The brilliant invention of Mr. McLean
Alejandro Vidal Crespo
Service Director, Market Strategies
MONTHLY STRATEGY REPORT
May 2015
Monthly Strategy Report. May 2015
The brilliant invention of Mr. McLean.
“Today we see as an everyday event the containers that are transported by sea and by air.
In this article we talk about the man who revolutionised maritime and land transport by
enormously reducing the cost of loading and unloading. An entrepreneur from a humble
background and with little academic education who holds several records and is highly
acknowledged in the business world”.
Malcom Purcell McLean may be an unknown name for most of our readers. He is, however, the father
of one of the most revolutionary inventions of the twentieth century. Mr. McLean was born in North
Carolina, U.S.A., in 1913. From a humble background, he was only able to complete secondary school
education.
Malcom worked at a petrol station in his town until he was able to acquire, in 1934, an old, second
hand lorry for 120 dollars, with which he began to pick up and withdraw cigarette barrels in the area.
Initially it was a purely family business in which he acted as driver and his sister and brother, Clare and
Jim, were engaged in other activities. During this early stage in his professional life, Mr. McLean already
demonstrated business acumen and business talent. By 1955, he had turned his family business into
the McLean Trucking Company, the second largest transport company in the United States with more
than 1,700 lorries, 32 terminals across the country and listed on Wall Street.
With a company of this size, McLean had noted the inefficiency at that time of sea transport. In
keeping with the experience of transporting merchandise during the second world war, the custom
at that time was to load the lorries directly aboard the ships and, as a result, a considerable excess
of weight was transported and a lot of storage space on the ships was wasted. The entrepreneur had
the idea of dismounting the hold of the lorries and of only loading that part onto the ships. Container
transport had been born. Since the regulators in those days did not allow a land transport company
to own a shipping company, he sold his holding in his trucking company and for 25 million dollars he
acquired a shipping company, (the Pan-Atlantic Steamship Co.) and port installations in Florida and,
later, another shipping company, the Waterman Steamship Co.
He also purchased for these companies (which he merged with McLean Industries Inc.) two old military
cargo vessels from the Second World War to which he ordered alterations in order to be able to
transport a maximum number of containers in the hold.
Having achieved this, on 26 April 1956, the Ideal-X, loading 58 containers, set sail from Newark (New
Jersey) to Houston (Texas), with more than 100 public personalities present. The reason for the
commotion: the cost of loading the vessel had been reduced from USD 5.36 per ton to 19 cents per
ton, 39 times less expensive, and furthermore, in much less time. Everyone was delighted with the
system, except the representative of the dockers union who, when asked for his impressions, was only
able to say that he would “love to sink that damned ship”.
Malcom McLean, however, was not through yet. According to his motto, “a ship only earns money when
it is at sea”, continued to improve his system. He standardised the measurements of the containers
and the chassis of the trailers, he patented the measurements and registered them as an ISO term,
although he left them open for public use. During the sixties, he expanded his installations (not only
ships, but ports, cranes...) and commercial maritime routes, at first in the United States and then
around the world (Rotterdam and Bremen, 1967, Hong Kong and Taiwan, 1968).
But his international explosion took place with the contract signed with the United States Government
in 1967 to transport the huge amounts of material to Vietnam. Around that time, the company (which
Monthly Strategy Report. May 2015
had become Sealand Industries) possessed 27,000 standardised containers, 36 cargo ships, and port
installations in 30 cities around the world. The use of standardised containers had been adopted
throughout the world and the competition began to develop ever larger vessels with improved
processes. This led Malcom McLean to sell part of his company, Sealand, to investors that could
contribute more capital to continue investing and to be more competitive.
Sealand eventually merged with Maersk in a company which received the name of Maersk Sealand
until in 2006 it adopted its current name of Maersk Line.
In any event, the development of this process completely revolutionised sea transport and, along with
it, global transport. In the year 2012, container ships transported 1.500 billion tons of freight across
the oceans, as opposed to 102 million tons in 1980 (16% of total freight as opposed to 2.75% in 1980).
Ship building has also undergone a revolution due to this system, taking full advantage of deck space.
The largest container vessel today is the Triple E of Maersk, a monster of 400 metres in length and
55,000 displacement tons when unloaded, with a capacity to transport more than 18,000 containers
(remember that in its first voyage, the Ideal-X transported 58.).
Perhaps the name of Malcom McLean has passed unnoticed for the majority of people, but his
brainchild has been one of the major levers giving rise to the globalisation of commerce, drastically
reducing the costs and logistics of transport and permitting an efficient movement of merchandise
throughout the world. For this reason, this humble petrol station attendant entered the Business Hall
of Fame in 1982 and was named Man of the Century by the International Maritime Hall of Fame. He
also the honour of being the only man to have founded five companies that have ended up listed on
the stock exchange (three on the NYSE and two on NASDAQ). Think of that!