Letters From Sol

The following is a series of letters written by Sol Katz, founder and owner of Solomon Tri-Modal, and father of the first marine containers in the 1950’s.  The letters are addressed to a business colleague in Europe and help to explain the history and importance of true intermodalism.

Dear Mark -

It is no surprise to me that there are 45 ft long pallet-wide swap bodies operating domestically in Europe.  In fact, they were in existence when we built the first GeoContainers in 1996. The EU later changed the length limit for trailers to13.6 m, but the existing 45’ containers, swap bodies and Geos were grand-fathered under that regulation.  After that all new boxes were built 13.6m until they changed the law again a few years ago to 45ft.

From day one in 1966 there were swaps starting with ISO measurements.  What is a surprise is why they are domestic???  The Geo is not patented.

When you come up with the answer to that, you will understand my comment.

I suggest you Google a brilliant, wonderful man named Yannick Guillemot, former director of the Port of Nantes. In the late 1960’s he made a presentation at the global container conference titled "Marry the swap body to the ISO container”.   No one listened to him either?  Why?

We benefit on the rail from the tie downs and locations being the same.  That’s why we have an opportunity now.

Sol

Chapter 2, July 5, 2010

Mark

1.  I did not invent the container.  Containers of all types have existed for centuries. 
2.  I did invent and build the first modern marine container for Malcolm McLean in 1953.  But that container did not fit my definition of “intermodal”.
3.  I also invented the Flexi-Van system used on the NY Central Railroad, but that was not “intermodal” either.

In 1966, at a meeting of the world container organization in San Francisco, I delivered a speech in which I defined the intermodal container.  That container I also invented. 

The true definition of “intermodal” is the ability of the container to move seamlessly on any of the three principle modes: road, rail, and sea.  A truly intermodal container must not suffer any penalty compared to a domestic trailer in freight cost, waiting time, tare weight or payload capacity. 

In 1966, the ISO (International Standards Organization) standardized marine container dimensions based on the size of the legal truck trailer on the highways of America, which was forty feet long, eight feet wide, and 12 foot 6 inches high.  The 12 foot 6 inches high trailer height translated into an 8'6" high container.

That year, every country in the world adopted 40’ foot long by 8’ wide by 12’ 6" high by as the legal maximum dimensions for trailers on their highways.  Ships and railcars were outfitted to accommodate this size. 

For two and half years, all container movements were truly intermodal. 

For example, if you loaded a container in Munich, it went by either road or rail to Rotterdam.  No one touched the freight.  The loaded container was placed on the ship, and when it arrived in Port Elizabeth NJ, the locked container was loaded onto a truck, and driven to Auckland, Ohio for delivery.  The Auckland destination was the first time or place the container was unlocked, and unloaded.  From loading in Munich, now one ever opened the doors or touched the freight.  Since the U.S. trucker was a licensed common carrier, and because the container was the same size and weight as his own van trailers, the carrier was able to use the container and chassis for free to load his domestic cargo in exchange for repositioning them to the port in a reasonable time. 

In the latter part of 1967 however, trailer sizes in America and Europe again began to change and get bigger.  Rail piggy-back and trucker highway fleets were either modified or sold to get the longer size trailer.  Shortly after that, trailer heights were increased by one foot to 13’6”.  Interestingly, only a small part of the world container fleets has since been converted to 9’ 6" high. Or 45’ long. 

In 1984, the U.S government initiated the most dramatic size change by legalizing both a length increase to 48’, but also a width change to 102” (8’6” or 2.59m).  Before this legislation, the railroad lobby had successfully argued against wider trailers for competing highway truckers because the 8’ trailer width limit (93” inside width) giving the rails an effective monopoly on productively moving 4’ x 8’ formatted building supplies.  Wallboard is 4’ x 8’.  Plywood is 4’ by 8’. Railroad box cars were ten feet wide creating huge payload advantages over truckers.  But with the growing railroad piggy-back programs using trailers instead of boxcars the rails realized they had shot themselves on the foot and decided to support the pending legislation.  The 8’6” wide trailer was born.

In the meantime in Europe, trailers dimensions had been enlarged to 2.55m wide to most efficiently carry a payload of (33) Euro pallets (.8 m x 1.2 m).  Unfortunately, however, it was impossible to fit more than (25) Euro pallets into a 40’ ISO marine container. 

