The Box - Marc Levinson [187]
4. Matson Research Corp., The Impact of Containerization, pp. 40–41; Fairplay, February 1, 1968, p. 8.
5. OECD, “Ocean Freight Rates as Part of Total Transport Costs” (Paris, 1968), p. 24.
6. Antwerp data taken from Bremer Ausschuß für Wirtschaftsforschung, Container Facilities. Dart Container Line spent nearly $300,000 in 1973 on a computer to keep track of its 20,000 containers. Fairplay, April 5, 1973, p. 40. By 1974, U.S. Lines was spending $1.7 million a year to operate its computers; see Fairplay, April 4, 1974, p. 76.
7. Broeze, The Globalisation of the Oceans, pp. 55–56. Worldwide, the containerships entering the fleet in 1973 traveled at an average speed of 25 knots, compared with 20 knots or less for almost all breakbulk and containerships built before 1968. Wallin, “The Development, Economics, and Impact,” p. 642. The 85 percent breakeven point is cited in U.S. Congress, Office of Technology Assessment, An Assessment of Maritime Technology and Trade (Washington, DC, 1983), p. 71. Three ship lines surveyed by J. E. Davies in 1980 reported that their fixed costs were between 53 and 65 percent of total costs, implying much lower breakeven points; “An Analysis of Cost and Supply Conditions in the Liner Shipping Industry,” Journal of Industrial Economics 31, no. 4 (1983): 420.
8. Fairplay, February 4, 1971.
9. Sletmo and Williams, Liner Conferences, chap. 5; Benjamin Bridgman, “Energy Prices and the Expansion of World Trade,” Working Paper, Louisiana State University, November 2003. Fuel cost as a share of operating costs are given in Office of Technology Assessment, An Assessment of Maritime Technology and Trade, p. 71. The International Monetary Fund cites the increase in market concentration in shipping following the introduction of containers as another reason for the failure of shipping rates to fall. However, it is not at all clear that pooling agreements and other anticompetitive practices succeeded in holding shipping rates above competitive levels for extended periods. International Monetary Fund, World Economic Outlook, September 2002, p. 116; Sjostrom, “Ocean Shipping Cartels,” pp. 107–134.
10. Fairplay, July 15, 1974, p. 50. In principle, it should be possible to quantify transport-cost saving over time by comparing a country’s imports under two different definitions, free on board (f.o.b.), which represents the value of merchandise at the point of export, and cost of insurance and freight (c.i.f.), which is the value at the point of import, including transport costs. In practice, however, the difference between c.i.f. and f.o.b. imports provides little guidance concerning freight-cost trends. The accuracy of the underlying data is questionable; if IMF figures are to be believed, insurance and freight accounted for a mere 1 percent of Switzerland’s imports as long ago as 1960. Data for countries with large-scale trade in bulk products, such as coal and oil, may not reflect changes affecting manufactured goods. More problematic, the use of aggregate c.i.f. and f.o.b. data assumes that the composition and origin of imports have not changed over time. Scott L. Baier and Jeffrey H. Bergstrand, “The Growth of World Trade: Tariffs, Transport Costs, and Income Similarity,” Journal of International Economics 53, no. 1 (2001): 1–27, show that for 16 wealthy nations, transport fell from 8.2 percent to 4.3 percent of import value between 1958–60 and 1986–88, but the various factors cited above make this conclusion unpersuasive.
11. Indexes of “tramp” charter rates were compiled during the 1960s and 1970s by several sources, including the Norwegian Shipping News and the British Chamber of Shipping. The price for a single-voyage charter, adjusted for the capacity of the vessel, yields a vessel cost per ton shipped. Japanese shippers were the tramps’ main customers. The tramp market was somnolent in the early 1970s, and it appears that most tramp charters involved bulk freight rather than breakbulk freight of the sort that would have been competitive with container shipping.