Container shipping has evolved from a revolutionary concept in the mid-20th century to a highly sophisticated and globally interconnected industry in the present day. With significant changes from its early days, it has played a pivotal role in shaping the global trade and logistics landscape.
Technological advancements, and heightened environmental awareness, promise even greater efficiency, innovation, and a potentially greener footprint for the future of this now-critical industry. Let’s delve into how shipping containers changed global trade in general, and seaborne trade in particular.
Seven decades of transformative progress in container shipping
A fleet of almost 6,000 container ships is responsible for the annual transportation of billions of metric tons of freight in around 226 million containers worldwide. In the years ahead, these figures are anticipated to further expand. Containers have become indispensable in the global supply chain landscape, making it challenging to envision ocean transportation without them. However, over the past 70 years, they have undergone significant changes.
The early days of containerization (1950s-1960s)
The credit for the concept of standardized shipping containers goes to the American entrepreneur Malcolm McLean. In 1955, this visionary in the trucking industry conceived uniform metallic boxes designed for packing goods, simplifying their transportation and facilitating seamless transfers between ships, trucks, and trains, eliminating the need for manual labor.
The global standardization (1960s)
In 1968, the International Organization for Standardization (ISO) set standards for container sizes. This standardization aimed at easing the intermodal intermodal shipping container across different modes such as trucks, rail, or ship, and among various ocean carriers. These regulations specify the external and internal dimensions of the containers, including minimum door opening sizes if applicable, as some models, like out-of-gauge (OOG) containers, may lack doors. ISO containers come in various fundamental types, such as flat racks, open-top, dry freight, insulated, reefer, and tank containers.
The 20-foot container is employed as the reference in the shipping industry to indicate the capacity of container ships. The widely utilized term is “twenty-foot equivalent unit”, often abbreviated as TEU. Its length is standardized at approximately 20 feet (equivalent to 6.10 meters), while its width measures 8 feet (2.44 meters), and its height is set at 8.5 feet (2.59 meters).
Additionally, the ISO norms mandate strength and durability prerequisites to ensure the container’s ability to withstand the harsh conditions encountered during transportation, and to possess the necessary structural integrity for lifting by cranes or other heavy machinery.
ISO containers come with a container safety certificate (CSC) provided by the manufacturer, and a certified inspector is required to renew this document every 30 months.
The adoption of container shipping (1970s)
The shipping industry gradually embraced containerization in addition to break bulk cargo carriage. Constructed from adapted bulk carriers or tankers, the initial wave of container ships could carry up to 1,000 TEUs, on their decks only. The pioneering container vessel, the “Ideal-X,” was a converted World War II T2 tanker. This first generation of container vessels was carrying onboard cranes since most port terminals were not equipped to handle containers. Loading and unloading were slow and labor-intensive, requiring cranes and manual handling.
They were succeeded by the first fully cellular container ships (FCC), exclusively designed for handling containers. In the 1980s, the industry achieved the Panamax standard, reaching a milestone in 1985 with a capacity of approximately 4,000 TEUs. The name Panamax refers to the maximum size allowed for a ship to pass through the Panama Canal to the United States.
By 1996, fully-fledged Post-Panamax container ships were introduced, boasting capacities of up to 6,600 TEUs. Subsequently, the Post Panamax emerged, offering even greater capacities, reaching up to 8,000 TEUs. In 2006, the third generation of post-Panamax container ships entered service when the Maersk shipping line unveiled the Emma Maersk (E Class) with a capacity ranging from 11,000 to 14,500 TEUs. The New-Panamax or Neo-Panamax (NPX) has a capacity of around 12,500 TEUs. The introduction of the Ultra Large Container vessels class, featuring capacities of 18,000 TEUs and above, occurred in 2013, named “Triple E” by Maersk. This class underwent further expansion, and by 2017, vessels exceeding 20,000 TEUs commenced delivery.
The growth and specialization of containers (1980s-1990s)
Starting from the 1990s, the container ship capacity boomed, and larger container ships were introduced, carrying hundreds of TEUs (twenty-foot equivalent units)
Dedicated container ports emerged, equipped with specialized cranes and container-handling systems. Elizabeth Port Authority Marine Terminal was the world’s first container port. Located on the United States’ East Coast was inaugurated on August 15, 1962, by the Port of New York & New Jersey Authority. It continues to serve as the primary container ship facility for goods entering and departing the northeastern quadrant of North America.
The current largest container ports are located in Asia: China (Shanghai, Ningbo-Zhoushan, Shenzhen, Qingdao Guangzhou, Hong Kong, Tianjin, Xiamen, Taicang), Singapore, South Korea (Busan), Malaysia (Port Klang and Tanjung Pelepas), Taiwan (Kaohsiung), Thailand (Laem Chabang), Vietnam (Saigon), Sri Lanka (Colombo). In Europe, the leading container ports are Rotterdam (The Netherlands), Antwerp (Belgium), Hamburg (Germany), and Valencia (Spain). Meanwhile, in the United States, the primary ports contributing to this global network are Los Angeles, Long Beach, and New York-New Jersey. The port of Jebel Ali, in Dubai (United Arab Emirates) also deserves a mention, securing the 11th position among the top 25 container ports globally.
Shipping companies formed alliances to share the vessels and resources on agreed trade lanes instead of operating their vessels separately. These partnerships enable route optimization, extended service coverage, and low pricing. The three major shipping alliances are:
- The 2M alliance, which comprises Switzerland-based MSC and Denmark-headquartered Maersk boasts a combined capacity of 2.82 million TEUs, making up only 11% of the global capacity.
