Containerization

by Dr. Glenn Gordinier

About This Lecture

Dr. Glenn Gordinier's lecture on Containerization was recorded in July of 2012 at the Frank C. Munson Institute of American Maritime Studies at Mystic Seaport.  The recording and web presentation of the lecture were made possible by the National Endowment for the Humanities.

To watch an interview with Dr. Gordinier, visit Gordinier Interview.

1. Introdcution

During the Second World War we start to see cargos being handled in more sophisticated ways, with pallets, boxes of stuff, lighters aboard ship where you load a light or a smaller boat; you bring it out and you hoist the whole boat up aboard the ship. That’s called lash or lighter aboard ship and is useful for shallow ports where the big ship can’t get in, there are no docking facilities so you load lighters and you just don’t unload them but move the lighters. Roll-on, roll-off or ro-ro, most famously in the war, these “L.S.T’s,” landing ship tanks where you run right up on the beach and you offload tanks and jeeps and such. That’s the most famous of the ro-ro's. So, new technologies for the war, just like in shipbuilding, same thing in cargo moving. Here’s a modern ro-ro.  This is for the sea lift, which is a small fleet of vessels maintained constantly with ships around the country to support emergency military supply. This is a classic ro-ro with a big ramp on the back so you can just roll your trucks, roll your tanks right on board. Automobile cars are ro-ro's.  Here’s an article that Eric dropped by: “Around the World with 5,500 Cars.” This is about these big ugly square car ships or ro-ro's where you drive the cars on; roll-on, roll-off. 

2. The Container Revolution

Those technologies come out of the Second World War and are still adaptable and used all around the world but it’s in April of 1956 the Malcom McLean comes up with a container revolution. McLean was a trucker, not a shipper but he saw how stuff would be offloaded from trucks going to warehouse and then going down to the wharf, out of the truck and into the warehouse by hand, from the truck down to the wharf by hand, onto the ship by hand, out of the ship by hand, into the warehouse there by hand, onto a truck and then he thought: “Why not just leave it on the truck? Let’s move the truck.”  So he came up with this old World War II Liberty Ship, here she is adapted in her older age, a C2 tanker, in fact which now on her first voyage to Houston in 1956 had fifty eight containers on board.  One way I like to look at it is to talk about how it’s a revolution inasmuch what didn’t happen as what did happen. Of course, we can kind of imagine what did happen is the technology of lifting the containers, getting them on the ship, securing them on the ship.  All kinds of racks and support systems and locking systems and then the crane on deck and on the shore and all that, that’s what did happen. We can kind of see that, we saw that in the video. What didn’t happen were all sorts of steps that used to cost money and time. What did happen was what we see up in the left, which is break bulk cargo handling, pilferage, accidental destruction, lost material, lost time and big crews that doesn’t happen. What happens instead is these boxes full of stuff that Ben Labaree can stand by in the mid 1980s and say, “I’m in a container port.” These are the kind of containers we see on I-95; if you’re driving up the highway and you see the boxes on the backs of these trucks with these big ridges, that’s a container, that’s a shipping box or can. Can is the latest term that they use in the industry. If they have fiberglass sides and it’s wobbling as they go along, that‘s stuck on the truck and that never gets loaded. It’s these giant cranes you’ll see in places like Tacoma and Seattle and Boston to a small degree, Port Elizabeth to a large degree. You’ll see these and these are what lifts the boxes off the back of the truck frame and loads them into the ship as we saw a little bit in the video. The ship comes under the crane, you offload, you reload, and off she goes again. The steady man is the crane operator. This is a more modern image, it could be Rotterdam, it could be Oakland, it could be most anywhere. It doesn’t look like Oakland to be honest with you but these massive cranes that are by the way, typically built in places like Korea and brought over whole on a barge. That’s an image when these things come through the Golden Gate up Puget Sound.

