The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

by Marc Levinson

  There can be no doubt, however, that containerization eliminated one of the key reasons for operating a factory in New York City: ease of shipment. A New York City location had long offered trans port-cost advantages for factories serving foreign or distant domes tic markets, as local plants could get their goods loaded on ships with much less handling than could factories inland. The container turned the economics of location on its head. Now, a company could replace its crowded multistory plant in Brooklyn or Manhattan with a modern, single-story factory in New Jersey or Pennsylvania, could enjoy lower taxes and electricity costs at its new home, and could send a container of goods to Port Elizabeth for a fraction of the cost of a plant in Manhattan or Brooklyn. This is exactly what occurred: while industry fled the city, 83 percent of the manufacturing jobs that left New York between 1961 and 1976 ended up no further away than Pennsylvania, upstate New York, or Connecticut.42

  In 1962, the Brooklyn waterfront was still lined with piers crowded with ships, vast transit sheds, and large, multistory factory buildings literally a stone’s throw from the docks. The shift of shipping to New Jersey through the 1960s, combined with the closing of the Brooklyn Navy Yard in 1966, helped destroy the industrial base of one of the largest manufacturing centers in the country. Long known for having a disproportionately large share of the New York region’s manufacturing, Brooklyn was remarkable for its disproportionately small share of manufacturing activity by 1980. Economic conditions were so bad that Booklynites abandoned the borough in droves. The population fell 14 percent between 1971 and 1980. Inflation-adjusted personal income fell for eight consecutive years. Not until 1986 did Brooklyn workers regain the income level they collectively enjoyed in 1972.43

  The container was not the sole cause of the surprising and painful economic changes of the 1960s and 1970s, but it was an important cause. Container technology developed far more quickly and affected transportation industries far more significantly than even its most ardent proponents had imagined. New York was only the first established shipping center whose economy would be transformed in ways that were unimaginable before the container arrived on the scene.

  Chapter 6

  Union Disunion

  The dislike between Teddy Gleason and Harry Bridges was almost visceral. Gleason, a voluble Irish-man born hard by the New York docks, held together the International Longshoremen’s Association, the union representing dockworkers from Maine to Texas, with a combination of personal charm, warm humor, endless patience, and more than occasional tolerance of corruption. Bridges was an Australian-born ascetic, a man whose role in the brutal battles that brought the International Longshoremen’s and Ware-housemen’s Union (ILWU) to power in Pacific ports made him a legend among his members. The two men disagreed about almost everything, including how their unions should respond to the threat that automation posed to longshoremen’s jobs. For a decade beginning in 1956, they struggled with very similar issues in very different ways. Both leaders understood from the outset that automation could put tens of thousands of jobs at risk and transform shoreside labor—their members’ labor—into almost an incidental expense. They ended up finding different ways to win extraordinary benefits for their members—in return for allowing the container to reshape the long-established pattern of life on and around the docks.

  It was in New York, where Gleason had run a local ILA union and then become the chief deputy to “Captain” William Bradley, the international president, that automation first arose as a major labor-relations issue. The New York Shipping Association, the group of stevedoring companies and ship lines that negotiated the local contract with the ILA, offered an unusual proposal in 1954. Shippers were starting to send their export cargo to the dock already tied on wooden pallets, intending that the entire pallet be transported as a single unit. Since pallets were easy to move with forklifts on the pier and to stow with forklifts inside the ship, the Shipping Association asked the union to handle them with gangs of only 16 men at each hatch, rather than the normal complement of 21 or 22. The ILA quickly did the math: the companies’ proposal could mean the loss of up to 30 jobs on a vessel with five hatches. The union objected, and the Shipping Association retreated.1

