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Published: Sunday, 5/18/2008

Shipping container transformed world trade

BY DAVID PATCH
BLADE STAFF WRITER
Truck-borne shipping containers await handling at a warehouse on Benore Road in Toledo. Such containers have become the backbone of global trade. Truck-borne shipping containers await handling at a warehouse on Benore Road in Toledo. Such containers have become the backbone of global trade.
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"If you own it, a truck brought it."

So goes a long-standing trucking industry slogan. But in these days of global production, chances are that most of the clothes in your closet, the shoes on your feet, the small appliances in your kitchen, and the electronics in your living room made portions of their factory-to-store journeys aboard ships - and probably trains too.

The proof is at a former JCPenney warehouse on Benore Road in North Toledo, where the parking lot and loading bays are often full of what look like trucks but in reality are truck-borne shipping containers belonging to Kawasaki Kishen Kaiwa Ltd. - otherwise known as "K" Line.

Shipping containers belonging to "K" Line and other shipping lines like Maersk, Hapag-Lloyd, Evergreen, and China Shipping are the backbone of today's global commerce. They cross the oceans on huge ships that carry thousands of them at a time, then are delivered by train and truck from ports to inland warehouses and distribution centers all over North America.

That, in essence, is intermodal transport: the movement of cargo from one mode of transport to another without reloading it.

The shipping container's impact on global manufacturing and trade hardly can be overestimated. It slashed the cost of moving freight around the world but facilitated the migration of manufacturing jobs from traditional industrial nations such as the United States to Asian countries that offered cheaper labor and more relaxed regulation. It allowed manufacturers to shift from producing huge inventories of products to making only what was needed based on customer orders.

"As container shipping became intermodal, with a seamless shifting of containers among ships and trucks and trains, goods could move in a never-ending stream from Asian factories directly to the stockrooms of retail stores in North America or Europe, making the overall cost of transporting goods little more than a footnote in a company's cost analysis," Marc Levinson wrote two years ago in The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger.

Last year, nearly 45 million container-units crossed the docks at U.S. ports, nearly three times as many as in 1990, according to the American Association of Port Authorities. The actual number of boxes was less than that because container traffic is measured by the equivalent volume of 20-foot containers, and the predominant container size is 40 feet long. The smaller 20-foot containers are used for denser cargo that would exceed highway or rail weight limits if loaded into bigger boxes.

Five decades ago, the shipping container hardly existed.

Malcom McLean, the owner of a small, North Carolina-based trucking company, is widely credited with conceiving the idea in 1937 as he watched longshoremen transfer freight from trucks to ships at a New Jersey port - and waited hours for his own truck's load of cotton bales to be unloaded. Nearly two decades later, he used the proceeds from selling McLean Trucking to buy a small steamship line and, after converting one of its vessels for his purposes, sent the first container ship from Port Newark, N.J., on April 26, 1956, with 58 cargo containers bound for Houston.

Initially, Mr. McLean imagined loading truck trailers, wheels and all, aboard ships, but that proved to be cumbersome and space-wasting. So he developed the idea of a free-standing container that could be stacked in a ship's hold or carried on a truck chassis or flatbed.

The shipping industry was cool to the concept because adopting it would require ship modifications and expensive shoreside container-handling equipment. Waterfront labor unions resisted because they believed, accurately, that containerization would cut jobs.

During the next 10 years, containers accounted for only a fraction of domestic trade and virtually no overseas traffic, which continued to be transported in "breakbulk" ships that were slow and expensive to load and unload.

Mr. McLean's Sea-Land Services got its big break in 1967 when it secured a U.S. military contract to ship cargo containers to Vietnam: not just to the ports but then trucking them to inland points. That venture's overwhelming success persuaded the commercial shipping sector that containerization was the wave of the future. It also gave Sea-Land a cheap way to introduce the Japan-U.S. container trade using his ships' eastbound voyages because the military was paying the overhead for the entire round trip.

Eventually, the railroads got on board too. As early as the late 19th century, the Long Island Rail Road introduced a form of intermodal transport when it began hauling farm wagons into New York City. During the mid-20th century, several railroads carried truck trailers on routes within their own networks.

Over time, technological and operational improvements enabled railroads to haul trailers and containers loaded on flatcars on long-distance routes, particularly in high-density corridors such as New York to Los Angeles, though economics and regulation discouraged short-haul traffic.

According to Mr. Levinson's book, Mr. McLean approached the railroads about transporting his containers from Chicago to the East Coast stacked two-high on flatcars in 1967 but was rebuffed by a financially troubled industry that had no desire to develop the terminals or specialized equipment needed to do it.

Only after railroad rates were deregulated in 1980, allowing carriers to enter long-term contracts with volume-based discounts, did the railroad companies become interested in developing intermodal business rather than considering it a drain on their traditional boxcar traffic. Even then, the railroads only embraced double-stacks after several major shipping lines, most notably American President Line and Sea-Land, initially provided the low-slung railcars needed to move two-high containers within bridge and tunnel clearance dimensions.

Today, railroads haul not only overseas containers on double-stack trains but domestic shipments as well, often in bigger, lighter-weight containers belonging to large trucking companies such as J.B. Hunt and Schneider National and under contracts that provide premium revenue for expedited, on-time service.

Trucks, which still have speed and reliability advantages over rail, continue to haul a significant majority of freight in the United States, especially on shorter-distance routes. But as fuel prices rise and highways become ever more congested, railroads and possibly even smaller ships working inland waterways stand to gain increasing shares of the market.

Contact David Patch at:

dpatch@theblade.com

or 419-724-6094.



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