Thread by @johnkonrad

No invention in human history has pulled more people out of poverty than the shipping container.

Yet this myth that it was a “wholly commercial invention” is both persist and false

Container shipping was an epic failure until the US Military poured billions of 💰into it 🧵

https://twitter.com/rasmusdotse/status/1695923586291171777

The NY Times called the MILITARY containerization project the “most massive construction effort ever organized and put into the field in so short a time and the largest military construction contract in history.”

More massive than the Pentagon or anything built in WW2

In 1956 trucker turned trucking magnate Malcom McLean welded racks to the deck of a WW2 tanker and rechristened the ship “Ideal X”

Today’s massive container ships carry over 25,000 containers but this one carried only 58

But McLean ran into problems:
➡️ Ships are expensive
➡️ Container cranes are expensive
➡️ Container ports require massive amounts of expensive waterfront real estate
➡️ Powerful longshoremen unions hated the idea
➡️ You need the cooperation of trucking companies & railroads

➡️ You need everyone to agree on a standard container size
➡️ Shipping was highly regulated
➡️ Shipping margins are thin with cutthroat competition
➡️ You need to build and store massive amounts of containers
➡️ ➡️ ➡️ I could keep going

But worst of all is the shipping container was not a new invention.

Intermodal shipping containers date back to at least the 18th century when Britain used them to combined rail and horse-drawn transport.

Countless others tired putting them on ships including the U.S. Army which used used conex boxes extensively throughout WWII

All failed for the reasons listed above but McLean realized something nobody else did. It wasn’t ship problems that caused containerization to fail… it was a real estate problem.

Waterfront real estate is massively expensive and requires BIG 💰financing

McLean solved that problem in two ways.

At the time factories were based in cities (yes Manhattan was filled with factories!) but McLean understood that trucks could take those containers from factories and drive them to cheap run down places like Newark, Oakland and Houston

While everyone else was jockeying for Piers closer to factories, McLean built his terminals a long driving distance away

He knew the factories and warehouses would move away from the expensive city centers if they were given the chance

1919 map of NYC’s 32,590 factories 👇

The second way he accomplished this was giving away the idea.

Other inventors - like Betjemin’s patent shown below - closely guarded their designs but McLean knew his design would only become dominant if other people used it.

So he open sourced it via @isostandards

@isostandards But still McLean had two massive and insurmountable problems that prevented him from rapidly expanding.

1️⃣ He needed massive amounts of money (so much he eventually sold his entire SeaLand company to RJR Tobacco, but that comes later)

2️⃣ He needed huge ports overseas

@isostandards Getting American real estate was relatively cheap and easy but navigating laws and labor contracts and myriad other problems in places like Rotterdam, Hamburg and London was too hard for a small company

These places had dense population centers with massive real estate costs

@isostandards Look at this aerial photo of London in the 1940’s. Even after bombing ravaged the docks, there was no room for expansion.

Worse Europe didn’t have the money to build highways so trucks couldn’t “get out” to places with cheaper land

@isostandards Of course, there is lots of cheap waterfront land all around the world BUT he needed massive amounts of volume to achieve “economies of scale” and lower costs

If he built ports in remote regions then factories would eventually follow but long after his loans were due.

@isostandards And he could not remain a domestic service because the massive highway, bridge and tunnel projects that allowed trucks to reach his remote ports… well those would compete against him as well.

Why use a ship when the government is massively subsidizing gas and roads across 🇺🇸?

If he was going to be successful he needed an overseas port that had a few things:
1) lots of undeveloped land
2) in a region with few roads or railroads to compete
3) he needed something that would consume massive amounts of cargo disappear off the dock quickly
4) he needed massive government subsidies
5) he needed absolute control over the foreign government and labor

@isostandards And for a long time after he came up with the idea he struggled to fill those needs and his business nearly failed.

He poured his 🚛’ing fortune into this new company called SeaLand but he couldn’t figure out how to get from a ship carrying 58 containers to this 👇

@isostandards But soon the US Military was having a massive problem that we now see happening again in Ukraine.

Large War require a MASSIVE amount of material and munitions, especially in a war with large bombers.

And it’s physically impossible to send all that weight via airfreight.

@isostandards And the U Generals directing the Vietnam war wanted the massive advantage US industry gave them.

But how do you get all that stuff across the world’s largest ocean?