  Pan-Atlantic’s venture at Port Newark two years later initially attracted little attention from the union. Port Newark, like all parts of New York harbor, operated under ILA contracts. Gleason knew Malcom McLean—the ILA had organized some McLean Trucking warehouse workers in 1939—and the union agreed to handle Pan-Atlantic’s containers when the Ideal-X first set sail in 1956. Some union leaders made clear their distaste for the container, but the ILA had a host of more pressing concerns: it was in internal turmoil; it faced yet another attempt to oust it as the sole union on New York’s docks; its portwide contract was set to expire on September 30, 1956; and its top bargaining demand, a single contract covering the entire Atlantic and Gulf coasts, was meeting strong management resistance. Members at Port Newark were worried about preserving their system for assigning work, which sought to equalize their earnings. In the grand scheme of things, two small ships carrying a few containers were not a priority at union headquarters on West Fourteenth Street in Manhattan. Besides, as an ILA official later told Congress, Pan-Atlantic’s was a new operation that added longshore jobs rather than removing existing jobs. The servicing of Pan-Atlantic’s containerships, along with the work of consolidating small shipments into full containers at Pan-Atlantic’s terminal, was divided between two ILA locals, one black and one white, on the understanding that most of the twenty-one men in each gang were not needed for loading and unloading and would stay out of the way.2

  Automation became a serious issue when the ILA negotiated new contracts in the fall of 1956. After observing McLean’s container operation, the New York Shipping Association sought freedom for employers to hire only as many longshoremen as they wanted “for any type of operation not practiced at this time.” An even more ominous issue arose in New Orleans, where the employers wanted to define longshore work as moving cargo from a point of rest on the wharf to the ship—language that would have shut the ILA out of work loading or emptying containers or moving them within the terminal area. Both proposals were eventually dropped, and after a ten-day strike the union achieved much of its main goal, winning a single contract covering wages and pensions from Maine to Virginia. Gleason, the union’s chief negotiator in New York, gave absolutely no ground on the automation-related demands, but the battle lines had been drawn. As a presidential board of inquiry noted dryly after the strike, proposals for smaller gang sizes “were a bone of contention with the union.”3

  By 1958, the ILA had seen off competing unions in New York and was free to turn its full attention to automation. The first returns on container shipping were in, and they were alarming. “A containership can be loaded and unloaded in almost one-sixth of the time required for a conventional cargo ship and with about one-third of the labor,” McLean Industries told shareholders after two years of operation. Other ship lines were examining containers, and, unlike Pan-Atlantic, they wanted to move consolidation of small shipments away from the docks to inland sites, where it would be out of the ILA’s jurisdiction. The match was lit by Grace Line, a company specializing in the South America trade. In November 1958, Grace docked its new Santa Rosa on the Hudson. The vessel was designed such that workers could load containers and mixed cargo by rolling them through doors in the side rather than hoisting them through hatches in the deck. Citing the ease of loading, Grace asked to hire only five or six men for each hatch. ILA Local 791 promptly refused to work the ship. When the company held firm, the ILA announced a boycott of all containers, except Pan-Atlantic’s, unless they had been filled by ILA members. Fred Field, head of the council of New York ILA locals, angrily accused the ship lines of “soliciting freight in prepackaged containers.”4

  With tensions mounting, the ILA stopped work on November 18 and convened twenty-one thousand longshoremen at Madison Square Garden to hear about the th
reat of mechanization. Union leaders demanded that employers “share the benefits” and insisted that they would not accept smaller gang sizes. The issue was critical to the union: if Grace Line had its way, far fewer men would be needed on the docks. Intense negotiations led to a temporary compromise in December: the ILA agreed that companies using containers before November 12, 1958—including Grace—could continue to use them, so long as they hired twenty-one men for each hatch. On December 17, the port’s labor arbitrator declared, “The problem of containers is well on the road to an amicable solution by both parties.”5

