The Dawn of Containerization: 1970

The Dawn of Containerization: 1970

Source: Containerization International.

The first containerized shipping services were established in the United States in the late 1950s and early 1960s. There were no specific container size standards, with the most prevalent form being the 35-foot container. By 1968, a standard was reached, defining 20 foot and 40-foot containers as the norm. This allowed the construction of single-purpose ships and specialized terminal facilities. Still, the uncertainty and capital-intensiveness of containerization implied a particular diffusion pattern. It was not until 1970 that a global system of container ports and shipping services started to emerge and that ports started reporting traffic in TEU (Twenty-foot Equivalent Unit), a standard that was set just two years earlier.

Early container shipping activity was highly clustered and involved economies with a strong relationship with the United States. This is reflective of the importance of existing trade relations along which the innovation could diffuse and capture market opportunities.

  • The first cluster involved domestic services between the continental United States and Alaska and Hawaii on the West Coast and Puerto Rico on the East Coast. Initially, container shipping was developed to service the American domestic market, particularly between the East, Gulf, and West coasts as well as the Caribbean.
  • The second cluster concerned Western European ports in the British Isles and the northern range (France, Belgium, Netherlands, and West Germany). The first transatlantic container shipping services began in 1966 between New York and Rotterdam. Initially, shippers were skeptical about the potential of long distance container shipping that was perceived to be more suitable for short distance and domestic markets. By 1970, the advantages of container shipping became apparent.
  • The third cluster was Japan, which at the time was becoming an export-oriented economy with the United States as the principal partner.
  • The fourth cluster was Australia, for which containerization offered a strong incentive for cost reduction for long-distance break bulk trade with Western Europe and the United States.