The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (27 page)

The surge in transatlantic container traffic, coming at a time when American factories were running hard to meet the demands of a wartime economy, offered a golden opportunity for U.S. railroads to regain their place at the heart of the domestic transportation system. Their business in conventionally packaged export cargo was dying. Thousands of containers were passing through New Jersey and Baltimore every week, many of them going to or from factories in the industrial heartland of the upper Midwest. This huge scale offered no advantage to truckers, because, no matter how many boxes were being handled, one truck could pull only one 40-foot box. Scale could bring real savings aboard trains, giving the railroads a way to recover some of the export traffic they were losing.

The European railroads saw things that way. The Europeans had been trying to make a business with containers since the 1920s, and they were eager to strike deals with the ship lines. Almost as soon as transatlantic container shipping began, they offered flat per-container rates to draw traffic. In 1967, the French National Railway charged a flat 572 francs to carry a loaded 40-foot container from Bremen, in North Germany, to Basel, in Switzerland, while the German Federal Railway charged $241 to take any 40-foot box from Bremen to Munich. In Britain, using dedicated trains to carry containers to and from the port at Felixstowe had been part of Sea-Land’s plan from the very beginning, and British Rail was an eager collaborator.
³⁵

American railroads, especially those in the East, were notably less enthusiastic. They feared that containers would draw shipments away from boxcars, bringing in less revenue. Most of them had already built ramps to load and unload truck trailers under the auspices of Trailer Train, and at a time when they were financially pressed, they had no desire to lay out additional money for overhead cranes and storage yards to handle containers. The New York Central had a successful operation with its unique Flexi-Van service, and it feared that maritime containers would siphon off Flexi-Van’s customers. The railroads could not refuse to handle containers, but they could provide such poor service that no customer would want to ship them. In February 1966, the Pennsylvania Railroad delivered a flatcar holding two 20-foot containers to a Caterpillar Tractor warehouse in York, Pennsylvania. The containers were loaded while sitting on the car on Caterpillar’s siding, and the railroad charged for the haul to New Jersey as if Caterpillar had simply loaded its parts into boxcars. The shipment was billed as an experiment for American Export Lines, and the railroads were rooting for it to fail. “[W]e hope that the high cost of loading, blocking and bracing, and the unloading of the containers plus the loss of the containers for 2 weeks with no offsetting per diem revenue, will discourage their pursuing this avenue further,” a New York Central official wrote his counterpart at the Pennsylvania.
³⁶

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 high boxcar freight rates were bound to fail; Newell estimated that railroads could save 30 percent of their train and engine costs by running the sort of unit trains McLean had in mind. “Take those savings and divide them between the railroad and the shipper,” Newell advised. But in 1967 and 1968, the railroads couldn’t be bothered. Their piggyback traffic was booming, up 30 percent in three years, in an economy white-hot from the Vietnam War. Their mind-set, reinforced by a century of regulation, did not encourage them to conquer new business. They were content to leave the land side of the new container shipping business to trucks.
⁴⁰

I
n the winter of
1965, the United States government began a rapid buildup of military forces in Vietnam. In the process, it created what may have been the greatest logistical mess in the history of the U.S. armed forces. The resolution of that mess represented containerization’s coming of age.
¹

Few places on earth were less suited to supporting a modern military force than South Vietnam in early 1965. The entire country, seven hundred miles long from north to south, had a single deepwater port, one railroad line that was largely inoperative, and a fragmentary highway system, mostly unpaved. The tasks of providing civilian aid and supplying the U.S. military “advisers” who had worked in Vietnam since the late 1950s—there were 23,300 of them at the start of 1965—were already overwhelming; by 1964, the small U.S. port detachment in Saigon was working twelve-hour shifts, seven days a week, to prevent a backlog of ships. The various American forces in the country had sixteen different logistical systems, a situation that led to endless competition for basic resources such as delivery trucks and warehouse space. There was no central system for keeping track of arriving cargo, and the navy’s Military Sea Transportation Service (MSTS), which was responsible for chartering merchant ships to haul supplies to Vietnam, did not even have an office in the country. So far as Washington was concerned, the entire operation in Vietnam was predicated on the assumption that all troops would be withdrawn in 1965. This political fig leaf meant that spending on docks, warehouses, and other permanent infrastructure was hard to justify.
²

