SEMINARS ON THE CONTAINER REVOLUTION

OCTOBER 23, 1967

III. A PORT DIRECTOR LOOKS AT THE CONTAINER REVOLUTION

(By Mr. Robert Edwards, General Manager, Mersey Docks and Harbour Board, Liverpool, England)

Ladies and gentlemen, I hope you are not in for too much of a disappointment tonight. I know why Mr. Schmeltzer invited me to talk about a port director looking at the container revolution, and I am sure it is because he hasn't got the pluck to ask an American port director to do it, so it must be someone from overseas.

I am very delighted to be with you, and I hope I don't bore you too much. The one difficulty I am really in is that I haven't got a crystal ball big enough to answer all the questions that I want to pose to myself and all the questions that I am sure you want to put to me.

I am over in America in this very rapid 2/2-week trip, primarily to talk with shippers and shipowners in this country to try to tell them that in the United Kingdom we are quite determined, unashamedly determined, to be in on the container revolution, if you call it a revolution. I prefer to think of the container revolution as a controlled evolution. I don't much care for revolutions because they're usually bloody and nobody comes out very well in the end.

I think that with containers there is an opportunity for improving services, for increasing the economy of the operation and surely that is what we are all looking for.

Now the ports in your country, and the ports in my country, and the ports all over the world have a very difficult job in that they have the most unsalable commodity to sell, and that is we sell a service. If we were selling washing machines or refrigerators we could design them, have them properly marketed, put a price tag on them, and people would buy them if they were good and competitive. Now when you are running a port, you have only a service to sell, and a port director is never really in charge of the shipping that uses his port. He's got to provide the port installation for those who wish to use it. The shipowner, generally speaking, being not exactly a philanthropist, only goes to the ports where he can use the port facilities if they suit him, they're the right price, and if they enable him to turn out his goods and take home goods at the right time and in the right way. So the container evolution has really been brought about not so much by the ports themselves, as by the shipowner. I don't think even that the shipper is being taken much in account in the thing at this moment. He is being promised a better service, he is being promised that his goods will be more secure while en route, he is being promised that he will get delivery on time, but he is not yet being promised any enormous reduc

tion in freight rates. I think that the most any container operator is offering at the moment is to give him some sort of reassurance that this will be an economic proposition and he won't have to pay more.

The whole concept of containers, of course, is not by any means new. The railroads have been using containers for a long time and the short sea trades in the United Kingdom have been running containers for a long time. Practically the whole of our trade with Ireland, for instance, has been in containers for some years. It is when we get from the domestic transport into the deep-sea transport worldwide that we are facing up against the new problems.

Most of the ports in the United Kingdom, and I suggest that many of the ports in America, were never designed for use by containers. Most of them, I think I'm right in saying, were designed and built for the railroad era, for bringing railroad cars quite close to the quays and for provision for men to hump the cargo from the ship to the shore. All these things are being gradually mechanized, speeded up, but the one thing that has been lacking to enable the real operation of containers to take place is land area. That is why, no doubt, the New Jersey side is developing in New York and not the New York piers.

Now we in Liverpool-and I'm not saying Liverpool alone; London is just the same situation-in order to accommodate containers we have got to build virtually a new port. Now both London and Liverpool are going ahead with container terminals.

Many of you are probably wondering whether Britain should not be regarded more of an offshore island of Europe. Why should we bother with container terminals on a large scale? Why should we bother with deep-sea berths in the new outlook? Is it not better, you may ask, for the ships to go to Rotterdam or Hamburg or Antwerp and for the cargo for the United Kingdom to be transshipped in feeder services, than to be railroaded or trucked to their ultimate destination?

This sounds all right in theory and there may be a number of economic reasons for suggesting it's the right thing to do. Although the United Kingdom is a small island, it has a very intensively employed industrial population and we feel that we are bound to remain a terminal country in our own right. However much goes to the continent, however much goes to Rotterdam, we are not prepared to sit back and see it routed via the continent of Europe. We think of our endless capabilities for providing direct services of containers to the United Kingdom.

