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

by Marc Levinson

  Despite these discontents, the longshore unions’ tenacious resistance to automation appeared to establish the principle that long-term workers deserved to be treated humanely as businesses embraced innovations that would eliminate their jobs. That principle was ultimately accepted in very few parts of the American economy and was never codified in law. Years of bargaining by two very differ entunion leaders made the longshore industry a rare exception, in which employers that profited from automation were forced to share the benefits with the individuals whose work was automated away.

  Chapter 7

  Setting the Standard

  Containers were the talk of the transportation world by the late 1950s. Truckers were hauling them, railroads were carrying them, Pan-Atlantic’s Sea-Land Service was putting them on ships, the U.S. Army was moving them to Europe. But “container” meant very different things to different people. In Europe, it was usually a wooden crate with steel reinforcements, 4 or 5 feet tall. For the army, it involved mainly “Conex boxes,” steel boxes 8½ feet deep and 6 feet 10½ inches high used for military families’ household goods. Some containers were designed to be shifted by cranes with hooks, and others had slots beneath the floor so they could be moved by forklifts. The Marine Steel Corporation, a New York manufacturer, advertised no fewer than 30 different models, from a 15-foot-long steel box with doors on the side to a steel-frame container with plywood sides, 4½ feet wide, made to ship “five-and-dime” merchandise to Central America. Of the 58,000 privately owned shipping containers in the United States, according to a 1959 survey, 43,000 were 8 feet square or less at the base, while a mere 15,000, mainly those owned by Sea-Land and Matson, were more than 8 feet long.1

  This diversity threatened to nip containerization in the bud. If one transportation company’s containers would not fit on another’s ships or railcars, each company would need a vast fleet of containers exclusively for its own customers. An exporter would have to be cautious about putting its goods into a container, because the loaded box could go only on a single carrier’s vessel, even if another line’s ship was sailing sooner. A European railroad container could not cross the Atlantic, because U.S. trucks and railroads were not set up to handle European sizes, while the incompatible systems used by various American railroads meant that a container on the New York Central could not readily be transferred to the Missouri Pacific. As containers became more common, each ship line would need its own dock and cranes in every port, no matter how small its business or infrequent its ships’ visits, because other companies’ equipment would not be able to handle its boxes. So long as containers came in dozens of shapes and sizes, they would do little to reduce the total cost of moving freight.

  The United States Maritime Administration decided in 1958 to put an end to this incipient anarchy. Marad, as it was known, was an obscure government agency, but it held enormous power over the maritime industry. Marad and a sister agency, the Federal Maritime Board, dispensed subsidies to build ships, administered laws dictating that government freight should travel in U.S.-flag vessels, gave operating subsidies to U.S. ships on international routes, and enforced the Jones Act, the venerable law dictating that only American-built ships, using American crews and owned by American companies, could carry cargo between U.S. ports. The wide variety among containers increased its financial risk: if a ship line took Marad’s money, built a vessel to carry its unique containers, and then ran into financial problems, Marad could end up foreclosing on a ship that no one would want to buy. Marad’s desire to set common standards was supported by the navy, which had the right to commandeer subsidized ships in the event of war and worried that a merchant fleet using incompatible container systems would complicate logistics. The situation was urgent: several ship lines were seeking subsidies to build vessels to carry containers, and if standards were not set quickly, each carrier might go off in its own direction. In June 1958, Marad named two committees of experts, one to recommend standards for container sizes and the other to study container construction.

  The problems the committees faced were not entirely novel. The railway industry, for example, had gone through a standardization process. The gauge—the distance between the inside faces of a pair of rails—on North American railroads varied between 3 feet and 6 feet during the nineteenth century. Trains on Britain’s Great Western Railway, with a gauge of 7 feet, could not travel on lines with the most common British gauge of 4 feet 8.5 inches. In Spain, gauges varied from 3 feet 3.3 inches to 5 feet 6 inches, and the multiplicity of gauges in Australia foreclosed long-distance rail transport well into the twentieth century. In some cases, the gauge had been chosen more or less randomly. In others, builders deliberately sought to prevent their line from interconnecting with others that might compete for traffic. Over time, these differences worked themselves out. The Pennsylvania Railroad took over lines in Ohio and New Jersey after the Civil War and converted them to its own gauge. When Prussia proposed a railway link to the Netherlands in the 1850s, the Dutch narrowed their lines so that trains could run through from Amsterdam to Berlin.2

