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

by Marc Levinson

  Once again, Malcom McLean was ahead of his time—but with the railroads, he lacked the power to turn his vision into reality. Farsighted rail executives, such as Trailer Train president James P. Newell, realized that attempts to preserve high boxcar freight rates were bound to fail; Newell estimated that railroads could save 30 percent of their train and engine costs by running the sort of unit trains McLean had in mind. “Take those savings and divide them between the railroad and the shipper,” Newell advised. But in 1967 and 1968, the railroads couldn’t be bothered. Their piggyback traffic was booming, up 30 percent in three years, in an economy white-hot from the Vietnam War. Their mind-set, reinforced by a century of regulation, did not encourage them to conquer new business. They were content to leave the land side of the new container shipping business to trucks.40

  Chapter 9

  Vietnam

  In the winter of 1965, the United States government began a rapid buildup of military forces in Vietnam. In the process, it created what may have been the greatest logistical mess in the history of the U.S. armed forces. The resolution of that mess represented containerization’s coming of age.1

  Few places on earth were less suited to supporting a modern military force than South Vietnam in early 1965. The entire country, seven hundred miles long from north to south, had a single deepwater port, one railroad line that was largely inoperative, and a fragmentary highway system, mostly unpaved. The tasks of providing civilian aid and supplying the U.S. military “advisers” who had worked in Vietnam since the late 1950s—there were 23,300 of them at the start of 1965—were already overwhelming; by 1964, the small U.S. port detachment in Saigon was working twelve-hour shifts, seven days a week, to prevent a backlog of ships. The various American forces in the country had sixteen different logistical systems, a situation that led to endless competition for basic resources such as delivery trucks and warehouse space. There was no central system for keeping track of arriving cargo, and the navy’s Military Sea Transportation Service (MSTS), which was responsible for chartering merchant ships to haul supplies to Vietnam, did not even have an office in the country. So far as Washington was concerned, the entire operation in Vietnam was predicated on the assumption that all troops would be withdrawn in 1965. This political fig leaf meant that spending on docks, warehouses, and other permanent infrastructure was hard to justify.2

  The logistical challenges were well known when President Lyndon Johnson ordered 65,000 U.S. soldiers and marines to Vietnam, along with several air force squadrons, in April 1965. Being aware of the problems, though, was not the same as resolving them. By June, when U.S. troop strength in-country had reached 59,900, the supply chain was already hopelessly tangled. Ships coming from California anchored outside Vietnamese harbors, but getting their cargo safely ashore was almost impossible: the harbors were so shallow that oceangoing ships could not reach the piers. Instead, a barge or a landing ship tank (LST), an amphibious vehicle longer than a football field but with a very shallow draft, would serve as a ferry. The barge or LST would tie up to the larger ship, whose crew would off-load the cargo painstakingly, often by placing crates or boxes into nets that were lowered by rope. The process was so slow that barges carrying ammunition from ships near Nha Be required ten to thirty days to make a single round trip to shore. At Qui Nhon, LSTs brought cargo directly onto the beach and lowered their huge ramps to let trucks and forklifts inside, but unloading them still took eight days. At Da Nang, oceangoing ships had to drop their cargo into lighters four miles out at sea. Coastal ships with less than a five-meter draft could reach the dock, but the port was repeatedly thrown into chaos when they arrived without advance notice. Storms, common during the summer monsoon, could bring the intricate unloading process to a halt.3

  The situation in Saigon was even worse. Vietnam’s only deepwater port, located on the Saigon River forty-five miles from the South China Sea, was a major bottleneck. Tonnage rose by half during 1965, and the port was simply overwhelmed. There were no cranes and few forklifts, leaving almost everything to be handled by muscle power. Ships carrying military cargoes, commercial cargoes, U.S. foreign aid, and food relief shipments competed for one of only ten berths. Once a vessel unloaded, its cargo often sat for days on the dock. Military recipients often did not know that they had freight coming. Commercial importers were accustomed to leaving their goods at the port as long as possible to put off the payment of customs duties. Cargo theft, much of it orchestrated by South Vietnamese generals, was so widespread that U.S. military police rode shotgun on the trucks taking cargo from the docks to military warehouses. Long port delays worsened the shortage of U.S.-flag ships that had forced the MSTS to activate the rustiest merchant vessels in the government-owned reserve fleet. “Military cargo requirement [sic] as of this date have been met only by accepting delivery of the cargo at dates later than desired,” the agency’s acting commander admitted in May 1965. Lacking warehouse space, army and air force commanders treated cargo ships as floating warehouses, making shipping problems worse. “Saigon just became a burying ground,” a high-ranking naval officer recalled. “Ships would move up the river and they would stay, and stay, and stay, not be offloaded. The Army would argue that the press of war was such that they couldn’t get the stuff ashore. Air Force didn’t bother to argue, the ship was there, period, we’ve got it and when we are ready we’ll let it go.”4