There are, of course, a number of commodities which are not going to go in containers for many, many years. There are a number of countries which are not able, I think, to go in for containerization in a big way-place like the east coast of South America, west coast of Africa, India, Burma, a good deal of the Far East. But highly industrialized areas like the United States, Canada, Australia, New Zealand-there's no question about it, they're going to go into the container business in a big way in a very quick time.

Now what really decides the importance of a port? In the past, historically, the port has depended on its hinterland-its immediate hinterland. And that is why the big ports in the United Kingdom-London, Liverpool, Glasgow, Southampton-have developed in their ways to serve the immediate hinterland population. Both London and Liver

pool have obtained, I should think, about 80 percent of their traffic, at least, within a hundred miles of the port. Now if you could say that in your vast country, of course, it would alter the position. I mean you don't talk in hundreds of miles; you are inclined now to talk in terms of thousands of miles. And because the port outlets have been so close to these areas of population, so industry was developed in these areas. Now within a hundred miles of the port of Liverpool, we have something like 16 million people living, working and producing their goods. And I think that when one can find a ready market for goods within a hundred miles of a terminal port for containers, this situation will continue. It will be self-supporting even in the vast quantities that can be containerized.

Some of you have seen various studies that have taken place recently into the economics of container movement in the United Kingdom. Some startling figures have come up to suggest that if the whole thing is done properly, we could probably carry the whole of the North Atlantic trade to the United Kingdom in something like four or five ships. This is a utopian idea, but you will want me to say, I think, whether England can support a number of container terminals. Our answer to that, which has to be borne out in practice, is emphatically "Yes". If you want my opinion as to how many there will be, I would think there will not be more than four major ones anyhow-London, Liverpool, Southampton, and possibly the Clyde ports. It is so very difficult to know how these things are going to be brought about. It can't come too rapidly, because it isn't only what the shipowner wants to do. Before the container revolution can really be successful, so many business practices of the past have got to be changed. The concept of a shipper putting his goods onto a ship and consigning it across the ocean and then making individual arrangements for its own carriage-all these things will be changed. The container is part of a through transport concept in my view. And until the whole thing can be really integrated, and until the whole thing becomes much more like an international mail service where one puts one's postal package into a post box and expects it to be delivered on time to the addressee in a few days' time, that is the ultimate concept of the container revolution. But before that can happen, people have got to change their trading patterns; they have got to be able to buy in bulk because the economy of the container is only good and sound so long as that container can be transported as an entity. If it's going to be broken down and repacked or broken down and distributed too often, it seems to me that the whole economics of the thing is going to be somewhat suspect.

One has got to remember that commodities now are extremely expensive and therefore the importer wishes them to be as short a time as possible in the pipeline. He doesn't want his goods to be warehoused for any longer than he can help. He wants them to come straight in and go into production as quickly as possible, which means a great deal of organization has got to be put into being if he's going to get these feeder services with containers really working well. There has got to be a change in my view, a change of attitude, a change of trading patterns, a change in methods of buying and selling, a giving up of a lot of old loyalties to ports, shipping lines, shipping companies,

forwarding agents. These will become, I think, in time, things of the past. The old personal loyalties will go out of it and the only thing that matters as I've said before, the only crux of the thing for its success, is whether the man at the end of the line gets what he wants, when he wants it, at the right price. In this respect, the ports have got to make a pretty courageous decision. We've got to decide whether we're going to supply the services in the hope that we will make them sufficiently efficient and economical to attract people to use them, or we just throw up our hands and say we're not going in for containers at all; we'll pick up the few crumbs that fall from the rich man's table. Now I think that many ports, not only in the United Kingdom, but in America and other countries, are going to find that they are going to lose a lot of trade to a small number of large ports who run container services.

The actual provision of a container terminal is, as you well know, a pretty expensive hobby, and I've said that we have sufficient faith in it in Liverpool that we're virtually building a small new port, and this port will provide for 10 berths altogether in the first phase. They won't become container berths, gentlemen, because we obviously couldn't support them.