3. Improvements in Containerization

So, improvements. We’ve got speed at the wharf, and these numbers come from the people that run the Port of Tacoma. Break bulk cargo, what had been nine tons of cargo per hour becomes four hundred tons of cargo per hour. Typically a container comes off a container vessel and another one goes in on the same crane within a matter of minutes.  Security is important; speed at wharf side of course is money. Ships don’t make money tied up to a wharf; ships make money when they move. The shorter period it’s tied to the wharf the more money she makes over a year. For security, one bill of lading typically in the break bulk days, there would be six or eight bills of lading.  The bill of lading out of the factory to the truck, the bill from the truck to the wharf, the bill from the wharf to the ship, another bill from the ship to the next wharf, then to the next truck, then to the warehouse, then to it’s destination.  Of course, every time that cargo is being handled by someone that might drop it, might run down the wharf with it, all kinds of issues and that’s really where things don’t happen. These opportunities are no longer available for accidental or purposeful destruction. We don’t waste a lot of time, we don’t lose a lot of cargo.

There have been times when whole containers have been pilfered; where someone has tracked this container full of DVD players or whatever, and you find the empty chassis, you know frame of the truck, sitting on the side of the New Jersey Turnpike. That’s rare. The big concern of course, post 9/11 is weapons of mass destruction and the guru of that is a fellow named Steve Flynn who is actually a local guy, Coast Guard Academy graduate and faculty member and friend of Pam’s and mine. After 9/11 he became the go-to man for this kind of security. For a long time his nightmare scenario, which was broadcast all over the place on the nightly news and such, is that a container comes in from somewhere like Pakistan or whatever and is set to detonate in Chicago.  Comes in through Tacoma, gets on the train, comes all the way across and in downtown Chicago detonates with a dirty bomb or whatever.  He had strategies to ameliorate that and it’s taken years. Many of the strategies are in place, although just a single percentage of these are opened and inspected but the vast majority now when they come in this country, if not before they leave their port of departure go through an advanced x-ray screener. Not a guarantee. The other thing he says is that the real thing to do is if it’s a container that keeps going from Rotterdam to New York and back and forth, there’s not much chance that one’s an issue. You can track every single one of these through digital records and if it has been to Pakistan or the eastern Mediterranean, if it’s taken weird, dangerous routes, that’s one you might want to pull aside.

Cost-cutting shipping costs- this is an old figure from when this all started. It used to cost thirty dollars to ship a two hundred and fifty dollar VCR. That’s fifteen percent of its value. That expense now is down to three dollars. Just over one percent of its value goes into the shipping cost because you’ve got all those longshoremen who are out of the way and all that time is saved. This is for your undergraduates; you can tell them that if they’re buying beer for a dollar only a penny of that goes into shipping. Worldwide shipping, generally what had cost five hundred dollars to move is now down to about ten bucks.

From our friends in Tacoma, they even seen grain (now talk about a bulk cargo, talk about something that you just open up a chute and you just let that corn or soy bean or whatever it is just go in by the ton) at times, depending on the market and the demand, they’ve seen grain move in the containers at a fifth of the cost of what it would have been to bring in a bulk carrier, chute it in. Lots of ways to save money and the big savings is in labor. In the 1950s, thirty-five thousand full time longshoremen moving 3.2 million tons of goods, by the mid 1990s, three thousand of them moving forty-four million tons of goods. That’s a lot of guys not working and that’s a lot of stuff being moved very, very cheaply.

Roughly if we go back two centuries the labor costs of moving cargoes were approaching thirty percent. Now it’s down around one percent.  It’s a global revolution in global economy and as far as the savings go, it’s also very much a cutthroat operation out there. Shippers around the globe are operating on a very, very narrow margin of profit. It’s not like that all went into their pocket. Basically that all comes into our pocket and that’s why we can have twenty pairs of shoes and not three.