  Confusing everything was the decision by the Joint Chiefs of Staff to run a “push” supply system. In contrast to a “pull” system, in which units in the field would request the supplies they needed, the push system required supply experts back in the United States to decide what to send. The Army Materiel Command shipped more than one million automatic resupply packets, providing equipment and spare parts based on assumptions about how much a normal unit in the field would require. Supply depots in California made similar judgments about needs for food, clothing, communications gear, and building supplies. The supply experts “had never had grease under their fingernails,” a top army general groused, and from a distance of thousands of miles they had no actual knowledge of the rapidly changing situation in the field. Nor were they familiar with Vietnam.5

  In terms of getting supplies to the field as quickly as possible, the push system was a success. Spending by the Army Materiel Command, the agency that bought the army’s weaponry, soared from $7.4 billion in fiscal year 1965 to $14.3 billion the following year as ammunition, weapons, building materials, and vehicles were pumped into Vietnam. What finally arrived there, though, was always unexpected and often unneeded or unwanted. Food supplies flooded in, then were suddenly cut off when it became clear that there was far too much on hand. Conex boxes, the five-ton steel containers favored by the military, would arrive with mixed loads of weapons, boots, fatigues, and assorted odds and ends, leaving quartermasters without enough of any one item to outfit their units. Troops on the ground often ran short of provisions and essential supplies.6

  A month before the Joint Chiefs had given final approval for the troop buildup, William Westmoreland, the U.S. military commander, and James S. Killen, head of the U.S. foreign aid mission, had agreed that the best way to keep Vietnam supplied was to expand the port at Da Nang, a small city 430 miles north of Saigon. The concept was that Da Nang could receive ships arriving directly from the United States, diverting traffic from Saigon. This plan could not be executed quickly; Da Nang had shallow water and no cargo-handling equipment, and the main landing ramps for LSTs were in the middle of a major street. In April 1965, Westmoreland recommended that the United States instead focus on developing Cam Ranh Bay, 300 miles south of Da Nang, as a “second major deep water port and logistics complex.” Defense secretary Robert McNamara assented in May, and army engineers quickly arrived to begin work on an airfield. Construction of piers, warehouses, and a huge maintenance complex was to follow. The logistical units that had been assigned to smaller ports were soon shifted to Cam Ranh Bay. In July, Westmoreland created a wholly new unit, the F
irst Logistical Command, with responsibility for port operations, supply, and maintenance across all of South Vietnam, including the new Cam Ranh operation.7

  Cam Ranh Bay was the largest natural harbor on the Vietnamese coast, but it was not an easy place to build a logistical complex. It had no infrastructure, and the shifting sands along the shore were hospitable neither to earthmoving equipment nor to standard construction techniques. Aside from the harbor, the location had one important feature: there was no South Vietnamese facility at the site. The dismal performance of the Vietnamese-run Saigon port preoccupied U.S. officials at the highest level, so much so that Ambassador Henry Cabot Lodge personally discussed port problems with South Vietnamese premier Nguyen Cao Ky in July 1965. These efforts made little headway: control over the port was too lucrative for top South Vietnamese generals, who resisted U.S. proposals that a new port authority should take over. The port at Cam Ranh Bay would ease those problems by being entirely a U.S.-run operation, free of Vietnamese corruption and inefficiency. Some top U.S. policymakers even envisioned a model community surrounded by industrial parks and residential subdivisions instead of the usual bars and brothels. The fastest way to get the port up and running was to bring in a DeLong pier, a three-hundred-foot barge with holes through which pilings could be driven into the harbor floor; the barge could then be jacked up on the pilings to the desired height above the water. The navy located a DeLong pier in South Carolina, towed it through the Panama Canal and across the sea to Cam Ranh Bay, and anchored navy ships in the harbor to provide temporary electrical power—and the port was in operation. By December, merchant ships were arriving directly from the United States, and more DeLong piers were under construction.8