  It was not. Negotiations over container use resumed in January 1959 but got nowhere. The issue festered until August, the start of bargaining on new contracts for all East Coast and Gulf Coast ports. At the most important talks, covering New York Harbor, the ILA demanded that ship lines “spread the fruits of automation.” It offered to eliminate one or two longshoremen from each gang. In return, it sought a six-hour workday and a requirement that every container, whatever its origin, be “stripped and stuffed”—that is, emptied and then reloaded—by ILA members on the pier. Stripping and stuffing, of course, were entirely make-work, and would have eliminated any cost savings from containerization. A few days later, the New York Shipping Association countered with a general concept: employers would protect the jobs of regular longshoremen in return for unlimited freedom to automate.6

  In a conventional labor-management relationship, a management proposal to guarantee jobs in return for the right to automate would have led to intense negotiations. Negotiating with the ILA, however, meant an endless series of distractions. With almost no warning, the union scheduled a membership vote for September 14—two weeks ahead of contract expiration—on whether the ILA should affiliate with the national AFL-CIO labor federation, six years after the old American Federation of Labor had expelled it for corruption. All other business was suspended while union leaders tried to convince members to vote yes. Only after the referendum’s narrow passage did contract negotiations resume, just a few days before the September 30, 1959, expiration date. The talks had a positive tone, and, with details unsettled a few hours before the contract expired, Gleason and New York Shipping Association president Alexander Chopin agreed on a fifteen-day extension. Field protested that the extension violated the ILA’s long-standing credo, “no contract, no work,” and his Manhattan local promptly went on strike. A few hours later, after separate negotiations covering southern ports failed, longshoremen from North Carolina to Texas walked out. Faced with two uprisings, Gleason canceled the contract extension and endorsed a strike—only to run afoul of powerful Brooklyn ILA boss Anthony Anastasia. Anastasia, a volatile Italian immigrant with no love for Gleason and the other Irishmen who dominated the ILA’s leadership, directed his own members to work and accused Gleason of backing the strike only to benefit Field. A court temporarily ended the chaos on October 6 by ordering the ports reopened for at least eighty days.7

  The employer side was no more united than the union. Every ship line had its own plans for automation, and the only company that truly understood the container business, Pan-Atlantic, was not at the bargaining table. When serious negotiations resumed at the start of November, the Shipping Association rejected the union’s proposal to strip and stuff all containers at the pier, but agreed to a container tax to compensate longshoremen hurt by containerization. The details proved sticky. The employers offered severance pay for displaced dockers. The union wanted a guarantee of dock-workers’ incomes instead; it dismissed severance pay as impractical because, in an industry where workers were hired by the day, automation was likely to mean less work for everyone rather than total unemployment for some.

  The outcome, in December 1959, was a three-year contract stating that New York employers would have the right to automate in return for protecting longshoremen’s incomes. Beyond that broad principle, all details were left to arbitration. “What the shippers did was give us a piece of the pie,” one ILA leader crowed. “Their savings with containers will be tremendous and they just passed on some of the cash to us.” The Shipping Association told a similar story. “The steamship industry and shippers are in a position for the first time to fully test and evaluate the economies that might result from these new developments,” Shipping Association president Vincent Barnett wrote his members. Civic boosters, long preoccupied by the decline of New York’s docks, touted the pact as the instrument of the port’s salvation. The new contract “may give New York a jump on competing ports in developing the use of huge containers in international shipping,” the Herald Tribune explained. The New York Times thought that it “should open the door to a flood of containers.”8

  The flood did not come, because nothing had been agreed but generalities. Three arbitrators, including Gleason, a management representative, and a neutral third member, spent months pondering the details, trying to navigate between the ship lines’ concern that a royalty on each container would “become another long-term mortgage on the industry” and the ILA’s worry that the carriers would find ways to avoid paying royalties. Finally, in the autumn of 1960, the arbitrators ruled by a two-to-one vote that employers in the Port of New York could use container-handling equipment without restriction—in return for paying $1.00 per ton for every container moving on a containership, $0.70 per ton for each container on ships designed both for containers and mixed freight, and $0.35 per ton for containers being carried on conventional breakbulk ships. As a sop to the union, the arbitrators dictated that when ship lines or stevedore companies stuffed or unstuffed containers at their own terminals, they would have to employ ILA labor.9

  With the 1960 arbitration award, the Port of New York was officially open to any ship line wishing to carry freight in containers. The reality was otherwise. The arbitrators had ordered that the container royalties be paid into a fund, but they had refused to say anything about how the fund should be spent. In addition, the arbitrators had neglected to define the term “container.” Gleason, the union’s representative on the arbitration panel, predicted that these omissions would cause further union-management conflict. He was right.

