a concept with little potential; McLean was, after all, an outsider unfamiliar with the industry’s storied traditions. For his part, McLean thought the U.S. maritime industry was obsessed with its ships rather than its potential customers. He aggressively built his business along the Atlantic and Gulf of Mexico coasts, on routes to Puerto Rico, and through the Panama Canal to California. He bought a ship line serving Alaska in early 1964, just before one of the most powerful earthquakes ever recorded created enormous demand to ship building materials by sea.

In the late 1950s, other ship lines cautiously tried to follow. Their efforts ran headlong into union opposition. Discharging and reloading traditional ships could require armies of workers, and the dockworkers’ unions knew that a shift to container freight would eliminate thousands of jobs on the docks. Only after repeated strikes on both Atlantic and Pacific coasts did port employers and longshore unions reach agreements in the early 1960s about payments to dockworkers displaced by the new technology.

The biggest barrier to the growth of container shipping, though, was diversity. Each company that followed Sea-Land ordered containers that suited its particular business, and each had a different design for the corner fittings by which cranes lifted containers. If a factory packed a shipment into one ship line’s boxes, the goods might have to wait for space on one of that carrier’s vessels and could only be delivered to a port which the line served.

At the behest of the U.S. Navy, which was concerned it might have to supply troops overseas with a fleet of incompatible ships carrying incompatible containers, domestic transportation companies began discussing how to standardize the container in 1958. The International Organization for Standardization soon picked up the cause, seeking to develop international standards.

McLean, treated as an outsider by the leaders of the shipping industry, was not involved in these talks, but after a decade of fruitless bargaining, negotiators turned to him for a solution. He agreed to surrender Sea-Land’s patents so that every container in every country could use the same corner fittings. That, along with agreement on a standard 40-foot length, assured that any container could fit on any ship and be handled by a crane in every port.

Standardization cleared the way for container shipping to become an international business. In 1967, McLean won a Defense Department contract to use containerships to supply U.S. troops in Vietnam, quickly disproving doubters who had insisted that container shipping across the Pacific would not be viable. The contract covered round-trip costs, and the lack of military cargo coming back from Vietnam to the United States left Sea-Land free to serve other customers. McLean found them in Japan. Starting in 1968, containership service made it possible for Japanese manufacturers like Matsushita and Pioneer to export televisions and stereos in massive quantities, and the burgeoning U.S. trade deficit with Japan soon became a sensitive diplomatic issue.

Tobacco company R.J. Reynolds bought Sea-Land in 1969, but nine years later McLean reentered the shipping industry by acquiring United States Lines, a large but weak competitor. As always, competition was on his mind; he ordered a dozen containerships that were larger and more fuel-efficient than any afloat, expecting they would enable United States Lines to have lower costs per container than other carriers. This time, though, McLean’s intuitive management style worked against him. Oil prices plunged, leaving United States Lines with the wrong ships for the times. In 1986, the company filed for bankruptcy. Its ships were sold off, and thousands of workers lost their jobs.

McLean was not ready to retire. Five years after the failure of U.S. Lines, at the age of 77, he founded yet another shipping company. Yet he remained out of public view, ashamed of his role in a failure that cost thousands of people their jobs. He shunned journalists and avoided public appearances. As a result, his legacy was not fully appreciated.

By the time of his death in 2001, the industry McLean had founded with a single vessel carrying 58 containers had reshaped the global economy. The local industries that had been the norm in 1956 were long gone; thousands of ships were moving millions of containers around the world each day; the equivalent of nearly 10 million truck-size containers arrived at U.S. ports in 2016. Long-time port cities such as New York and San Francisco had been reborn after years of struggle to replace the jobs and industries lost to the rise of container shipping. Consumers had unprecedented choice among a nearly endless array of products from all parts of the world, but the manufacturing workers who produced those goods strained to cope with more intense global competition. McLean’s innovation, intended just to make his trucking company a bit more efficient, ended up changing the world in ways that no one had imagined.

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