Friday Story: A Man and an Idea that Changed the World
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Malcolm McLean died on May 25, 2001 at the age of 87. I don't know what's inscribed on his tombstone, but it might be: "He changed the world," and that change grew from a single, powerful idea.
To the end of his life, Malcolm McLean would remember the specific day that he got his big idea. The year was 1937. The place was Hoboken, New Jersey.
McLean grew up on a farm in Maxton, Robeson County, North Carolina. He graduated from high school in 1931, in the midst of the Depression. College was out of the question. He was glad to land a job pumping gas.
Like the hero in all those rags-to-riches stories, Malcolm saved his money. By 1934 he had enough to buy a secondhand truck. He started hauling loads for the local farmers.
The Depression being what it was, McLean couldn't just hire drivers and spend his time drumming up business. In 1937 he was the driver hauling a load of cotton bales from Fayetteville, North Carolina up to Hoboken.
He got in line with other trucks, just like he always did. McLean knew he was going to be there for a while. The process of getting cargo from the trucks bringing it to the port to the ships that would carry it away was slow and labor intensive.
When McLean's truck finally got to the front of the line, a crew of stevedores would begin the process of getting the cotton bales on board. First the bales would be muscled into a cargo net.
The cargo net would be raised by a crane, and then set down in the hold of the ship. There, another crew of stevedores would position the bales for the trip to their ultimate destination. Then the crane would swing back to the truck for the next load of bales.
At the destination port, the process would be repeated, but in reverse. It took lots of people and lots of time and it meant that truck drivers like Malcolm McLean had to wait a long time before they could get back on the road and start making money again. Here's how he remembered it.
"I had to wait most of the day to deliver the bales, sitting there in my truck, watching stevedores load other cargo. It struck me that I was looking at a lot of wasted time and money."
For nineteen years, McLean worked on the idea while he grew McLean Trucking. By 1955 he had built the company up to 1776 trucks and 37 terminals along the East Coast. It was the largest trucking company in the South and the fifth-largest in the US.
Originally, he thought McLean Trucking would implement his idea. It was deceptively simple, like most great ideas. Why not load the whole trailer on to the ship and unload the whole trailer at the other end? That would take less labor. It would reduce costs, as well as pilferage and accidents.
There were lots of details that needed to be worked out. No, the wheels didn't need to be on the trailer so he re-designed the truck as a chassis with a detachable container. That would make them easier to stack, too.
But the containers were very heavy. Any ship that carried them would need to be very strong.
Those were the kinds of problem McLean focused on while he built the company. By the middle of the 1950s, he was sure the idea would work, but probably not as part of McLean Trucking. His company did not have the regulatory permission to operate in important ports and the Interstate Commerce Commission would not let McLean own both his trucking company and a shipping company.
So, in 1955, McLean sold his company for six million dollars. That was a tidy sum, but not enough to do what he wanted.
He went to legendary banker Walter Wriston for help. Wriston, one of the great visionaries of American business understood what McLean was up to and what the implications were. He loaned McLean $57 million to make it work.
McLean used some of the money to buy Pan-Atlantic Steamship was based in Alabama. It had shipping and docking rights in important eastern port cities. He re-named the company SeaLand.
The company refitted an old tanker, the Ideal X, to be able to carry containers. On April 26, 1956, the Ideal X left Port Newark carrying 58 containers and headed down the East Coast of the US, and around Florida to Houston.
It was the beginning. But it was only the beginning.
Getting new customers was easy because the benefits were obvious. The 25 percent discount that SeaLand charged compared to other companies was just the beginning.
Freight moved faster than ever because long loading and unloading delays were eliminated. Shippers could negotiate lower insurance rates because sealed containers reduced damage and pilferage.
The waterfront unions hated the containers. They could see thousands of jobs disappearing and they fought containerization every step of the way.
And, like Edison's light bulb that needed a system that delivered electricity in order to work, SeaLand needed a system of ports that could handle containers. That meant huge investments by the ports.
The New York Port Authority was the first "name" port to adopt containerization, but making basic changes like this was a long, slow process. The tide seemed to turn in the early Sixties, when the Port of Oakland, California decided to build a new container-ship facility.
McLean was awarded patents for his standardized container designs. Some people might seek to maximize profit from the patents themselves, but McLean took a different route.
McLean's thinking was that his company benefitted most if the entire shipping industry, every company and every port and every shipper used containers. He granted a royalty-free lease to the Industrial Organization for Standardization (ISO). That established standards for the industry and lowered the barriers to entry for new companies and ports.
SeaLand prospered. By the end of the Sixties it was the largest cargo shipping business on the planet. In 1969, R. J. Reynolds bought SeaLand for $160 million.
Take a look around wherever you happen to be. Just about everything you see or set your hand on spent some time in a cargo container. In fact, sixty percent of world trade, measured by value, travels in cargo containers and it's all because of Malcom McLean, one big idea, and the hard work to make it pay off.
Note: This blog post is based on material in Ruthless Focus.
Wally's Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. Click here to check it out.




Wally,
I haven't read "Ruthless Focus" yet, but I have read 'The Box" http://www.amazon.com/Box-Shipping-Container-Smaller-Economy/dp/0691136408/ref=sr_1_3?ie=UTF8&qid=1298061214&sr=8-3 .
It contains much information about Mr. McLean.
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Thanks, Tim. I haven't read that book, but I've heard good things about it. I did my first piece in a radio commentary right after McLean died. At the time hardly anyone even mentioned his passing and there was almost nothing written about his story, which I think is exceptional. After he left SeaLand, he stayed active. He developed a way to move a patient from a stretcher to a hospital bed with less discomfort. He set up a hog farm that was a model of cleanliness. He was active and engaged and developing ideas right until the end.
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Thank you for telling an inspiring story! From a economic perspective, containerization is an example of learning by doing. However, if not for the courage and relentless effort of McLean, the idea would not come into reality. Progress of productivity will be achieved sooner if more management have the insights and courage of McLean.
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Wally,
Stories like these help keep me on my toes. Everyday when I go out in the world, I am always looking for and constantly thinking of the "next" big idea. The thing is, in the present day and the world we live in, just about everything has been invented or created. But that doesn't mean that what has been invented or created cant be improved upon. Just like Malcolm, he took a preexisting system and improved on it. I'm big on efficiency and believe that it is the key to making some of the modern day systems more modern and thus creating more productivity. This all equates to more service or product being provided and ta da! More revenue. So being that today appears to be like every other day to most, to me it is another opportunity to go out into the world and be a Malcolm. What can I do to improve upon a process to make a difference!
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I wish you well, Brett. I think there are two things about McLean's story that really resonate with me. First, he put together his basic system and worked out the details of his idea while he was also building a very successful business. Second, he just kept moving ahead. For his idea to become reality, people had to re-think the way shipping was done, municipalities and companies had to invest mountains of money in equipment and facilities, and powerful opposing forces (read shipping companies and unions) had to be thwarted. Think of all the times it would have been easy to say, "I'm done."
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