The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (32 page)

Both the London and the Liverpool docks were run by local government agencies, which since the 1940s had walked a tightrope between improving operations and antagonizing the powerful Transport and General Workers Union; as one careful student aptly described the situation, the docks had been modernized in “a leisurely manner.” Dozens of small stevedoring companies competed to load or unload each vessel, and the stevedores in turn hired long-shoremen by the day. These transitory arrangements involving lightly capitalized companies provided no incentive to make long-term investments in automation. Although productivity gains had been sluggish since the mid-1950s, pay gains had been robust. The average full-time docker earned about 30 percent more than the average male worker in Britain in the mid-1960s, compared with a gap of about 18 percent a decade earlier.
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Numerous government commissions had studied ways to make the ports more efficient. An inquiry in 1966 had called for a reduction in the number of stevedore companies, in the expectation that the survivors would be larger, more professional, and better able to finance equipment for efficient cargo handling. In return, the government promised that automation would not lead to redundancies among dockers. Given time, perhaps a deal could have been struck: on both coasts of the United States, the union agreements that opened the way for containerization had taken half a decade to arrange. No time was available in Britain, because technological change was forcing its way onto the docks. In March 1966, United States Lines carried the first large containers, along with other freight, on a voyage from New York to London. The following month, Sea-Land’s
Fairland
steamed across the North Atlantic to Rotterdam, Bremen, and the Scottish port of Grangemouth, carrying only containers. With barely a year’s notice, Rotterdam and Bremen had lengthened docks, deepened channels, and begun installing container cranes. London had not—and
Fairland
did not bother to call.
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London’s formidable docks, it was obvious, were not well suited for container shipping. The docks were grouped in sheltered enclosures off the Thames that were difficult even for conventional ships to navigate; large vessels had to unload into lighters nearer the mouth of the river. Labor issues aside, transferring huge cargo containers from oceangoing ships to lighters made no economic sense, and the prospect of hundreds of lorries hauling 40-foot loads through the narrow streets of East London was a nightmare. Liverpool’s aging docks had similarly few attractions for container operators. The British Transport Docks Board, the government’s oversight agency, turned to consultants McKinsey & Company for advice. McKinsey predicted that container shipping would quickly consolidate around a few companies using gigantic ships carrying standardized containers. Ports, it said, would need to be very large to gain economies of scale in transferring containers between ships, trains, and trucks at high speed. Containerization could cut Britain’s ocean freight bill in half, McKinsey found—but only if a single huge port were to handle all cargo to and from North America and then use unit trains to link the port to other parts of the United Kingdom. A simultaneous study by consultant Arthur D. Little predicted that in 1970, ships would carry the equivalent of 1,800 20-foot containers each week from America to Britain, and 1,580 from Britain to America. Every aspect of these findings represented a threat to the power of the Transport and General Workers Union: there would be fewer ships, fewer ports, and fewer workers at each port. An important part of traditional dock work, the loading and unloading of cargo, would move to warehouses miles inland, where dockers surely would not be employed.
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The British Transport Docks Board and local port agencies agreed on major investments that would total £200 million ($550 million at the 1967 exchange rate) between 1965 and 1969. The largest was the Port of London Authority’s £30 million ($83 million) container complex at Tilbury, a longtime port twenty miles down the Thames. Away from the traffic congestion of central London, and with populous southeast England at its doorstep, Tilbury had the potential to become Europe’s premier containerport, or so the government hoped. There were to be five deepwater berths for containerships, each with twenty acres of land to store containers. Another containerport was built at Southampton, southwest of London, and the Mersey Docks and Harbour Board began a container terminal at Seaforth, north of Liverpool close to the deep water of the Irish Sea.
