The Box - Marc Levinson [131]
The increasing riskiness of the port business did not pass unnoticed. Government investment in ports had been crucial to the development of container shipping in the 1960s and 1970s. With the exceptions of Felixstowe and Hong Kong, every major containerport in that era was developed at public risk and expense. At the time, there had been no alternative: the undercapitalized ship lines and stevedoring companies could not possibly have financed port development on their own. As investment needs grew larger, public officials began to lose their enthusiasm for running ports. “The incremental costs are now staggering,” the head of Seattle’s port said in 1981. The possibility that a ship line’s departure or demise could leave a public agency to pay for idle cranes and silent container yards was too great for many governments to chance.13
British prime minister Margaret Thatcher broke the ice by selling off twenty-one ports to a private company in 1981. Governments in other countries followed suit. Malaysia leased its container terminal at Port Klang to a private group in 1986, and ports from Mexico to Korea to New Zealand were soon in private hands. The investors included not only stevedoring and transport companies, but also leading ocean carriers. Containership lines were by now huge businesses, able to raise the large amounts of capital that ports required. As port users, they had an interest in having facilities that could handle their ships quickly. Unlike government agencies, the private port operators had no imperative to expand for the sake of local economic development; they could insist on long-term contracts, backed by banks or by collateral, to assure that they would recover whatever investments they made. Governments retreated to the role of landlords, renting out waterfront land to private companies. By the end of the twentieth century, nearly half the world’s trade in containers would be passing through privately controlled ports.14
In 1977, container shipping reached a landmark. Containerships were put into service between South Africa and Europe, the last big maritime route still handled by breakbulk ships. Containers were by no means universal; on many less trafficked routes, especially to Africa and Latin America, traditional ships still dominated. In commercial terms, though, these were niche markets, not large opportunities. The major ocean routes had become the floating highways that Malcom McLean had envisioned. Seventeen ships with a total capacity of 20,000 20-foot containers sailed each week from the U.S. Pacific coast to Japan in 1980. From northern Europe, 23 ships set sail weekly for Atlantic and Great Lakes ports in North America, and 8 more, with a capacity of more than 15,000 containers, left Europe for Japan. Even the long route between Australia and the U.S. East Coast had an average of 2.5 containerships in each direction each week, carrying Australian meat to America and manufactured goods the other way.15
In their endless quest to get bigger, ship lines set their sights on a new way of linking ports that they already served: sailing around the world.
Round-the-world service had been an idea hardly worth contemplating in the days of breakbulk shipping. With slow ships and long port calls, the 39,000-mile trip from New York across the North Atlantic, through the Straits of Gibraltar and the Suez Canal, calling at Singapore and Hong Kong and Yokohama and Los Angeles and heading home through the Panama Canal, would easily have taken six months. Faster vessels and shorter port calls made a three-month voyage imaginable. In 1978, the year after McLean’s departure, R. J. Reynolds ordered 12 diesel-powered vessels at a cost of $580 million and promised that Sea-Land would soon launch a “new weekly round-the-world service.”16
The idea was not entirely insane. Most ship lines suffered from highly imbalanced traffic patterns. Sea-Land, for example, was a major carrier in the North Pacific, but Japan’s huge trade surplus with the United States meant that it carried far more cargo east-bound than