by Dave Akers, IHSA
“Who controls the past controls the future: who controls the present controls the past.” — George Orwell During the 1970s and 1980s, the Transpacific ocean container shipping industry was just as fiercely competitive as it is today. Transpacific capacity was heavily shaped by dominant carriers like Sea-Land Service, American President Lines, Maersk, Evergreen Marine, United States Lines, K Line, OOCL, NYK Line, Neptune Orient Lines, and Hanjin Container Line (HCL). Competition among these lines primarily centered on transit speeds from Asian hubs, chiefly Hong Kong, to U.S. West Coast ports. Additionally, carriers competed fiercely on the speed and reliability of their inland networks, specifically for Mini-Landbridge (MLB) and Interior Point Intermodal (IPI) cargo moving onward from the West Coast. The Sea-Land SL-7 ships built in the early 1970s were absolute marvels of engineering, capable of sustained speeds of 33 knots (about 38 mph). They could indeed cross the Pacific in breathtaking time. Today, however, a modern container ship cruises at a leisurely 14 to 19 knots. This dramatic slowdown isn’t a regression in technology; it’s a deliberate choice driven by physics, economics, and environmental policy. Why the Shipping Industry Traded Speed for Efficiency:1. The Brutal Physics of Water ResistanceThe single biggest factor is the non-linear relationship between a ship’s speed and its fuel consumption. Because of hydrodynamic drag, a ship’s fuel consumption increases at roughly the cube of its speed (known in naval architecture as the Admiralty formula). Doubling a ship’s speed doesn’t require twice as much fuel, it requires roughly eight times as much. Even dropping speed by just 10% reduces fuel consumption by nearly 27%.
2. The Oil Crises Killed the “Gas Guzzlers”When the SL-7s were ordered in the late 1960s, bunker fuel was incredibly cheap (around $20 a ton). The ships were powered by massive steam turbines that guzzled hundreds of tons of heavy fuel oil a day to maintain 33 knots. By the time the fleet was fully operational, the 1973 and 1979 oil crises had hit, and fuel prices spiked exponentially. At high speeds, the SL-7s became financial black holes. They were so unprofitable to run that Sea-Land ended up selling all eight of them to the U.S. Navy in 1981, where they were converted into Algol-class Fast Sealift Ships (and remain the fastest conventional cargo ships in the world).
3. The Era of “Slow Steaming”Fuel remains the single highest operating expense for a shipping line, sometimes accounting for up to 75% of voyage costs. Following the 2008 financial crisis, the shipping industry formalized a practice called “slow steaming”. By intentionally dropping commercial speeds from 22–24 knots down to 18 knots (or even 14 knots for “super slow steaming”), shipping lines slashed their fuel bills by tens of millions of dollars. Even when fuel prices occasionally dip, slow steaming remains standard practice because it helps companies absorb excess vessel capacity on the market, preventing freight rates from crashing.
4. Scale Replaced SpeedInstead of moving a small amount of cargo very fast, modern logistics optimizes for moving a massive amount of cargo slowly. · 1970s SL-7: Carried roughly 1,000 to 2,000 TEUs (Twenty-foot Equivalent Units). · Modern ULCV: Can carry up to 24,000 TEUs. The economies of scale mean the cost to transport a single flat-screen TV or pair of sneakers from China to California today is radically cheaper than it was in the 1970s, even if the voyage takes a week longer. 5. Environmental RegulationsShipping lines are now under strict international mandates from the International Maritime Organization (IMO) to decarbonize. Because fuel burned correlates directly to greenhouse gas emissions, reducing speed is the single most effective, immediate way to cut a fleet’s carbon footprint. Modern ships are legally required to meet stringent energy efficiency indexes, making a return to 30-knot Transpacific sprints practically impossible under current environmental frameworks. Speed Was Not EverythingWhile Sea-Land led ocean transit times, APL focused on inland rail efficiency. Many East Coast importers initially resisted shipping via West Coast ports due to concerns over cargo damage on railcars. APL set out to change this perception in 1984 through a famous marketing demonstration promoting its new “Stacktrain” double-stack intermodal service:
This test proved that double-stacking (developed alongside Thrall Car and Southern Pacific Railroad) eliminated violent slack-action by reducing coupler slack from 15 inches to just 3 inches. It fundamentally transformed North American freight transit and allowed APL to capture East Coast cargo that previously moved via the Panama Canal. Urban Legend vs. Reality:A popular industry urban legend claimed the crystal glasses were filled to the brim with water without spilling a drop. Campaign organizers later clarified that no water was used—the structural survival of fragile tableware was the true test. The Evolution of the Line Neither Sea-Land nor APL operate as independent transpacific giants today. Sea-Land was acquired by Maersk, while APL was acquired by NOL and is now a subsidiary of CMA CGM (operating 11 U.S.-flagged vessels for military, dry, and reefer cargo). Today’s container industry prioritizes mega-vessels, lower slot costs, alternative fuels, Vessel Sharing Agreements (VSAs), and strategies designed to navigate economic, geopolitical, and weather disruptions. If you would like to subscribe to the IHSA blogs, please send a message to team@shippersassociation.org. | |