The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (31 page)

Then Oakland raised the bar. The port’s ambitions centered on an area known as the Outer Harbor, bisected by an embankment that had once carried passenger trains to their terminus at a ferry landing. The Port Commission was out of money after expanding the Oakland airport, but the Bay Area Rapid Transit District, which began designing its regional rail system in 1963, came to its rescue. In return for permission to tunnel beneath port property, the rail agency agreed to clear abandoned buildings along the embankment, construct a 9,100-foot dike, and fill the enclosed area with dirt excavated in tunnel construction. Oakland designed an enormous terminal for the 140-acre site, with 12 berths, wharves 78 feet wide—wide enough to erect cranes that would straddle the dockside railroad tracks—and the ability to accommodate ships of almost any length. The outermost dock was barely a mile from 60-foot water depth in San Francisco Bay, assuring that the port would remain accessible as ships became larger.

Oakland delegations visited Japan, in 1963, and Europe, in 1964, and learned that several ship lines were interested in containerization. None of them was prepared to sign a contract that would allow the port to sell revenue bonds, but a timely $10 million grant from the federal Economic Development Administration, intended to generate jobs in the depressed city, supplied construction funds. A new terminal was rushed into construction, without a tenant, before new environmental regulations took effect. With that project under way, Sea-Land decided in 1965 that it needed more space, and signed a contract for a twenty-six-acre terminal with two big shoreside cranes. A few months later, Matson, hitherto a purely domestic company, announced that Oakland’s new landfill would be its base for an unsubsidized service carrying containers between the Pacific Coast and Asia.
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Behind this frenzied expansion of long-neglected ports was the emergence of an entirely new line of thought about economic growth. Manufacturing was almost universally regarded as the bedrock of a healthy local economy in the 1960s, and much of the value of a port, aside from jobs on the docks, was that transportation-conscious manufacturers would locate nearby. As early as 1966, though, public officials in Seattle were sensing that their remote city, with little industry, might be able to develop a new economy based on distribution rather than on factories. The lack of population close at hand would be no obstacle; Seattle could become not merely a local port for western Washington but the center of a distribution network stretching from Asia to the U.S. Midwest. “Commodity distribution has grown out of the dependent sector to link production and consumption,” port planner Ting-Li Cho wrote presciently. “It has become an independent sector that, in return, determines the economy of production and consumption.” Much the same message, with opposite implications for the local economy, was transmitted that same year to San Francisco officials by consulting firm Arthur D. Little. A great proportion of the city’s wholesaling, trucking, and warehousing business would soon relocate to be near the emerging port facilities on the eastern side of San Francisco Bay, Little warned, because it no longer needed to be close to the other business activities in San Francisco.
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Fortified by increasing confidence in their economic prospects, Seattle, Oakland, Los Angeles, and Long Beach were in a constant state of construction. Sea-Land opened container service from Seattle to Alaska in 1964, a few days before the devastating Alaska earthquake created huge demand for construction supplies and relief shipments. The U.S. buildup in Vietnam sent a flood of aid cargoes through Los Angeles and Long Beach. Oakland’s nonmilitary container shipments, just 365,085 tons in 1965, quadrupled to 1.5 million tons in 1968 and doubled again to 3 million tons in 1969, as Japanese and European ship lines began pushing containers through the port. By now, nearly 60 percent of Oakland’s cargo was moving in containers. Los Angeles attracted four Japanese lines to a new terminal. Long Beach, anticipating that the shallower Los Angeles harbor would soon force ship lines to look elsewhere, began building space to handle ten ships at a time at three new terminals, including a hundred-acre site for Sea-Land alone. Seattle began no fewer than three new terminals with no tenants in place, driven by a new imperative: if the supply of terminal space was not adequate to meet the demand for container shipping, the ships might go somewhere else.
