Malcom McLean
Encyclopedia
Malcom Purcell McLean (November 14, 1913 – May 25, 2001), born in Maxton, North Carolina
, was an American entrepreneur, often called "the father of containerization
". In 1956, he developed the metal shipping container
, which replaced the traditional break bulk
method of handling dry goods and revolutionized the transport of goods and cargo
worldwide. He later founded Sea-Land Service, Inc.
, one of the pioneers in the intermodal
cargo transport business. McLean was named "Man of the Century" by the International Maritime Hall of Fame
.
, McLean Trucking started out hauling empty tobacco barrels – with Malcom as one of the drivers.
From that beginning, with his single pickup truck, he built it into the second-largest trucking company in the U.S., with 1770 trucks and 32 terminals. On January 6, 1958 (after McLean had sold his interest in the company), McLean Trucking became the first trucking company in the nation to be listed on the New York Stock Exchange.
Carrying trucks, or carriages, was not new - it had been done on the Dover-Calais trade.
The idea of transporting trucks on ships was put into practice during World War II, and in the early 1950s McLean decided to attempt it commercially. By 1953, 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 onboard the vessel, known as broken stowage. McLean modified his original concept into loading just the containers, not the chassis, onto the ships, hence the designation containership or "box" ship. At the time, U.S. regulations would not allow a trucking company to own a ship line. In 1955, McLean sold his trucking company for $25 million and purchased the Pan-Atlantic Steamship Company and the Gulf Florida Terminal Company from Waterman Steamship Corporation
, with the idea of using Pan-Atlantic's vessels and operating rights to carry containers. These purchases were made under the name a newly-formed corporation called McClean Industries, Inc of New York. Later the same year McLean Industries acquired the capital stock of Waterman Steamship Corporation
.
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 chassies to allow removable containers.
In some ways, McLean's vision was nothing new. Beginning in 1929, Seatrain Lines
had carried railroad boxcars on its sea vessels to transport goods between New York and Cuba. Likewise, the idea of putting truck trailers on railroad flatcars was a method of moving less-than-railroad carload shipments economically. This integrated transport concept held the hope of competing with trucks, which were taking more and more of this business from the railroads. From 1926 to 1947, the Chicago North Shore and Milwaukee Railroad
carried motor carrier vehicles and shippers' vehicles loaded on flatcars between Milwaukee and Chicago. In the mid-1930s, the Chicago Great Western Railway
and then the New Haven railroad began piggy-back service limited to their own railroad. By 1953, the CB&Q
, the C&EI
and the SP
railroads had joined the innovation. Most cars were surplus flatcars equipped with new decks. By 1955, an additional 25 railroads had begun some form of piggy-back trailer service. What was new about McLean's innovation was the idea of using large containers that were never opened in transit between shipper and consignee and that were transferable on an intermodal basis, among trucks, ships and railcars.
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 feet (10.7 m) 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 cargo was 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, a 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 the mid-1950s, mechanization overall was entering the shipping industry as operators tried to increase profit margins. The mechanization they had in mind, however, was larger slingloads, pallet
ization, mechanical conveyor belts and other ways of using more machinery to move break bulk cargoes. McLean's container concept moved the mechanization movement ahead by a quantum leap.
In April 1957, the first 'cellular
' 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 (0.40873286 km²) port facility in Port Elizabeth, New Jersey
, 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 containership 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 dramatic reductions in labor and dock servicing time, McLean was vigilant about standardization. His efforts to increase efficiency resulted in standardized container designs that were awarded patent
protection. Believing that standardization was also the path to overall industry growth, McLean chose to make his patents available by issuing a royalty-free lease to the International Organization for Standardization
.
The move toward greater standardization helped broaden the possibilities for intermodal transportation. By the end of the 1960s, Sea-Land Industries had 27,000 trailer-type containers, 36 trailer ships and access to over 30 port cities.
As the advantages to McLean's container system became apparent, competitors quickly developed. 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 U.S. Reynolds agreed in January 1969 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 containerships 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 containerships.
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 to the size 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.
Increasingly frustrated with the conservative culture within Reynolds, 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, Inc, 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
.
In 1982, McLean made the Forbes 400 Richest Americans list with a net worth of $400 million, however, a few years later, having gambled on rising oil prices that failed to materialize, McLean had to file for Chapter 11 bankruptcy owing debt of $1.3 billion.