  Yet the supply problems kept growing worse. Every month, 17,000 additional U.S. troops were landing in Vietnam. Each 830- man infantry battalion hit the beach with 451 tons of supplies and equipment, each mechanized battalion 1,119 tons. Feeding, clothing, and arming the troops after arrival was using every ship the MSTS could lay hands on. By Thanksgiving 1965, 45 ships were being worked in Vietnamese ports—and 75 more, loaded with food, weapons, and ammunition, were holding off the coast or in the Philippines, where they were sent to avoid the higher pay to which merchant seamen were entitled while their ships were in Vietnamese waters. “Ten first class ports in CONUS [the continental United States] are shipping material to SVN [South Vietnam] as fast as they can—we have four second-class ports to receive it,” the head of the military’s trucking branch complained. When the defense secretary and the chairman of the Joint Chiefs of Staff visited Vietnam in November 1965, they got an earful about logistical problems. “Our ports are jammed with ships and cargo,” the head of the First Logistical Command told them. Life magazine ran photos of Saigon port congestion in December, and a visiting congressman advised Westmoreland to place more emphasis on the ports. The logistical mess in Vietnam was starting to become a political embarrassment at home.9

  Washington demanded solutions. Under heavy pressure, the South Vietnamese government agreed in late 1965 that the United States could build a new deepwater port, appropriately called Newport, in Saigon, so it could move military freight away from the downtown docks. The Pentagon simplified the supply chain by overruling navy objections and making the U.S. Army responsible for supplying all allied forces in Vietnam, including the famously independent Marine Corps. And, on orders directly from the secretary of defense, the MSTS hired a private company, Alaska Barge and Transport Co., to take charge of coastal shipping. Alaska Barge earned its living delivering cargo to remote ports in Alaska, and its boss managed to persuade McNamara that the company could straighten out logistics in Vietnam. Alaska Barge quickly began building docks, and it replaced the erratic service of Vietnamese coastal ships with a barge shuttle service to move supplies up and down the coast. “We couldn’t have gotten along without it,” recalled the commander of the MSTS. Alaska Barge’s success left an impression on military officials used to doing things in war zones the military way: perhaps there were other jobs in Vietnam that private companies could do better than uniformed troops.10

  It was not the excess of cargo alone that caused the port logjam in Vietnam. Aside from fuel, every bit of cargo shipped to Vietnam, military or civilian, arrived in the holds of breakbulk ships. Unloading meant lifting individual items out of the hold and placing them on the dock or, even worse, into a shallow-draft vessel that would ferry them to shore, where they would have to be unloaded a second time. Many ships made multiple stops, and if a ship had been stowed poorly in Oakland or Seattle, some cargo would have to be unloaded and then reloaded for delivery to the next port. Often, cargo could not be identified once it was finally on the dock, complicating efforts to get it to the troops who were supposed to receive it. After surveying the situation, a military study team recommended basic changes in shipping procedures in November 1965. Logistics officers in the United States should send full shiploads to individual Vietnamese ports, rather than having a ship make several port calls, so the vessel could return to America as quickly as possible. Vessels should be loaded for ease of discharge. Cargo for different consignees in Vietnam should be kept separate as much as possible, to minimize sorting at the dock. The first recommendation on the committee’s list was most notable of all: all shipments should come in “unitized packaging.”11

  To military logistics experts, “unitized packaging” meant above all the ubiquitous five-ton Conex boxes that were carried with other cargo in the holds of breakbulk ships. Palletization, in which individual items were wrapped on a wooden pallet and moved on and off ships as a single piece, had come into commercial use in the early 1950s, and by late 1965 the Sharpe Army Depot, the main supply base in California, was promoting it for military cargo. McNamara, however, knew that the commercial world had moved far beyond small containers and wooden pallets. Leading shipping executives were invited to Washington, where they were shown film clips of sailors lowering cargo nets by rope and asked for advice. When Malcom McLean saw the film, a colleague recalled, “[h]e got obsessed with the idea of putting containerships into Vietnam. He was back and forth to Washington, talking to people, and they told him there isn’t anything you can do in Vietnam.”12

