Malcolm Mclean: Father of Containerization
There are few people who have contributed to the world through their grit and innovation. One of them is Malcolm P. McLean who earned the name, “Father of Containerization”, with his innovation in the shipping industry. He conceptualized the idea of reducing labor and dock servicing time. He changed the face of shipping industry which did not see much scope to change and evolve.
A truck driver, Malcolm changed the century old shipping industry just overnight by developing fast, reliable and cost effective way of containerized cargo.
His Childhood And His Business
Malcolm hailed from a small town of Maxton, North Carolina. His father was a farmer who did odd jobs to meet the ends. Malcolm graduated from high school when the country was undergoing severe phase of depression. Studying further was not an option Malcolm had. Soon after graduating from school in 1931, he took to work, pumping gas at the station. With the money he saved, he bought a second hand truck and became a truck driver. With his hard work and determination, he soon expanded his venture by purchasing 5 more trucks. And from thence, there was no stopping him.
He thrived and so did his business. However, this was to change soon. The ongoing depression in the country forced him to scale his business down again and take to driving as he was doing earlier. As they say, “whatever happens happens for good”. And so did this happen for good. On one of his various trips, Malcolm got an idea that not only changed his destiny but that of the entire shipping industry and the world, at large.
The year was 1937. Malcolm was delivering cotton bales. He had to wait for hours to unload his truck. While he was waiting, he saw the amount of time and money being wasted in the entire process. As he recalled, “"I had to wait most of the day to deliver the bales, sitting there in my truck, watching stevedores load other cargo. It struck me that I was looking at a lot of wasted time and money. I watched them take each crate off the truck and slip it into a sling, which would then lift the crate into the hold of the ship."
The Great Idea Conceived
However, the thought and the plan was not conceptualized before 19 years. He continued working in the truck business making it the largest trucking fleet in the South and the fifth-largest in the country. By early 50s he had as many as 1776 trucks and 37 transport terminals under his wing. With the growing truck business, the state levied a fees regime and weight restrictions. This got Malcolm to wear his thinking hat again. He conceived of possible ways to reduce the fees being levied.
This made him to look at shipping vessels as the cost effective and more efficient means of transporting his goods. He thought "that ships would be a cost effective way around shoreside weight restrictions . . . no tire, no chassis repairs, no drivers, no fuel costs . . . Just the trailer, free of its wheels. Free to be lifted unencumbered. Not just one trailer or two of them, or five, or a dozen, but hundreds, on one ship.”
Though the concept was not new but dedicating a ship to systematic process of hauling boxed cargo was never done before. Malcolm saw this as the best thing to do.
SeaLand Service, Incorporated
His business plan ran thus: there would be few trucking hubs in the South and the North that would act as end points, delivering goods at the ports. Rest of the goods would be carried through ships. It was not seatrain that he had envisioned but stackable truck trailers made of heavy steel to withstand the rough weather and without permanent wheels. He patented a steel-reinforced corner-post structure that would help trailers in getting a grip. McLean alongside acquired the Pan-Atlantic Steamship Company, based in Alabama and also got shipping and docking rights in prime eastern port cities.
Pan-Atlantic cost him $7 million. He realized that he now could immediately proceed with plans to construct trailerships in place of conventional cargo. However, it was not very well appreciated. Commenting on McLean's controversial business plan, the Wall Street Journal reported: "One of the nation's oldest and sickest industries is embarking on a quiet attempt to cure some of its own ills. The patients are the operators of coastwise and intercoastal ships that carry dry cargoes."
Some problems with the endorsement from ICC forced him to choose between ownership of his well-established trucking fleet or a shipping venture that he had no experience in. being a risk taker, he gave up everything he possessed and bet on intermodal transportation. 75 percent interest in McLean Trucking was sold for $6 million by him in 1955. With that he became the owner of Pan-Atlantic. He changed the name to SeaLand Industries.
Hurdles and Problems And Finally Huge Success
With this new venture, he had to change and incorporate a lot of things. For one, he had to get his old customers to change to this mode of transportation. Secondly, he had to get the port authorities to redesign their dockyards. Thirdly, he had to stabilize his business. The first was achieved without much problem as it was cheaper, securer and faster mode of transport. His second problem was lifted only after the older ports also adopted containerization. The big break came in the form of an investment of $600,000 by Port of Oakland, California to build a new container-ship facility. This was expected to "revolutionize trade with Asia”.
Slowly by slowly and bit by bit, Malcolm built the largest cargo shipping business in the world. This happened over a period of 15 years. By now, he owned 27, 000 trailer-type containers, thirty-six trailer ships, and access to over thirty port cities. It was later acquired by R.J Reynolds for $160 million. Malcolm had definitely taken the company to different heights, extending his reach worldwide. The container ships have become the main source of transportation. In 90s it container ships carried out 90 per cent of the world’s trade cargo.
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