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Tilbury’s opening in 1967 was accompanied by a “voluntary” severance scheme for dockworkers, funded by charges on cargo at major ports. The union soon accused employers of abusing the rules to get rid of workers, and it objected to the new government policy encouraging permanent employment rather than daily hiring on the docks. Reaching back to a tactic tried by the International Longshoremen’s Association in New York a decade earlier, the union imposed a ban on containers at Tilbury from January 1968.
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The Transport and General Workers Union was powerful, but not omnipotent. It had never bothered to sign up members at the tiny port of Felixstowe, located on a North Sea estuary ninety miles northeast of London. Felixstowe, one of the hundreds of towns on Britain’s coasts, had two docks owned by the Felixstowe Railway and Dock Company, a private company controlled by an importer of grain and palm oil. The docks had been destroyed in the storms of 1953, and by 1959 the only activity involved ninety permanent workers who unloaded tropical commodities into a few storage tanks and warehouses. Felixstowe had no general-cargo business to protect, no militant unions, and, because it had never employed casual dock labor, no requirement for ship lines to contribute to the national dockworker severance scheme.

In 1966, while the British government was trying to convince container ship lines to call at Tilbury, Felixstowe’s owners had had the foresight to strike a private deal with Sea-Land Service. They spent £3.5 million pounds ($10 million), a fraction of the government’s outlay at Tilbury, to reinforce a wharf and install a container crane. Sea-Land opened service in July 1967 with a small ship shuttling containers back and forth to Rotterdam, and soon added ships directly from the United States. In 1968, with Tilbury closed by the strike, the hitherto obscure Port of Felixstowe became Britain’s largest container terminal. U.S. Lines finally was able to use Tilbury after reaching a union agreement, but the port remained closed to most other container carriers, including British lines. By 1969, Felixstowe, with two or three North Atlantic sailings each week and several feeder services running across the North Sea to Rotterdam, handled 1.9 million tons of general cargo, every bit of it in containers.
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Tilbury’s prolonged closure hit hard at the two consortia of British carriers that had planned to launch container services there, one across the North Atlantic and the other to Australia. They struck back in the traditional way: by trying to stifle their competitors. Sea-Land’s request to join the conferences that set rates between the United States and Britain was rejected until the company filed an antitrust suit in British courts. When a small U.S. company, Container Marine Lines, offered Scottish distillers a through rate covering shipments between their plants and U.S. ports, including land transportation from Scotland to Felixstowe, the conference objected that a through rate would lead to “regulatory disintegration.” Only the threat that the U.S. Federal Maritime Commission would curb the conference’s right to set rates forced it to accept more competition.
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Felixstowe’s fortune came directly at London’s expense. London’s port had been busy through the mid-1960s. The shift to container shipping boosted average tonnage per man-hour 66 percent in just four years. The abrupt fall in costs at other ports drove the London docks to collapse. As Tilbury opened, the famous East India Dock closed without warning in 1967. As Felixstowe burgeoned, the St. Katherine Docks, adjoining the Tower of London, were shut in 1968. The nearby London Docks followed immediately, and the Surrey Docks, across the river, closed in 1970. Of the 144 wharves that had operated in London at the start of 1967, 70 closed by the end of 1971, and almost all of the rest followed soon after. The number of dockworkers fell from 24,000 to 16,000 in less than five years. Factories and warehouses, with no further need to be near the Thames, began to flee, taking their import-and-export business elsewhere, and the waterfront communities tied to the port began to disintegrate.
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The Transport and General Workers Union finally lifted its ban on handling containers at Tilbury after twenty-seven months, in April 1970. No sooner did the port reopen than it shut again, as the union waged a three-week nationwide dock strike to protest the stevedores’ preference for employing permanent, skilled workers to run their expensive equipment rather than hiring day labor. Nationally, dockers won a 7 percent pay raise, but a special agreement in London allowed containerization in return for double pay. Tilbury was able to open for container shipping at long last. But the delay took a toll. By the time it reopened, greater London had lost its place as the maritime center of Europe.
