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The Federal Maritime Board promptly announced that only containerships designed for those sizes could receive construction subsidies.
The standards wars were by no means over. In fact, they had barely begun.
containers together could be secured with the twist of a handle. Pan-Atlantic threatened to bring suit against anyone infringing on its design, forcing other ship lines and trailer manufacturers to develop their own locks and corner fittings. This meant that, even if container sizes were standardized, Sea-Land’s cranes would not be able to lift Grace’s containers,
The obstacle was that every company had financial reasons to favor its own fitting.
Containerships were hugely capital-intensive, and the industry’s viability depended upon minimizing port time and maximizing the time that each vessel was under way, earning revenue.
Sea-Land released its patents, so that the MH-5 committee could use them as the basis for a standard corner fitting and twist lock.
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In principle, land and sea carriers would soon be able to handle one another’s containers.
Container leasing companies could expand their fleets in the knowledge that many carriers would be prepared to lease their equipment, and shippers could make use of containers without wedding themselves to a single ship line. “Projects awaiting the outcome of the fitting question are already underway,
Railroads in Europe had different coupling systems from those in the United States, meaning that the cars in a train banged against one another with greater force, and the Sea-Land fittings and locks had never been subjected to such conditions.
The thousands of boxes that had been built since ISO first approved corner fittings in 1965 had to have new fittings welded into place, at a cost that reached into the millions of dollars.
The most powerful evidence against the international standards came from the marketplace. Despite the U.S. government’s pressure on carriers to use “standard” sizes, nonstandard containers continued to dominate. Sea-Land’s 35-foot containers and Matson’s 24-footers, all a nonstandard 8 feet 6 inches high, accounted for two-thirds of all containers owned by U.S. ship lines in 1965.
Standards from practice
The large ones were too hard to fill—too few companies shipped enough freight between two locations to require an entire 40-foot container—and small ones required too much handling.
“In the economics of transportation, there is no magic in mathematical symmetry.”29
In addition, Marad dispensed other types of aid. It gave operating subsidies to U.S. ship lines sailing international routes, to compensate for the requirement that they employ only high-wage American seamen,
the subcommittee agreed to increase the “standard” height for containers to 8½ feet,
“The key to automation is the existence of a standardized product,” British steamship
Sea-Land and Matson, which had invested a combined $300 million in containerization, were less concerned about the cost of conversion than about the inefficiency of doing business with equipment ill-suited to their needs.
don’t care what size container is adopted as a standard,” he affirmed. “If the marketplace can find one that moves cheaper, that is the way the marketplace will dictate it and we want to be flexible enough to follow the marketplace.
Two controversies remained. The MH-5 committee undertook a futile effort to make containers compatible with airplanes as well as with ships, trucks, and trains.
After months of studies, it dawned on the engineers that shippers paying a premium for the speed of air freight would be unlikely to want their cargo carried in ships, and a separate standard was developed for air containers.
Railroads raised a more serious problem, contending that containers needed heavier end walls.
by one estimate, the requirement for stronger end walls added one hundred dollars to the cost of manufacturing a standard container.36
In hindsight, the process can be faulted in almost every particular. It led to corner fittings that were too weak and needed redesign. Several newly approved container sizes were uneconomic and were soon abandoned. The standards for end walls may have been excessive, and the standards for lashing containers together on deck never quite added up. No one would declare that all of the subcommittees and task forces came up with an optimal result.
almost all of the world’s major ship lines were using compatible containers. Finally, it was becoming possible to fill a container with freight in Kansas City with a high degree of confidence that almost any trucks, trains, ports, and ships would be able to move it smoothly all the way to Kuala Lumpur. International container shipping could now become a reality.37
their businesses had survived thanks almost entirely to government coddling. On domestic routes, government policy discouraged competition among ship lines. On international routes, rates for every commodity were fixed by conferences, a polite term for cartels, and the most important cargo, military freight, was handed out among U.S.-flag carriers without the nuisance of competitive bidding.
It was all well and good for visionaries to proclaim that containers were a “must,” but the collective wisdom of the shipping industry held that they would never carry more than a tenth of the nation’s foreign trade.2
What both transportation companies and shippers were slowly coming to grasp was that simply carrying ocean freight in big metal boxes was not a viable business. Yes, it produced some savings:
much of the cost of loading and unloading vessels at the dock. Shippers, though, cared not about loading costs, but about the total cost of delivering their products from factory to customer. By this standard, the advantages of containerization were less apparent.
The use of 40-foot trailers on superhighways instead of 28-foot trailers on congested two-lane roads led to large productivity gains that helped truckers take business from railroads. Trucking
the Transportation Act of 1958. In a single remarkable sentence, the law ordered the ICC not to keep any carrier’s rates high to protect another mode of transportation, while also directing it to block unfair or destructive competition.
Viewed at the start of 1965, the balance on containerization’s first nine years was positive but unspectacular.
Behind the scenes, though, the prerequisites for the container revolution were falling into place.
All three carriers reported stunning efficiencies. Three medium-size containerships could handle as much transatlantic freight as six breakbulk ships, with only half the capital cost and two-thirds of the operating cost, a
Moore-McCormack pegged the cost of loading containerized cargo at Port Elizabeth as $2.00 to $2.50 per ton, versus $16.00 per ton for conventional freight.29
The eastern railroads commissioned a study, which urged them to act quickly to attract container traffic. The railroads chose to do the opposite.
Whirlpool shipped by truck instead.
Confusing everything was the decision by the Joint Chiefs of Staff to run a “push” supply system. In contrast to a “pull” system, in which units in the field would request the supplies they needed, the push system required supply experts back in the United States to decide what to send. The Army Materiel Command shipped more than one million automatic resupply packets, providing equipment and spare parts based on assumptions about how much a normal unit in the field would require.
Logistics officers in the United States should send full shiploads to individual Vietnamese ports, rather than having a ship make several port calls, so the vessel could return to America as quickly as possible.
Just like commercial shippers, military shippers needed to learn how to use the container to best advantage. At first, they treated it simply like a big, empty box.
The army instructed its depots to stop combining shipments that would need to be sorted in Vietnam and to abide by the Three Cs: one container, one customer, one commodity.
“The full benefits of containerization can only be derived from logistic systems designed with full use of containers in mind.” It was a conclusion that shippers in the private sector were only beginning to reach.25
No figures are available on profits from the Vietnam service, but high capacity utilization must have translated into robust profitability.
By the late 1950s, the lesson for public officials already was clear. As container shipping expanded, maritime traffic would be drawn to a small number of very large ports. Many established centers of maritime commerce would no longer be needed, and ports would have to compete to be among the survivors.
Containerization offered a chance to escape these geographic constraints.
early as 1966, though, public officials in Seattle were sensing that their remote city, with little industry, might be able to develop a new economy based on distribution rather than on factories.
A great proportion of the city’s wholesaling, trucking, and warehousing business would soon relocate to be near the emerging port facilities on the eastern side of San Francisco Bay, Little warned, because it no longer needed to be close to the other business activities in San Francisco.14
They struck back in the traditional way: by trying to stifle their competitors.
The number of dockworkers fell from 24,000 to 16,000 in less than five years. Factories and warehouses, with no further need to be near the Thames, began to flee, taking their import-and-export business elsewhere, and the waterfront communities tied to the port began to disintegrate.32
The container stripped Liverpool of its competitive advantages. Its costs per ton of cargo were too high, and it was on the wrong side of an island that was reorienting its trade toward continental Europe. In