In 1991, at 78, McLean founded Trailer Bridge, Inc.
, which operates between the US mainland (Jacksonville, Florida
), Puerto Rico and the Dominican Republic
.
McLean also developed non-maritime inventions, including a means of lifting a patient from a stretcher onto a hospital bed.
and Tanjung Pelepas
, in Malaysia. By making shipping so cheap that industry could locate factories far from its customers, the container paved the way for Asia to become the world's workshop and brought consumers a previously unimaginable variety of low-cost products from around the world.
in 2001, age 87, the U.S. Secretary of Transportation made the following statement:
McLean died in relative obscurity, although he was influential in the world's economic growth in the 20th century. In an editorial shortly after his death, Baltimore Sun
stated that "he ranks next to Robert Fulton
as the greatest revolutionary in the history of maritime trade." Forbes Magazine
called McLean "one of the few men who changed the world."
On the morning of McLean's funeral, container ships around the world blew their whistles in his honor.
magazine inducted McLean into its Business Hall of Fame in 1982. In 1995, American Heritage
magazine named him one of the ten outstanding innovators of the past 40 years. And in 2000, he was named Man of the Century by the International Maritime Hall of Fame
.
McLean was inducted into the Junior Achievement U.S. Business Hall of Fame in 1982.
In 2000, Mclean received an honorary degree from the U.S. Merchant Marine Academy
.
McLean is the only person to found three companies that were later listed on the New York Stock Exchange
(plus two others on the NASDAQ
).
Trailer Bridge, Inc., which McLean founded in 1992, annually awards the Malcom P. McLean Innovative Spirit Award. And, the annual McLean Award recognizes an outstanding graduating student at George Mason University
, selected by professors.
Maxton, North Carolina
Maxton is a town in Robeson County and Scotland County Counties, North Carolina, in the United States. The population was 2,551 at the time of the 2000 U.S. Census.-History:...
, was an American entrepreneur, often called "the father of containerization
Containerization
Containerization is a system of freight transport based on a range of steel intermodal containers...
". In 1956, he developed the metal shipping container
Intermodal container
An intermodal container is a standardized reusable steel box used for the safe, efficient and secure storage and movement of materials and products within a global containerized intermodal freight transport system...
, which replaced the traditional break bulk
Break bulk cargo
In shipping, break bulk cargo or general cargo is a term that covers a great variety of goods that must be loaded individually, and not in intermodal containers nor in bulk as with oil or grain. Ships that carry this sort of cargo are often called general cargo ships...
method of handling dry goods and revolutionized the transport of goods and cargo
Cargo
Cargo is goods or produce transported, generally for commercial gain, by ship, aircraft, train, van or truck. In modern times, containers are used in most intermodal long-haul cargo transport.-Marine:...
worldwide. He later founded Sea-Land Service, Inc.
Sea-Land Service, Inc.
Sea-Land Service, Inc. was a pioneering shipping and containerization company founded by American entrepreneur Malcom McLean in 1960, out of the operations of the Pan-Atlantic Steamship Company, which McLean acquired in 1955...
, one of the pioneers in the intermodal
Intermodal freight transport
Intermodal freight transport involves the transportation of freight in an intermodal container or vehicle, using multiple modes of transportation , without any handling of the freight itself when changing modes. The method reduces cargo handling, and so improves security, reduces damages and...
cargo transport business. McLean was named "Man of the Century" by the International Maritime Hall of Fame
International Maritime Hall of Fame
The International Maritime Hall of Fame is a museum honouring people who have made a large contribution in the maritime field. The hall of fame inducted its first set of honorees in or about 1994...
.
Biography
With only a high school education, McLean pumped gas at a service station near his hometown and saved enough money by 1934 to buy a second-hand truck for $120. He and his sister, Clara McLean, and brother, Jim McLean, founded McLean Trucking Co. Based out of Winston-Salem, North CarolinaWinston-Salem, North Carolina
Winston-Salem is a city in the U.S. state of North Carolina, with a 2010 population of 229,617. Winston-Salem is the county seat and largest city of Forsyth County and the fourth-largest city in the state. Winston-Salem is the second largest municipality in the Piedmont Triad region and is home to...