  The ILA’s Pacific coast counterpart, the International Longshoremen’s and Warehousemen’s Union, took an entirely different tack in addressing waterfront automation.

  The ILWU had a long history of difficult and at times violent relations with employers in the Pacific ports. The union, then the Pacific division of the ILA, gained recognition only after a bloody coastwide strike in 1934, and staged 1,399 legal and illegal stoppages over the next fourteen years in order to assert its rights. The net result of this constant conflict was a large body of rules, both written and unwritten, governing port operations in great detail. One formal rule provided that, once assigned to a job at a particular hatch of a particular ship, a worker would do only that specific job until the ship sailed; if loading was complete at one hatch but not at another, an idle worker from the first hatch could not be shifted to help out at the second. An important “hip pocket” rule, codified nowhere but enforced by the gang foreman as required, provided that a trucker delivering palletized cargo to a pier would have to remove each item from the pallet and place it on the dock. Longshoremen would then replace the items on the pallet for lowering into the hold, where other longshoremen would break down the pallet once more and stow each individual item—all at a cost so high that shippers knew not to send pallets to begin with.10

  Developing such rules, a top ILWU official admitted later, “took no end of imagination and invention.” The union regarded them as indispensable to preserve jobs and maintain uniform costs among competitors. The stevedoring firms with which the ILWU negotiated were willing to accept the rules to avoid the alternative of endless wildcat strikes. Louis Goldblatt, the union’s longtime secretary-treasurer, claimed that the stevedores actually liked many of the rules, because the ship lines paid them a premium of 30 percent for each man-hour worked. Perversely, the more man-hours required to discharge and
load a ship, the more profit the stevedore could make.11

  The other reason strict work rules were accepted is that there was little choice. The stevedores’ association had attempted to loosen many of the rules in contract negotiations in 1948. Unwisely, it did so by mounting a personal attack on Harry Bridges. The union president, a political radical from his Australian youth, made no secret of his socialist sympathies, and the employers labeled him a Communist and declared that they would not deal with Communists. By so doing, they merely enhanced his reputation on the docks. The ILWU walked out when the contract expired, and the union’s leadership was so successful in promoting solidarity that members stayed out through a ninety-five-day strike. Finally, the major ship lines brought the conflict to an end by pushing aside the stevedores’ association and their own rabidly anti-Communist counsel and taking charge of negotiations. The union achieved its greatest desire: it was finally able to negotiate face-to-face with the ship operators that ultimately paid for its services, rather than with the financially tenuous middlemen at the stevedoring companies.12

  The largest of the Pacific ship lines, Matson, was facing a financial squeeze, and it persuaded the others that it was time for “a new look” in labor-management relations. The companies agreed to leave the work rules alone, in return for a contract clause allowing stevedores to use new devices and methods so long as individual workers did not face speedups. Innovation would no longer automatically trigger a strike. If a gang thought it was being asked to perform dangerous or excessive tasks, a union representative and a supervisor would try to work things out while unloading or loading continued; if no settlement could be reached at the job site, the dispute would move quickly to higher levels and, if needed, to binding arbitration. These provisions created a new openness, with the union frequently bending the rules to permit new equipment and smaller gangs so long as workers received a portion of the savings. Faced with cargo volumes one-quarter smaller than before the war, the ILWU, in the words of two California labor experts, accepted that “[r]adical measures were necessary to halt the decline in maritime commerce.”13