The Box - Marc Levinson [43]
Sea-Land benefited from this boom—but it also helped cause it. Puerto Rico’s shipping-dependent economy had been a prisoner of high transport costs. Between 1947 and 1957, as U.S. prices overall were rising 31 percent, rates per ton for shipping between the mainland and Puerto Rico increased about 50 percent. Federal regulators approved five general rate increases over that decade, effectively taxing Puerto Rican consumers to cover the inefficiencies of U.S.-flag ship lines. McLean’s push into the Puerto Rico trade in 1958 began to shake up this rate structure, which benefited mainly Bull Line. Over the ensuing decade, by Sea-Land’s estimates, the cost of shipping consumer goods from New York to San Juan fell 19 percent, and the average rate per ton for freight shipped in full truckloads fell by a third. Lower southbound rates for industrial components and northbound rates for finished products magnified the advantages of opening factories in Puerto Rico, and McLean Industries established a new subsidiary to help manufacturers locate there. By 1967, Sea-Land was carrying 1,800 containers each week between the island and the U.S. mainland, half of them to or from Puerto Rican factories.34
Its unassailable position in Puerto Rico provided a firm base for Sea-Land’s growth. Sea-Land owned 7,848 containers, 4,876 chassis, and 386 tractors at the end of 1962. By the end of 1965, it had expanded to 13,535 containers and controlled 15 containerships calling at 15 ports, using Puerto Rico as a hub to serve the Virgin Islands. At the center of this expanding empire was a new office building at Port Elizabeth, New Jersey, where the berths at the new Sea-Land terminal, the first purpose-built container terminal anywhere, were visible out the window. The building, like the rest of the Port Elizabeth complex, was built by the Port of New York Authority, without a nickel of Sea-Land’s money. “A lot of people thought Malcom was building a big pagoda,” recalled Gerald Toomey, who was recruited to Sea-Land in 1962. “He knew what he was doing. You put a pencil to what that building cost and what it’s saved the company, it turned out to be a very good deal.”35
Sea-Land was a large company by 1963, with nearly three thousand employees, and an increasingly difficult one to manage. Computers had arrived in 1962, but only for administrative purposes such as payroll; at Port Elizabeth, Sea-Land kept track of its incoming and outgoing boxes on magnetic boards high on the walls of its octagonal control room, with an employee reaching a long pole to move the corresponding metal piece on the board each time a container was moved in the yard. At the end of each day, photos were taken of the board to provide a permanent record. Containers had a way of vanishing, especially in Puerto Rico, where a lack of warehouse space led many recipients to store goods in the containers they arrived in; headquarters produced an “aging report” listing containers that had not been seen for a week, and local supervisors frantically worked the phones to try to locate missing boxes before a manager called. Loading required teams of vessel planners to pore over sheets listing the weight and destination of each container as they figured out the best way to load each ship. Computers