The Box - Marc Levinson [91]
Sea-Land’s quick moves to acquire a huge new fleet opened the floodgates. During eight short weeks in the late summer of 1965, no fewer than twenty-six containership projects hit the headlines. Each required $8 to $10 million to convert a ship and another $1- $2 million for chassis and containers. For an industry notoriously tight with its cash, a total investment of a quarter billion dollars to enter a trade that might not generate business was almost incomprehensible. Companies that had watched containerization from a distance for years, curious but noncommittal, now felt that they had to put up real money or be swept away in the flood. Not all of them were eager. When Sea-Land threw a party at the Rotterdam Hilton to introduce its service to Dutch shippers at the start of 1966, its guests booed, and the head of Holland-America Line, itself preparing to carry containers, told a Sea-Land executive, “You come back with the next ship and take all the containers home.”27
The established carriers’ great fear was that containers would force down freight rates. Four conferences, one covering traffic each way between North America and northern Europe and the other two dealing with cargo between North America and the British Isles, set the rates for every commodity in their trades. They naturally had no provisions for containers.
Joining the conferences was not essential for Sea-Land, although belonging would surely smooth its way in dealings with European governments and ports. For United States Lines, already a conference member, conference rules on containers were critical. McLean ordered his representatives to seek admission to the eastbound and westbound North Atlantic Continental Freight Conferences, and to do so without causing fights. After Sea-Land proclaimed that it had no desire to start a rate war, the doors were opened. Sea-Land and U.S. Lines put forth two proposed rules: moving containers between piers and warehouses should be cheap, and ocean freight rates should include the use of steamship lines’ containers and chassis, so that shippers would not have to pay extra. Their European competitors, contemplating container services themselves, accepted both requests. “We didn’t ask for any big concessions,” a Sea-Land executive recalled. “We just asked them to accommodate the container. And, you know, I think that was a big mistake they made, but they did.” A European shipping executive remembered things differently: “They’re afraid of Sea-Land,” he said, “but they would rather keep an eye on them from the inside than have them on the outside and wonder what they’re doing.” Whatever the case, Sea-Land was able to enter the North Atlantic trade not as an outcast, but as a member of the club.28
Moore-McCormack Lines, a subsidized American carrier sailing between the East Coast and Scandinavia, opened the first transatlantic container service in March 1966, using combination ships that carried truck trailers, containers, and mixed freight. U.S. Lines, also a subsidized operator, followed almost immediately, carrying 40 20- foot containers along with mixed freight in its holds. In April, after signing agreements with 325 European truck lines to deliver its cargo to places like Basel and Munich, Sea-Land, with no government operating subsidy, began service on a