, McLean Trucking started out hauling empty tobacco barrels – with Malcom as one of the drivers.
From that beginning, with his single pickup truck, he built it into the second-largest trucking company in the U.S., with 1770 trucks and 32 terminals. On January 6, 1958 (after McLean had sold his interest in the company), McLean Trucking became the first trucking company in the nation to be listed on the New York Stock Exchange.
Carrying trucks, or carriages, was not new - it had been done on the Dover-Calais trade.
The idea of transporting trucks on ships was put into practice during World War II, and in the early 1950s McLean decided to attempt it commercially. By 1953, 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 onboard the vessel, known as broken stowage. McLean modified his original concept into loading just the containers, not the chassis, onto the ships, hence the designation containership or "box" ship. At the time, U.S. regulations would not allow a trucking company to own a ship line. In 1955, McLean sold his trucking company for $25 million and purchased the Pan-Atlantic Steamship Company and the Gulf Florida Terminal Company from Waterman Steamship Corporation
Waterman Steamship Corporation
Waterman Steamship Corporation is an American deep sea ocean carrier, specializing in liner services and time charter contracts. It is owned by International Shipholding Corporation, based in Mobile, Alabama....
, with the idea of using Pan-Atlantic's vessels and operating rights to carry containers. These purchases were made under the name a newly-formed corporation called McClean Industries, Inc of New York. Later the same year McLean Industries acquired the capital stock of Waterman Steamship Corporation
Waterman Steamship Corporation
Waterman Steamship Corporation is an American deep sea ocean carrier, specializing in liner services and time charter contracts. It is owned by International Shipholding Corporation, based in Mobile, Alabama....
.
McLean secured a bank loan for $22 million and in January 1956 bought two World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
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 chassies to allow removable containers.
In some ways, McLean's vision was nothing new. Beginning in 1929, Seatrain Lines
Seatrain Lines
Seatrain Lines was a shipping company most responsible for the introduction of the standard international intermodal container, most commonly high by 8 feet wide by long...
had carried railroad boxcars on its sea vessels to transport goods between New York and Cuba. Likewise, the idea of putting truck trailers on railroad flatcars was a method of moving less-than-railroad carload shipments economically. This integrated transport concept held the hope of competing with trucks, which were taking more and more of this business from the railroads. From 1926 to 1947, the Chicago North Shore and Milwaukee Railroad
Chicago North Shore and Milwaukee Railroad
The Chicago North Shore and Milwaukee Railroad, often called the North Shore Line, was an interurban railroad line that operated between Chicago, Illinois, and Milwaukee, Wisconsin, until its abandonment in 1963.- Early history :...
carried motor carrier vehicles and shippers' vehicles loaded on flatcars between Milwaukee and Chicago. In the mid-1930s, the Chicago Great Western Railway
Chicago Great Western Railway
The Chicago Great Western Railway was a Class I railroad that linked Chicago, Minneapolis, Omaha, and Kansas City. It was founded by Alpheus Beede Stickney in 1885 as a regional line between St. Paul and the Iowa state line called the Minnesota and Northwestern Railroad...
and then the New Haven railroad began piggy-back service limited to their own railroad. By 1953, the CB&Q
Chicago, Burlington and Quincy Railroad
The Chicago, Burlington and Quincy Railroad was a railroad that operated in the Midwestern United States. Commonly referred to as the Burlington or as the Q, the Burlington Route served a large area, including extensive trackage in the states of Colorado, Illinois, Iowa, Kentucky, Missouri,...
, the C&EI
Chicago and Eastern Illinois Railroad
The Chicago and Eastern Illinois Railroad was a Class I railroad that linked Chicago to southern Illinois, St. Louis, and Evansville. Founded in 1877, it grew aggressively and stayed relatively strong throughout the Great Depression and two World Wars before being purchased by the Missouri Pacific...
and the SP
Southern Pacific Railroad
The Southern Pacific Transportation Company , earlier Southern Pacific Railroad and Southern Pacific Company, and usually simply called the Southern Pacific or Espee, was an American railroad....
railroads had joined the innovation. Most cars were surplus flatcars equipped with new decks. By 1955, an additional 25 railroads had begun some form of piggy-back trailer service. What was new about McLean's innovation was the idea of using large containers that were never opened in transit between shipper and consignee and that were transferable on an intermodal basis, among trucks, ships and railcars.
