Segment from In Plain Sight

Inside the Box

Economist and historian Marc Levinson shares the story of Malcolm McLean, who invented the shipping container and changed the way goods move around the world.

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BRIAN: This is BackStory. I’m Brian Balogh.

PETER: I’m Peter Onuf.

ED: I’m Ed Ayers. We’re talking today about the history of America’s infrastructure– how it’s taken shape, and what it has meant for Americans to be ever more interconnected by these physical networks.

BRIAN: Malcolm McLean was born in the swamp lands of southeastern North Carolina. In the midst of the Great Depression, McLean started a trucking company that within a couple of decades would be the third-largest in the country. As McLean’s company grew, so did traffic on the routes his trucks drove between North Carolina and the Northeast, and McLean was not a patient man.

Looking to the east, he saw potential for a traffic-free journey in the sleepy waterways of the Atlantic coast. He figured, why not drive my trucks right on to the decks of ships? And he came up with a brilliant idea for keeping truck cabs and wheels from taking up valuable space on those desks.

MARC LEVINSON: He developed the notion that maybe you could just take the trailer off of the wheels of the truck and simply put the trailer on a ship.

BRIAN: This is journalist Marc Levinson. In his book The Box, he makes the case that McLean’s big idea sparked an infrastructure revolution in the 20th century– containerization. It got its first test run at the port of Newark, New Jersey.

MARC LEVINSON: McLean had bought a couple of old World War II tanker ships. There were a lot of leftover ships from the war, and so he’d purchased a couple of these. And he built an artificial deck on top with basically squares, so that the containers could be dropped into these squares and locked into place. And in April of 1956, one of these ships carried a handful of containers– by modern standards– from Newark to Houston, Texas. This was really the first modern container voyage.

Now, Malcolm McLean had a very sharp pencil. So after the first voyage, he did some calculations. He figured that a normal ship going from Newark to Houston would cost about $5.86, something like that, per ton of cargo. And by shipping container, it cost closer to $0.16 a ton. There was just an enormous, enormous cost saving by putting the freight into a container. And that was information that he used to help convince the world that this was a technology whose time had come.

BRIAN: And when did containerization go global today? That’s the first thing I think about is stuff going from China to Los Angeles.

MARC LEVINSON: There was a big step in going from domestic containerization to international containerization. Once McLean got his business going, other ship lines saw that, hey, maybe there’s a little business in containers.

And so different ship lines developed different containers. And some used, like McLean, a 35 foot container, and others used a container that was 17 feet long, or 24 feet long, or 40 feet long. And containerization really couldn’t go global until everybody agreed on a standard size. So starting in the late 1950s, there was an almost endless series of negotiations about standards for containers.


BRIAN: Those must have been thrilling negotiations.

MARC LEVINSON: Can you imagine sitting in smoke-filled rooms for five or six or seven years, arguing about the thickness of the end wall of a container? That’s what was going on.

BRIAN: I love it.

MARC LEVINSON: That’s what was going on here. But the point was that this business was not going to go global unless the shipper, the person who owned the cargo, could be confident that the container could be handled in any port around the world, and could go on any ship. And it really took about 10 years before there was an international agreement on what we now think of as the standard shipping container– 40 feet long, eight feet wide.

BRIAN: Mark, you know, this is a show about the history of infrastructure. And when I think about infrastructure, I think about systems. And I don’t really see the system here. This is just a bunch of metal boxes.

MARC LEVINSON: The container industry is entirely a system, and that was really McLean’s genius. People had been talking about putting goods in containers to ship them since the 1700s.

BRIAN: Right.

MARC LEVINSON: And it was a very inefficient way to ship merchandise. Why? Well, the ships were not really designed for the containers. What did you do with the container when it got to the other end? Often you just had to cut it up or melt it down. So this was actually a money losing kind of venture.

And McLean’s genius was to see that you needed to build a system around this. You needed to have cranes that could lift the containers at the ports and put them on the ships and then remove them from the ships. You needed to be able to shift those containers onto trucks or onto trains. And all the parts had to work together, not only at Newark or at Houston, but at any port in the world.

BRIAN: Well, your book has an enviably short title– The Box– but it’s got a whopper of a subtitle– How the Container Made the World Smaller and the World Economy Bigger. Can you tell us how the container made the world smaller and the world economy bigger, once it began to take off?

MARC LEVINSON: Sure. If you go back to the pre-container days– we’re talking the 1950s here– it often cost 10% or 20% or more of the value of the goods to send goods internationally. So a lot of things just didn’t make sense to ship. A lot of industries simply served its own local area, wherever that was, because of the transport costs. Loading it into a truck, loading it into a ship were just too expensive to move the goods.

And the containerization process really drove shipping costs down. All of a sudden, it became practical to ship things than previously had been uneconomical to ship. Consider that today, if you’re in the United States and you’re buying a bottle of wine that was made in Australia, maybe you’re paying $0.09 or $0.10 for the shipping cost of that bottle of wine halfway around the world.

BRIAN: Is that right? It’s only $0.09 or $0.10?

MARC LEVINSON: Yes, absolutely. If you’re buying a pair of shoes that was made in Vietnam, maybe you’re paying $0.06, $0.07 to ship those shoes.

BRIAN: You write that there are a lot of unintended consequences of this infrastructure. Could you name three or four of those?

MARC LEVINSON: Sure. When the container business started, obviously, no one really thought that it was going to change international shipping costs that much and change the world economy that much. Again, the purpose of containerization initially, from Malcolm McLean’s point of view, was to save some time going up and down the US East Coast.

BRIAN: Yeah. He didn’t want to sit in traffic.

MARC LEVINSON: He didn’t want to sit in traffic. And he was not thinking about the fact that this was going to turn China into the world’s workshop. So certainly one unintended consequence of containerization was this redistribution of economic activity all around the world.

Another was the demise of the giant factory. Back in the 1950s, we still had a large number of factories in this country– and in other countries– that employed 10,000, 20,000, 30,000 people. And they engaged in what you can think of as integrated production. They made all of the parts for a final product, and then they brought all those parts together, and then they assembled the final product all in one place.

Why was that done? It was done that way because moving the parts and components around was really expensive. But once containerization came in, you didn’t need all this stuff happening at one location anymore. You could make these components here and these other components there, and these other things here, and you could ship them to be assembled into the final product at yet another place.

So containers have changed our lives as consumers. Containers have changed our lives as workers. And not always for the better. We’ve had workers who are much worse off because the world has become more global. People used to have well paid jobs in factories, and the factories simply moved. And those jobs haven’t been replaced. So I think it’s fair to say that the container has really changed our lives in many, many ways.

BRIAN: Marc, thanks so much for joining us on BackStory today.

MARC LEVINSON: Thank you for having me.

BRIAN: Marc Levinson is the author of The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger.