Container shipping turns 65 rattled yet more resilient

Container shipping turns 65 rattled yet more resilient

Malcom McLean’s Ideal X (pictured) was the first vessel to carry cargo in the standard shipping containers that have since become ubiquitous in global trade. Photo credit: Sea Land/JOC Image Archives.

The 65th anniversary of the dawn of containerization on April 26, 1956, finds the industry struggling to handle a continuing surge of pandemic-driven trade, with delays endemic and costs and frustrations rising, but in an increasingly robust financial condition and no less essential as a key facilitator of global trade.

It took nearly a decade from the first sailing of American trucker Malcom McLean’s Ideal X, a converted World War II tanker, from Newark, New Jersey, to Houston, Texas, for containerized ships to replace traditional breakbulk liner services on the major east-west trade routes. But today, container ships are ubiquitous in all of the world’s major and minor trade lanes, responsible for moving an estimated 45 percent of total global trade, according to United Nations Conference on Trade and Development.

With half of international air freight capacity removed due to the shutdown of passenger service during the COVID-19 pandemic, container ships have become even more the workhorses of international trade, handling the surge in volumes driven by shift in spending by homebound consumers from travel and leisure to home improvement goods. But those additional volumes have brought with them unprecedented challenges in moving goods through an end-to-end system beset by COVID-related impacts on the transportation workforce. The practical result is that containers aren’t being unloaded, reloaded, and returned to origin points fast enough, resulting fewer containers available, despite a ramp-up in new container production, and chronic delays for shippers that many believe could persist throughout 2021.

“I do think we have a long way to go” before containerized supply chains are able to recuperate, George Goldman, US president of Zim Integrated Shipping Services, told the 2021 Georgia Foreign Trade Conference. “I don’t see us getting out of this thing any time soon.”

Container shipping has become increasingly prone to disruption and inconsistent service; the Suez Canal blockage in late March was only the most recent example. And yet, there is no evidence that shippers regard it as risky enough to prompt a wholesale rethinking of long-haul supply chains due to transport disruption.

Over the past 15 years, shocks to the container system have occurred consistently — the squeeze on capacity during the 2010 restocking frenzy, longshore labor disruption on the West Coast in 2014–15, and the bankruptcy of Hanjin Shipping in 2016 can be added to dozens of container ship fires, fog delays, and at sea incidents caused by rough weather or rogue waves — but shippers haven’t been deterred. The share of US containerized imports originating in Latin America and the Caribbean, for example, declined from 12 percent in 2005 and to 11 percent in 2020, while the share arriving from all points in Asia grew from 66 percent to 67 percent during the same period. That indicates importers haven’t rushed to change their sourcing strategies to bring manufacturing closer to end consumers in the US.

As the cargo container celebrates its 65th birthday, the carriers themselves are in the strongest financial position in years, if not ever. Multiple tailwinds are propelling the market from one characterized by chronic overcapacity and financial underperformance over the past two decades, to one in which shipping lines are firmly in the driver’s seat.

From 2015 through 2020, consolidation that removed half of the east-west carriers from the market occurred alongside a steady decline in ship ordering. In addition, global carrier alliances emerged from that period of consolidation as agile operating entities able to quickly flex capacity in response to short term changes in demand, something they had attempted but never done successfully before.

That shines a different light on the recent spate of ship ordering. Container lines ordered more than 70 ships in March alone, but at 3 million TEU, the current order book is equal to 12.8 percent of the world’s current fleet, according to data from IHS Markit, parent company of That’s an increase from the 10.7 percent level in 2020, but greatly reduced from an orderbook-to-fleet ratio of 54 percent in 2007, which resulted in severe oversupply when those vessels were deployed in 2010–12, when global trade was still recovering from the Great Recession.

If carriers’ discipline in quickly removing capacity after China locked down in early 2020 is a permanent change in their behavior, an increased order book is not necessarily a sign that a new period of overcapacity is approaching.

Contact Peter Tirschwell at and follow him on Twitter: @petertirschwell.