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CONTAINERIZATION the unfinished battle for agreed standards

BY JOHN DARKER, AMBIM 1111111111111111

"CONTAINERIZATION" is galloping ahead with such giant strides that most busy road hauliers cannot pretend to an up-to-date awareness of what is happening. It is not an exaggeration to say that the full-time student finds difficulty in comprehending the significance of the vast investment in the system, probably amounting to more than £1,000m worldwide.

Most hauliers are aware that the basic idea of the system of worldwide containerization calls for the use of standard containers of 8ft x 8ft in lengths up to 40ft. Many container ships built or building are designed to carry the 8ft X 8ft x 20ft standard ISO containers although it is by no means certain that this size will meet the majority of shippers' needs.

The American shipping interests who sparked off the container revolution a decade ago realized that the system would never get off the ground unless there was international agreement on container module sizes. Yet two of their most successful container operators use 24ft and 35ft containers.

There has recently been a tremendous commercial battle in Washington over the standardization issue. Government subsidies have been made available to builders of container ships designed for the standard 8ft x 8ft module containers and unless the ruling is changed Sealand and Matson (the "non-standard" operators) feel that their commercial interests will be threatened.

Malcolm P. McLean, Sealand's chairman, has stressed that "the total answer is not to be locked into any single dimension". The proper place to set standards, he claims, is in the market place. Sealand executives gave detailed evidence to the House merchant marine sub-committee of the adverse effect on revenues if Sealand was compelled to switch from 35ft to 40ft containers on a service to Puerto Rica. This would reduce profit margins from 10.7 to 4.2 per cent.

Supporting the case for the non-standard container operators, A. T. Kearney and Co. Inc.—very influential transport consultants—said that at July 1967 24ft and 35ft containers operated represented over 55 per cent of the total. I was not surprised to learn at the recent ICHCA conference at Birmingham (CM, October 27, 1967) that Cunard has ordered a number of nonstandard containers 8ft 6in. highX 8ft x 40ft.

The small change in dimension means considerably extra volume. It also implies that the non-standard containers will be collected and delivered by road. British Railways' rail gauge-with a few notable exceptions—does not allow 8ft 6in.-high containers to be carried. It is doubtful, I feel, if non-standard containers would be allowed on rail in any event, either in the UK or in Europe. because of the principle at stake.

It seems possible that Cunard's "standard-breaking" exercise may induce wholesale breaking of the conventional container standards in the UK and Europe. Many practical transport managers do not like the idea of an official or semi-official straitjacket of standard module sizes being imposed on an industry expected and wishing to serve the diverse needs of its customers. Yet—cruel paradox—if a substantial measure of standardization

is not accepted the containerization bubble—port installations, inland clearance depots, special high loading banks, Freightliner developments—bursts.

COMMERCIAL MOTOR readers will, I suspect, be as fascinated as I was to read the views of some American road transport operators, container and trailer manufacturers. The recently published proceedings_ of a conference of the Truck Trailer Manufacturers' Association (at the improbable location of Grand Bahama island) highlight US thinking.

Many transport people here tend to think of containers and trailers as entirely unrelated. Mr. J. P. Newell, president of the Trailer Train Co. of Philadelphia, which owns 21,000 rail cars used for lorry piggy back services, defined containerization as "... the use of containers—containers being the physical equipment required for unification of a number of shipments which then move as an individual unit".

He continued: "Thus, a box or a bin or a cage is a container. A conventional highway trailer body, with or without wheels attached, is also a container. . . When I speak of a trailer I trust that you will think of it as a container on wheels—a container which is permanently or temporarily mounted on a chassis or bogie."

A problem

Mr. Newell drew attention to a problem already faced by road and rail operators in the UK. In the USA, he noted, 40 per cent of import traffic terminated more than 200 miles from the port but 60 per cent of the export traffic originated more than 200 miles from the port. "Who will pay for the empty movement necessary to provide the additional containers for the export movement?" He also felt that any artificial boosting of containers (boxes) in domestic transport would be like the tail wagging the dog. It would be stupid to provide inter-modal equipment with sea carriers unless there was a good economic reason for doing so.

