The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger - Second Edition with a new chapter by the author

“In a sense, Waterman was the first LBO,” Wriston recalled.20 McLean’s prize was a formerly debt-free company whose bank loans and ship mortgages soared to $22.6 million at the end of 1955, nearly ten times its $2.3 million of after-tax income. In a step that set the norm for future leveraged buyouts, McLean disposed of unwanted Waterman assets to

Malcom McLean’s fundamental insight, commonplace today but quite radical in the 1950s, was that the shipping industry’s business was moving cargo, not sailing ships. That insight led him to a concept of containerization quite different from anything that had come before. McLean understood that reducing the cost of shipping goods required not just a

Container shipping thrives on volume: the more containers moving through a port or traveling on a ship or train, the lower the cost per box. Places with lower demand or poorer infrastructure will face higher transport costs and will be far less attractive manufacturing sites for the global market. In the 1970s and 1980s, when many U.S. industrial c

Reshaping the business of shipping was left to an outsider with no maritime experience whatsoever, a self-made trucking magnate named Malcom Purcell McLean.

Interest in such a remedy was widespread. Shippers wanted cheaper transport, less pilferage, less damage, and lower insurance rates. Shipowners wanted to build bigger vessels, but only if they could spend more time at sea, earning revenue, and less time in port. Truckers wanted to be able to deliver to and pick up from the docks without hour upon h

Malcom McLean’s genius was acknowledged unanimously: almost everyone save the dockworkers’ unions thought that putting freight into containers was a brilliant concept. The idea that the container would cause a revolution in shipping, though, seemed more than a little far-fetched. At best, the container was expected to help ships recover a tiny shar

The British Transport Docks Board, the government’s oversight agency, turned to consultants McKinsey & Company for advice. McKinsey predicted that container shipping would quickly consolidate around a few companies using gigantic ships carrying standardized containers. Ports, it said, would need to be very large to gain economies of scale in tr

The railroads were in the happy situation of being able to pass their lower costs on to customers and still earn better profits than they did carrying freight the traditional way, in boxcars. Freight forwarders took advantage of the rate difference, arranging to consolidate smaller shipments into full carloads, for which they could demand lower rai

the McLeans understood that the easiest way to control costs was to get employees involved. Holding down insurance and repair bills, for example, meant having safety-conscious drivers. Novices were trained by being paired with senior drivers on the run from Winston-Salem to Atlanta. The senior driver got a bonus of one month’s pay if a man he had t