The Box

In the early 1950s, shipping goods by sea was slow, expensive, and labor-intensive. Longshoremen loaded and unloaded cargo by hand, piece by piece, maneuvering crates, barrels, and bags into the holds of breakbulk ships, conventional cargo vessels carrying loose, individually handled freight. A typical vessel spent as much time docked as at sea, and cargo handling alone could consume half the total cost of an ocean voyage. Ports were dangerous, theft-prone workplaces, and the waterfront neighborhoods around them depended on irregular employment governed by a daily hiring ritual known as the shape-up. In The Box, Marc Levinson traces how a deceptively simple innovation, the metal shipping container, reshaped global trade, destroyed established industries and cities, and enabled modern supply chains, while producing consequences that virtually no one predicted.

The story begins with Malcom McLean, a self-made North Carolina trucking magnate who built McLean Trucking Company into one of the largest in the United States through relentless cost cutting and financial ingenuity. Frustrated by highway congestion, McLean conceived the idea of shipping truck trailer bodies by sea. In 1955, he left his trucking company, acquired two ship lines through a leveraged buyout requiring only $10,000 of his own cash, and hired engineer Keith Tantlinger to design a workable container system. On April 26, 1956, a crane loaded 58 aluminum containers aboard the Ideal-X, a converted tanker, at Port Newark, New Jersey, at a cost of 15.8 cents per ton compared with $5.83 per ton for conventional cargo. Levinson stresses that McLean's real breakthrough was not the metal box itself but the insight that the entire freight-handling system needed to be redesigned around the container.

McLean converted C-2 freighters, a class of standardized cargo ships, into pure containerships by installing metal cells in their holds, increasing capacity to 226 containers per vessel. His company, renamed Sea-Land Service in 1960, expanded aggressively and by 1965 operated from a purpose-built terminal at Port Elizabeth, New Jersey, the first container terminal anywhere. Meanwhile, Matson Navigation Company took a more methodical approach on the West Coast, commissioning academic research and computer simulations before launching container service between California and Hawaii. Matson produced the world's first purpose-built container crane, which began operation in January 1959 and could load a 40,000-pound box every three minutes, more than 40 times the productivity of a conventional longshore gang.

The container devastated New York City's port economy. In the early 1950s, the city handled about one-third of America's seaborne trade in manufactured goods, with perhaps half a million livelihoods dependent on the port. But New York's narrow piers, congested streets, and lack of land for container storage made it incompatible with the new technology. While the Port of New York Authority built container terminals on the New Jersey side of the harbor, Mayor Robert F. Wagner spent hundreds of millions reconstructing Manhattan and Brooklyn piers designed for a bygone era. Longshore employment in Manhattan collapsed 91 percent between 1963 and 1976, and the city lost one-fourth of its factories and one-third of its manufacturing jobs between 1967 and 1976.

Containerization forced wrenching labor negotiations. On the Pacific Coast, Harry Bridges, president of the International Longshoremen's and Warehousemen's Union (ILWU), persuaded his members that resisting automation was futile. The ILWU signed the Mechanization and Modernization Agreement in October 1960, granting employers flexibility to change working methods in exchange for retirement benefits and income guarantees. On the East Coast, Thomas "Teddy" Gleason of the International Longshoremen's Association (ILA) faced a more fractious union and a series of strikes before reaching an agreement in 1965 that reduced gang sizes and established a Guaranteed Annual Income for displaced workers. Both agreements affirmed that employers profiting from automation should share benefits with displaced workers, but neither fully resolved the social disruption containerization caused.

A contentious standardization process proved essential to making container shipping viable globally. Beginning in 1958, overlapping committees representing ship lines, truckers, railroads, and governments fought over container dimensions and fittings. McLean released Sea-Land's patents on its corner fitting design in 1963 to enable a common standard, and after testing revealed deficiencies in the first approved design, a revised fitting was adopted internationally in 1967. By 1970, it became possible to fill a container in Kansas City with high confidence that it could reach Kuala Lumpur by truck, train, and ship.

