The Box - Marc Levinson [129]
And still the vessels grew. The economies of scale were so clear, and so large, that in 1988 ship lines began buying vessels too wide to fit through the Panama Canal. These so-called Post-Panamax ships needed deeper water and longer piers than many ports could offer. They were uneconomic to run on most of the world’s shipping lanes. They offered no flexibility, but they could do one thing very well. On a busy route between two large, deep harbors, such as Hong Kong and Los Angeles or Singapore and Rotterdam, they could sail back and forth, with a brief stop at each end, moving freight more cheaply than any other vehicles ever built. By the start of the twenty-first century, ship lines were ordering vessels able to carry 10,000 20-foot containers, or 5,000 standard 40-footers, and even bigger ships were on the drawing boards.
As ships got bigger, ports got bigger. In 1970, the equivalent of 292,000 loaded 20-foot containers passed across the piers at Newark and Elizabeth, far and away the world’s largest container complex. In 1980, the wharves around New York Harbor, including the new U.S. Lines terminal on Staten Island, handled seven times that many loaded boxes, even though New York’s share of all U.S. container traffic had declined. Container traffic from Britain to points outside Europe, almost all of which passed through either Felixstowe or Tilbury, more than trebled in a decade, despite Britain’s weak economy. Deep-sea ports from Rotterdam, Antwerp, and Hamburg to Hong Kong, Yokohama, and Kaohsiung, on Taiwan, more than doubled the number of boxes they handled in the late 1970s. More and more, the biggest ports traded largely with one another: in 1976, nearly one-quarter of all U.S. containerized foreign trade went through Kobe, Japan, or Rotterdam, in the Netherlands, and another quarter went through just five Asian or European ports.6
The ceaseless expansion of port capacity was driven by the same force as the ceaseless increase in ship capacity, the demand for lower cost per box. New ships sold for as much as $60 million apiece in the late 1970s, despite the depression in shipbuilding. To cover their mortgage payments, ship lines had to maximize the time that their vessels were under way, filled with revenue-generating cargo, and minimize the time spent in port. The equation was simple: the bigger the port, the bigger the vessels it could handle and the faster it could empty them, reload them, and send them back out to sea. Bigger ports were likely to have deeper berths, more and faster cranes, better technology to keep track of all the boxes, and better road and rail services to move freight in and out. The more boxes a port was equipped to handle, the lower its cost per box was likely to be. As one study concluded bluntly, “Size matters.”7
Size mattered, but a port’s location mattered less and less. Traditionally, ports had prospered from interrupting the flow of trade. Customs brokerage, wholesaling, and distribution had been concentrated in port cities, as they were in New York, because all inbound and outbound cargo made a stop there. A port usually had overwhelming financial and commercial links with the interior region that was its hinterland. Geographers, once upon a time, had designated inland points as “tributary” to a particular port.
There were no tributaries in container shipping. Containers turned ports into mere “load centers,” places through which large amounts of cargo flowed with hardly a break. Each ship line organized its operations around a small number of load centers to minimize the number of stops its costly vessels would make. Customers did not care where those load centers happened to be: an Illinois manufacturer shipping machinery to Korea was indifferent as to whether its goods went by truck to Long Beach or by rail to Seattle, much less whether they entered Korea at Busan or Inchon. The ship line would make those decisions at its discretion—and it would make them based entirely on which combination of vessel operating costs, port charges, and