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Cargo handling at both ends of the voyage accounted for 36.8 percent of the outlay.
The solution came from an outsider who had no experience with ships.30
Yet while the larger American ship lines were not particularly profitable, they were relatively sheltered.
Reshaping the business of shipping was left to an outsider with no maritime experience whatsoever, a self-made trucking magnate named Malcom Purcell McLean.
The ICC controlled almost every aspect of the business of common carriers—truckers whose services were on offer to the public. A common carrier could haul only commodities the ICC allowed it to haul, over ICC-approved routes, at ICC-approved rates.
The ICC’s concern was not efficiency but order. Regulation protected the interests of established truck lines by limiting competition, and it protected the railroads by forcing truck lines to charge much more than railroad companies. More than anything else, the ICC wanted to keep the transportation industry stable.
much slower railroads, which protested the proposed rates as “unfair and destructive.
with senior drivers on the run from Winston-Salem to Atlanta. The senior driver got a bonus of one month’s pay if a man he had trained made it through his first year without an accident.
In the context of the 1950s, McLean’s plan was revolutionary.
The country’s best-known trucking magnate walked away from the business he had built in order to build a new one, based on some untested ideas about shipping.17
Typical of McLean’s financial acumen, he laid out only $10,000 of his own cash to gain control of one of the country’s largest ship lines through what later became known as a leveraged buyout.
A government maritime-promotion program made leftover World War II tankers available to ship lines very cheaply. Pan-Atlantic
For McLean, though, the real triumph came only when the costs were tallied. Loading loose cargo on a medium-size cargo ship cost $5.83 per ton in 1956. McLean’s experts pegged the cost of loading the Ideal-X at 15.8 cents per ton.
While many companies had tried putting freight into containers, those early containers did not fundamentally alter the economics of shipping and had no wider consequences.
Malcom McLean’s fundamental insight, commonplace today but quite radical in the 1950s, was that the shipping industry’s business was moving cargo, not sailing ships.
That insight led him to a concept of containerization quite different from anything that had come before. McLean understood that reducing the cost of shipping goods required not just a metal box but an entire new way of handling freight. Every part of the system—ports, ships, cranes, storage faciliti...
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The combination of cells and gantry cranes allowed the containers to be handled with unprecedented speed.
McLean was not deterred. Pan-Atlantic’s problems, he determined, were rooted in the maritime industry’s passive, slow-moving culture. Domestic ship lines, such as Pan-Atlantic, operated in a highly regulated environment that left little room for entrepreneurial spirit.
After commissioning outside studies for two years—the same two years it took Malcom McLean to move from a concept to a functioning business—Matson created an in-house research department in 1956.
Renting time on an IBM 704 computer at several hundred dollars a minute, the researchers built a fully fledged simulation model of the business, incorporating data on volume and costs for more than three hundred commodities at every port the company served at every time of year.
At that rate, the Alameda terminal could handle 400 tons per hour, more than 40 times the average productivity of a longshore gang using shipboard winches. Similar cranes were installed in Los Angeles and Honolulu
By now, everyone in the close-knit maritime industry was talking containers. The talk, however, far outstripped the action.
It was easy enough to conclude that containers would change the business, but it was not obvious that they would revolutionize it.
Sea-Land benefited from this boom—but it also helped cause it. Puerto Rico’s shipping-dependent economy had been a prisoner of high transport costs.
In the early 1950s, before container shipping was even a concept, New York handled about one-third of America’s seaborne trade in manufactured goods.
the following year, a dozen carriers had placed their first orders for new vessels meant to carry nothing but containers, both in their holds and on deck.
No fewer than sixty-four of these gigantic ships were under construction, and the Port Authority touted a study showing that 75 percent of the Port of New York’s general cargo could move in containers.
The union made a last-ditch effort to preserve the old port by hiring Vincent O’Connor, Wagner’s marine and aviation commissioner, to lobby for pier construction.
ships with much less handling than could factories inland. The container turned the economics of location on its head. Now, a company could replace its crowded multistory plant in Brooklyn or Manhattan with a modern, single-story factory in New Jersey or Pennsylvania, could enjoy lower taxes and electricity costs at its new home, and could send a container of goods to Port Elizabeth for a fraction of the cost of a plant in Manhattan or Brooklyn. This is exactly what occurred: while industry fled the city, 83 percent of the manufacturing jobs that left New York between 1961 and 1976 ended up no
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The container was not the sole cause of the surprising and painful economic changes of the 1960s and 1970s, but it was an important cause. Container technology developed far more quickly and affected transportation industries far more significantly than even its most ardent proponents had imagined. New York was only the first established shipping center whose economy would be transformed in ways that were unimaginable before the container arrived on the scene.
“A containership can be loaded and unloaded in almost one-sixth of the time required for a conventional cargo ship and with about one-third of the labor,
But “container” meant very different things to different people. In Europe, it was usually a wooden crate with steel reinforcements, 4 or 5 feet tall. For the army, it involved mainly “Conex boxes,” steel boxes 8½ feet deep and 6 feet 10½ inches high used for military families’ household goods. Some containers were designed to be shifted by cranes with hooks, and others had slots beneath the floor so they could be moved by forklifts.
This diversity threatened to nip containerization in the bud. If one transportation company’s containers would not fit on another’s ships or railcars,
So long as containers came in dozens of shapes and sizes, they would do little to reduce the total cost of moving freight.
The railway industry, for example, had gone through a standardization process. The
The first carrier with fully containerized ships, Pan-Atlantic, used containers that were 35 feet long, because that was the maximum allowed on the highways leading to its home base in New Jersey. A 35-foot container would have been inefficient for carrying canned pineapple, Matson Navigation’s biggest single cargo, because a fully loaded container would have been too heavy for a crane to lift; Matson’s careful studies showed that a 24-foot box was best for its particular mix of traffic. Grace
Container shipping was brand-new, and pushing standardization before the industry developed might lock everyone into designs that would later prove undesirable. From
The committee finally agreed that containers should be no more than 8½ feet high but could be less.
The length question was deferred.5
The other Marad committee, on container construction, defined its most important task as establishing maximum weights for loaded containers.
Various other complicated issues, such as the strength of corner posts, the design of doors, and the standardization of corner fittings for lifting by cranes, were put off.6
The specifics mattered less: within the limits set by state laws, trucks and railroads could accommodate almost any length and weight. The maritime interests that were influential in the Marad committees,
Most ships then carrying containers had ship-board cranes built to handle a particular size, and they would have to be converted to handle other sizes.
The previous November it had voted to make 8½ feet the maximum height for containers, but it ruled now for 8 feet. The change stemmed from concern that an 8½-foot-high container would violate highway height limits in some eastern states—a problem that was real for trucks hauling containers on standard trailers, but one that did not affect trucks pulling the specially designed chassis used by Pan-Atlantic and Matson.
A lower height limit would benefit eastern truckers at the expense of ship lines:
The Federal Maritime Board would not approve federal mortgage insurance for a ship fitted for nonstandard containers,
with the weight to be carried on the corner posts rather than on container walls.
The effort’s chief proponent was a brash entrepreneur named Morris Forgash, who had built the United States Freight Company into a $175-million-a-year business over two decades by picking up small lots of cargo from various shippers, consolidating them
If Pan-Atlantic and Matson declined to adopt the standards, they would forfeit eligibility for government ship-construction subsidies, while their competitors would be able to build “standard” containerships partially at government expense.
No government control because nomsubsidies
Either way, the latecomers to containerization would gain at the expense of the pioneers.