4. The Disappearance of Longshoremen

Longshoremen’s jobs disappeared. Here’s the way it was in the C2 break bulk Liberty Ship, and again that’s only a Four hundred and forty foot ship, nowadays you can find 900 to 1100 foot long ships.  On a four hundred and forty foot ship, five gangs of twenty-one men moving four to six tons per hour would be in port six to eight days. Bringing containerization, two gangs of twenty-one moving two-hundred and sixty-four tons per hour, it’s in port fourteen hours. Again, that’s a lot of men without work. We’ll look at the union’s efforts, as we saw in the video there’s no stopping this train. People like Harry Bridges and others realize that. So here’s the deal; the ILWU under Harry Bridges subsidized early retirement for workers and the shipping companies were willing to go along with this. They know they’d suffer a little in the short term but in the long term they’d be much better off. Twenty-one million dollars and five years to the ILWU retirement fund but the shippers saved two hundred million dollars in cost.  Those guys worked through the years and retired as you heard George say on here, you only had to show up one day a month to maintain your position.

The East Coast took a different strategy; guaranteed annual income, not the greatest income in the world but all you had to do was show up at the union hall one day a month and you got a working wage.  That’s how they worked it out with the shippers. I think you had to live within fifty miles of the port, but for those that stayed the wages become really exceptional. Like I said, steady men $120,000 a year is not unusual, these guys are very well paid.  Of course they’re like what you hear about these days. There’s plenty of work out there in the United States but if you’re a workingman or woman you need the technical skills. If you have them people are falling all over themselves to hire you. These guys have technical skills and people will pay for that.

A shipping explosion, TEUs, twenty-foot equivalency units, that’s the term that came out of Malcom McLean’s original strategy. Typically the back of a pick up truck here or an eighteen-wheeler is forty feet long, so each one of these cans is two TEUs.  You can see half-sized ones, you can see oversized ones but a typical one is forty by eight by eight. At the Port of Oakland, two million TEUs, Tacoma three million TEUs coming through the ports. New York/New Jersey five million, L.A. Long Beach, Southern California and the other route to the heart of America. If you come through Seattle/ Tacoma then you come out across the Rockies up north and you’re probably headed to Chicago. If you come through L.A. Long Beach you can spread out much more through the flat lands and feed a lot more of the economy. Take a look at this; Singapore has up to twenty-eight million TEUs, of course that’s where it’s all coming from.

An explosion means other changes relating back to some of the things we talked about this morning. The Barbary Coast disappears. San Francisco’s Sailor Town, New York’s Sailor Town; all of these places disappear as the shipping moves elsewhere to Oakland or to Port Elizabeth and if you’re on a ship and you’re a sailor, well maybe you want to get into Tacoma but you’re not going to have the time anyway because by the time you ship the rest and have a nice meal and a good night’s sleep, you’re outward bound. You’d never get into these cities anyway, so places like The Old Ship Saloon, one of the few buildings in the Barbary Coast of San Francisco that survived the earthquake, still there today. It’s a disgusting sport’s bar but it had been a brothel in its glory days. So this is what we find instead; a gentrified waterfront. Down on the bottom there we’ve got Fisherman’s Wharf and interestingly I’ll point out here is the Eagle Café. This is Pier 39, this is where the Sea Lions sit out down here and have taken over the float docks. Millions of people come by, the Eagle Café had been located across the street and they thought “well, let’s save this one remnant of the old long shore days” so they picked it up with a crane and put it up on top of whatever the store is down below and it’s changed now but for many years you could still go in there and have breakfast, and there were guys drinking their breakfast at the bar and you placed your number and you stood in line and it was very old school. There were tourists, there were longshoremen, there were all kinds of folks, that’s all kind of changed but the setting is still cool.

