Chapter 1: HEADLINES: A Sea Change in Shipping 50 Years Ago

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A fully loaded container ship can carry thousands of containers.

The following article discusses the invention of the shipping container 50 years ago, which allowed goods to be shipped between countries at a much lower cost.

Globalization is having an anniversary. It was 50 years ago that Malcom McLean, an entrepreneur from North Carolina, loaded a ship with 58 35-foot containers and sailed from Newark, N.J., to Houston. He wasn’t the only one to suggest that containers might make shipping more efficient. But he was the first to design a transportation system around the packaging of cargo in huge metal boxes that could be loaded and unloaded by cranes.

Container shipping eventually replaced the traditional “break-bulk” method of handling crates, barrels and bags, and stowing them loose in a ship’s hold, a system in use since the days of the Phoenicians. Replacing break-bulk with cargo containers dramatically reduced shipping costs, reinvigorating markets and fueling the world economy… .

In 1959, according to Matson Research, the industry was loading and unloading 0.627 tons per man hour. By 1976, with container shipping well established, the figure was 4,234 tons per man hour. A ship’s time in port shrank from three weeks to 18 hours. In 1950, an average commercial vessel could carry 10,000 tons at a speed of 16 knots. With container shipping, the average commercial vessel carried 40,000 tons at a speed of 23 knots, Matson says. The numbers are even larger today. A vessel capable of carrying 6,600 20-foot containers can carry 77,000 tons at up to 24.8 knots.

“Containerization has transformed global trade in manufactured goods as dramatically as jet planes have changed the way we travel and the Internet has changed the way we communicate,” said Joseph Bonney, editor of the Journal of Commerce, the bible of the shipping industry. “The Asian economic miracle of the last two decades could not have happened without the efficient transportation that containerized shipping provides.”

Questions to Consider

After reading A Sea Change in Shipping 50 Years Ago, consider the question(s) below. Then “submit” your response.

Question

1. Over the past 50 years, air transport has also developed significantly. While a large amount of international trade is shipped by plane, airfreight hasn’t replaced container shipping by any stretch. Why does container shipping, which is relatively slow compared to most other forms of transport, continue to be such a popular mode of transporting goods?
Container shipping, thanks in large part to the efficiency of the container mechanism as discussed in the article, is much less expensive for large capacity shipments. For low-value, high-volume commodities, air transport would prove economically infeasible.

Question

2. What are some of the benefits of container shipping compared to other methods of transport (e.g., rail, road, air)?
Answers will vary, but students will likely discuss the cost advantages, especially compared to air shipping, and the ability to ship intercontinentally, compared to rail/road. Students should address lowest unit costs over long distances.

Question

3. In what ways has the container “model” of shipping been used in other types of transport?
Answers will vary, but students may note that FedEx and UPS used a similar mechanism of bulk shipment for their delivery networks that depend largely on road and air transportation. Another example might be the way in which truck trailers are loaded directly on/off a train car, contents included. These are examples of intermodal shipping that are similar to the container style shipping discussed in the article. Increasingly, container shipping companies are using hub and spoke distribution systems much like Fed Ex but only by necessity. Many vessels currently deployed in the US trades are simply too large to be accommodated by some major ports and therefore must transfer some cargo to “feeder” vessels at hub ports.