  The railway precedent suggested that ship lines might eventually make their container systems compatible without a government dictate. Yet the analogy is misleading. The gauge that became “standard” on railways had no particular technical superiority, and standardization had almost no economic implications; the width of the track did not determine the design of freight cars, nor the capacity of a car, nor the time required to assemble a train. In the shipping world, on the other hand, individual companies had strong reasons to prefer one container system to another. The first carrier with fully containerized ships, Pan-Atlantic, used containers that were 35 feet long, because that was the maximum allowed on the highways leading to its home base in New Jersey. A 35-foot container would have been inefficient for carrying canned pineapple, Matson Navigation’s biggest single cargo, because a fully loaded container would have been too heavy for a crane to lift; Matson’s careful studies showed that a 24-foot box was best for its particular mix of traffic. Grace Line, which was planning service to Venezuela, worried about South America’s mountain roads and opted for shorter, 17-foot containers. Grace’s design included small slots at the bottom for fork-lifts, but Pan-Atlantic and Matson chose not to pay extra for slots because they did not use forklifts. Each company deemed the fittings it used to lift its containers the best for loading and discharging ships at top speed. Conforming to industry standards, each line felt, would mean using a system that was less than ideal for its own needs.3

  There were two other important distinctions between standardizing rail gauges and standardizing containers. One was scope: the width of a railroad track affected only railroads, whereas the design of containers affected not just ship lines, but also railroads, truck lines, and even shippers who owned their own equipment. The other difference was timing. Railroads had been around for several decades before incompatible track gauges came to be seen as a major problem. Container shipping was brand-new, and pushing standardization before the industry developed might lock everyone into designs that would later prove undesirable. From an economic perspective, then, there was every reason to doubt the desirability of the standardization process that began in 1958. If government agencies in those days had made it a routine practice to conduct cost-benefit studies, most likely the entire process of container standardization would never have begun.4

  These concerns were unrepresented when Marad’s two expert committees held their first meetings on successive days in November 1958. Neither Pan-Atlantic nor Matson was seeking government construction subsidies, so the only two companies actually operating containerships in 1958 were not invited to join in the process of setting standards for the industry that they were creating.

  Controversy arose almost immediately. After much debate, the dimension committee agreed to define a “family” of acceptable container sizes, not just a single size. It voted unanimously that 8 feet should be the standard width, despite the fact that
some European railroads could not carry loads wider than 7 feet; the committee would “have to be guided mainly by domestic requirements, with the hope that foreign practice would gradually conform to our standards.” Then the committee took up container heights. Some maritime industry representatives favored containers 8 feet tall. Trucking industry officials, who were observers without a vote, argued that 8½-foot-tall boxes would let customers squeeze more cargo into each container and allow room for forklifts to work inside. The committee finally agreed that containers should be no more than 8½ feet high but could be less. Length was a tougher issue still. The diversity of containers in use or on order presented a serious operational problem: while a short container could be stacked atop a longer one, its weight would not rest upon the longer one’s load-bearing steel corner posts. To support a shorter container above, the bottom container would require either steel posts along its sides or thick, load-bearing walls. More posts or thicker walls, though, would increase weight and reduce interior space, making the container more costly to use. The length question was deferred.5

  The other Marad committee, on container construction, defined its most important task as establishing maximum weights for loaded containers. Weight limits were crucial, because they would determine the lifting power required of cranes and the load that the bottom container in a stack might have to bear. The weight of empty containers, however, would not affect cranes, ships, or trucks, and the committee decided not to address it. Various other complicated issues, such as the strength of corner posts, the design of doors, and the standardization of corner fittings for lifting by cranes, were put off.6

  The two committees appointed by Marad did not have the field to themselves. There was a competitor: the venerable American Standards Association. The association, supported by private industry, was in the business of setting standards, dealing with subjects as diverse as the size of screw threads and the construction of plaster walls. The work was vital but also mind-numbing; the engineers on a typical American Standards Association committee would study technical reports, hear the views and interests of the firms concerned, and eventually recommend standards that individual companies could abide by if they wished. To deal with containers, the association created Materials Handling Sectional Committee 5—MH-5, to all concerned—in July 1958. MH-5, in turn, organized itself into subcommittees, which were instructed to develop specifications that would “permit optimum interchange among carriers and also be compatible with domestic pallet containers and cargo containers, and foreign carriers.”7

  The MH-5 committee’s first act was to ask the Marad committees to withdraw from the scene. The maritime industry alone should not be making decisions about standardization, MH-5 officials argued; the process should involve other affected industries, and should include foreign organizations so that the standards might eventually apply globally. The Marad committees refused to wait for a decade-long international process. They carried on over the winter of 1959, debating maximum weights, lifting methods, and the pros and cons of requiring steel posts every eight feet along container walls rather than just at the corners. The MH-5 subcommittees, involving many of the same participants, went to work on the same issues. The MH-5 subcommittee on dimensions quickly reached a consensus that all pairs of lengths in use or about to be used—12 and 24 feet, 17 and 35 feet, 20 and 40 feet—would be considered “standard.” The subcommittee rejected only a proposal to endorse 10-foot containers, because members thought them too small to be efficient, and, in any case, none were planned.8