5. Remnants of the Longshoreman Culture

Better yet, if you want to see a remnant of Old Sailor Town, Barbary Coast, San Francisco, go to the Specs Adler Museum kitty-corner across the street from City Lights Bookstore, the famed City Lights of Kerouac fame.  If you come out down here at this corner and you look kitty-corner across the street there’s a little alley where you can’t see anything.  The alley’s only forty-feet long and up in that alley you’ll find the entrance to Specs.  That’s Spec standing there with Shawn his bartender and if you look at Shawn there you can look around and see lots of flags of all nations. Apparently they’re a State of California Cockroach Sanctuary, it says. They’ve got a big wheel of cheese and on the bar they have baskets full of postcards from around the world. Old school postcards, and you can work your way through them and they’re just specs. Specs bought this place because he had fifty-percent rights to Charlie on the MTA. He found out that no one held the rights to it and he told his attorney to go find out who owned it and he found out that the two elderly sisters of the guy that wrote it as a labor song back in the thirties were still alive and he said that he would let him know and they said that they didn’t care. I’ll have my lawyer do all the work; you’ll get fifty percent of its value. Shortly after that the Kingston Trio made it top of the charts and they got a ton of money. He bought this in 1968 just as Containerization was taking over San Francisco, so it was in fact a longshoremen’s bar, a sailor’s bar. Still today you’ll find the remnant of that community. You’ll also find transvestites and streetwalkers, they show up just before two A.M. or closing time but there’s also tourists and businessmen. It’s a great atmosphere, not dangerous at all, just very inviting and great.  Of course it’s all driven by the fact that we were born to buy. The first time I bought a shirt for myself I was in high school and I paid twelve dollars for a shirt. I didn’t realize that I had to look at the size. I still will wait until I can buy a shirt for twelve bucks. That’s the way I shop.  I can do that because containerization allows me fifty years later to buy the same product for the same price.  Yet it’s not all consumer goods.  A third of the containers entering L.A. Long Beach are consumer goods, the rest are all this other stuff that’s actually coming in as raw material of some sort to be manufactured into something here in this country as well. So it’s not all just sneakers and us buying them, it’s other stuff too.  But the most common thing within containers is air. So you see a big ship in the distance, is it a lighter board ship? Could be.  Is it a crude oil carrier? Quite likely.  Is it a bulk carrier with grain or cement or something? If you’re on the lakes, it’s quite likely. Is it a ro-ro, roll on and roll off? Might be if it’s headed to a smaller port. Container ships are easily recognized. We see a lot of container barges on Long Island Sound. Is it American? That’s not likely. What it likely is is a F.O.C. vessel, a flag of convenience. These images kind of give us a sense that Panama is the biggest flag of convenience nation. You can get these from all sorts of nations, Liberia and others that don’t even have saltwater, and it really amounts to an office somewhere and connections through the internet. So you can register your vessel at these flag of convenience nations and it’s nothing but a way for them to gain but profit because they don’t bother with issues of safety, they don’t bother with inspections, they don’t bother with proper numbers of crew, all sorts of ways. Any of us could register our vessel under a flag of convenience this afternoon. Then the real operators that run them don’t have to worry about lots of safety and other regulations so they cut costs that way. There are an inordinate number of losses in flag of convenience vessels and some nightmare scenarios. 

6. Seaman's Friend Societies

This morning we were talking about Seaman’s Friends. Here’s some old stuff, here’s the sailor’s magazine that was produced by the American Seaman’s Friend Society and we have the whole run of them, but here’s August 1875.  Here’s an article about the Serenity of Christian Faith, a Good Ship Never Fails, the Good Lord as a Shield, Filling Our Sphere: Are you a helper? Handling Edged Tools, good to know. Seaman’s Friend’s Society report, pretty standard stuff. As I was saying this morning these people are still active. They still send ministers out and inspectors out to these ships; we have a similar one to this from our New Haven Friends.  It describes going on a ship, being called by the Coast Guard to visit a flag of convenience vessel; and the minister went on board and he found that none of the safety systems on the ship worked (this is New Haven, Connecticut in 2002). The toilets were backed up, the crew had not been paid in eight months, and the crew was a third world crew. They had not been allowed to leave the vessel in the last two ports. We talk about Shanghaiing and all of the abuses of the Benjamin F. Packard days, but these flags of convenience today really operate beyond the law and in many cases beyond the reach of the law. The abuses are different but particularly third world sailors today, whether it is on crude oil carriers or container ships particularly in the flags of convenience scene really are suffering for a lack of protection and representation. Probably the best people at helping them here are those Seaman’s Friends who are in places like Tacoma and Oakland and maybe can get in touch with them, and then the international transportation workers also do inspections or will send some of the crew on board and find some of these horror scenes and help the people out. It’s kind of a wide-open scene out there these days.