On April 26, 1956, with 100 invited dignitaries on hand, one of the converted tankers, the SS Ideal-X
SS Ideal-X
SS Ideal X was the first container ship. She was a converted World War II T-2 oil tanker which carried shipping containers. During her maiden voyage on April 26, 1956 the Ideal X carried 58 containers from Newark, New Jersey to Port of Houston, Texas where 58 trucks were waiting to be loaded with...
(informally dubbed the "SS Maxton" after McLean’s hometown in North Carolina), was loaded and sailed from the Port Newark-Elizabeth Marine Terminal
Port Newark-Elizabeth Marine Terminal
Port Newark-Elizabeth Marine Terminal is a major component of the Port of New York and New Jersey. Located on the Newark Bay it serves as the principal container ship facility for goods entering and leaving New York-Newark metropolitan area, and the northeastern quadrant of North America...
, New Jersey, for the Port of Houston
Port of Houston
The Port of Houston is a port in Houston—the fourth-largest city in the United States. The Port is a 25-mile-long complex of diversified public and private facilities located a few hours' sailing time from the Gulf of Mexico...
, Texas, carrying fifty eight 35 feet (10.7 m) 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
International Longshoremen's Association
The International Longshoremen's Association is a labor union representing longshore workers along the East Coast of the United States and Canada, the Gulf Coast, the Great Lakes, Puerto Rico, and inland waterways...
, 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 cargo was 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, a 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 the mid-1950s, mechanization overall was entering the shipping industry as operators tried to increase profit margins. The mechanization they had in mind, however, was larger slingloads, pallet
Pallet
A pallet , sometimes called a skid, is a flat transport structure that supports goods in a stable fashion while being lifted by a forklift, pallet jack, front loader or other jacking device. A pallet is the structural foundation of a unit load which allows handling and storage efficiencies...
ization, mechanical conveyor belts and other ways of using more machinery to move break bulk cargoes. McLean's container concept moved the mechanization movement ahead by a quantum leap.
In April 1957, the first 'cellular
Cellular
Cellular may refer to:*Cellular automaton, a model in discrete mathematics*Cellular , a 2004 movie*Cellular frequencies, assigned to networks operating in cellular RF bands*Cellular manufacturing...
' 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
San Juan, Puerto Rico
San Juan , officially Municipio de la Ciudad Capital San Juan Bautista , is the capital and most populous municipality in Puerto Rico, an unincorporated territory of the United States. As of the 2010 census, it had a population of 395,326 making it the 46th-largest city under the jurisdiction of...
with the vessel Fairland.
The name was officially changed from Pan-Atlantic Steamship Corporation to Sea-Land Service, Inc.
Sea-Land Service, Inc.
Sea-Land Service, Inc. was a pioneering shipping and containerization company founded by American entrepreneur Malcom McLean in 1960, out of the operations of the Pan-Atlantic Steamship Company, which McLean acquired in 1955...
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 (0.40873286 km²) port facility in Port Elizabeth, New Jersey
Port Elizabeth, New Jersey
Port Elizabeth is an unincorporated area within Maurice River Township, Cumberland County, New Jersey. The area is served as United States Postal Service ZIP code 08348....
, 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
Rotterdam
Rotterdam is the second-largest city in the Netherlands and one of the largest ports in the world. Starting as a dam on the Rotte river, Rotterdam has grown into a major international commercial centre...
, Bremen
Bremen
The City Municipality of Bremen is a Hanseatic city in northwestern Germany. A commercial and industrial city with a major port on the river Weser, Bremen is part of the Bremen-Oldenburg metropolitan area . Bremen is the second most populous city in North Germany and tenth in Germany.Bremen is...
and Grangemouth
Grangemouth
Grangemouth is a town and former burgh in the council area of Falkirk, Scotland. The town lies in the Forth Valley, on the banks of the Firth of Forth, east of Falkirk, west of Bo'ness and south-east of Stirling. Grangemouth had a resident population of 17,906 according to the 2001...
(Scotland).
The following year (1967) they were invited by the U.S.Government to start a container service to South Vietnam
South Vietnam
South Vietnam was a state which governed southern Vietnam until 1975. It received international recognition in 1950 as the "State of Vietnam" and later as the "Republic of Vietnam" . Its capital was Saigon...
