Malcom McLean and the Birth of Container Shipping
Malcom McLean (1913-2001) was the American entrepreneur who started modern container shipping and founded Sea-Land.
Malcom McLean (1913-2001) was the American entrepreneur who started modern container shipping and founded Sea-Land. He began in North Carolina with one truck, sold his trucking company to buy a ship line despite knowing nothing about shipping, and on 26 April 1956 had 58 aluminium truck bodies lifted onto the deck of an old tanker at Newark. Five days later they were in Houston.[1] He spent his last fifteen years out of public view, after a bankruptcy that cost thousands of people their jobs.[1]
Childhood in Maxton and First Jobs
McLean was born on 14 November 1913 in Maxton, a small cotton town in Robeson County, North Carolina. A state archives article gives the year as 1914.[1][11] His father was also Malcolm Purcell McLean and his mother was Almena McLeod Currie. He was registered as Malcolm and later chose to spell it Malcom.[4][8] His siblings Jim and Clara would later join him in business.[4]
As a child he sold eggs from the side of the road. He finished high school in 1931, in the middle of the Depression, and the family could not afford college.[1][2][4] He stocked shelves in a grocery store, then ran a gas station. With what he saved he bought a used truck, in 1934 according to most sources and 1935 according to Wikipedia.[1][4][7] That was McLean Trucking. He was its only driver and went on selling gasoline at the same time.[1] Accounts differ on the first loads. NCpedia has him hauling dirt for road projects, and others have him carrying empty tobacco barrels.[7][8]
Growth of the Truck Line
Jim and Clara came into the firm, and it grew by hauling textiles and cigarettes between North Carolina and New York. The base moved from Red Springs to Winston-Salem, where a terminal opened in 1954 that was considered the largest in the world at the time. By the 1950s the company ran 1,700 trucks.[3][7][8]
Regulation shaped how it grew. The Interstate Commerce Commission required freight rates to reflect the cost of providing the service, so anything that cut cost could mean permission for a lower rate and new customers. McLean corrugated the sides of his trailers to reduce wind resistance, then used the saving to get a rate cut and take traffic from competitors.[1] Levinson describes him as a man always thinking about business.
From Trailer to Box
There are two versions of how he reached the container idea. The popular one has him waiting for hours on a New Jersey pier in 1937 to unload cotton bales from Fayetteville, and thinking the truck body could go straight on the ship.[9][11] The historian Marc Levinson, who researched him closely, dates the real start to the early 1950s.[1] US car sales were booming, the interstate system did not yet exist, and coast roads ran through town centres. McLean's drivers were getting stuck in traffic and costs were rising. His answer was waterfront terminals with ramps, so trailers could roll onto ships running between North Carolina, New York and Rhode Island.[1]
The industry he wanted to enter ran on muscle. A typical ocean ship of the 1950s carried about 200,000 separate crates, bags, barrels and bales. Each piece came off a truck or rail car into a warehouse, then went out to the dock, onto a pallet and down into the hold, and at the other end it all happened in reverse. Ocean shipping therefore often cost 15 or even 20 percent of the value of the goods.[1] This system is known today as breakbulk.
The trailer plan had a flaw, because wheels and chassis wasted space in the hold. So McLean decided to leave them behind and ship only the bodies, which could also be stacked.[1] The right boxes, cranes and ships did not exist, so he hired engineers and naval architects. One was Keith Tantlinger, chief engineer at Brown Trailers in Spokane, who argued that the box should come off its chassis, have strong corner posts and stack. Today's corner casting and twistlock grew out of his designs.[1][6]
There was a legal obstacle too, since federal rules barred trucking companies from owning ships. In 1955 McLean sold his profitable truck line and bought Pan-Atlantic Steamship, a marginal operator. NCpedia and FreightWaves disagree on the sale price, giving $6 million and $12 million.[1][3][7] Asked later whether he had thought of sheltering his wealth from the risk, he said you had to be totally committed.[1] In January 1956 he bought two T-2 tankers with a $22 million bank loan.[4]
The Ideal-X Voyage
Ideal-X was a wartime T2 tanker, formerly Potrero Hills. She carried 15,000 tons of petroleum below and, on a frame built over the deck, 58 boxes 35 feet long and 8 feet wide. Loading them took under eight hours.[5][9] She left Newark on 26 April 1956 and reached Houston five days later, where waiting trucks took the boxes to factories and warehouses.[1]
The real difference was in the arithmetic. McLean's people calculated that hand-loading a medium-sized ship in 1956 cost about $5.80 a ton, and loading boxes on Ideal-X less than 16 cents.[5][9] The ship was the costliest part of the business, so the more boxes on board, the less each one cost to carry, and his later decisions all came back to this. Most of the industry still did not take him seriously. To them he was an outsider, and he thought shipping people cared more about ships than customers.[1] The first ship had a short career and was scrapped in 1964.[5]
The Sea-Land Years
In 1957 the first full containership, Gateway City, entered service, in April or on 4 October depending on the source.[4][9] A Puerto Rico route opened in 1958. In April 1960 the company took the name Sea-Land Service. A 101-acre facility opened at Newark and Elizabeth in August 1963. Early in 1964 he bought a line serving Alaska just before the great earthquake created huge demand for building materials. Service to Europe began in April 1966.[1][4]
Resistance came from two directions. Dockworkers' unions knew thousands of jobs would go, and only after repeated strikes on both coasts did employers and unions agree in the early 1960s on payments to displaced men. The other problem was standards. Each company had its own box sizes and corner fittings, so one line's container would not fit another line's ship. Talks began in 1958 at the urging of the US Navy, and after a decade of getting nowhere the negotiators went to McLean, who let the industry use Sea-Land's patents royalty-free.[1] There is more on this in the piece on containerization.
