The Box - Marc Levinson [84]
The leaders of the nation’s maritime industry were by no means unanimous that the container was the future. The steamship business was as tradition-bound as any in the country. Many of its most prominent executives were men who reveled in the romance of sea and salt air. They worked within a few blocks of one another in lower Manhattan, and spent well-oiled luncheons comparing notes with their peers at haunts like India House and the Whitehall Club. For all of their earthy bluster, their businesses had survived thanks almost entirely to government coddling. On domestic routes, government policy discouraged competition among ship lines. On international routes, rates for every commodity were fixed by conferences, a polite term for cartels, and the most important cargo, military freight, was handed out among U.S.-flag carriers without the nuisance of competitive bidding. Decisions about buying, building, or selling ships, about leasing terminals, and about sailing new routes all depended upon government directives. For men who had prospered in this environment, who loved the smells of the ocean and fondly referred to their ships as “she,” Malcom McLean’s wholly unromantic interest in moving freight in boxes had little appeal. It was all well and good for visionaries to proclaim that containers were a “must,” but the collective wisdom of the shipping industry held that they would never carry more than a tenth of the nation’s foreign trade.2
New union agreements and progress toward standardization encouraged shipping executives to look more seriously at containerization. When they did, though, they saw a waterfront littered with costly mistakes. Malcom McLean himself had made them; the novel shipboard cranes he had installed proved to be a nightmare, breaking down frequently, with each breakdown delaying a ship. Matson, more cautious in its investments, nonetheless built two vessels to carry both bulk sugar and containers, losing the efficiency and quick turnaround of pure containerships. Luckenbach Steamship Company had embarked on a $50 million scheme to operate five containerships between the East and West coasts, only to have to abandon the plan when government aid was not forthcoming. The Erie and St. Lawrence Corporation’s container service between Port Newark and Florida, inaugurated amid great fanfare in 1960, ended six months later when paper manufacturers and food processors failed to provide enough freight.3
What both transportation companies and shippers were slowly coming to grasp was that simply carrying ocean freight in big metal boxes was not a viable business. Yes, it produced some savings: cranes, boxes, chassis, and containerships eliminated much of the cost of loading and unloading vessels at the dock. Shippers, though, cared not about loading costs, but about the total cost of delivering their products from factory to customer. By this standard, the advantages of containerization were less apparent. If a wholesaler was sending, say, three tons of water pumps from Cleveland to Puerto Rico, the pumps would have to be trucked to Sea-Land’s warehouse in Newark, removed from the truck, and consolidated into a container along with twenty or twenty-five tons of goods from other shippers. Upon arrival in Puerto Rico the contents would have to be removed from the container, sorted, and loaded into trucks for final delivery. There was only a limited amount of traffic, involving fully loaded containers going from one shipper