Supporting those who questioned the too hasty standardization of container sizes, Mr. Newell referred to the increasing use of "double bottom" trailers 27ft in length, with "the possibility of triple bottom 27ft trailers in the offing". In these circumstances was it not likely that a 27ft container would be proposed in the future to provide flexibility if and when containerization does expand domestically?"

Mr. H. M. Werksman, president of Helms Express, Pittsburgh, a prominent US road haulier, addressed the conference with refreshing candour. "Containerization", he said, "means nothing! So far, containerization is nothing but a bunch of boxes, into which somebody puts freight and moves it. And they move it the way they did before—except that they 'say' that we have containerization!"

He continued: "Containerization is the movement of freight in unitized loads under a specific price based on the fact that the freight is unitized and that until that price effect comes about you do not have containerization—you have freight being put into boxes!"

Mr. Werksman has visited Europe 18 times in the setting up of his firm's container handling service to Europe. He confessed that over a period of eight years he had "discussed and fought and argued and bedamned" with steamship lines to urge a pricing arrangement conducive to door-to-door container movements. Always the reply was: "We do not want to lose our control of the traffic." Yet, said Mr. Werksman, an inland carrier in Birmingham would quote a single rate to Berlin, with no extras.

It was Sealand's successful operation which induced the North Atlantic shipping lines to jump on the container bandwagon, suggested Mr. Werksman. As a result, there was "panic" buying of containers. "You didn't engineer anything new. You just lifted the bodies off the wheels and you said this is containerization. They (the shipping lines) bought them and they have them in stacks all over the world today—in the US and in Europe—and they don't know what to do with them—take my word for it."

Mr. Werksman revealed that one shipping company was paying Helms Express $ 10 for every container brought into or exported from the US. "We tell them what to do with them after they get them off their ships..."

Road hauliers and railway engineers should be consulted in the design of intermodal containers, insisted Mr. Werksman. "You have different stresses in the air on containers than you have in steamships „ . or trucks. Where in the name of sense is all this information going to come from? How are you fellows going to know what to build? . . The steamship companies didn't know what they needed!

"There are going to be a lot of bloody noses before this thing is over and a lot of people will have to have a new nose put on their

face because of the conditions that they are in as a result of thecontainers that they have bought.. . ."

Mr. Werksman was scornful of the American government officials who agreed the 8ft X 8ft container module in Europe. "We need 8ft containers like we need holes in the head, becaUse when we get two 20ft, 8ft containers put together . . . we lase 5,000lb of payload. and 18 per cent of our cube. And we run this pair in two directions, we don't run it with one load, we have got to move another load in another direction because nobody pays us."

Moreover, said Mr. Werksman, there were proposals that 20ft containers should be limited to an 18,000lb lading so that shippers, on a pair of containers, would pay for 27,000lb weight (9,0001b representing the container weight) for an 18,000lb load.

Mr. F. N. Melius, Junior, president, United States Freight Co., said that in the last decade in America containerization and piggy-backing had experienced the most fantastic growth of any innovation in transport since the invention of the wheel. But there was a missing element. The pricing methods of land and sea carriers did not mesh together. The break-bulk classifications did not fit containerized transportation. "A 40ft container occupies the same space on a ship whether it is loaded with radios or straw hats."

The Waterman shipping line, said Mr. Melius, had adopted a "freight-all-kinds" rate for containers which was comparable with rail piggy-backing, and he was confident that other shipping lines would adopt such rates because the old pricing structure simply did not fit the containerization method.

In the discussion some points made earlier were amplified and some most revealing remarks were made by Mr. Maitland S. Pennington, of the Maritime Administration, Washington. (Mr. Pennington is vice-chairman of the Economic Commission for Europe working party on the inter-Continental movement of containers.) Mr. Werksman, replying to a question, "What are the specific steps that need to be taken in order that inter-modal containerization can reach its full economic significance?" returned to his "cube" theme. "The 8ft is only because of the rail situation in Europe," he said. "Germany may have 500,000 rail employees but the American Trucking Association will tell you that . . the trucking industry in the US is the second largest employer of labour. . • . Politically, this should mean something too."