. The service to Vietnam produced 40% of the company's revenue in 1968/69.
In late 1968 commercial containership service was inaugurated from the Far East to the United States. This service was expanded to Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
and Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
in 1969, and to Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
, and the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
in 1971.
To achieve dramatic reductions in labor and dock servicing time, McLean was vigilant about standardization. His efforts to increase efficiency resulted in standardized container designs that were awarded patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
protection. Believing that standardization was also the path to overall industry growth, McLean chose to make his patents available by issuing a royalty-free lease to the International Organization for Standardization
International Organization for Standardization
The International Organization for Standardization , widely known as ISO, is an international standard-setting body composed of representatives from various national standards organizations. Founded on February 23, 1947, the organization promulgates worldwide proprietary, industrial and commercial...
.
The move toward greater standardization helped broaden the possibilities for intermodal transportation. By the end of the 1960s, Sea-Land Industries had 27,000 trailer-type containers, 36 trailer ships and access to over 30 port cities.
As the advantages to McLean's container system became apparent, competitors quickly developed. 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 U.S. Reynolds agreed in January 1969 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 containerships 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 containerships.
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 to the size 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
Dun & Bradstreet
Dun & Bradstreet is a Fortune 500 public company headquartered in Short Hills, New Jersey, USA that provides information on businesses and corporations for use in credit decisions, B2B marketing and supply chain management...
, 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.
Increasingly frustrated with the conservative culture within Reynolds, 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
CSX Corporation
CSX Corporation was formed in 1980 by the merger of Chessie System and Seaboard Coast Line Industries and eventually merged the various railroads owned by those predecessors into a single line that became known as CSX Transportation. Based in Richmond, Virginia, USA after the merger, in 2003...
. 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, Inc, which accounts for approximately 36% of the total U.S. marine container shipments between the continental U.S. and the markets of Alaska
Alaska
Alaska is the largest state in the United States by area. It is situated in the northwest extremity of the North American continent, with Canada to the east, the Arctic Ocean to the north, and the Pacific Ocean to the west and south, with Russia further west across the Bering Strait...
, Hawaii
Hawaii
Hawaii is the newest of the 50 U.S. states , and is the only U.S. state made up entirely of islands. It is the northernmost island group in Polynesia, occupying most of an archipelago in the central Pacific Ocean, southwest of the continental United States, southeast of Japan, and northeast of...
and Puerto Rico
Puerto Rico
Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...
, and to Guam
Guam
Guam is an organized, unincorporated territory of the United States located in the western Pacific Ocean. It is one of five U.S. territories with an established civilian government. Guam is listed as one of 16 Non-Self-Governing Territories by the Special Committee on Decolonization of the United...
. The company is headquartered in Charlotte, North Carolina
Charlotte, North Carolina
Charlotte is the largest city in the U.S. state of North Carolina and the seat of Mecklenburg County. In 2010, Charlotte's population according to the US Census Bureau was 731,424, making it the 17th largest city in the United States based on population. The Charlotte metropolitan area had a 2009...
.
Subsequent business ventures
In 1978, McLean purchased United States Lines. There, he built a fleet of 4,400-TEU container ships that were the largest afloat at the time. The ships, operating in round-the-world service, were designed in the aftermath of the 1970s oil shortages and were fuel-efficient but slow, and therefore not well-adapted to compete in the subsequent period of cheap oil. USL went bankrupt in 1987. McLean took very personally the criticism directed against him after the collapse of USL and the resulting loss of many jobs associated with and dependent on USL.In 1982, McLean made the Forbes 400 Richest Americans list with a net worth of $400 million, however, a few years later, having gambled on rising oil prices that failed to materialize, McLean had to file for Chapter 11 bankruptcy owing debt of $1.3 billion.
In 1991, at 78, McLean founded Trailer Bridge, Inc.
Trailer Bridge, Inc.
Trailer Bridge Inc. is a freight service company headquartered in Jacksonville, Florida that was the first company to provide what its website describes as a "unique combination of over-the road and over-the-water transportation."-History:...
, which operates between the US mainland (Jacksonville, Florida
Jacksonville, Florida
Jacksonville is the largest city in the U.S. state of Florida in terms of both population and land area, and the largest city by area in the contiguous United States. It is the county seat of Duval County, with which the city government consolidated in 1968...