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Two traditional maritime centers stood aside from the frenzy. Portland, which handled nearly as much cargo as Seattle during the 1950s, could not muster the money or resources to build a containerport. The consequences were severe. Seattle’s foreign trade more than doubled between 1963 and 1972, but Portland’s barely grew. Once Japanese containerships began to call at Seattle, in 1970, Portland found itself receiving Japanese goods by truck from Seattle rather than by ship from Yokohama. San Francisco faced more fundamental problems, because the city’s location, on a congested peninsula with direct rail access only to the south, was ill-suited to handling freight to and from points east. City officials managed to get dredging under way in 1968 after wresting control of their port away from the state, but actual construction of container piers was delayed so long that even American President Lines, whose predecessor companies had made their home in the city for more than a century, finally decamped for Oakland. The city’s plans kept changing, even as Seattle, Oakland, Los Angeles, and Long Beach opened one huge purpose-built container terminal after another. In 1969, a Swedish ship line’s massive neon sign, a fixture of the San Francisco water-front for decades, was moved across to the Oakland side of the bay, the glowing words “
JOHNSON LINE
” offering San Franciscans a nightly reminder that their city’s time as a major port was over.
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The explosion of port construction on the Pacific coast, starting in the 1950s, had no counterpart on the other side of the country. After Grace Line abandoned its ill-fated container service to Venezuela, Sea-Land was left as the only company using dedicated ships to move containers in the East. The many other lines that advertised container service handled boxes along with mixed freight and did not need special cranes or storage yards. More important, the extraordinary enthusiasm for containerization shown by Pacific Coast ports was little in evidence on the Atlantic, except at Sea-Land’s home port in New Jersey. The West Coast ports that embraced containerization, save for Los Angeles, were withering in the late 1950s, and they saw salvation in the new technology. The ports on the Atlantic and the Gulf of Mexico had a steadier flow of cargo: as late as 1966, nine of the ten largest maritime routes for U.S. international trade passed through ports on the East Coast or the Gulf, and only one touched the West Coast. The eastern ports had less to gain from containerization, and, outside of New York, their eagerness to invest millions of dollars of public money was correspondingly less acute.
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The Port of New York Authority docks in Newark and Elizabeth were expanding without cease as container shipping became an international business. By 1965, half a dozen ship lines announced plans to launch container services from New Jersey docks to Europe in 1966, and dozens of new ships were on order. The embrace of containerization was not repeated up and down the coast. The obstacles were the same almost everywhere: labor and money.

On the labor front, the New York Shipping Association and the ILA had negotiated smaller gang sizes and a guaranteed annual income for displaced longshoremen in 1964, but union locals at other ports, save Philadelphia, had not. Unlike New York, where the efforts of the Waterfront Commission had eliminated casual dock-workers in the 1950s, most other East and Gulf Coast ports had large numbers of part-time longshoremen well into the 1970s. Boston longshoremen worked an average of one and a half days per week, New Orleans longshoremen two days. If containers were allowed, these part-time jobs were likely to vanish as the industry shifted to a permanent, full-time workforce. The ILA had seen how container shipping had decimated its membership rolls in New York, and it was loath to tolerate it in other ports until income guarantees were in place.
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Interunion disputes were a problem as well. In Boston, the Massachusetts Port Authority spent $1.1 million to build a container crane in 1966 so that Sea-Land ships could call on their way between New York and Europe, but the terminal was kept closed first by a dispute between the ILA and port employers and then by a dispute between the ILA and the Teamsters union. Sea-Land and its competitors soon learned that they could operate more profitably by trucking Europe-bound containers to New York and having their ships bypass Boston, and port traffic never recovered. In New York and other ports, the Teamsters objected to contracts that guaranteed ILA members the right to consolidate partial loads into containers at inland warehouses. The ILA viewed these contracts as essential to preserving its members’ jobs as traditional maritime functions moved away from the waterfront, but the Teamsters viewed them as infringements on their own jurisdiction over the warehouse industry. Contests over which union’s members would do the work persisted until 1970.