- The Alliance, a collaboration involving Japan’s ONE (ranking as the world’s seventh-largest carrier), Germany’s Hapag-Lloyd (No. 5), South Korea’s HMM (No. 8), and Taiwan’s Yang Ming (No. 9). The aggregate deployed capacity within THE Alliance stands at 3.03 million TEUs, constituting 12% of global capacity.
- The Ocean Alliance consists of France’s CMA CGM (the world’s third-largest liner operator), China’s Cosco (the fourth largest, including subsidiary OOCL), and Taiwan’s Evergreen (the sixth largest). With a total capacity of 4.3 million TEUs, the Ocean Alliance surpasses 2M by 52%. The Ocean Alliance’s capacity represents 16% of the global fleet capacity.
However, in a recent development, the 2M alliance, a partnership that lasted for 7 years, has been dissolved. As per the agreement’s stipulations, Maersk and MSC are set to entirely disentangle all their operations by the year 2025.
Emergence of mega-ships and advancements in technology (2000s-Present)
Throughout the 20th and 21st centuries, the shipping industry experienced the emergence of ultra-large container vessels (ULCVs), which are capable of carrying thousands of TEUs, surpassing 20,000 units for the most recent ones. Among the largest container ships, MSC Irina, launched in March 2023, has set a new benchmark with a staggering capacity of 24,346 TEUs. This navigating giant measures 399.9 meters in length and 61.3 meters in width. These mega-ships capitalize on economies of scale, by transporting larger quantities of cargo along the main trade routes, hence drastically reducing shipping costs per unit.
This era also witnessed major technological advancements in the container shipping market. The implementation of automated container terminals for cargo loading and unloading, along with the integration of GPS tracking, data-driven route optimization, and sophisticated software systems for container tracking and management, substantially enhanced efficiency and visibility within international trade. Additionally, these technologies bolstered freight security, minimized transit times, and enabled more effective inventory management.
Meanwhile, the industry is undergoing digital transformation with the implementation of blockchain technology for secure and transparent documentation. Digital platforms are streamlining communication and collaboration between stakeholders in the supply chain.
The challenges and disruptions faced
Nevertheless, despite experiencing growth in capacity and automation, container shipping has encountered significant challenges in recent years, particularly in the aftermath of the COVID-19 pandemic. The primary challenges include:
- the severe port congestion in the ports of Los Angeles and Long Beach on the US West Coast, the port of Rotterdam in the Netherlands, as well as some of the biggest Chinese ports like Shenzhen and Ningbo-Zhoushan.
- the disruptions caused by natural disasters (hurricanes, earthquakes, tsunamis), may damage port infrastructure, making the facilities unusable for extended periods, or slowing down cargo handling. Such situations lead to a backlog of ships waiting to dock and unload their cargo.
- the supply chain issues, because of uneven container availability at different ports around the world, labor shortages at ports due to lockdowns and travel restrictions, disruptions in landside transportation, and surges in demand for specific goods.
These challenges highlight the industry’s need for resilience and adaptability. The geopolitical landscape, marked by the conflict in Ukraine since February 2023 and the ongoing situation in Israel, coupled with attacks on cargoes in the Red Sea, poses new challenges for shipping lines.
The future of container shipping
As the world combats the repercussions of climate change, the shipping transportation sector is under increasing pressure to minimize its carbon footprint. Addressing environmental concerns, greener solutions and practices are embraced across the entire supply chain. These initiatives encompass the utilization of alternative fuels, the development of more energy-efficient vessels, heightened emphasis on sustainable port operations, and the optimization of voyage planning.
The future presents exciting possibilities for “smart” containers, integrating sensors for real-time tracking and condition monitoring. These sensors can measure various parameters such as temperature and humidity for sensitive cargo, light levels, stability issues, emissions of dangerous or harmful gases, radiation levels, and energy consumption for refrigerated containers. Even anti-theft technologies are now available: access control, door status surveillance (detecting openings or tampering), and identification of potential breaches or structural damage.
Last, autonomous ships are the next level of efficiency. Although still in the nascent phase of development, their potential could revolutionize the industry by optimizing routes and reducing the occurrence of human errors.
FAQ about container shipping over time
Containerization revolutionized global trade by introducing standardized metallic containers in the 1950s, streamlining the packing, transportation, and transfer of goods between ships, trucks, and trains.
This eliminated manual labor, leading to increased efficiency and seamless intermodal shipping.
The International Organization for Standardization (ISO) established container size standards in the 1960s. These standards include various container types, such as flat racks, open-top, dry freight, insulated, reefer, and tank containers.
The widely used “twenty-foot equivalent unit” (TEU) became the industry benchmark, with dimensions standardized at approximately 20 feet in length, 8 feet in width, and 8.5 feet in height.
Shipping alliances, like the 2M, THE Alliance, and the Ocean Alliance, have reshaped the industry by enabling route optimization, extended service coverage, and cost efficiency.
These alliances involve major shipping companies sharing vessels and resources on agreed trade lanes. Despite recent dissolutions, alliances have played a crucial role in shaping the global container shipping network.
Recent challenges in the container shipping industry include severe port congestion in major hubs like Los Angeles and Rotterdam, disruptions caused by natural disasters, supply chain issues due to uneven container availability, labor shortages, and increased demand for specific goods.
The industry also faces geopolitical challenges, such as conflicts in Ukraine and ongoing situations in Israel, adding to the need for resilience and adaptability.
