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By Root 1001 0

independent carriers altogether. Even where governments allowed nonconference lines to compete, relatively few did, because there often was not enough freight: shippers typically agreed to pledge all of their freight on a route to conference members in return for “loyalty” discounts—a pledge that strengthened the conference by making it harder for nonconference intruders to get business. Shippers, ship lines, and governments all thought of ocean ship lines in much the same way they thought of trucking companies and railroads, as providers of a public service entitled to raise their rates whenever their costs went up. “Our future depends on having strong conferences supported by strong commercial shipper bodies,” an executive of a British ship line said in 1974—as if the interests of ship lines and their customers were one and the same.24

The huge capital requirements of container shipping left fewer ship lines on each route, strengthening the conferences and tilting the playing field against shippers. The 1971 pooling agreement on the North Atlantic, to take the most extreme example, essentially combined the efforts of fifteen lines that had once been competitors. On the Europe-Australia route, the thirteen companies that sailed between Europe and Australia in 1967 had combined into seven by 1972. As these new groupings began to curb competition, shippers reacted by working together more closely. By 1976, private-sector shippers’ councils were active in thirty-five countries.25

It was in Australia, where farmers were almost totally dependent upon exports, that shippers began to flex their muscles. In 1971, four groups representing sheep farmers and wool buyers formed a joint organization to oppose rises in freight rates. A year later, rubber traders in Singapore responded to conference surcharges by finding a nonconference carrier to move their product to Europe for 40 percent less. Australian dairy producers signed with a nonconference carrier to save 10 percent on freight rates to Japan. By 1973, shippers’ power on the East Asia-Europe route was substantial enough that the conference was forced to bargain, and the Malaysian Palm Oil Producers Association won an unprecedented two-year rate freeze. “Increases in the liner freight rates met considerable opposition from shippers in certain trades,” UNCTAD reported in 1974. In 1975, the Australian Meat Board bargained for unusually deep rate reductions in return for giving four ship lines all its meat shipments to the U.S. East Coast.26

Shipper organizations had no legal status in the United States, and shippers were reluctant to negotiate jointly lest they be accused of violating antitrust law. The biggest shippers, however, began to exert influence on their own, even as they changed the way they worked in order to take advantage of the container.27

In the early days of containerization, users dealt with shipping much as they had in breakbulk days. Traffic management was decentralized, with each plant or warehouse making its own arrangements. If the company as a whole could have saved money by sending fully loaded 40-foot containers to individual customers, well, that was not the concern of the freight managers at individual locations, whose job was mainly to get the products out the door. Most shippers favored 20-foot maritime containers, which cost more per ton to ship, because they could not coordinate production of various orders well enough to fill a 40-foot box. The biggest shipper of all, the U.S. military, divided responsibilities between one agency that handled land shipping and another that dealt with sea freight, often paying extra because it had selected the wrong size container for a given load.28

In industry, the traffic department, housed in the back of the plant near the loading dock, would be given whatever the manufacturing department produced, with instructions to ship it. A tariff clerk, his desk piled high with the freight classification guidelines of various liner conferences, trucking conferences, and railroads, would try to describe the cargo in