LectureSHIP – Containers

Malcom McLean was born into a farming family in Maxton, North Carolina on November 14, 1913. When he finished high school in 1931, furthering his education was not an option for the struggling farming family as the Great Depression loomed large. Resorting instead to a job pumping gas, Malcom was able to eventually buy a second-hand truck for $120. One afternoon while sitting in his truck waiting for his cargo to be unloaded, he thought, why not take the whole trailer off the back of my truck? Why do we  reload each crate? In that eureka moment, Malcom had conceptualized the modern intermodal shipping container that upended the shipping industry and would drive global shipping costs down from $6 a ton to $0.16 a ton. The book, The Box, by Marc Levinson, tells the extraordinary journey of Malcom McLean, the truck driver who  revolutionized the global supply chain and was named “Man of the Century” by the International Maritime Hall of Fame.

Standard intermodal containers measure 8 feet in width and their length is measured in twenty-foot equivalent units or TEUs. A container 20 feet in length would be considered one TEU, while one measuring 40 feet in length would be considered two TEUs. This unit of cargo capacity, TEU, is used to describe the capacity of container ships, from small feeder ships of less than 1,000 TEU to the 21,413 TEU OOCL Hong Kong, currently the largest container ship in the world. 

Despite their traditional appearance, shipping containers have evolved beyond the standard dry box to an array of containers with new features, such as containers with collapsible sides for shipping equipment, refrigerated containers for perishables, chilled and frozen cargo like seafood, bananas and other fruits, ventilated containers for coffee and cocoa beans and tank containers. As Malcom McLean intended, the beauty of this metal box is that it can be seamlessly transferred between ships, trains and trucks. In fact, much of what you use in your daily life, from the clothes you wear to what you eat and drink, probably was transported great distances in an intermodal container.

COVID-19 has severely impacted the shipping industry, causing a combination of higher costs and a collapse of charter rates. The precipitous drop in global consumer demand, coupled with crippled ports and worldwide travel restrictions left ships unable to rotate crew members and led to a humanitarian crisis that saw crews confined on board for up to a year in some cases. 

The speed at which the first wave of COVID-19 spread globally caught much of the world by surprise. After the initial period of shock that coincided with retrenchment of most communal activities, the spread of COVID-19 relapsed. With many countries on the downslope of the initial spread, people figured out a new normal, businesses adjusted inventories that needed replenishment and eventually containers began to move again. Container ship charter rates gradually improved in the second half of the year,  culminating in December with the Clarkson’s Container Ship Time Charter Rate Index hitting its highest level since September 2008. To quote from the Clarksons December 2020 report, “Major uncertainty remains, and COVID-19 ‘2nd waves’ still pose risk. The ‘base case’ outlook remains for a firm ‘rebound’ in trade growth in full year 2021 (4.9% in TEU-miles).”

Clarkson’s Container Intelligence Monthly Volume 22, No. 12

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