The Box - Marc Levinson [82]
When discussions resumed in early 1966, the subcommittee agreed to increase the “standard” height for containers to 8½ feet, but it split on whether to recommend a change in policy to make 24-foot and 35-foot containers “standard.” It bounced the entire issue up to the full MH-5 committee. The MH-5 committee itself then split. The dogged Hall, still pushing the standardization process along despite failing health, remained convinced that all approved sizes should be mathematically related. The various maritime associations on the committee, most of whose members had by then adopted 20-foot or 40-foot containers, had little incentive to cast a vote that might force them to share government subsidies with Sea-Land and Matson. Five trucking associations, whose members picked up and delivered containers for Sea-Land and Matson, submitted votes by telegraph in favor of the two additional sizes, but their votes were disallowed. Almost all of the government representatives in attendance abstained. With 15 no votes, 5 yes votes, and 54 voters abstaining or absent, the MH-5 committee had no consensus for anything. A revote the following year found the split persisting, with 24 participating organizations favoring 24-foot containers and 28 against them.32
Faced with the prospect of competing against subsidized competitors while being excluded from subsidies themselves, Sea-Land and Matson turned to Congress. Their lobbyists drafted legislation in 1967 to prohibit the government from using the sizes of containers or shipboard container cells as a basis for awarding subsidies or freight. Representatives and senators were soon delving into the obscure details of containerization. Other ship lines urged that the government push adoption of standard containers so that any company could handle others’ containers. “The key to automation is the existence of a standardized product,” British steamship executive G. E. Prior-Palmer testified. Sea-Land and Matson, competitors charged, were disrupting the effort to make containers compatible around the world. Of 107 container-carrying ships under construction in September 1967, all but six, commissioned by Sea-Land and Matson, were designed around standard sizes. Marad concurred, arguing that Sea-Land and Matson should accept the standards adopted by everyone else. Sea-Land could add five feet to each of its 25,000 containers and 9,000 chassis and alter all of its ships and cranes for about $35 million, acting Marad chief J. W. Gulick testified, and Matson, a much smaller company, could switch from 24- foot containers to 20-foot containers at a cost of only $9 million.33
Sea-Land and Matson, which had invested a combined $300 million in containerization, were less concerned about the cost of conversion than about the inefficiency of doing business with equipment ill-suited to their needs. Matson president Stanley Powell testified that using 20-foot containers instead of 24-footers would raise his company’s operating costs by $500,000 per ship per year in service to the Far East, and would increase costs for trucks picking up and delivering containers as well. Malcom McLean followed, armed with a consultant’s study showing that switching from 35- to 40-foot containers in Sea-Land’s Puerto Rico service would reduce revenues by 7 percent and costs hardly at all. “I don’t care what size container is adopted as a standard,” he affirmed. “If the marketplace can find one that moves cheaper, that is the way the marketplace will dictate it and we want to be flexible enough to follow the marketplace.”34
The Senate passed their legislation, but Matson sensed that a compromise would be needed to get the bill through the House. On the spur of the moment, Powell told a House committee that Matson wanted Marad to subsidize two ships with a radically new feature, adjustable steel cells for container stowage. The ships would initially carry only 24-foot containers, but if market requirements changed,