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Market story

How cheap oil sank the inventor of the container

Published .

As a ship carrying 58 containers set off, the local boss of the longshoremen’s union said he would happily sink it. In April 1956 the converted tanker Ideal-X sailed from Newark to Houston. It had been bought by Malcom McLean, the owner of a trucking company from North Carolina. At first he planned to carry his whole trucks on ships, but that would have wasted space on board, so only the trailer bodies were loaded.

When ships were loaded by hand, loading a ton cost $5.86. With containers it cost 16 cents. McLean knew that a ship earns money only while it is at sea, and he built his business on that idea.

Later he bought United States Lines. Betting that oil would stay expensive, he borrowed money to build the largest cargo ships of the time, which were fuel-efficient and slow. Just as they were delivered, oil fell almost to a historic low, and competitors’ fast ships became profitable again. In 1986 McLean declared bankruptcy with debts of more than a billion dollars. Since 2007, when fuel prices rose sharply, shipping lines have deliberately run their container ships slowly.

Source: Wikipedia, Malcom McLean

Story archive

All issues in order, newest first.

  1. How cheap oil sank the inventor of the containerAs a ship carrying 58 containers set off, the local boss of the longshoremen’s union said he would happily sink it.
  2. How a goatskin bond outlived the guilder and pays in eurosOf the tens of thousands of manuscripts in Yale’s rare book library, one still earns interest.
  3. The pension where the last survivor winsThe tontine insured against a misfortune nobody expects: living too long.
  4. How a pact of 24 brokers became the New York Stock ExchangeThe world’s largest stock exchange began as a cartel: 24 brokers promised each other to hold their commissions.
  5. How “Bogle’s Folly” grew into trillionsThe first index fund for retail investors raised just $11 million, and competitors dubbed the venture “Bogle’s Folly.”
  6. How two traders cost the exchange its onionsA sack of onions was once worth less than an empty sack.

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