The first containers were used as early as the beginning of 1920. These consisted of metal frames covered with wood, and some even remained open at the top. The sizes were not standardized, were between two and three meters and mostly rarely used, because the return of an empty container caused costs.
That was about to change when Malcom McLean came on the scene. He had been born into a Scottish-born family and, after graduating from high school and working for years, had built a trucking company from nothing with hundreds of trucks and aggressively expanded it into a leading transportation company. His legendary focus on cost-savings had also led him to hammer out a discount for his trucks at gas stations along the highways. His drivers were only allowed to fill up at. these gas stations. It was a first in the trucking industry, which until then had given its drivers a choice, but again, that meant tens of thousands of dollars less in fuel expenses, which McLean was able to pass on to his customers in the form of lower transportation rates, thereby undercutting the competition.
McLean’s constant search for efficiencies and improvements did not go unnoticed by the loading process at the docks. His trucks were regularly loaded with goods for the docks, and often had to wait there for hours for their turn to be unloaded. That fact, and the realization that he could make a difference, led to arguably the biggest pivot in business history. McLean sold his freight forwarding business and used the proceeds to acquire Pan-Atlantic Steamship Company. And there he began to implement his vision. With two used U.S. Navy ships, which could be had for a song after the end of World War II, he pursued the idea of driving the truck trailers with their cargo directly onto the ship and driving them back down again at their destination.
However, this approach was quickly discarded, for several reasons. First of all, the truck trailers did not allow stacking because of the body and chassis, and thus provided little cost savings. Also, dock workers required that the trailers not only be opened and inspected, but also that the goods loaded on them be weighed individually to calculate the correct rates. Thus, the cost and time advantage was lost. And the aggregate tariff McLean had targeted, which would allow shippers to pay a uniform rate from pickup at the warehouse to delivery at the destination, had been banned by the Interstate Commerce Commission, an agency that set rates and issued licenses for transportation routes for railroads, trucks and shipping lines.
But it wouldn’t be McLean if he admitted defeat. He tackled a modified trailer idea, removing the trailer body and instead developing containers that could be lifted onto a flatbed trailer and fit into his converted cargo ships. In addition, there were some fortunate coincidences. The New York Port Authority was responsible for port facilities in New York and neighboring New Jersey, and was trying new approaches out of the muddled situation of outdated docks in Brooklyn and Manhattan, limited space for expansion, traffic congestion on congested roads that caused hours of delays in bringing in goods, and dockers notoriously ready to strike. Newark, on the west side of the Hudson River, had fallow wetlands that could be developed into new port facilities. And transportation links on this side of the Hudson were much better.
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After special negotiations with dockers and with the receipt of waivers, the Pan-Atlantic Steamship Co.’s first all-container ship – the Idea X – sailed from Newark to Houston, Texas, in 1956. McLean and his guests were in Newark when the Idea X departed, then took a plane to Houston to await the ship’s arrival.
This did not go unnoticed on the west coast of the United States. The Matson Navigation Company in San Francisco, which handled freight and passenger traffic with Hawaii, had already thought of it, too. While McLean tackled these things without thinking twice and solved problems as they arose, Matson took a different approach. They hired transportation experts from universities who analyzed data, did studies, and came up with proposals. And in 1958, the Hawaiian Merchant embarked on its maiden voyage as a container ship.
Similar to New York, where the container port was moved to Newark, something similar happened in San Francisco. The first container terminal opened on the other side of the Bay Area in Alameda with the first land-based container crane. These decisions, and the failure of the major ports and dockworkers’ unions of the time to recognize the importance of containers, were yet to lead to a rude awakening. San Francisco, New York, London or Liverpool were among the most important ports in the world in the middle of the 20th century. They were to lose out to Oakland/Alameda, Newark, or a tiny, privately owned port like Felixstowe with the containerization of cargo shipping. Felixstowe is now the largest container port in the United Kingdom. Ports, however insignificant they may have been, suddenly had a chance to establish themselves as the cargo centers. And many did: Singapore, Newark or Oakland took advantage of it. Traditional ports such as Rotterdam, Hamburg and Bremerhaven reacted quickly to these changes and were able to maintain their position as cargo handling centers in the recent past. But the port of Piraeus has also seen a steep increase in container traffic following its takeover by a Chinese operator, as Chinese cargo ships dock there and unload goods.
Before that happened, however, it took more than a decade. Because despite the obvious benefits of Container, there were non-negligible hurdles to overcome at all levels, and it wasn’t until all the pieces of the puzzle fell into place that Container managed to change the world in ways no one could have predicted.