Wikipedia Article
” Malcolm Purcell McLean (November 14, 1913 – May 25, 2001; later known as Malcom McLean) was an American businessman. He was a transport entrepreneur who developed the modern intermodal shipping container, which revolutionized transport and international trade in the second half of the twentieth century. Containerization led to a significant reduction in the cost of freight transportation by eliminating the need for repeated handling of individual pieces of cargo, and also improved reliability, reduced cargo theft, and cut inventory costs by shortening transit time. “
” The idea of transporting trucks on ships was put into practice before World War II. In 1926 regular connection of the luxury passenger train from London to Paris, Golden Arrow/Fleche d’Or, by Southern Railway and French Northern Railway began. For transport of passengers’ baggage, four containers were used. These containers were loaded in London or Paris and carried to ports, Dover or Calais, on flat cars in the UK and “CIWL Pullman Golden Arrow Fourgon of CIWL” in France.
In the early 1950s, Malcolm McLean decided to attempt use of the containers commercially. By 1952, he was developing plans to carry his company’s trucks on ships along the U.S. Atlantic coast, from North Carolina to New York. It soon became apparent that “trailerships”, as they were called, would be inefficient because of the large waste in potential cargo space on board the vessel, known as broken stowage. The original concept was modified into loading just the containers, not the chassis, onto the ships, hence the designation container ship or “box” ship. At the time, U.S. regulations would not allow a trucking company to own a shipping line.
McLean secured a bank loan for $22 million and in January 1956 bought two World War II T-2 tankers, which he converted to carry containers on and under deck. McLean oversaw the construction of wooden shelter decks, known as Mechano decking. This was a common practice in World War II for the carriage of oversized cargo, such as aircraft. It took several months to refit the ships, construct containers to carry on and below the vessels’ decks and design trailer chassis to allow removable containers.
On April 26, 1956, with 100 invited dignitaries on hand, one of the converted tankers, the SS Ideal-X (informally dubbed the “SS Maxton” after McLean’s hometown in North Carolina), was loaded and sailed from the Port Newark-Elizabeth Marine Terminal, New Jersey, for the Port of Houston, Texas, carrying fifty-eight 35-foot (11 m) Trailer Vans [8] later called containers, along with a regular load of liquid tank cargo. As the Ideal-X left the Port of Newark, Freddy Fields, a top official of the International Longshoremen’s Association, was asked what he thought of the newly fitted container ship. Fields replied, “I’d like to sink that son of a bitch.” McLean flew to Houston to be on hand when the ship safely docked.
In 1956, most cargoes were loaded and unloaded by hand by longshoremen. Hand-loading a ship cost $5.86 a ton at that time. Using containers, it cost only 16 cents a ton to load a ship, 36-fold savings. Containerization also greatly reduced the time to load and unload ships. McLean knew “A ship earns money only when she’s at sea”, and based his business on that efficiency.
In April 1957, the first container ship, the Gateway City, began regular service between New York, Florida, and Texas. During the summer of 1958 McLean Industries, still using the name Pan-Atlantic Steamship Corporation, inaugurated container service between the U.S. and San Juan, Puerto Rico with the vessel Fairland. The name was officially changed from Pan-Atlantic Steamship Corporation to Sea-Land Service, Inc. in April 1960. McLean’s operation was profitable by 1961 and he kept adding routes and buying bigger ships.
In August 1963, McLean opened a new 101-acre (0.41 km2) port facility in Port Newark-Elizabeth Marine Terminal, to handle even more container traffic. The development of the container market was slow until the late 1960s. Many ports did not have the cranes to lift containers on and off ships, and change was slow to come to an industry steeped in tradition. Moreover, unions resisted an idea that threatened their very livelihood.
In April 1966, Sea-Land commenced service between New York and Rotterdam, Bremen and Grangemouth (Scotland).
The following year (1967), they were invited by the U.S. Government to start a container service to South Vietnam. The service to Vietnam produced 40% of the company’s revenue in 1968/69.
In late 1968, commercial container ship service was inaugurated from the Far East to the United States. This service was expanded to Hong Kong and Taiwan in 1969, and to Singapore, Thailand, and the Philippines in 1971.
To achieve reductions in labor and dock servicing time, McLean followed Roy Fruehauf’s lead and became vigilant about standardization. His efforts to increase efficiency resulted in standardized container designs that were awarded patent protection. McLean made his patents available by issuing a royalty-free lease to the International Organization for Standardization.
By the end of the 1960s, Sea-Land Industries had 27,000 trailer-type containers, manufactured by Fruehauf, 36 trailer ships and access to over 30 port cities.
As the advantages to McLean’s container system became apparent, competitors quickly adapted. They built bigger ships, larger gantry cranes and more sophisticated containers. Sea-Land needed cash to stay competitive. McLean turned to Reynolds Tobacco Company, a company he knew from his trucking company days when his trucks transported Reynolds cigarettes across the United States. In January 1969, Reynolds agreed to buy Sea-Land for $530 million in cash and stock. McLean made $160 million personally, and got a seat on the company’s board. To carry out the purchase, Reynolds formed a holding company, named R.J. Reynolds Industries, Inc., which bought Sea-Land in May 1969. That same year, Sea-Land ordered five of the largest, fastest container ships in the world – SL-7 class vessels. They had come a long way since the inaugural sailing of the Pan-Atlantic “Ideal-X” in 1956.
Under Reynolds, Sea-Land’s profits were intermittent. By the end of 1974, Reynolds had put more than $1 billion into Sea-Land, building huge terminals in New Jersey and Hong Kong and adding to its fleet of container ships.
Sea-Land’s biggest expense was fuel, so in 1970, RJR bought the American Independent Oil Co., better known as Aminoil, for $56 million. RJR put millions into oil exploration, trying to get Aminoil large enough to compete in the world exploration market.
In 1974, R.J. Reynolds Industries had its best year. Sea-Land’s earnings increased nearly 10 times, to $145 million. Aminoil’s earnings soared to $86.3 million. Dun & Bradstreet, the financial-ratings firm, named RJR one of its five best-managed companies in America. But in 1975, Sea-Land’s earnings dropped sharply, along with Aminoil’s. McLean gave up his Reynolds board seat in 1977 and cut ties with the company.
In June 1984, R.J. Reynolds Industries, Inc. spun off Sea-Land Corporation to shareholders, as an independent, publicly held company, with stock trading on the New York Stock Exchange. Sea-Land achieved the highest revenues and earnings in its 28-year history.
In September 1986, Sea-Land Corporation merged with CSA Acquisition Corp., a subsidiary of CSX Corporation. Sea-Land Corporation common stock was exchanged for $28 per share, cash.
Sea-Land’s international services were sold to Maersk in 1999, and the combined company was named Maersk Sealand, which, in 2006, became known simply as Maersk Line.
The former Sea-Land’s domestic services now operate as Horizon Lines, which accounts for approximately 36% of the total U.S. marine container shipments between the continental U.S. and the markets of Alaska, Hawaii and Puerto Rico, and to Guam. The company is headquartered in Charlotte, North Carolina. “