  The MH-5 process was dominated by trailer manufacturers, truck lines, and railroads. These interests wanted to reach a decision on container sizes quickly, because once standard dimensions were approved, the domestic use of containers was expected to burgeon. The specifics mattered less: within the limits set by state laws, trucks and railroads could accommodate almost any length and weight. The maritime interests that were influential in the Marad committees, in contrast, cared greatly about the specifics. A ship built with cells for 27-foot containers could not easily be redesigned to carry 35-foot containers. Most ships then carrying containers had ship-board cranes built to handle a particular size, and they would have to be converted to handle other sizes. Large containers might prove impossible to fill with the available freight, but smaller ones would increase costs by requiring more lifts at the dock. Some lines had made large investments that could be rendered worthless if their containers were deemed “nonstandard.” Maritime executives were especially concerned that Marad would deny financial help and perhaps even government cargoes to “nonstandard” operators. Bull Line, which carried containers 15 feet long and 6 feet 10 inches high on its breakbulk ships to Puerto Rico, begged to be left alone, because it had no desire to interchange containers with other companies. Other lines urged the government to let the market sort things out as the container industry matured. When the Marad committee on dimensions reviewed the MH-5 subcommittee’s six proposed “standard” lengths in April 1959, it split. The deciding vote in favor of the MH-5 standards came from Marad itself, which was in a hurry to get standards, any standards, into place.9

  The Marad committee also changed its mind about height. The previous November it had voted to make 8½ feet the maximum height for containers, but it ruled now for 8 feet. The change stemmed from concern that an 8½-foot-high container would violate highway height limits in some eastern states—a problem that was real for trucks hauling containers on standard trailers, but one that did not affect trucks pulling the specially designed chassis used by Pan-Atlantic and Matson. A lower height limit would benefit eastern truckers at the expense of ship lines: an 8-foot-high container held 6 percent less cargo than an 8½-foot-high container of the same length, and would be less attractive to shippers. On height standards as on length standards, the committee split, with the government once again casting a vote that would determine how private transportation companies would invest. The new standards were promptly tested by Daniel K. Ludwig’s American Hawaiian Steamship Company, which wanted to build a ship carrying 30-foot-long containers. The Federal Maritime Board would not approve federal mortgage insurance for a ship fitted for nonstandard containers, so American Hawaiian asked the committee to declare 30-foot containers “standard.” The committee rejected the request 3 to 2, with Marad once more casting the deciding vote. Federal aid was not forthcoming, and the ship was never built.10

  The sister Marad committee, dealing with container construction and fittings, worked more smoothly. Members readily agreed that each container should be able to carry the weight of five fully loaded containers atop it, with the weight to be carried on the corner posts rather than on container walls. All containers should be designed to be lifted by spreader bars or hooks engaging the top corners. Rings on top for lifting by hooks or slots underneath for forklifts would be acceptable, but not mandatory. Those decisions gave engineers the basic criteria to use in designing new containers. The committee also recommended that each ship be designed with various sizes of steel cells so that it could carry multiple sizes of containers. With that, the two Marad committees scheduled no further meetings.11

  Meanwhile, yet another player entered the standards business. The National Defense Transportation Association, representing companies that handled military cargo, decided that it, too, would study container dimensions. The effort’s chief proponent was a brash entrepreneur named Morris Forgash, who had built the United States Freight Company into a $175-million-a-year business over two decades by picking up small lots of cargo from various shippers, consolidating them into truck trailers or containers, and shipping the trailers cross-country by rail. The outspoken Forgash impelled his committee to reach consensus quickly. By late summer of 1959, it had agreed unanimously that “standard” containers would be 20 feet or 40 feet long, 8 feet wide, and 8 feet high. The other lengths approved by the MH-5 and Marad committees, and the 8#-foot-high boxes supported by some truckers and most ship lines, would not be acceptable fo
r military freight—a decision Forgash’s committee was able to reach only because no one from the maritime industry was involved. No matter: individual companies’ preferences, Forgash asserted, would have to yield to the need for uniformity. “Even if we reach the goal slowly, we must have a goal,” he said. “Otherwise, obsolescence will overtake us all if each man is his own engineer.”12

  With the MH-5 subcommittee and the Marad dimensions committee having adopted one set of “standard” sizes, and with the National Defense Transportation Association having approved another, the wheeling and dealing began at the American Standards Association. Under the ASA’s normal procedures, the February 1959 subcommittee recommendation to designate six “standard” sizes would have been sent for a mail ballot among all participating organizations. The vote never occurred. Instead, insiders set to work to change the recommendations.