The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (53 page)

44.
Fairplay
, November 7, 1974, p. 15;
Containerisation International Yearbook;
Gerald H. Krausse, “The Urban Coast in Singapore: Uses and
Management,” Asian Journal of Public Administration
5, no. 1 (1983):44–46.

45.
Containerisation International Yearbook;
Krausse, “The Urban Coast in Singapore,” pp. 44–46; Port of Singapore Authority
A Review
, p. 19; United Nations Economic and Social Commission for Asia and the Pacific,
Commercial Development of Regional Ports as Logistics Centres
(New York, 2002), p. 45.

1.
Comment by James A. Farrell Jr., chairman of Farrell Lines, to New York World Trade Club,
NYT
, June 7, 1966.

2.
Matson Research Corp.,
The Impact of Containerization
, 1:151; McLean Industries,
Annual Report
, 1968.

3.
Tozzoli, “Containerization and Its Impact on Port Development,”, pp. 336–337; Marad, “United States Flag Containerships,” April 25, 1969. Grace Line’s four biggest container-carrying ships, built in 1963–64, had room for 117 first-class passengers;
see Jane’s Freight Containers 1969–70
, p. 389. On the complexities of moving containers on breakbulk ships, see Broeze,
The Globalisation of the Oceans
, pp. 29 and 41.

4.
The first newly built vessel designed solely to carry containers in cells was the
Kooringa
, constructed in Australia in 1964 for Associated Steamships.
Kooringa
carried containers of 14.5 tons or less—smaller than standard 20-foot containers—on a domestic route between specially built terminals in Melbourne and Fremantle. The ship had two gantry cranes for loading and unloading.
Kooringa
proved to be a dead end in the development of containerization, and lost any competitive advantage after the arrival of standard-size containers. The service was discontinued in 1975 after heavy losses. See Broeze,
The Globalisation of the Oceans
, p. 34, and
The Australian Naval Architect 2
, no. 3 (1998): 6. Roy Pearson and John Fossey,
World Deep-Sea Container Shipping
(Liverpool, 1983), pp. 247–253.

5.
McKinsey & Co., “Containerization: A 5-Year Balance Sheet” (1972), p. 1–1. McKinsey’s estimate of the outlays was £4 billion, which was $9.6 billion at the 1970 exchange rate; I have inflated this to current value using the U.S. producer price index for capital equipment. For British carriers’ earnings, see
Fairplay
, January 12, 1967, p. 92, and January 11, 1968, p. 92A.

6.
ICC,
Transport Statistics
, 1965–67; John J. Abele, “Smooth Sailing or Rough Seas?”
NYT
, January 19, 1969; John J. Abele, “Investors in Conglomerates Are Seeing the Other Side of the Coin,”
NYT
, April 13, 1969.

7.
Toomey interview; John Boylston interview, COHP; Frank V. Tursi, Susan E. White, and Steve McQuilkin
, Lost Empire: The Fall of R. J. Reynolds Tobacco Company
(Winston-Salem, 2000), p. 174; John J. Abele, “Stock Exchange Ends Day Mixed,”
NYT
, January 4, 1969.

8.
Immer,
Container Services of the Atlantic
, pp. 194 and 198–200; Peter Stanford, “The SL-7: Sea-Land’s Clipper Ship,”
Sea History
, Fall 1978; Sea-Land advertisement, “SL-7,” n.d.

9.
Lloyd’s Shipping Economist
, August 1982, p. 36; “Sea-Land Line Orders 5 New Containerships,”
NYT
, August 14, 1969; Tursi, White, and McQuilkin,
Lost Empire
, p. 176.

10.
United Nations Economic and Social Commission for Asia and the Pacific,
Statistical Yearbook 1915
(Bangkok, 1977), pp. 205–208; Marad,
Foreign Oceanborne Trade of the United States
, 1970.

11.
Fairplay
, June 15, 1972.

12.
United Nations,
Statistical Yearbook 1915
, p. 208.

13.
Reuters, August 9, 1969; Marad, “Maritime Subsidies” (Washington, DC, 1971), p. 85.

14.
Broeze,
The Globalisation of the Oceans
, p. 50;
Fairplay
, October 7, 1971, p. 41.

15.
United Nations,
Statistical Yearbook 1915
, pp. 41–43, 127–129, 230–232, and 390; International Monetary Fund,
Direction of Trade Annual 1969–15
(Washington, DC, 1977), pp. 2–3; Matson Research Corp.,
The Impact of Containerization
, 1:114–122; “Matson, Sea-Land to Expand Containership Services,”
JOC
, March 18, 1970;
Fairplay
, February 16, 1967 and July 15, 1971, p. 11; OECD,
OECD Economic Surveys: Australia
, esp. 1979.

