What would Malcom have said?
A search of our archives illustrates how history has a habit of repeating itself. As early as 1980 the headlines were full of ships with ever increasing capacities as well as of the expansionist policies of container shipping lines. Now the concept of too big to fail has been on everyone’s lips again since 2008, albeit in a different context. What can the container shipping industry learn from this?
No, we have not mistaken the date, though the subject of this particular contribution to our journal from 1980 could hardly have a more contemporary ring to it. The issue then was the creation of a fleet of so-called jumbo ships, designed to provide a global service. Our worried editor at the time wondered whether «the American tycoon Malcom McLean wants to help gigantism in maritime container transportation make its crucial breakthrough.»
We reported on McLean, who is considered the inventor of the modern container and who thus single-handedly revolutionised global multimodal transport, in a previous issue (see ITJ 9-10 / 2014, page 24). In this specific case, however, we reported on his intention to order 14 new ships with a capacity of 3,900 teu each. We wrote that with this project, United States Lines wanted to take the «jumboisation» of container shipping to an altogether different level.
Our view was that a new competitive market situation was being created between international shipping lines, and we concluded that it was emerging due to the visionary approach of one creative personality. Such developments were and are viewed critically in the industry, then as now. In 1980 we discussed whether a company should operate under the motto management by genius, or management by teamwork. In case of failure a campaign such as the one planned by McLean would leave the banks in serious trouble. The fate of large companies, we wrote, can damage the national economy and was thus not only a matter for private investors to decide on.
Observing developments at the time we concluded that a diversified corporation in which not only large banks but also trade union representatives have a say should not give a brilliant maverick unrestrained freedom, especially as a highly-developed instinct for business is not always paired with a sense of social and political responsibility.
This is where the principle of too big to fail seems highly relevant. The consequences of the global economic crisis are well known and are still being felt by shipping lines the world over today. We are again talking about the «jumboisation» of container shipping. With a capacity of about 18,000 teu the new leviathans have now reached dimensions that were totally unheard of in 1980.
On top of this, the P3 alliance has received the green light to proceed from the US authority concerned, so the three largest market players can now get together. This is a first for the global market. Let us hope that the management of the shipping lines base their cooperation on teamwork in this case.