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Aside from Baltimore, most ports found the cost of building dedicated container facilities so daunting that they postponed decisions. The city of Philadelphia, short of funds, did nothing toward containerization until worried business leaders pushed for the creation of a port corporation with authority to issue bonds, in 1965. Only after a study predicted that Philadelphia would soon be losing a million tons of freight per year did the new corporation reluctantly invest in a container terminal, which opened in 1970. Miami built ramps for roll on-roll off ships but no specialized wharves for containerships. Gulf Coast ports such as Mobile decided not to invest in containerization because many of the Caribbean islands to which they exported were too small to require large containers. New Orleans, long the largest Gulf port, handled containers over the same wharves used for other types of cargo; its first purpose-built container terminal, located on a canal that subsequently proved too shallow, did not open for business until 1971. Houston, Sea-Land’s original western terminus, invested sooner, and it firmly established itself as the premier containerport on the Gulf.
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The net result of these decisions was that a single port, the Port of New York Authority’s complex at Newark and Elizabeth, dominated container shipping in the East. In 1970, only one other harbor between Maine and Texas, the Hampton Roads of Virginia, could boast even one-ninth the container capacity of the wharves on New York harbor. The emerging economics of container shipping meant that the laggards faced potentially serious consequences. The newly built containerships coming on the scene in the late 1960s carried far more cargo than the vessels they supplanted; even if the total amount of cargo grew, fewer voyages would be required. Shipowners wanted to keep their ships under way to recover the high construction cost, so they preferred that each voyage involve only one or two stops on either side of the ocean rather than four or five. Secondary ports would not see transatlantic ships but would get only feeder services to bigger ports. Once a port had slipped from the first rank, it would have a hard time climbing back: a less active port would have to spread the cost of building a capital-intensive container terminal across fewer ships, and its higher costs per ship would in turn drive away business. Ports that came late to the container game either would have to take huge risks in hopes of attracting tenants or would need to find a large ship line willing to help bear the costs of establishing a major new port of call.
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Some late starters did succeed in turning themselves into major containerports with relentless investment. The first containers passed through Charleston, South Carolina, in 1965, but the port had only one berth and no specialized crane to handle containers. Then, in the late 1960s, Sea-Land decided to expand its very modest Charleston operation. The state-owned port began an ambitious development program, growing from an initial fifteen-acre container terminal into three terminals covering nearly three hundred acres by the early 1980s. Charleston, with almost no container traffic in 1970, ranked eighth among continental U.S. ports by 1973 and climbed to fourth by 2000. The nearby port of Savannah, Georgia, another late starter, followed a similar trajectory after belatedly installing its first container crane in 1970. But as container shipping made the transition from the emerging technology of the early 1960s to the booming business of the early 1970s, the opportunity for ports to establish themselves as major maritime centers was diminishing rapidly. “The maintenance of a major port in every major coastal city is no longer justified,” a government report declared in the early 1970s. Such long-standing ports as Boston and San Francisco, Gulfport, Mississippi, and Richmond, California, would have to find other roles in the container age.
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The first decade of container shipping was an American affair. Ports, railroads, governments, and trade unions around the world spent those years studying the ways that containerization had shaken freight transportation in the United States. They knew that the container had killed off thousands of jobs on the docks, rendered entire ports obsolete, and fundamentally altered decisions about business location. Even so, the speed with which the container conquered global trade routes took almost everyone by surprise. Some of the world’s great port cities soon saw their ports all but disappear, while insignificant towns on little-known harbors found themselves among the great centers of maritime commerce.
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Nowhere was the transformation more tumultuous than in Britain. London and Liverpool were by far Britain’s biggest ports in the early 1960s, but their business was remarkably close to home. Exporters and importers tended to use the nearest port in order to minimize trucking costs. About 40 percent of Britain’s exports in 1964 originated within twenty-five miles of their port of export, and two-thirds of all imports traveled fewer than twenty-five miles from the port of discharge. London, a huge industrial center in its own right, and Liverpool, serving the industrial heartland in the English Midlands, each handled one-fourth of British trade, with dozens of other ports claiming small shares.
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