He continued: "I don't think it's wrong to Say to the Europeans, 'all right, you need 8ft, we will give you 8ft when it moves by rail, but we want 811 6in. when it moves by highway'. The more restrictions we put on these containers, and sizes . . the more the American shipper pays, because if the American trucking industry decides, and rightfully so, that they should be paid for the loss of this cube and the additional weight, the American shippers will pay for it."

Declared Mr. Werksman: "We would be better off to go over and pay for moving the tunnels a little lower on the European railroads so we could get 8ft 6in. and then in the long run the American shipper wouldn't have to pay for it."

Mr. Pennington was asked if—before the 8ft X 811 container dimensions were agreed internationally—any estimates had been made of the cost of making it possible to run 8ft 6in. containers in Europe compared with the economic cost over the long run in the US of attempting to run 8ft containers? Replying, Mr. Pennington said there had been much compromise involved.

The US Government felt that 8ft 6in. was the most economic unit for domestic use but so far as Europe was concerned it was purely and simply "a question of penetration from both a military and industrial point of view". The Europeans, said Mr. Pennington, had said frankly: "Look, we are not going to build our railroads over to suit your needs! We are building them for ourselves—we are the ones who pay the bills."

He continued: "There is no doubt in my mind that as the economies of integrated transportation penetrates Europe, they themselves will come to the conclusion that they had better build their tunnels over, they had better revise the `Bahn'—the con

vention which sets forth the size of their tunnels—they had better alter their bridges.

"Now this is something that they have to come to by themselves as they have some big tunnels and some large investments There will be huge opposition because integrated transportation and international trade will change traffic patterns measurably and there will be opposition to change."

With all this emphasis on the significance of cube it is not surprising that some questions related to container width as well as height. Mr. Newell of the Trailer Train company said that for the past four years all piggy-back rail cars had been purchased 6in. wider so that if and when 8ft 6in.-wide trailers or containers come they could be handled.

Mr. Werksman agreed that as far as the US was concerned the 8ft 6in. height dimension was already outmoded: 911 6in. was common. The 2011 container, he thought, was pass—he looked for 3011 double bottoms, not 2711 as had been mentioned by one speaker. Thirty-four double bottom's, said Mr. Werksman would soon be running all over the US.

Stressing the wastefulness of 20ft containers to road hauliers in terms of unused platform space Mr. Werksman said: ". . In England they will raise all kinds of hell about their railroad system. It would be better if they didn't have one, it is so poor."

Mr. Pennington said he had personally talked to the senior people in every ministry of transport in Europe. "You know we are not very popular at this stage of the game and compromises are a little bit more difficult to come by.... We've had to find the size that lets us work and penetrate that market. . . . At the moment it is a matter of national pride rather than economics, of the Russians who would build a 9ft X 911 right now, saying, 'move everything through Leningrad and we will go with you on the large size'."

As a tailpiece to this eye-opening discussion on container sizes I must mention an effective broadside by Mr. Erik Heirung, vicepresident, Fred Olsen and Co., against the conclusions of the much publicized McKinsey Report (Commissioned by British Transport Docks Board). This stressed the key role of Freightliners in moving containers to British ports.

"McKinsey and Co." (writes Mr. Heirung, Fairplay International Shipping Journal, October 1967) "have a strong belief in 'unit trains'. We are not able to judge the economic potential of the Freightliners or unit trains, but we know that British Rail and Deutche Bundesbahn are among the biggest deficit companies in the world. Whether their low freight offers for container trains will cover full amortization might at least be questioned."

Mr. Heirung says: "It seems the height of stupidity for port authorities who have guaranteed a high fall-back compensation for unemployed labour to invest millions of pounds with the very object of eliminating the need for labour. The capital costs of transitions of this kind should be examined with very great care.