Container shipping went international in 1966, when Sea-Land began weekly sailings from Newark to Rotterdam and Bremerhaven. By 1967, 64 containerships were under construction worldwide. The Vietnam War soon proved containerization's value on a massive scale. The U.S. military buildup beginning in 1965 created a logistical crisis in a country with one deepwater port and almost no infrastructure. After McLean visited Vietnam at Christmas 1965, Sea-Land won a $70 million contract in 1967 to serve the country directly, built a containerport at Cam Ranh Bay, and deployed seven containerships that moved as much cargo as 20 conventional vessels. McLean exploited the military contracts to launch commercial service from Japan, stopping ships at Yokohama to pick up consumer electronics for the return trip. Since government contracts covered all westbound costs, eastbound cargo was almost pure profit.

Ports worldwide scrambled to build container facilities. Oakland's tonnage quadrupled between 1965 and 1968, while San Francisco lost its maritime prominence. In Britain, a 27-month union ban at the government-funded Tilbury complex near London allowed the tiny Port of Felixstowe to become Britain's largest container terminal. Rotterdam captured the traffic London lost. Singapore built a container terminal that opened in 1972 and grew far beyond expectations, eventually becoming one of the world's largest ports.

The rush to build containerships triggered a punishing boom-and-bust cycle. McLean sold Sea-Land to R. J. Reynolds Industries for $530 million in 1969 and ordered eight enormous SL-7 containerships. Between 1968 and 1975, 406 new containerships entered service, creating chronic overcapacity and rate wars. The 1973 oil crisis quadrupled fuel costs, and the SL-7s, burning 500 tons of fuel per day, became a crushing burden. After leaving Reynolds in 1977, McLean bought United States Lines and ordered 14 giant "Econships" for round-the-world service. When oil prices collapsed in 1985, McLean Industries filed for bankruptcy in November 1986 under $1.2 billion of debt, then the largest bankruptcy in U.S. history.

Through the 1970s and 1980s, shippers gained leverage over ship lines. Nonconference carriers—those operating outside the industry cartels, known as conferences, that fixed shipping rates—such as Maersk of Denmark and Evergreen Marine of Taiwan undercut established rates. The deregulation of U.S. trucking and railroads in 1980 slashed land transportation costs, and the first double-stack container train ran in 1983. The Shipping Act of 1984 allowed shippers to sign long-term service contracts with carriers. Economists Daniel M. Bernhofen, Zouheir El-Sahli, and Richard Kneller reported in 2013 that the container was more than twice as important in promoting international trade among wealthy countries as governments' efforts to eliminate formal trade barriers.

As freight costs fell, the container enabled global supply chains and just-in-time manufacturing, a concept originated by Toyota Motor Company that required precise, reliable transportation only containerization could provide. By 2014, reduced inventory levels saved U.S. businesses roughly $100 billion per year. Container shipping thrived on volume, favoring places with busy ports while leaving landlocked countries at a severe disadvantage. The geography of global trade shifted: Of the 20 largest containerports in 2014, 11 had seen little or no container traffic in 1990, and seven of the ten largest were in China.

Levinson examines how ports sought to capture economic value from shipping in the 21st century. Antwerp shifted from chasing cargo volume to attracting businesses that would add value locally. Dubai transformed from a small fishing port to one of the world's largest containerports through the Jebel Ali development. Ships grew to unprecedented size, with vessels capable of carrying 20,000 twenty-foot equivalent units, a standard measure of container capacity, joining the fleet by 2015, but these giants added vast capacity during a period of slow trade growth.

Levinson concludes that nearly every major prediction about containerization proved wrong. The companies that came to dominate the industry, including Maersk and Evergreen Marine, were latecomers with financial and managerial skills rather than maritime knowledge. The container's history is one of unintended consequences: a disruptive technology that continued to reshape the world in ways no one foresaw.