He was Ridiculed, Violently Opposed, and Forced to Close His Trucking Company… Malcom McLean; The Trucker Who Revolutionized the Transportation Industry Against All Odds
Malcom McLean’s Ideal X, a converted World War II T-2 oil tanker set sail from Newark, NJ to Houston, TX on April 26th, 1956. Carrying 15,000 tons of liquid oil and an astonishing 58 8’X8’ containers on board! One longshoremen official was reported saying “I think they ought to sink the sonofabitch!” Despite the violent opposition, McLean’s idea of containerization was about to revolutionize the shipping industry making it efficient, less laborious and cost-effective for the shipper and receiver.
In 1935, Malcom McLean was fresh out of high school without a dime to his name. His parents were equally penniless and couldn’t afford to send him to college. Malcom took up a job at a gas station and soon learned he could make $5 a load trucking the gas to the station! He bought a truck and with his brother Jim and sister Clara; began hauling local loads in North Carolina. 2 years into his trucking career he watched longshoremen unload his trailer bale by bale and questioned
“Why couldn’t you just take the entire truck and trailer?”.
By 1945, McLean’s company had 162 trucks dedicated to textiles and cigarettes from North Carolina. With WWII over and GIs about to benefit from GI Loans, McLean offered them haulage contracts as an independent operator adding 600 more trucks to his fleet between 1947 and 1949. At the time, Interstate Commerce Commission (ICC) controlled the trucking industry like a tyrant, ensuring you didn’t break his rules in the name of “Fair Competition”. Forcing McLean to drive his trucks empty after delivery and not allowing him to charge his clients less. Of course, trucking and railroad competitors were on the side of the ICC. Nevertheless, by 1954 McLean Trucking was the 8th largest U.S. trucking revenue yet 3rd in after-tax profits.
Trucking aside, McLean always thought about making ocean shipping efficient by skipping the loading and unloading process that took at times 8 days on each end! To McLean “It all made sense.” But others saw tight government regulations, powerful unions who’ll fight change in the name of job protection, ships that were never built to carry containers and ports that didn’t have cranes. Lots of money and persuasion would be needed but McLean always broke major problems into bite-sized pieces and attacked them head-on.
In 1955, McLean saw an opportunity in Waterman Steamship Company and secured a bank loan for $22 million to purchase the company. But the ICC shot at McLean stating he could not own a trucking business and shipping business simultaneously. McLean had no choice but to get out of the trucking industry. He then purchased a WWII T-2 Tanker which was converted to carry containers on and under the deck that he christened the SS Ideal X. On April 26, 1956, the SS Ideal X set sail from Port Newark Elizabeth Marine Terminal, NJ for the port of Houston. By April of 1960, McLean’s operation was profitable and dropped the $5.86 per ton to only $0.16 a ton! Drastically cutting costs on shippers and receivers!
But what really set McLean apart from you average businessman was his move against patenting the container. He instead backed the fabricators at Fruehauf trailer company to develop containers for the entire industry (even his competitors). By the mid-60s, McLean’s ships would carry over 200 containers and face its first transoceanic sail from Elizabeth to Rotterdam, arriving 4 weeks faster than any other ship. During the late 60s, McLean’s containers proved essential during the Vietnam War.
In 1969 McLean sold his company to old friend RJ Reynolds for $500 million and pocketed a hefty sum of $160 million and was offered a seat on the board of directors but resigned from the position saying “I am a builder and they are runners”. McLean’s Sea-Land empire soon ended up in the hands of CSX Railroad and Maersk Shipping.
McLean wasn’t a man with idle hands and in 1978 he got back into container shipping and raised $1.2 billion for 12 super-large Econoships which could hold over 2,000 TEU’s. The intention was to have these ships circling the globe exchanging loads with smaller ships but the United States was still recovering from the Oil Embargo and was about to face the shipping price wars which put a stop to McLean’s new idea in 1986. Resulting in one of the biggest bankruptcies of the era. McLean passed in 2001 at 87 years old.
Because of McLean’s revolutionizing idea, containerization has reduced cost by 90% and dropped the 8-week load and unload time to 48 hours. Without Mclean’s innovation, our country wouldn’t have the exotic foods and beverages that come thousands of miles away at a cost-effective price. What’s most magnificent is McLean’s thinking of systems. He never saw himself as in the trucking business or sea shipping. But, in the transportation business. He saw everything as one, built the ultimate platform, and changed the world while at it. Cheers to the man who stood up against all odds and succeeded.
