By Clifford F. Lynch
DC Velocity, September 2006
Visionary though he was, Malcom McLean probably
had no idea what he had started on the April day 50 years ago when he loaded 58
highway trailers onto a modified World War II tanker for a six-day voyage from
Newark to Houston. And no inkling that he had ushered in the era of
containerized shipping. But thatís what he did, say Arthur Donovan and Joseph
Bonney in their new book, The Box That Changed the World. Those trailers,
which had been reinforced and had their wheels and undercarriages removed for
the trip, represented the first major ocean container shipment. And although
McLean made no claim to having invented the ocean container, what he did with
that historic voyage was demonstrate the economic advantages of containerized
shipping, and in the process, revolutionized global trade.
Today, over 70 percent of general ocean cargo is shipped in containers, and
about 11,000,000 containers, representing $1.5 billion in goods, enter the
United States each year. That number is projected to increase to 13,000,000 by
next year, according to Rosalyn Wilson, author of the annual State of Logistics
That has some observers worried. As the wave of incoming containers turns
tidal, the question becomes whether the nationís transportation system can
handle the flood. And despite their well-publicized congestion woes, itís not
just he ports that are in danger of being overwhelmed. That surging tide of
imports threatens to swamp intermodal handling facilities and the railroads as
Right now, virtually all of the containers that arrive at U.S. ports are
hoisted onto trains for inland movement via intermodal service. And as the
volume of incoming containers has risen in the past few years, so has the volume
of intermodal traffic handled by the railroads. According to the Association of
American Railroads, intermodal shipments reached record-high volumes in 2005,
when an unprecedented 11.7 million intermodal units moved over the U.S.
railroads. That trend, it adds, has continued into 2006.
But containerized imports arenít solely responsible for that growth in
intermodal volume. Strange as it may sound, truckers have contributed as well.
Unrelenting cost pressures in recent years have driven many truckload carriers
to intermodal. Both J.B. Hunt and Schneider, for example, are investing heavily
in intermodal equipment. J.B. Hunt today owns 25,000 containers, compared to
As they scramble to cope with the growing traffic, railroads are increasingly
taking advantage of the so-called inland ports. When containers arrive at the
seaports, the rails load the containers onto flatcars as quickly as they can and
whisk them directly to these inland ports. Cities like Memphis, Dallas, Kansas
City and Chicago all boast intermodal yards where trains can be broken down, and
in some cases, freight can be cleared by Customs.
Theyíre investing in these inland networks too. In June, for example, the
Kansas City Southern Railway (KCS), along with its Kansas City Southern de
Mexico subsidiary, launched daily service from the West Coast port of Lazaro
Cardenas, Mexico, to Jackson, Miss., and points beyond. The Kansas City Southern
also says it plans to develop an intermodal terminal at the Port of Lazaro
Though desperately needed, this new capacity is not a long-term solution.
Much more is needed. And itís by no means clear that the rails can do it on
their own. Although the nationís railroads continue to invest in new track,
new equipment and infrastructure improvements (they will spend $8 billion for
capital improvements this year alone), most industry watchers doubt this will be
enough to keep up with demand.
The question, it seems, is no longer whether intermodal is here to stay. The
question is, are we ready for it?