Vietnam and Japan
With standards settled, the business could go across oceans. In 1967 he won a Defense Department contract to supply US troops in Vietnam by containership. The contract covered the round trip, and it disproved those who had said container service across the Pacific could not work. By 1968 and 1969 the route brought in 40 percent of company revenue.[1][4] Military cargo did not come back, so ships returned empty. McLean filled them in Japan. From 1968 manufacturers such as Matsushita and Pioneer sent televisions and stereos to the US in great quantities on these services.[1]
The Sale to Reynolds and Other Ventures
In January 1969 R. J. Reynolds agreed to buy Sea-Land for $530 million in cash and stock. The deal closed in May, McLean came away personally with $160 million and joined the board, which he left in 1977.[4] Sea-Land kept growing without him. It ordered the fast SL-7 ships in 1969 and earned $145 million in 1974. Reynolds spun it off to shareholders in 1984, it merged with a CSX subsidiary in September 1986, and its international services went to Maersk in 1999.[4]
McLean put his money elsewhere. In 1968 he financed the Mississippi housing project that became Diamondhead, and in 1971 he bought the Pinehurst resort. Forbes listed his wealth at $400 million in 1982, the same year Fortune inducted him into its Business Hall of Fame.[4]
United States Lines and Bankruptcy
In 1978 he returned to shipping by buying United States Lines, large but weak, though some sources put the purchase in April 1977. These were the years of the oil shocks. He ordered a dozen containerships larger and more fuel-efficient than any afloat, expecting to undercut competitors on cost per box.[1][10] He was counting on oil going up, and it went down. Fuel economy was worth far less with cheap oil, and these turned out to be the wrong ships.
The company filed for bankruptcy on 24 November 1986, with debt that Wikipedia puts at about $1.3 billion. The ships were sold and thousands of people lost their jobs. Under the 1988 reorganisation plan most of the fleet went to Sea-Land, the company he had started.[1][4][10] Fuel still sits at the centre of a liner's economics, and of the choice of fuel type.
Last Years and Death
After the bankruptcy he avoided journalists and public appearances, which Levinson puts down to shame over the jobs lost.[1] In 1991, at 77, he founded another shipping company, Trailer Bridge, running between Jacksonville and Puerto Rico.[1][4] He had three children with his first wife Sarah and married Irena McLean in 1993.[4]
American Heritage named him one of the ten outstanding innovators of the previous 40 years in 1995, and the International Maritime Hall of Fame named him Man of the Century in 2000. He died of heart failure in New York on 25 May 2001, aged 87. On the morning of his funeral container ships around the world sounded their whistles.[4]
Frequently asked questions
Who was Malcom McLean?
Malcom McLean (1913-2001) was the American entrepreneur who started modern container shipping and founded Sea-Land. He began with one truck in North Carolina and made the first container voyage with Ideal-X in 1956.
Who invented the shipping container?
Cargo boxes existed before McLean. He built the system in which one box moves unchanged between truck, crane and ship. The engineer Keith Tantlinger designed the corner castings and locks.
What was the first container ship?
The first container voyage was made on 26 April 1956 by Ideal-X, a converted T2 tanker. The first full containership was Gateway City, which entered service in 1957.
Sources
- Marc Levinson. The Now-Ubiquitous Shipping Container Was an Idea Before Its Time, Smithsonian.com, 16 June 2017.
- Marc Levinson. The North Carolina Trucker Who Brought the World to America in a Box, Brewminate.
- FreightWaves. The Launch of the Shipping Container.
- Wikipedia. Malcom McLean.
- Jean-Paul Rodrigue. First Containership, Ideal-X, 1956, The Geography of Transport Systems.
- Wikipedia. Keith Tantlinger.
- NCpedia. McLean Trucking Company.
- Winston-Salem Time Traveler. November 14: Happy Birthday.
- The Maritime Executive. The Story of Malcom McLean.
- Wikipedia. United States Lines.
- North Carolina Department of Natural and Cultural Resources. Malcolm McLean, Containerization Innovator.
