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By Root 869 0

Goldman, a leading naval architect, were “an expedient” that would do little to reduce costs. Many experts considered the container a niche technology, useful along the coast and on routes to U.S. island possessions, but impractical for international trade. The risk of placing multimillion-dollar bets on what might prove to be the wrong technology was high. Sea-Land’s shipboard cranes were indeed radically new, but they soon developed a reputation for maintenance problems that caused ships to be delayed. American President Lines, which sailed across the Pacific, created a container that attached to a single pair of wheels so that a truck could pull it without a chassis, but had to abandon the idea once the company added up the cost of giving every container extra structural elements to replace the chassis. The experience of Grace Line offered a graphic warning. Grace had won a $7 million government subsidy to convert two vessels into containerships and spent another $3 million on chassis, forklifts, and 1,500 aluminum containers, only to have longshoremen in Venezuela refuse to handle its highly publicized ships. Having badly misjudged the politics and the economics of container shipping, it would eventually sell the ships to Sea-Land at a loss. As a Grace executive noted ruefully, “The concept was valid, but the timing was wrong.”22

Sea-Land itself was finding the container business difficult. Its Puerto Rico service was struggling against Bull Line, which controlled half the southbound trade and 90 percent of shipments from Puerto Rico to New York. Bull opened a trailership service in April 1960 and added containerships in May 1961, skimming some of the shippers McLean had hoped to convert to containers. Business on the mainland was not much better. A few food and drug companies, such as Nabisco and Bristol Myers, signed up right away to ship from New York-area factories to Houston, and Houston’s chemical plants used containers to send fertilizers and insecticides to the Northeast. Most big industrial companies, though, were not desperate for container shipping. Ideas such as a combined sea-air service, with Sea-Land carrying cargo from New York to New Orleans and an airline taking it onward to Central America, found few takers. The cargo flow through Pan-Atlantic’s home terminal at Newark jumped from 228,000 tons in 1957 to 1.1 million tons in 1959, as the Puerto Rico service began—and then abruptly stopped growing. Another longshore strike in 1959 did serious damage. Revenues fell. From 1957 through 1960, Sea-Land’s container shipping business lost a total of $8 million. McLean Industries was forced to suspend its dividend.23

In desperation, McLean tried in 1959 to buy Seatrain Lines, the only other coastal ship line in the East and an opponent of Waterman’s efforts to secure operating subsidies on international routes. Seatrain’s management turned him down. Competitors traded rumors that McLean Industries was near bankruptcy. Waterman, unprofitable without subsidies, was put up for sale, minus the cash and many of the ships that had made it so attractive to McLean in 1955.24

The problem, McLean decided, was the maritime mind-set: Pan-Atlantic’s staff, experienced in the slow-moving ways of the maritime industry, did not know how to sell to an industrial traffic manager who cared not about ships, but about getting freight to the customer on schedule at low cost. McLean brought in a team of aggressive young trucking executives to turn the business around. He had agreed not to poach McLean Trucking employees when he gave up the trucking company in 1955. Now, former McLean Trucking employees, many of them still in their twenties or early thirties, began moving into key positions at Pan-Atlantic, alongside young talent head-hunted from other big truck lines.

“They were just recruiting,” one of those hires remembered. “It was like a football draft. You recruit the best quarterback.” Many were invited to Newark without being told what job McLean had in mind for them. When they arrived, they were given intelligence and