Container doesn’t come across as a world changing Innovation. But this seemingly simple metal box changed the face of global trade and industry.
This has been beautifully chronicled in the book, ‘The Box’ by Marc Levinson
Loading goods crate by crate is a costly and time consuming affair. Containers by standardizing the process enabled speed and cost effectiveness.
It is estimated that they reduced the freight cost from Asia to US by 40-60%, thereby helping the emergence of export oriented economies of East Asia.
It helped connect the cheap Asian labour with consumers in the developed world.
Containerisation enabled emergence of Global Value Chains ( Read more about it – here)
The story of Container have lessons for how any disruptive innovation takes hold.
Any disruptive innovation will bring changes across the entire value chain, in this case – ports, ships, cranes, storage facilities, trucks, trains and operations of shippers themselves.
It might take years or even decades before the idea is fully accepted. While Containers were first tried in 1950s, it took almost three decades for them to be widely adopted.
First mover advantage not always works. Nimbleness does.
Many older ports, shipping companies tried to better the older ways and fight containerisation. They went down. If something is fundamentally better, adopt it, don’t fight it
Disruptive innovation usually comes from outsider rather than rank insiders. Entrepreneur Malcolm McLean the man behind the revolution was a trucker before and thought of loading an entire truck onto a ship. Obviously he couldn’t have done that so ended up loading a metal box which we today call Container.
And he ended up revolutionising not only his industry but also ended up influenced profound changes in the Global economy.
Get one such article delivered every day on Whatsapp. Subscribe at bit.ly/finixschool