16.
McKinsey & Co., “Containerization: A 5-Year Balance Sheet,” p. 1–4.

17.
Marad, “United States Flag Containerships,” April 25, 1969; Pearson and Fossey,
World Deep-Sea Container Shipping
, p. 220.

18.
Marad, “A Statistical Analysis of the World’s Merchant Fleet,” 1968 and 1974.

19.
Pearson and Fossey,
World Deep-Sea Container Shipping
, p. 30;
Fair-play
, February 10, 1972, p. 40.

20.
Matson Research Corp.,
The Impact of Containerization
, 1:24.

21.
P. Backx and C. Earle, “Handling Problems Reviewed,”
Fairplay
, February 9, 1967, p. 36; McKinsey & Co., “Containerization: The Key to Low-Cost Transport,” p. 57;
Fairplay
, November 24, 1966; Matson Research Corp.,
The Impact of Containerization
, 2:4; Litton Systems Inc., “Oceanborne Shipping: Demand and Technology Forecast,” June 1968, p. 6–2.

22.
Fairplay
, April 20, 1967, p. 42.

23.
There is a long-standing debate on the extent to which conferences have succeeded in restricting competition and raising prices. For recent summaries, see Alan W. Cafruny,
Ruling the Waves
(Berkeley, 1987), and William Sjostrom, “Ocean Shipping Cartels: A Survey,”
Review of Network Economics
3, no. 2 (2004).

24.
Fairplay
, August 24, 1967, p. 8; J. McNaughton Sidey, “Trans-Atlantic Container Services,”
Fairplay
, October 5, 1967.

25.
Fairplay
, February 9, 1967, p. 41; “U.S. Panel Weight a Boxship Accord,”
NYT
, August 28, 1969.

26.
Hans Stueck, “2 Big German Shipping Lines Plan Merger,
NYT
, July 4, 1969; George Horne, “U.S. Lines Plans 16-Ship Charter,”
NYT
, October 4, 1969; Werner Bamberger, “Line Sets Its Course on Time Charters,”
NYT
, January 11, 1970.

27.
George Horne, “Grace Line Is Tentatively Sold,”
NYT
, February 7, 1969; Broeze,
The Globalisation of the Oceans
, p. 48; Farnsworth Fowle, “4 Freighters Sold for $38.4 Million,”
NYT
, August 6, 1970; “Cooling the Rate War on the North Atlantic,”
Business Week
, April 29, 1972; “U.S. to Challenge R. J. Reynolds Bid,”
NYT
, December 15, 1970;
Fairplay
, July 15, 1971, p. 62, and December 9, 1971, p. 45; ICC,
Transport Statistics
, Part 5, Table 4, 1970 and 1971.

28.
Broeze,
The Globalisation of the Oceans
, pp. 42 and 57–59; UNCTAD,
Review of Maritime Transport 1912–73
, p. 97; Gilbert Massac, “Le transport maritime par conteneurs: concentrations et globalisation,”
Techniques avancées
, no. 43 (April 1998); Gunnar K. Sletmo and Ernest W. Williams Jr.,
Liner Conferences in the Container Age: U.S. Policy at Sea
(New York, 1981), p. 308; “Cooling the Rate War.”

29.
Pearson and Fossey,
World Deep-Sea Container Shipping
, p. 25; Wallin„ “The Development, Economics, and Impact,” p. 883.

30.
U.S. Council of Economic Advisers,
Economic Report of the President
(Washington, DC, 1982), p. 356; UNCTAD,
Review of Maritime Transport 1974
, p. 40.

31.
UNCTAD,
Review of Maritime Transport 1972–73
, p. 96; Pearson and Fossey,
World Deep-Sea Container Shipping
, pp. 25, 220; Clare M. Reckert, “R. J. Reynolds Profit Up 3% in Quarter,”
NYT
, February 13, 1975; “Their Ship’s Finally Come In,”
NYT
, September 8, 1974.

32.
UNCTAD,
Handbook of International Trade and Development Statistics 1981 Supplement
(New York, 1982), p. 45; UNCTAD,
Review of Maritime Transport 1975
, p. 36, and
1976
, p. 32; Robert Lindsey “Pacific Shipping Rate War Flares, Mostly on Soviet Vessel Build-Up,”
NYT
, July 4, 1975.

33.
On costs, see Sletmo and Williams,
Liner Conferences
, pp. 147 and 156. Peninsula & Oriental, a major British ship line, announced in 1968 that its planning was based on the assumption that the Suez Canal was closed permanently, and other carriers appear to have made the same choice; see
Fairplay
, July 4, 1968, p. 79, and Pearson and Fossey,
World Deep-Sea Container Shipping
, p. 248.