I watched the loading of a container in Antwerp.  Four men and a lift truck with a single empty pallet entered the 8 foot wide ISO container with the cargo sitting, un-palletized on the floor.  They loaded the pallet on the lift truck piece by piece.  The lift truck driver backed out of the container and loaded the pallet into a 2.55 m (8’ 4.375”) wide semi-trailer at an adjoining loading dock.  He then re-entered the marine container with a fresh, empty pallet.  They repeated this process until the container was unloaded and the trailer was fully loaded with (33) pallets.  At the time, I estimated that the total cost of unloading the container and re-loading the trailer, in addition to possible loss, damage, or pilferage was probably equal to the cost of dock to dock ocean transportation

Since then, the permissible length of trailers in the U.S, Canada and Mexico has increased to 53 feet in length, with each 53’ trailer equal to the square footage of (2) 40’ ISO marine containers. 

In Europe, trailer lengths are now legally 45’ long x 2.6 m.(102.36”) wide x  4 m high (13.12’).  Last I checked, South America, Russia, Africa and the rest of the world are standard on 45’ like Europe.

So as for today, true intermodal containerization does not exist anywhere because of the dysfunctional variety of sizes, even though the savings from true intermodal are monstrous.  So the question is why has it not changed?

It has not changed because the liner shipping companies and related maritime industry are not interested in re-tooling.  There is no incentive for them to jeopardize their huge sunk cost in existing assets as long as shippers are willing to pay the enormous premium for inefficient container sizes, the expense of trans-loading and the hidden costs of damage, loss and theft that come from a multi-handling logistics system.

Especially with our disastrous current global economy, people like Ikea and Walmart are looking hard for cost savings in their transportation, material handling and warehousing.  But sadly, they don’t see or understand the potential that true intermodal has for increasing productivity and minimizing cost. 

To undertake the battle of promoting intermodal container standards worldwide is monstrous.  Perhaps we can find a smaller market-place like the Med to start eating the elephant one bite at a time.

Sol

Chapter 3, July 8, 2010

Dear Mark -

All of the early containers were made primarily from aluminum.  Keep in mind that the intermodal container was intended to travel in all three modes with no penalty to weight, waiting time, or cost.  Since the intermodal container evolved from the American highway the original models were built of aluminum like the trailers. 

The number one reason for aluminum was long life.  The second reason was more payload.  For every pound you take out of the trailer, you can carry an additional pound of freight at no cost.  Strick introduced the aluminum trailer to America in 1937.  Prior to that, all the trailers had steel bodies with a useful life of about ten years.  Corrosion was the killer.  Several years ago, I saw a 1937 twenty six foot long aluminum Strick trailer still in service.  There is not a single older steel van trailer in existence anywhere in America.  They have all long since rusted away.

One day in the early 1970’s while I was walking in the financial district of Manhattan,  I heard Malcolm Mclean yell across the street for my attention, and began darting toward me.  I wondered what was important enough for him to be dodging traffic on a busy NY street.  He explained to me that his containers, all of which were aluminum with muffler grade stainless steel end frames, had just reached fifteen years of age and they were still in service.  The reason for his joy and excitement was because he had been battling the accountants over the fact that he was depreciating his containers over fifteen years. 

In the mid 1960's, when the marine container first became popular industry-wide, most of the containers we build for foreign carriers were aluminum.  We licensed our designs to manufacturers in Germany, Japan, Belgium, France, and England.  It did not take long before our three thousand dollar aluminum container was being replaced by Japanese built one thousand dollar steel containers. 

In fact, as a principal stock holder at the time in the world’s largest container leasing company, ICS, when I learned that the company was not only buying foreign steel containers, but depreciating them in the same life span as aluminum containers, I sold all of my ownership at the peak of its share value.  My reason for selling was not because they were buying steel containers, but that depreciating them over the same life as aluminum was a bad decision. 

Today, 99% of the global container fleet is made of steel.  These steel containers are considerably heavier than aluminum.  Also, they have a much shorter life.  So the cost advantage of steel in the long term is questionable.  One of the reasons that the pressure is not on the industry to use lightweight equipment is because the ship doesn’t care as much as the traffic cop who stops you on the highway.  Without the uniformity of true intermodal equipment, the standardization of ship and handling equipment has not been an important priority.  I believe that the lighter weight of an aluminum container and the resulting several thousand pound increase in cargo per load will pay for the container in year or two.

The true intermodal container on a chassis has to be as lightweight and as large inside as the competing semi-trailer if common carriers are going to haul them for free or heavily discount.  The trucker cannot afford to leave freight on the dock. 

Sol