  McLean finally got the ear of Frank Besson, the four-star general who headed army supply operations. At Christmas 1965, Besson agreed that McLean could take a look at the situation in Vietnam. McLean phoned his engineering chief, Ron Katims, and consulting engineer Robert Campbell, both just arrived in Europe to plan the start of Sea-Land’s European service, and told them to meet his Pan Am flight in Paris the next morning. A day later, with their wool suits and overcoats, the trio was in steamy Saigon. They visited Da Nang and Cam Ranh Bay, got rounds of military briefings, and crossed paths with a delegation from the International Longshoremen’s Association, which had arrived in Saigon on December 16. McLean’s team concluded that containerization would solve much of the logistical confusion in Vietnam. He received the prompt endorsement of ILA president Teddy Gleason—the same Teddy Gleason who had fended off containerization in New York for the better part of a decade. On departing Vietnam in late January, Gleason urged the government to lease as many containerships as it could find.13

  The military command was of two minds when it came to such a radical change in procedures. On the one hand, political pressure to bring in private-sector expertise was intense. At a top-level conference in Honolulu in January 1966, the Joint Chiefs announced a new policy “to contract for civilians to perform duties which they could accomplish, such as the operation of port facilities.” On the other hand, no one in the military had experience with containerization. The MSTS had never leased a containership or run a supply exercise involving containers. The Defense Department’s initial request for proposals to run a “containership service” to Vietnam involved only 7-foot Conex boxes carried as breakbulk cargo, not the far larger aluminum containers that could be handled by high-speed cranes and lifted directly onto truck chass
is for delivery. The numerous port construction projects under way by early 1966, including the deepwater complex at Cam Ranh Bay, the Newport development in Saigon, and the new piers at Da Nang and other ports, all were proceeding as conventional breakbulk facilities. Container shipping, no matter how important in the commercial world, was not something that the military knew how to do.14

  Through the winter of 1966, McLean struggled to convince the Pentagon that containerization could solve its logistical problems in Vietnam. In April, he finally obtained a foothold. Equipment Rental Inc., a new division of McLean Industries, was awarded an army contract to run a trucking operation at the Saigon piers. The contract had nothing to do with containers, but McLean was so eager to show what his company could do that Equipment Rental began moving freight two months ahead of schedule. In May, Besson asked the MSTS to give Sea-Land a contract to run three containerships between Oakland and the Japanese island of Okinawa, a major staging point for Vietnam. Sea-Land was to deliver 476 35-foot containers every 12 days. At the same time, with conventional carriers unable to supply additional vessels, the MSTS solicited bids for containerships to sail directly from the United States to Vietnam. Sea-Land would have to compete for the business—but as the largest containership operator by far, the only one sailing across the Pacific, and the only one with a handy supply of vessels equipped with the shipboard cranes needed to unload in Vietnam, it had the edge. When several competitors sought to submit a joint proposal, the MSTS refused to accept their bid. Things finally seemed to be going McLean’s way.15

  But Vietnam was still not ready for container shipping. The First Logistical Command, the agency in charge of the military’s port, warehousing, and trucking operations in Vietnam, was notably unenthusiastic. The port delays facing military ships had eased during the first half of 1966, from an average of 6.9 days in February to 5.3 in July, and port congestion problems had less urgency for the forces on the ground. No cranes or storage areas for containers were available, and none were under construction. With Besson’s Washington-based Army Materiel Command pushing container shipping aggressively, and with Sea-Land showing in Okinawa that container service required only half as many ships and one-sixteenth as much labor as breakbulk service, Westmoreland ordered the First Log to reassess its opposition. In July 1966, that command finally conceded that a containership service was desirable, but no sooner than October 1967. Sea-Land won a contract to open a containership service to Subic Bay, the huge U.S. naval base in the Philippines, but the bidding for service to Vietnam was postponed.16