@isostandards Lucky for them 🇺🇸 still had a large Merchant Marine (now mostly gone), we had an enormous amount of surplus Liberty & Victory ships in mothballs (mostly gone now) & plenty of repair shipyards to fix them (now at capacity)

But offloading each of these old ships could take a week

@isostandards Do you remember the Port Congestion crisis after covid? The problem in Vietnam’s ports where something like 10 times worse

It was a 🤯 problem but I won’t go into details because you can read all about it in @mercoglianos’ amazing (free to download) book: history.navy.mil/research/publi…

@isostandards @mercoglianos But now McLean had a solution to each problem:

1) Vietnam had lots of undeveloped land
2) few roads or railroads to compete
3) lots of cargo that magically disappeared into bombers
4) massive government spending
5) absolute military control over the foreign government

@isostandards @mercoglianos General Westmoreland’s logistical teams met with McLean and focused on new ports locations.

Soon they settled one massive container port at Cam Ranh Bay and smaller ones at Da Nang, Qui Nhon, Vung Ro, Vung Tau and Newport, in Saigon

@isostandards @mercoglianos “Moving more than two million people - along with their weapons, aircraft, food and medical supplies - in and out of the country was an almost *unfathomable* challenge,” as the NY Times wrote back then and has reiterated in countless articles since:

@isostandards @mercoglianos When all was completed and the US Navy closed out the contract for building these ports at a total cost of $1.9 billion (equivalent to $14 billion today)!

But that’s just the ports in Vietnam. It doesn’t include:

Building the ports in the United States, building containers and cranes and handling equipment. Building the container ships! And the biggest cost of all… jungle roads!

“Seabees and Army construction units participated in the largest single military construction effort, a network of highways strung around the country called the Lines of Communication, which cost about $500 million, or $3.7 billion today.”

@isostandards @mercoglianos So yes, Malcolm McClain was a genius, but he would have (and very nearly did) failed without the war

Those ports in Vietnam sent a strong message around the world: “if” you invest huge amounts of money in ports and roads and change laws THIS invention will turbocharge your ports

@isostandards @mercoglianos So, yes, “commercial entities” took over from there BUT nobody was willing to invest until the US Navy proved the concept with - what @nytimes claims was “The Largest Military Construction Project in History”

nytimes.com/2018/01/16/opi…

@isostandards @mercoglianos @nytimes But NOBODY knows about this because the foreign shipping companies who now dominate the market are ESG sensitive and their biggest customer is China so they do not want you to know about their deep historical connections to the 🇺🇸 defense industrial complex.

Especially @Maersk who is the world leader in ESG and recent investment in expansion in China.

They acquired McLean’s ships and continue to be the largest carriers of US Military cargo but they conveniently erased the whole Vietnam thing from their official corporate history:

@isostandards @mercoglianos @nytimes @Maersk But maybe that’s because they have bigger SeaLand secrets to hide: gcaptain.com/day-seafarer-c…

@isostandards @mercoglianos @nytimes @Maersk All that said @Maersk is one of my favorite companies. They do care about the US military, the environment and build a wonderful ships and strongly support the US Merchant Marine. Plus they have the most amazing lego kits in the world!

amzn.to/3KXUkUu

I do not blame Maersk one iota for the deal McLean made with the Pentagon.

A deal that was a 💯 critical prerequisite to the success of the shipping container which has pulled more people out of poverty than any other invention in history (Source: The Box: )

@isostandards @mercoglianos @nytimes @Maersk But it is 💯 critical that we fully understand the close historical connections between shipping containers and the military.

A connection, no shipping company wants to talk about because they know 🇨🇳 is investing a LOT more into ports today than 🇺🇸 did during Vietnam

@isostandards @mercoglianos @nytimes @Maersk And - it’s not just Maersk - but EVERY major shipping company in the world is helping China expand its dual use military/commercial ports and shipping facilities globally.

Even the shipping companies who have the most to lose: gcaptain.com/is-taiwans-eve…

@isostandards @mercoglianos @nytimes @Maersk There is no separating the world of shipping from geopolitical military interests but we can not 🙈🙉🙊

We must fully understand the relationships between the world’s largest Navies and commercial shipping.

@isostandards @mercoglianos @nytimes @Maersk We can’t afford accept #seablindness any longer because, as navalist @JerryHendrixII recently showed, the age of American naval dominance is over.

theatlantic.com/magazine/archi…

@isostandards @mercoglianos @nytimes @Maersk @JerryHendrixII 🇺🇸 🌊 dominance is over (the US Merchant Marine today has less than 80 ships in overseas service!) and the next great naval power might not bow away and let foreign commercial interests take over (like the US Navy did after Vietnam) after the next great war across the Pacific