The Box - Marc Levinson [120]
Cars, which did not travel in containers, accounted for part of the export surge. Much of the increased trade, however, was stimulated by containerization. Within three years, nearly one-third of Japanese exports to the United States were containerized, as were half of Japan’s exports to Australia.11
Electronics manufacturers had been among the first Japanese exporters to see the advantages of shipping their fragile, theft-prone products in containers. Electronics exports had been on the rise since the early 1960s, but the lower freight rates, inventory costs, and insurance losses from container shipping helped turn Japanese products into everyday items in the United States, and soon in Western Europe. Exports of televisions climbed from 3.5 million sets in 1968 to 6.2 million in 1971. Shipments of tape recorders went from 10.5 million to 20.2 million units over the same three years. Containerization even gave new life to Japanese clothing and textile plants. Rising wages had put an end to the growth of Japan’s apparel exports in 1967, but the drop in shipping costs briefly made it viable for Japanese clothing manufacturers to sell in America again.12
In 1969, as United States Lines was preparing to add eight fast containerships to its U.S.-Japan service, the Japanese government put shipping at the center of its economic development strategy. Its new five-year plan called for a 50 percent expansion of Japan’s merchant fleet, including tankers and ore carriers as well as containerships. The government offered $440 million to help Japanese ship lines begin container service to New York, the Pacific Northwest, and Southeast Asia, using Japanese-built ships. The subsidies were an incredible bargain. A ship line needed to put up only 5 percent of the cost of building its new vessel. The government development bank provided most of the funds. No payments were due for three years, after which the ship line was to repay the loan over ten years at an interest rate of 5.5 percent—a lower rate than the Japanese government paid to borrow the money that its development bank lent out. The remainder of the construction cost came from commercial banks, with the government paying 2 percentage points of interest. With such giveaway terms, Japanese ship lines had no fewer than 158 vessels on order or under construction by the end of 1970, all in Japanese shipyards.13
Hong Kong received its first visit from a fully containerized ship in July 1969, even before its container terminal was ready. The following year, as Sea-Land opened container service to South Korea and Matson began biweekly visits to Taiwan, Hong Kong, and the Philippines, container capacity on transpacific routes reached nearly a quarter million units in 73 vessels. Other new services linked Australia to Europe, North America, and Japan. Regular sailings with fully containerized ships between Europe and the Far East began in 1971.14
Shipyards around the world were choked with new orders. East Asia’s ports, with years to prepare themselves, were ready and waiting as the new vessels came on line in 1971 and 1972. Trade soared, as a story similar to Japan’s was repeated along the Pacific Rim. Oceanborne exports from South Korea, 2.9 million tons in 1969, reached 6 million tons in 1973. Korean exports to the United States trebled over those three years as lower shipping costs made its garments competitive in the U.S. market. Hong Kong followed much the same course. Before it filled ninety-five acres of harbor to build a containerport, the colony’s shipping had been so primitive that oceangoing ships anchored far out in the harbor, and small boats shuttled imports and exports back and forth to shore. With the new terminal allowing containerships to collect cargo