The Box - Marc Levinson [137]
Determining exactly what happened to the cost of shipping from 1972 through the late 1970s poses an insurmountable challenge for the historian. Only short sea routes, such as those across the North Sea, had flat rates per container for most of that period. Elsewhere, charges were based not on the container but on the commodity inside. There is no reliable way to calculate an average cost, much less to track its change over time.10
Three sources other than actual freight rates have been used to estimate the trends in shipping costs. One is the cost of leasing “tramp” ships, vessels that are chartered rather than providing regularly scheduled, or “liner,” service. The charter price per ton of tramp capacity rose sharply, as was widely reported in shipping publications during the 1960s and 1970s. Most tramps, however, carried grain or other bulk cargo rather than manufactured goods, so the rental cost sheds little light on the price of container shipping. As container shipping gained importance, tramps were increasingly relegated to carrying low-value freight that could not efficiently be containerized, making tramp prices of little relevance to the cost of containerized freight.11
A second main source of freight-cost data is the Liner Index compiled by the German Ministry of Transport. This shows that freight rates flattened out in 1966, as container shipping arrived, but then rose steeply, trebling between 1969 and 1981. The Liner Index, though, is highly problematic as a gauge of global transport costs. It tracked rates on cargoes passing through ports in northern Germany, the Netherlands, and northern Belgium, not worldwide, and its coverage included a large proportion of noncontainer shipping. Changes in the exchange rate of the German mark seem to have had a huge influence on the index’s movements. It took four German marks to buy one U.S. dollar in 1966, three in 1972, and only two by 1978. For shippers who did business in dollars, ocean freight rates as measured by the Liner Index rose well below the rate of inflation during the 1970s.12
The third alternative is the estimate of standardized charter rates for containerships published by Hamburg ship broker Wilhelm A. N. Hansen starting in 1977. Hansen’s measure, unlike the Liner Index, shows prices falling in 1978 and 1979. However, it is drawn from charters of very small containerships, the kind most likely to be available for charter. It is not clear whether it accurately reflects rates charged by operators with larger, more efficient vessels.13
The technical problems involved in measuring shipping rates during the 1960s and 1970s are so great that reliable measures of the container’s price impact are unlikely to be developed. International shipping rates were often set in U.S. dollars, and dramatic changes in exchange rates changed shipping costs for companies in many countries independent of changes in technology. Many conferences offered discounts of as much as 20 percent to shippers that signed “loyalty agreements” promising to use only conference members’ ships, so the published conference rates were not necessarily the rates that important shippers paid. Many large shippers demanded, and received, under-the-table rebates from ship lines in return for paying the published rate; although rebates on routes to the United States were illegal—Sea-Land was fined $4 million in 1977 for distributing $19 million in secret payments to customers between 1971 and 1975—the practice was common elsewhere. Rebates, of course, made the actual prices that shippers paid much lower than the prices ship lines claimed to