By Peter A. Coclanis
It's difficult in today's world to turn the volume any higher on the importance of entrepreneurship and innovation. Virtually every organization -- from Alcoa to Al Qaeda, from Zipcar to Zenith Bank -- has made those attributes part of its strategy. Vision statements from businesses, churches, schools and NGOs often sound as though their authors were channeling Joseph Schumpeter.
Amid the paeans to Steve Jobs after his death -- the special issues of magazines, TV tributes, superficial comparisons to Edison and so on -- I'd like to call attention to another American original, now almost forgotten, who would be celebrating his 98th birthday this week: Malcolm Purcell McLean.
McLean's great innovations dwarfed in economic importance the Mac and the iPod, the iPhone and the iPad -- arguably, everything Jobs accomplished.
McLean, like Jobs, seemed an unlikely candidate for entrepreneurial superstardom. He was born in 1914 in the tiny town of Maxton, North Carolina. His family wasn't wealthy, but had sufficient means to allow McLean to stay in school long enough to finish high school in 1931. After managing a gas station for three years, McLean and two of his siblings established the McLean Trucking Company in 1934. For a time, McLean was the company's only driver.
By the next year, McLean Trucking was in the long-haul business up and down the East Coast, and by 1940 the company, now with 30 trucks, had revenues of $230,000. Business increased during the war, and McLean would soon become one of the biggest trucking companies in the country.
Its rapid growth was due to a variety of factors, including acquisitions and an ability to navigate the bureaucracy of a heavily regulated industry. But most important was its efficiency, which allowed it to underbid many of its competitors. The company cut costs relentlessly, particularly through innovations. It was an early adopter of automated terminal technology and was one of the first lines to switch to diesel engines for its trucks.
McLean's push into containers was the next step. Containerization is an "intermodal" method of shipping freight, using standardized, sealed, stackable boxes. Intermodality means that goods can be moved from one transportation mode to another -- ship to railroad car or tractor trailer -- without labor-intensive loading at each transfer point.
On the eve of World War II, intermodal logistics remained relatively rudimentary: Containers were small and non-stackable; they weren't employed systematically; ports and terminals often lacked container-handling equipment. As a result, stevedores, longshoremen, cargo men and freight handlers of various kinds abounded, and transferring freight from one mode to another was still a slow, labor-intensive and relatively expensive process.
McLean once said he came up with the idea that led to modern containerization in 1937 in Hoboken, New Jersey, after waiting for hours to get a cargo of cotton bales that he had hauled up from North Carolina transferred, crate by crate, from his truck onto a ship. There had to be a better way, he thought.
During the war, the push toward containerization intensified. Fully loaded vehicles were sometimes carried on ships, specialized containers were used more and more, and shipyards and terminals introduced more sophisticated freight-handling equipment.
In 1955 McLean sold his interest in McLean Trucking -- it was illegal at the time for a company to be involved in both trucking and shipping -- and purchased the Pan-Atlantic Steamship Corporation. McLean's bold act anticipated Theodore Levitt's insight in "Marketing Myopia," a hugely influential 1960 article in the Harvard Business Review: Know what business you're in and focus on customers rather than products.
McLean knew he was in the transportation business, not the trucking business, and acted accordingly.
Once his purchase was approved, McLean acquired two World War II tankers and had them retrofitted to carry standardized containers. On April 26, 1956, one of these ships, the Ideal-X, became the first vessel in the world to achieve full containerization, setting sail from Port Newark for Houston, carrying 58 33-foot steel and aluminum containers. The containers had been loaded by cranes in less than eight hours, dramatically cutting the loading time and cost-per-ton.
The rest is history. McLean grew his business, changing the name of his company to Sea-Land in 1960, and many competitors entered the market. Innovations throughout the industry -- in loading technology, the configuration of shipyards, container and ship design, and logistics -- rendered intermodal shipping increasingly efficient.
In 1969, when McLean cashed out of Sea-Land, the company was the largest container line in the world.
McLean wasn't through as an entrepreneur and businessman, but his signal contribution had been made. Containerization rendered the global economy more integrated and more efficient. Labor markets were disrupted and economic geography remade. New occupations arose as old ones were destroyed, and new ports emerged as others lapsed into terminal decline. Although the great growth in the transport sector in recent decades has been in air cargo, the container revolution continues to pay huge dividends. Without the changes it wrought, the effects of later innovations in communications -- the Internet, most notably -- would have been far less profound.
Yet McLean was scarcely known outside the shipping industry when he died on May 25, 2001, and remains little remembered today. A reference book published in 2002, called "The North Carolina Century: Tar Heels Who Made a Difference, 1900-2000," had no room for McLean among all the Tar Heels listed in its 645 pages.
In terms of long-term economic importance, though, the Maxton-born trucker trumps them all -- and even, arguably, Jobs himself.
(Peter A. Coclanis is the Albert R. Newsome Distinguished Professor of History and the director of the Global Research Institute at the University of North Carolina at Chapel Hill. The opinions expressed are his own.)
To reach the writer of this blog post: Peter A. Coclanis at firstname.lastname@example.org.
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-0- Nov/14/2011 22:48 GMT