The logistical challenges were well known when President Lyndon Johnson ordered 65,000 U.S. soldiers and marines to Vietnam, along with several air force squadrons, in April 1965. Being aware of the problems, though, was not the same as resolving them. By June, when U.S. troop strength in-country had reached 59,900, the supply chain was already hopelessly tangled. Ships coming from California anchored outside Vietnamese harbors, but getting their cargo safely ashore was almost impossible: the harbors were so shallow that oceangoing ships could not reach the piers. Instead, a barge or a landing ship tank (LST), an amphibious vehicle longer than a football field but with a very shallow draft, would serve as a ferry. The barge or LST would tie up to the larger ship, whose crew would off-load the cargo painstakingly, often by placing crates or boxes into nets that were lowered by rope. The process was so slow that barges carrying ammunition from ships near Nha Be required ten to thirty days to make a single round trip to shore. At Qui Nhon, LSTs brought cargo directly onto the beach and lowered their huge ramps to let trucks and forklifts inside, but unloading them still took eight days. At Da Nang, oceangoing ships had to drop their cargo into lighters four miles out at sea. Coastal ships with less than a five-meter draft could reach the dock, but the port was repeatedly thrown into chaos when they arrived without advance notice. Storms, common during the summer monsoon, could bring the intricate unloading process to a halt.
³

The situation in Saigon was even worse. Vietnam’s only deepwater port, located on the Saigon River forty-five miles from the South China Sea, was a major bottleneck. Tonnage rose by half during 1965, and the port was simply overwhelmed. There were no cranes and few forklifts, leaving almost everything to be handled by muscle power. Ships carrying military cargoes, commercial cargoes, U.S. foreign aid, and food relief shipments competed for one of only ten berths. Once a vessel unloaded, its cargo often sat for days on the dock. Military recipients often did not know that they had freight coming. Commercial importers were accustomed to leaving their goods at the port as long as possible to put off the payment of customs duties. Cargo theft, much of it orchestrated by South Vietnamese generals, was so widespread that U.S. military police rode shotgun on the trucks taking cargo from the docks to military warehouses. Long port delays worsened the shortage of U.S.-flag ships that had forced the MSTS to activate the rustiest merchant vessels in the government-owned reserve fleet. “Military cargo requirement
[sic]
as of this date have been met only by accepting delivery of the cargo at dates later than desired,” the agency’s acting commander admitted in May 1965. Lacking warehouse space, army and air force commanders treated cargo ships as floating warehouses, making shipping problems worse. “Saigon just became a burying ground,” a high-ranking naval officer recalled. “Ships would move up the river and they would stay, and stay, and stay, not be offloaded. The Army would argue that the press of war was such that they couldn’t get the stuff ashore. Air Force didn’t bother to argue, the ship was there, period, we’ve got it and when we are ready we’ll let it go.”
⁴

Confusing everything was the decision by the Joint Chiefs of Staff to run a “push” supply system. In contrast to a “pull” system, in which units in the field would request the supplies they needed, the push system required supply experts back in the United States to decide what to send. The Army Materiel Command shipped more than one million automatic resupply packets, providing equipment and spare parts based on assumptions about how much a normal unit in the field would require. Supply depots in California made similar judgments about needs for food, clothing, communications gear, and building supplies. The supply experts “had never had grease under their fingernails,” a top army general groused, and from a distance of thousands of miles they had no actual knowledge of the rapidly changing situation in the field. Nor were they familiar with Vietnam.
⁵

In terms of getting supplies to the field as quickly as possible, the push system was a success. Spending by the Army Materiel Command, the agency that bought the army’s weaponry, soared from $7.4 billion in fiscal year 1965 to $14.3 billion the following year as ammunition, weapons, building materials, and vehicles were pumped into Vietnam. What finally arrived there, though, was always unexpected and often unneeded or unwanted. Food supplies flooded in, then were suddenly cut off when it became clear that there was far too much on hand. Conex boxes, the five-ton steel containers favored by the military, would arrive with mixed loads of weapons, boots, fatigues, and assorted odds and ends, leaving quartermasters without enough of any one item to outfit their units. Troops on the ground often ran short of provisions and essential supplies.
⁶

A month before the Joint Chiefs had given final approval for the troop buildup, William Westmoreland, the U.S. military commander, and James S. Killen, head of the U.S. foreign aid mission, had agreed that the best way to keep Vietnam supplied was to expand the port at Da Nang, a small city 430 miles north of Saigon. The concept was that Da Nang could receive ships arriving directly from the United States, diverting traffic from Saigon. This plan could not be executed quickly; Da Nang had shallow water and no cargo-handling equipment, and the main landing ramps for LSTs were in the middle of a major street. In April 1965, Westmoreland recommended that the United States instead focus on developing Cam Ranh Bay, 300 miles south of Da Nang, as a “second major deep water port and logistics complex.” Defense secretary Robert McNamara assented in May, and army engineers quickly arrived to begin work on an airfield. Construction of piers, warehouses, and a huge maintenance complex was to follow. The logistical units that had been assigned to smaller ports were soon shifted to Cam Ranh Bay. In July, Westmoreland created a wholly new unit, the First Logistical Command, with responsibility for port operations, supply, and maintenance across all of South Vietnam, including the new Cam Ranh operation.
⁷