60 Years of Containerized Deliveries

By Elizabeth Sandefur, GHPB

On April 26 1956, the Ideal-X left the Port of Newark, New Jersey, on a five day journey bound for the Port of Houston. The first container ship, the Ideal-X, carried a mere 58 containers and 15,000 tons of bulk petroleum - a far cry from the new Triple E Class ships with a carrying capacity of up to 18,000 TEU. This maiden voyage of the Ideal-X was the design of Malcolm McLean, who would go on to found Sea-Land Service Inc., after unearthing the wealth of possibilities offered by containerized cargo operations. As an owner of one of the largest trucking operations in the country, McLean was familiar with the hefty costs associated with the loss of time created by having individual stevedores load goods like coffee by the sack. Replacing this tedious manual operation with containers that could be moved from a ship deck directly on to a truck chassis was revolutionary on several fronts. Containerization didn’t just make shipping goods by container cheaper via labor, but it also cut down on the taxes accrued and time spent trucking goods over land that could pass through dozens of states.

Non-Containerized Exports
Although many thought containerized cargo shipping would face too many hurdles to ever become main-stream in the shipping industry, the fact that the Ideal-X already had orders to ship containers back north before even arriving in the Port of Houston should have been an early indicator. A year after the Ideal X’s maiden voyage, McLean’s second ship, the Gateway City, set sail carrying 226 containers and onboard gantry cranes able to lift up to 60,000 lbs. The savings in both time and money was clear, spurring a wealth of new construction at ports across the nation. As more container ships arrived, ports began to realize the need to build new docks and install jumbo cranes to keep up with the growing demand.

The first container ships didn’t cross the Atlantic until 1966. While domestic trade was relatively quick to adapt to the new business model, international trade took longer to adjust to the new norms. In one instance, this took shape in the form of dockworkers refusing to handle containerized goods, causing one ship to be stuck in a Venezuelan port for 11 months. Strangely, the Vietnam War is partially to thank for the expansion of containerized cargo into international shipping. In 1966 the United States began a rapid build-up of forces in Vietnam; resulting in a logistical quagmire due to the underdeveloped nature of South Vietnam’s infrastructure. With only one deep water port and one semi-functional rail line, traditional outfitting of troops became a significant challenge. McLane saw an opportunity to break into the international market, and lobbied hard to use container ships as the primary method for supplying troops in South Vietnam. In this risky business move, McLean managed to reap huge profits while also proving the possibility and utility of international container shipping. Globally, about 90% of cargo is now transported via container, with the largest exception being cars.

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As we pass the 60th birthday of the first container ship arrival in the Port of Houston it is difficult to imagine a time when a Port’s success was not measured, at least in part, by TEU counts. The average cost of shipping goods overseas has fallen drastically due to increased efficiency, and the decreased breakage and theft that was so proliferate in the days before containers. The shipping world has changed significantly since 1956, as is apparent in the rush to attract increasingly larger container ships expected to frequent US ports via the new Panama Canal expansion. In preparation for these larger container vessels, ports across the United States are investing significant capital into making themselves attractive options to receive these massive ships: the ports of Los Angeles and Long Beach equipped several terminals with Triple E Class ready cranes, the Port Authority of New York & New Jersey is spending $1.3 billion to raise the Bayonne Bridge to accommodate the larger container ships, and the Georgia Ports Authority is launching a $706 million dredging project to deepen Savannah harbor, just to name a few.

Containerized Exports
Despite the excitement of the Panama Canal opening, not all US ports are looking to draw in the largest of the new container ships. For ports like Houston, where continual dredging is needed to keep a clear 45 foot draft in the main channel, additional dredging would be costly and hard to maintain. With the lack of draft available at other deepwater ports, Houston continues to maintain a healthy and diverse containerized and non-containerized trade that keeps the Port of Houston market more insulated from drastic economic ups and downs seen at other ports across the country.

  • Date May 10, 2016
  • Tags May 2016