34.
Relative fuel costs appear in Sletmo and Williams,
Liner Conferences
, p. 162. Opposition by Sea-Land’s board to the SL-7 purchase is discussed in John Boylston interview, COHP.

35.
On relations between Sea-Land and R. J. Reynolds, see Tursi, White, and McQuilkin,
Lost Empire
, chaps. 15–16 and 23; R. J. Reynolds Industries,
Annual Reports
from 1975 through 1980; transcript of R. J. Reynolds Industries Analyst Meeting, September 19–21, 1976; and comment from R. J. Reynolds Industries’ chief financial officer Gwain H. Gillespie at analyst presentation, November 1, 1984, p. 78. These and other relevant R. J. Reynolds documents are available on a Web site created in conjunction with antitobacco litigation, tobaccodocuments.org.

36.
Colin Jones, “Heading for a Period of Consolidation,”
Financial Times
, January 15, 1976.

1.
Author’s telephone interview with Earl Hall, May 21, 1993; “Malcom McLean’s $750 Million Gamble,”
Business Week
, April 16, 1979.

2.
“Pinehurst Club Is Sold for $9-Million,” NYT January 1, 1971; author’s telephone interview with Dena Van Dyk, May 2, 1994; William Rob-bins, “Vast Plantation Is Carved Out of North Carolina Wilderness,”
NYT
, May 8, 1974;
Business Week
, April 1, 1979.

3.
Sletmo and Williams,
Liner Conferences
, p. 39.

4.
Lloyd’s Shipping Economist
, September 1982, p. 9; Pearson and Fossey,
World Deep-Sea Container Shipping
, p. 220; UNCTAD,
Review of Maritime Transport
, various issues.

5.
Michael Kuby and Neil Reid, “Technological Change and the Concentration of the U.S. General Cargo Port System: 1970–88,”
Economic Geography
68, no. 3 (1993): 279.

6.
American Association of Port Authorities; Marad, “Containerized Cargo Statistics,” various years; Pearson and Fossey,
World Deep-Sea Container Shipping
, p. 29;
Containerisation International Yearbook
, various years. The figures for this period must be interpreted cautiously, because the statistical definition of “container” had not yet been standardized in terms of 20-foot units, and individual ports’ statistics did not always distinguish between loaded and empty containers.

7.
Hugh Turner, Robert Windle, and Martin Dresner, “North American Containerport Productivity: 1984–1997,”
Transportation Research Part E
(2003): 354.

8.
Yehuda Hayut, “Containerization and the Load Center Concept,”
Economic Geography
57, no. 2 (1981): 170.

9.
Brian Slack, “Pawns in the Game: Ports in a Global Transportation System,”
Growth and Change
24, no. 4 (1993): 579–588; Kuby and Reid, “Technological Change,” p. 280;
Containerisation International Yearbook
, 1988.

10.
Port of Seattle, Marine Planning and Development Department, “Container Terminal Development Plan,” October 1991; Eileen Rhea Rabach, “By Sea: The Port Nexus in the Global Commodity Network (The Case of the West Coast Ports)” (Ph.D. diss., University of Southern California, 2002), p. 86. Rabach’s assertion that port competition is a zero-sum game is not correct; as this study argues, declining costs throughout the transportation system have stimulated the flow of international trade.

11.
UNCTAD,
Review of Maritime Transport 1979
, p. 29; Marad, “United States Port Development Expenditure Report,” 1991; Herman L. Boschken,
Strategic Design and Organizational Change: Pacific Rim Seaports in Transition
(Tuscaloosa, 1988), pp. 61–65. On the Oakland dredging saga, see Christopher B. Busch, David L. Kirp, and Daniel F. Schoenholz, “Taming Adversarial Legalism: The Port of Oakland’s Dredging Saga Revisited,”
Legislation and Public Policy 2
, no. 2 (1999): 179–216; Ronald E. Magden,
The Working Longshoreman
(Tacoma, 1996), p. 190.

12.
Fairplay
, July 3, 1975, p. 37; Slack, “Pawns in the Game,” p. 582; Turner, Windle, and Dresner, “North American Containerport Productivity,” p. 351; author’s interview with Mike Beritzhoff, Oakland, CA, January 25, 2005.

13.
Boschken,
Strategic Design
, p. 200.

14.
Hans J. Peters, “Private Sector Involvement in East and Southeast Asian Ports: An Overview of Contractual Arrangements,”
Infrastructure Notes
, World Bank, March 1995.

15.
Pearson and Fossey,
World Deep-Sea Container Shipping.

16.
Lloyd’s Shipping Economist
, January 1983, p. 10.