), Puerto Rico and the Dominican Republic
Dominican Republic
The Dominican Republic is a nation on the island of La Hispaniola, part of the Greater Antilles archipelago in the Caribbean region. The western third of the island is occupied by the nation of Haiti, making Hispaniola one of two Caribbean islands that are shared by two countries...
.
McLean also developed non-maritime inventions, including a means of lifting a patient from a stretcher onto a hospital bed.
Significance of accomplishments
McLean’s "containerization” process of using large containers to hold goods on cargo ships allowed huge increases in port and ship productivity, helping to lower the cost of imported goods. The container transformed economic geography, devastating traditional ports such as New York and London and fueling the growth of previously obscure ones, such as Oakland, CaliforniaOakland, California
Oakland is a major West Coast port city on San Francisco Bay in the U.S. state of California. It is the eighth-largest city in the state with a 2010 population of 390,724...
and Tanjung Pelepas
Port of Tanjung Pelepas
The Port of Tanjung Pelepas is a port for container ships located on the eastern mouth of the Pulai River in south-western Johor, Malaysia. Receiving its maiden vessel on 10 October 1999 on a three-month trial operation, it set a world record as the fastest growing port with of containers handled...
, in Malaysia. By making shipping so cheap that industry could locate factories far from its customers, the container paved the way for Asia to become the world's workshop and brought consumers a previously unimaginable variety of low-cost products from around the world.
Death
When McLean died at his home on the East Side of ManhattanManhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
in 2001, age 87, the U.S. Secretary of Transportation made the following statement:
McLean died in relative obscurity, although he was influential in the world's economic growth in the 20th century. In an editorial shortly after his death, Baltimore Sun
The Baltimore Sun
The Baltimore Sun is the U.S. state of Maryland’s largest general circulation daily newspaper and provides coverage of local and regional news, events, issues, people, and industries....
stated that "he ranks next to Robert Fulton
Robert Fulton
Robert Fulton was an American engineer and inventor who is widely credited with developing the first commercially successful steamboat...
as the greatest revolutionary in the history of maritime trade." Forbes Magazine
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
called McLean "one of the few men who changed the world."
On the morning of McLean's funeral, container ships around the world blew their whistles in his honor.
Honors
FortuneFortune (magazine)
Fortune is a global business magazine published by Time Inc. Founded by Henry Luce in 1930, the publishing business, consisting of Time, Life, Fortune, and Sports Illustrated, grew to become Time Warner. In turn, AOL grew as it acquired Time Warner in 2000 when Time Warner was the world's largest...
magazine inducted McLean into its Business Hall of Fame in 1982. In 1995, American Heritage
American Heritage (magazine)
American Heritage is a quarterly magazine dedicated to covering the history of the United States for a mainstream readership. Until 2007, the magazine was published by Forbes. Since that time, Edwin S...
magazine named him one of the ten outstanding innovators of the past 40 years. And in 2000, he was named Man of the Century by the International Maritime Hall of Fame
International Maritime Hall of Fame
The International Maritime Hall of Fame is a museum honouring people who have made a large contribution in the maritime field. The hall of fame inducted its first set of honorees in or about 1994...
.
McLean was inducted into the Junior Achievement U.S. Business Hall of Fame in 1982.
In 2000, Mclean received an honorary degree from the U.S. Merchant Marine Academy
United States Merchant Marine Academy
The United States Merchant Marine Academy is one of the five United States Service academies...
.
McLean is the only person to found three companies that were later listed on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
(plus two others on the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
).
Trailer Bridge, Inc., which McLean founded in 1992, annually awards the Malcom P. McLean Innovative Spirit Award. And, the annual McLean Award recognizes an outstanding graduating student at George Mason University
George Mason University
George Mason University is a public university based in unincorporated Fairfax County, Virginia, United States, south of and adjacent to the city of Fairfax. Additional campuses are located nearby in Arlington County, Prince William County, and Loudoun County...
, selected by professors.
External links
- Photo of Ideal-X, the first container ship
- Ideal-X and McLean
- Pennsylvania TrucTrain Service: An Overview - (Apparatus for shipping freight)
- http://driversmag.com/ar/fleet_passing_pioneer/
- http://www.forbes.com/business/global/2006/0313/030.html