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By Root 972 0

Carolina, was the nation’s largest tobacco company. Its cigarette business threw off cash by the bucketful, and its managers were using that cash to turn the company into a conglomerate. U.S. cigarette consumption had fallen in 1968, and impending restrictions on marketing—the government would ban cigarette advertising on American television at the start of 1971—boded ill for its core business. The ship line’s huge investment needs would provide Reynolds with a convenient shelter from corporate income tax. An added inducement was McLean’s status as a local genius—he had moved McLean Trucking to Winston-Salem after World War II and had lived there for a decade. Reynolds offered $530 million, with McLean Industries’ shareholders free to choose between Reynolds securities and $50 per share in cash. Litton Industries cashed out at a huge profit, as did Daniel K. Ludwig: the $8.5 million that Ludwig had invested in Sea-Land in 1965 now was worth $50 million. Many Sea-Land executives, shocked by word of their company’s sale, instantly became very wealthy men.7

If anyone doubted McLean’s timing, his wisdom soon became clear. In October 1968, he had commissioned designs for an entirely new kind of containership, the SL-7. The SL-7 was meant to leave U.S. Lines’ new Lancer looking as outdated as a Liberty Ship. It would be nearly a thousand feet long, just a few feet shorter than the famed Queen Mary. Its capacity was 1,096 of Sea-Land’s 35-foot containers, equivalent to more than 1,900 20-foot boxes—a far greater load than any other ship afloat. Its most striking characteristic, though, was its speed. The SL-7 would travel at 33 knots, twice as fast as any ship in the Sea-Land fleet. It would be fast enough to sail around the world in 56 days, so fast that a fleet of eight ships could provide a round-the-world sailing from each major port each week. U.S. Lines boasted that the Lancer and its sister ships could deliver a container from Newark to Rotterdam in 6½ days. The SL-7s would do it in 4½ days and could cross the Pacific from Oakland to Yokohama in just 5½ days. Only one commercial ship ever built, the venerable passenger liner United States, was fast enough to keep up with it.8

More was at work than megalomania. McLean, once more, had conceived a way to gain a strategic edge. He planned to deploy the new ships in the Pacific. Sea-Land was a conference carrier in the Pacific, charging the same rates as its competitors. The SL-7s’ faster transit time would help Sea-Land attract cargo, and other carriers, bound by the conference agreement, would not be able to drop their rates in response. In the summer of 1969, the Sea-Land division of R.J. Reynolds Industries made its plans for the SL-7 public, ordering eight vessels from European shipyards. The price tag was $32 million per ship. Containers and other equipment would bring the total cost of the SL-7s to $435 million. For McLean Industries, even if it could have raised the money, spending nearly half a billion dollars on ships would have been a bet-the-company gamble. For R. J. Reynolds, it was almost spare change. The tobacco giant was so cash rich that in 1970 it purchased a petroleum company, American Independent Oil Company, to provide a cheap source of fuel for Sea-Land’s expanding fleet.9

The first stage of the container boom occurred entirely on the North Atlantic. The second happened on the Pacific. Matson sailed the first fully containerized ship from Japan in September 1967, in what it thought would be a partnership with Japanese ship lines. Having learned the business, the Japanese soon left Matson behind and began their own container service to California in September 1968. Sea-Land, using containerships headed home from Vietnam, began carrying 35-foot boxes from Yokohama and Kobe the following month. If there had been any doubt about whether Japanese exporters would adopt containerization, it was settled quickly. Within a year, container tonnage between Japan and California was two-thirds that across the North Atlantic. The impact on trade flows was immediate.