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LEAD Innovation Blog

Read our latest articles on innovation management and innovation in a wide range of industries.

Date: 25-Sep-2019
Posted by: Daniel ZAPFL

Containers: The ideal packaging for globalisation

 

Fifty years ago, the first container-loaded ship anchored in a European port. Around 95 percent of global trade is now transported in containers. The standardized container for goods and raw materials of all kinds has minimized transport costs and thus made globalization possible. In this blog post you can read how the inventor of the container, Malcom McLean, prevailed in the USA against the mighty resistance and why the "tin crates" were also a major success on the Internet of Things. will play a role.

Malcom McLean, born in 1913 in the US small town of Maxton (North Carolina), embodies the American dream in a very typical way: after a short career as a gas station attendant, he founded a forwarding agency together with his siblings Jim and Clara, and, as a shirt-sleeved company, he naturally got himself behind the wheel of his truck. The long waiting times in the seaports began to annoy him. In the 1930s, armies of dock workers were busy unloading the truck, repacking, interim storage and unloading the ship, and it took 60 men a week to unload a load of a 5,000-ton ship. The commercial ports of those days were therefore like anthills, but at the same time guaranteed many dock workers jobs and substantial profits for the shipowners.

 

Sheet metal box with standard standard does not find financiers

Perhaps during these long waiting times, the young McLean began to think about how to speed up the loading and unloading of ships. At first he had the idea to simply transport the entire truck to the ship in order to save the reloading. Another idea was to make better use of the limited loading space by sending only the trailers of the trucks. Because: At the destination a tractor could then wait and move the trailer further to its destination. Ideally, of course, only crates of the same standard size should be loaded into ships, which are then lifted onto trucks or freight trains at the port of destination and thus reach their destination. The concept of the container was born and McLean was looking for investors for its business model. He could not realize his idea on his own, and as a freight forwarder, US antitrust law forbade him to operate a shipping line. However, his search for financial backers was in vain.

Trend Collection Packaging

 

Office finds containers too expensive

One reason for McLean's failure may have been the result of the Bureau internationale de Container (BIC), founded in Paris in 1933. This committee was the result of decades of reflection and discussion by logistics companies around the globe. They were all concerned with the question of how the transport of goods could be made simpler and more effective. Again and again they came across special containers. However, the BIC experts found the development of new cranes, lorries of the same type and the containers themselves too complex. Container transport was virtually officially declared impracticable.

 

Innovation against resistance

McLean obviously didn't think much of this expert opinion of the bureaucracy, but all the more of his idea. Twenty years later, he sold 75 percent of the shares in the shipping company, which now comprises 1800 vehicles, and acquired a small shipping company in 1955. Against the resistance of the unions, who feared for jobs in the port, he converted a tanker into the first container ship.

The "Ideal X" set sail from Port Newark, New Jersey, loaded with 58 containers on 26 April 1956. Six days later, the ship arrived at its destination in Houston, Texas. Unloading did not take several days as usual, but was completed within a few hours. McLean was able to achieve cost savings of 90 percent through the short port stay.

 

The containers also protected the cargo better from wind, weather and thieves than conventional packaging such as sacks, boxes or bales. And: A container ship could load about three times as much as a conventional freighter. Thanks to all these advantages, the container quickly established itself in the USA: In the mid-1960s, 171 container ships were already sailing under the US flag.

 

European premiere with a crash

In May 1966, a container ship of McLeans Reederei, the Sea-Land-Corporation, called at a European port for the first time. When unloading the 226 containers loaded by MS Fairland, an accident promptly occurred in the port of Bremen. The second container crashed into the driver's cab of a waiting truck. The accident only caused property damage, but in retrospect the incident was a wake-up call for Europe's shipowners. Until then, McLean's container steamships had been dismissed as a niche business or even ridiculed as "box ships".

 

picture source: Radio Bremen

 

Fear triggers innovations

In 1967, Richard Bertram, then member of the Board of Management of North German Lloyd, described McLean's innovation in Der Spiegel magazine as an avalanche that "will bury many of us under it. A study by consultant McKinsey predicted that 16 of the 20 major North Atlantic shipping companies would go bankrupt in 1970, and only one port, Rotterdam, would survive the change.

 

But instead of falling into a state of shock, shipowners are relying on investment and cooperation. In 1968, a common ISO standard was agreed with the USA, setting the dimensions for a standard container. This measure, called Twenty-foot Equivalent Unit (TEU), is still used today as a unit for the handling volume of port terminals and ship capacities. At the same time, European shipowners invested in modern container ships. While McLean continued to operate with its converted freight fleet, the European shipping companies used modern ships that could already transport three times as many containers.

 

Pioneering nation loses leadership role

Today, US carriers play a subordinate role in container shipping. And even the shipping company of container pioneer McLean, the Sea-Land Corporation, acquired a European owner in 1999 in the form of the Danish Maersk. Anyway, the McKinsey forecasts didn't come true. Instead of the death of ports and shipowners, there was a boom. The volume of container transport itself increased anyway: while in 1980 around 13.5 million standard containers (TEU) were handled worldwide, by 2014 the figure had already risen to 171 million. The global economic crisis in 2008 caused only a slight dip in the growth curve.

 

The end of the container revolution is not yet in sight and there is a very simple reason for this: the versatile transport container marginalises the costs: while before the invention of the container, transport costs accounted for a good 10 percent of the value of goods, today they amount to about one percent. Logistics costs are increasingly becoming a negligible factor. A production chain spread all over the world is becoming more and more profitable.

 

Conclusion: Containers fuel globalisation even more as intelligent packaging

The container has made globalisation possible in the first place and is firing it even more: as the loading capacities of ships increase, transport costs will fall even further. The largest container ship in the world, the MSC Zoe, is almost 400 metres long and can transport 19,224 standard containers. Even larger cargo ships have already been ordered. The container is also the ideal container for integrating logistics into the Internet of Things. A container equipped with various sensors and networked thanks to a communication unit can independently monitor its contents, report accidents and announce its location. Just knowing where the container is means a high efficiency gain, Michael ten Hompel, head of the Fraunhofer Institute for Material Flow and Logistics (IML), recently told golem.de. Incidentally, this institute recently developed an intelligent container together with Bosch that can also produce customs documents on its own.

Trend Collection Packaging

Daniel ZAPFL

Born in Graz, Austria. After positions as project manager & head of innovation of the project management at LEAD Innovation, Daniel Zapfl has been responsible for the success of the innovation projects of our innovation partners since January 2018.

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