Shipping Break Bulk vs Containers

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Shipping Break Bulk vs Container

Break Bulk vs Containers

Containerized shipping – The shift to use of containerized shipping is very visible at many sea ports around the world. Many docksides facilities have added huge, long legged, spider like cranes that go alongside rows of rectangular 

boxes stacked 2 or 3 high. Some cranes stretch 200 feet high and straddle two lanes of tractor trailers loaded with the same rectangular boxes.  If you look closely, you will see that the boxes loaded on the trailers are movable from the trailer structure. Containerization is also visible along major waterways where huge ships are piled high with the same boxes. Some of the ships carrying containers are 1200 feet long and 160 feet wide and carry thousands of containers. The largest ships can carry 14,000 containers.

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Break Bulk Merchant Marine -. Prior to about early 1970’s almost all general cargo was shipped by the break bulk process. The break bulk process means that cargo, in small containers  (bagsboxescratesdrums, or barrels) from various places is collected at the dock, moved aboard ship by longshoremen using cranes and pallets, unloaded and

placed in the ships hold, shored up so that the cargo does not shift when underway, takes a boat ride then repeats the process in reverse at a destination. The process of loading a ship in this way is very time consuming and expensive.  Break bulk is the opposite of shipping in large containers or in bulk such as oil, coal or grain

USS Whiteside (AKA 90) typical Maritime Administration designed C2 break bulk cargo ship.

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SS Warrior Study – A 1954 study by the federal government looked at the cost of transporting good from the US to Germany. It found that to move 1156 separate shipments from 151 locations cost $237,000. Half the total costs of shipping the goods were the longshoremen cost of loading the ship (port cost). The sea voyage itself cost 11.5% of the total cost. Some of the goods took 95 days from first identifying the cargo to its destination in Germany.

The typical cost of an exports shipped by the break bulk process amounted to about 25% of the cost of the product in an export market. The same is true for an imports.

The bulk of the ships used by the Merchant Marine prior to about mid 1970’s were World War II ships. They were built just before WWII, during or just after WWII.  The early container ships (1960’s) were modified break bulk ships, modified to accept containers.

Containerization Pioneers – Matson Lines and Malcom McLean – In the mid 1950’s there were two entities that were looking at containerizing general cargo to circumvent the time and cost of loading general cargo at the dock (port costs). Matson Line for its Hawaii to West coast shipments and Malcom Mclean for the rest of the world. McLean had a vision of widespread containerized shipping and he wanted to be the lead shipping company using the process. He had the containers designed, the ships to hold them designed and built, the crane system to load and unload the ships. Several key events in working out a containerized shipping process follows.  All are activities by McLean’s company unless otherwise noted.

     1954 – Matson used computer simulation to evaluate proposed systems. Matson modified some of its ships to test for shipping by the containerization process.

      1955 – Demonstrate the concept by shipping a load of Ballentine Beer from New York to Miami with a break bulk ship modified to handle containers. Cost of shipment 94% less than break bulk.

     1956 – Ship Ideal X.  Test concept by modifying a WWII T2 tanker to carry containers above the normal tanker deck. Ship containers from New York to Texas. The process reduced shipping cost from $5.83 per ton break bulk to sixteen cents per ton.

      1957 – Design a standardized truck chassis, containers, holding mechanism and cranes to handle containers moving from trailer to ship. Demonstrate on Ship Gateway City

     1958 – After sailing from Newark to Puerto Rico with containers, longshoremen refuse to unload the ship.

     1960 – Los Angeles biggest container port on West coast.

     1961 – Matson steamship shifted operation from San Francisco to Oakland/Alameda new container port.

     1965 – Shipping containers from East Coast to California by way of Panama Canal.

     Mid 1960s - McLean’s company was the dominant shipping company between Port Elizabeth NJ and Puerto Rico.  Early in the Vietnam War, the process for shipping cargo was in shambles. With his company money at risk, he built a port and established a sound system for logistics support of our military.

     Mid 1960s into the 1970s it was boom time for building ports, cranes, containers, container trailers, not only in the US but many world locations.

        1969 – The first purpose-built container ships, American Lancer for US Lines started operation. Ship designation C7 by Maritime Administration.

The movement to full containerized shipping required a financial commitment beyond the capabilities of any one shipping company. Large new container ports required financial support from governments around the world but resulted in lowering shipping costs.

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Maritime Administration designed C7 ship. First purpose built container ship (1969).

Container Ships – in 2020, about 90% of general cargo, worldwide is transported by container ships. The holds of purpose built container ships are divided into vertical guides to receive containers. Once the holds are loaded with cargo and sealed at the deck level, additional containers are loaded on the deck. The containers are standard size and can be loaded onto railroad cars or trucks and hauled away without opening or repackaging its content. Containerization has reduced shipping time by about 84% and costs by 35%. Containerization ships can be unloaded and loaded in hours vs days for a break bulk ship and handle multiples of the amount of cargo. There are several size categories of container ships. The biggest are over 1000 feet long and 160 feet wide and can carry more than 1400 standard size containers.

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Two container ships and a view into the hold of a container ship showing guides used when loading containers.

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Impact of containerization – The container made shipping costs much lower and in doing so changed the shape of the world economy. Shipping costs no longer sheltered high-cost manufacturers whose great cost advantage was closeness to their customers and suppliers. Manufacturers moved away from urban centers such as New York and Liverpool. Huge industrial complexes were built near container ports such as Los Angeles and Hong Kong to take advantage of lower shipping costs. Malaysia could deliver blouses to Macy’s in New York more cheaply than blouse manufacturers in nearby lofts of New York’s garment district. In 1956 the world was full of small manufacturers selling locally. By the end of the 20th century, local markets for goods were few and far between.

Consumers benefitted greatly from a wider variety of goods all at low prices. The US imported 4 times the variety of goods in 2002 as in 1974. For nations not devastated by World War II, the world demand for products created a opportunity to produce for the world. After containerization, low shipping costs and low wages for workers in Asia set limits for wages in South Carolina.

Suggested reading – The Box by Marc Levinson

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