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May 14 2018

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4 The Journal of Commerce | May 14 2018 Joseph Bonney IF MODERN CONTAINER shipping were a US citizen, it would be old enough to collect Social Security. April 26 marked the 62nd anniversary of the first sailing of Malcom McLean's Ideal X from Newark to Houston in 1956. McLean never claimed to have invented containerization and was quick to note that containers moved on ships long before he entered the business. But he was proud to have introduced the first cellular ship, which debuted two years after the Ideal X and helped launch a system of containerized shipping that changed the world. What's striking about modern containerization's early years was how much its development owed to seat-of-the-pants experimentation and improvisation. Consider the twistlock, the device that made it possible for containers to be loaded and discharged from within the tight confines of below-deck con- tainer cells. Keith Tantlinger, the mechanical genius who invented the twistlock, was a hunter who adapted the design of a bolt-action rifle to create a con- tainer locking-and-lifting device. He later persuaded McLean to release Sea-Land Service's patents on the twistlock, providing the industry with a standard design that allowed containerization to take off globally. More than a half-century later, container shipping is still tinkering with ways to improve operations, add reliability, and fix problems that no one anticipated when the system was taking root. These efforts center on the port and inland side of the supply chain. Bigger ships are reaching the point of diminishing returns. Today's largest container ships carry up to 22,000 TEU. That's a far cry from the Ideal X, which carried 58 containers mea- suring 33 feet each, or McLean's first cellular ship, a converted freighter that carried 226 35-foot boxes. How much larger will container ships become? A recent paper by Adam Kaliszewski, chief financial officer at Baltic Container Terminals in Gdynia, Poland, cites an academic's speculation that the maximum size of container ships could eventually reach 50,000 TEU. That sounds unlikely, and Kalis- zewski notes that numerous advanc- es would be needed in to make such a vessel feasible. Yes, McKinsey & Co. forecast in 1967 that container ships could eventually reach 10,000 TEU, which sounded preposterous at the time. But Kaliszewski notes that while reaching the 10,000-TEU was difficult, making the leap to 50,000 TEU will be even harder. For one thing, dredging harbors to 20-meter depth (in excess of 65 feet) to handle a fully laden 50,000-TEU behemoth would be horrendously ex- pensive. Carriers operating such ships would be severely restricted in where their vessels could be deployed. And the biggest question: How would such ships fit with the rest of the supply chain? The short answer: Not well, barring dramatic changes that may not be worth the cost. It's bad enough for a shipper whose box is the last one discharged from a 22,000-TEU ship. Imagine what it would be for a 50,000-TEU vessel. But while the idea of a 50,000- TEU ship was what caught my eye in Kaliszewski's article, most of his paper discusses what kinds of term- inals, inland networks, and supply chain management would be needed to handle such a ship — or to handle existing sizes more efficiently. Landside operations still haven't caught up with the explosive increase in container ship sizes. However, growing problems with port and inland bottlenecks have produced a new wave of innovation focused less on vessel hardware than on informa- tion technology. You can see it at port terminals that are introducing automation to speed the handling of containers between ship and shore, within terminals, and at truck gates. Com- panies such as NYSHEX (New York Shipping Exchange) are using tech- nology to attack the problem of over- booking and no-show containers. In the United States, there is innovation in chassis supply, where the next big advance is likely to be in improved use of predictive analytics to help providers determine when, where, and how many chassis will be needed to meet a customer's needs. Then there's the buzzword of the day, blockchain, which Maersk and others are trying to harness as a way to untangle supply chains. Could blockchain technology in container shipping eventually rival the importance of the twistlock? We'll see. Meanwhile, the tinkering continues. JOC Joseph Bonney recently retired as senior editor of The Journal of Commerce. Someindustry comments on Joe's retirement can be found on page 7. Container shipping's next frontier The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, May 14, 2018, Volume 19, Issue No. 10. The Journal of Commerce is published bi-weekly except the last week in December (printed 25 times per year) by JOC Group Inc., 450 West 33rd St., 5th Floor, New York, N.Y. 10001. Subscription price: $595 a year. Periodicals postage paid at New York, N.Y., and additional mailing offices. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 450 West 33rd St., 5th Floor, New York, N.Y. 10001. Letter From the Editor What's striking about modern containerization's early years was how much its development owed to seat-of-the-pants experimentation and improvisation.

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