The Box - Marc Levinson [94]
The eastern railroads commissioned a study, which urged them to act quickly to attract container traffic. The railroads chose to do the opposite. They agreed on a new rate structure to discourage containers, providing that any container weighing more than five hundred pounds would be charged on the basis of the weight and the contents, rather than receiving the lowest full-carload rate. In addition, they insisted upon charging ship lines for carrying empty containers from the port to customers inland—hardly a policy that encouraged shippers to use rail for the land portion of international shipments. If those measures were not enough to deter container business, some railroads simply drove it away. In the spring of 1967, when Whirlpool Corporation asked the New York Central to move containers of refrigerators from an Indiana factory to the New Jersey docks, the railroad advised Whirlpool to ship its refrigerators in boxcars and put them into containers at the port; Whirlpool shipped by truck instead. Matson’s plan to ship containers of Hawaiian pineapple cross-country by train met with similar hostility, because the rate for transporting the containers between Chicago and New Jersey was far below the standard per-ton rate for carrying canned goods. “It is extremely important that we defeat the proposal,” a New York Central executive wrote.37
Malcom McLean had a different vision. For him, railroads, trucks, and ship lines were in the same business—moving freight. He wanted to turn Sea-Land’s intrepid sales force loose to locate manufacturers exporting to Europe from Little Rock and Milwaukee. In 1966, as Sea-Land’s transatlantic service was getting under way, McLean Industries offered an audacious proposal to build rail-road yards in Chicago and St. Louis, at its own expense. Freight forwarders owned by McLean Industries would collect freight from shippers, consolidate it into McLean-owned containers, and load the containers aboard McLean-owned railcars, specially designed by the Pullman Company to carry containers stacked two high. The Pennsylvania Railroad would pull McLean’s all-container train straight to a rail yard Sea-Land would build by the docks at Elizabeth, arriving in time to meet a Europe-bound ship, which would in turn connect with trucks and trains on a European dock. For the first time, a shipper a thousand miles from the sea would be able to buy not just international transportation but tightly scheduled international transportation. A seller could tell its customers when the goods were to arrive, with a reasonable likelihood that the schedule would be met.38
The economic advantages of this truck-train-ship combination seemed overwhelming. Trucks would do the short-haul work for which they were best suited. Trains would handle the long land haul, where their costs were lowest. Shippers’ costs for the domestic leg of their international shipment would fall by half. The Pennsylvania was intrigued by the plan, the New York Central and the Baltimore and Ohio opposed. But as the Pennsylvania and the New York Central announced plans to merge, McLean’s ambitions were scuttled. The railroads made the minimum counteroffer that the ICC would allow: they would carry Sea-Land’s container cars—mixed in with other cars on their regular slow freights.39
Once again, Malcom McLean was ahead of his time—but with the railroads, he lacked the power to turn his vision into reality. Farsighted rail executives, such as Trailer Train president James P. Newell, realized that attempts to preserve