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The new center was Rotterdam, in the Netherlands. A port since the 1400s, Rotterdam had been demolished by German bombing in 1940. The old port had been modest, with two-thirds of the cargo being off-loaded into barges because deepwater ships could not reach the docks. The ruins provided Dutch planners a clean canvas on which to build a modern port starting in the 1950s along the river Maas. Road, rail, and barge connections to Germany helped Rotterdam prosper as the two countries joined in the European Common Market. By 1962, its vast imports pushed Rotterdam ahead of New York as the world’s largest port by tonnage. Rotterdam set aside land for containers early on, and Dutch longshoremen, unlike their British counterparts, posed no objections when containerships began calling in 1966. During two and a half years of union-induced delay in Britain, Rotterdam spent $60 million to build the European Container Terminus, with ten berths and room for more. Traffic that had once fed through London to other British ports was now transshipped at Rotterdam, which was on its way to becoming the largest container center in the world.
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In Liverpool, meanwhile, the Mersey Docks and Harbour Board had become a financial disaster, its condition worsened by the diversion of cargo to the containerports. Parliament was forced to approve an emergency bailout in 1971. With Felixstowe now seen as a model, the national government took over the city’s docks. An infusion of government loans and grants paid off redundant dockers and financed completion of the new pier complex at Seaforth, including three terminals for containers. As the Royal Seaforth Docks opened in 1972, ten of Liverpool’s historic piers, some of them two centuries old, were abandoned for good. The great maritime center of the British Empire, the cosmopolitan city whose cotton trade fueled the Industrial Revolution and whose Cunard and White Star steamers dominated the North Atlantic, fell into an economic stupor that would last for three decades.

The container contributed to a fundamental shift in the geography of British ports. In the precontainer era, London and Liverpool had dominated Britain’s international trade, their docks and warehouses filled with goods headed to or from factories located nearby. The two ports each loaded one-quarter of Britain’s exports, with no other port handling more than 5 percent. The container stripped Liverpool of its competitive advantages. Its costs per ton of cargo were too high, and it was on the wrong side of an island that was reorienting its trade toward continental Europe. In 1970, only 8 percent of Britain’s rapidly growing container traffic moved through Liverpool, and the port’s share of all British maritime trade in manufactured goods was falling toward 10 percent. Within five years, the exodus of port-related manufacturing would leave the city’s economy devastated.
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Britain’s accession to the European Economic Community in 1973 reoriented its trade to Europe, favoring London and other southern ports over northern and western ports such as Liverpool and Glasgow. Even so, London continued to struggle. “From being the world’s largest port after Rotterdam and New York, London has been overhauled by Antwerp, Hamburg, and Le Havre,” the British shipping magazine
Fairplay
warned in 1975. “If the present situation is allowed to continue she will slip still further down the ‘big league’ and face the grim prospect of being relegated to the role of feeder port to the continent.” Meanwhile, Felixstowe surged. In 1968, the new containerport had handled all of 18,252 loaded containers. By 1974, 137,850 loaded boxes passed through the port, which was well on its way to becoming the major port for British trade with North America. As containerization’s economies of scale begin to take hold, more than 40 percent of all container movements in British harbors would soon occur in a single port, Felixstowe, whose traffic at the dawn of the container age had been too small even to merit statistical mention.
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The preparations for container shipping in the United States and Europe provided Asian governments a lesson. In the United States, ports responded to containerization with no overriding rhyme or reason; cities such as New York and San Francisco squandered tax money on wharves and cranes that had little chance of recouping the initial investment, even as cities that might have become important containerports, such as Philadelphia, failed to invest in time. In Britain, the government was so terrified of the waterfront unions that it took few steps to prepare for the container era until the first ships were already in port. In continental Europe, the ports that had the foresight to plan for container shipping, notably Rotterdam, Antwerp, and Bremen, were the first to capture the traffic. Along Asia’s Pacific rim, it seemed apparent that containerization would require major change, and change had to be planned.
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