In the first phase we shall have at least two container berths with a possibility for adding another two. We shall have a deepwater grain terminal and a mechanized meat-handling berth. We do a good deal of trade with Australia and New Zealand with meat and this is being entirely mechanized, handled electronically. We shall have two or three packaged lumber berths and we shall have one or two additional conventional, highly mechanized cargo berths. But the main thing is that in our plan is the flexibility. We feel that there is not enough certainty in life in this new thing to really plunge, but what we have made sure about is that there is plenty of depth of water-probably too much many would say. We're going to 48 feet. There is plenty of quay length. The berths will run from 750 feet to 950 feet long and the container berths, we can provide up to 22 or 23 acres of backup area to serve each one.

This little scheme is going to cost us upwards of $100 million to be spent over the next 3 years. Now if we have played our cards wrongly, of course, it's going to be extremely serious. I don't think we have played our cards wrongly. And I don't think London has played their cards wrongly. London is spending a similar sum of money in providing a new container complex in Tilbury. We don't know yet, and I don't think there is any unanimity that I can find from the shipowners, as to how they intend to operate container berths or in fact what types of ships they are going to have in the long term. We are operating at the moment or fixing up agreements with the Atlantic Container Line and they are running a combination ship, as you well know, with a mixture of containers and roll-on/roll-off. U.S. Lines, on the other hand, are going for the complete cellular ship. There is no unanimity of thought yet as to the size of the container. There is no unanimity of thought yet about the handling of containers, whether they be on bogies, whether they be on the ground, whether they are stacked one high, two high, five high. Overseas Containers Ltd. are, in fact, planning on stacking their containers at Tilbury five high. Our plans at Liverpool are that we are basing them on two high.

But from a port man's point of view, this really isn't so much a dream as a nightmare at times, as I say we can only provide a service. We can only provide what people want. And at the moment there is no unanimity as to what people do want, and if you gentlemen here tonight can help me to resolve, in my own mind, what it is that people really are looking for in the container terminal, my journey to the United States would be more than worthwhile.

As I said, I don't think the future is going to pay much attention to what has historically happened in the ports. What has gone before won't count very much. What they will look for is to make sure that there is a through route from A to B in the shortest possible time. Now I have said that we are confident that the United Kingdom will not become an offshore island of Europe. I say this for a number of reasons. From the point of view of the Americas, the journey to Liverpool is the shortest sea-crossing that you can get to a major port in Europe. I am encouraged to hear you are developing here the through rail service from your Pacific Coast to the East Coast; a 3-day service I'm just told, is likely to be available very shortly. When you think of that distance and you think of the short distances in the United Kingdom, it's not too fanciful in my view to believe that if you give a very fast shuttle service of ships from the United States to Liverpool, put the containers immediately on what we call our liner trains— you've got an equivalent for that; I don't know quite what it is--they can then be in any part of the country overnight easily or half a day, and as this is much quicker than a ship going to Rotterdam and railing the container back again or transshipping it, it must be, in my view, more economical. I think also, the shipowner has got to be careful that he gets a balanced trade. So far as containerizable cargoes are concerned, trading with the United Kingdom to America is a fairly balanced trade, and therefore he is able to get a good load each way. The thing, of course, that the shipowner in the container era is looking for, I'm afraid, is massive movements, quantities, in order to keep up a shuttle service by a ship that will perhaps take the place of 10, 12, or 15 conventional ships on a comparatively short run like the Atlantic. I think I've taken the point that we are going to have three or four terminals in the United Kingdom. There are other terminals, the Felixstowes, the Grangemouths, which are doing a very good trade at the moment, at the early stages, particularly in the cross-channel ferry services. I think there may well be a good reason for those to be continued.

There are other complications from a port point of view, and I'm looking at this generally as a port director now. The one thing we want to see with containers is that they don't hang about the place and they don't get broken down; that is to say, that they don't have to be opened up by Customs and people on the docks or for security reasons or anything else.

This will need in our country anyhow, and I suspect in your country, a very different attitude of mind from people like Customs. They've got to be prepared to let these containers go through to destination and be examined there.

There is another thing in this container world that the ports have got to look to: there will be for a long time to come an enormous