Professor Manered Zachcial
4. Shipping Companies
4.1 The British
British commercial and shipping business in the nineteenth century developed along the lines of its colonial empire, and the inter-Empire and British external trade that was operated by close-knit global business networks. At the beginning of the twentieth century British shipping was world’s largest fleet owning 40%
of the world’s tonnage, followed by Germany which owned one-fourth of its size. In 1918 a government committee reported that “at the outbreak of war, the British Mercantile Marine was the largest, the most up-to-date and the most efficient of all the merchant navies of the world”.26 The fleet was particularly hit during the interwar period, where it saw some of its leading shipping companies like the Royal Mail disintegrate and some of its main tramp-shipping owners leave the stage. It has been argued that British performance has been affected by the “unfair competition” of countries that subsidised their liner fleets like France, Germany, Italy, Japan and the United States, or the low-cost tramp operators like the Greeks that took large portions of its share in the Atlantic trade, and by the reluctance of British shipowners to invest in the new technology of diesel engines and tankers during the interwar period.27
World War II did not really affect the British share in world shipping which by 1948 had reached its pre-war level. Until 1967, Britain despite its decreasing share, remained world’s maritime leader and UK fleet continued to grow until 1975. Part of its 1975 tonnage, however, the year when the British fleet reached its peak, was foreign-owned and this “masked the extent to which British interest in merchant shipping had already declined before the downward plunge after 1975”.28 From 1975 to the beginning of the twenty-first century there was a continuous decrease in the UK register due to the “flagging-out” of the British- owned fleet. By 2007 British shipping under all flags was in tenth position with only 2.35% of world tonnage.29
The regional dimension in maritime Britain has played an important role in the organisation of both tramp and liner business. The main poles of liner shipping have traditionally been Liverpool and London followed by Glasgow and Hull. The newly emerging liner shipping companies from the mid-nineteenth century onwards were very strongly connected with a big home port, like London, Liverpool, Glasgow and Hull, where strong shipping elites were
formed.30 For example, the Peninsular and Oriental (P&O), based in London, was established by Wilcox and Anderson in 1837 and specialised in trade with India and Australia; the Cunard Company, established by Samuel Cunard, Burns and the MacIvers in 1839 specialised in the north Atlantic; the British India (BI) shipping company, based in Glasgow, was established in 1856 by the MacKinnon shipping group and specialised in the Indian ocean; the Ocean Steam Ship Company known as the Blue Funnel Line, based in Liverpool, was established by the Holt family in 1865 and specialised in trade with southeastern Asia. The Union-Castle Line, was established in the 1850s and run by Donald Currie, specialised in South Africa by the 1870s, the Elder-Dempster based in Liverpool, was formed by Alexander Elder and John Dempster in 1868 and specialised in African trade; Lleyland, Moss, McIver and Papayanni, all based in Liverpool, were established in the 1840s and 1850s and were involved in the Mediterranean. Hull was the home port of the Wilson Line, established by the Wilson family – “Wilson’s are Hull and Hull is Wilson’s” –, that traded in all oceans and seas.31 In 1910 there were 65 liner companies that owned 45% of the British fleet. And all, during the previous 30 years, had organised themselves in closed cartels of the sea, the conferences, according to the oceanic region they traded, securing their share in the world market.32
The five largest liner companies in 1910 were British India, White Star Line, Blue Funnel Line, P&O and Elder Dempster (see Table 2). Low freight rates and a widespread depression in the late 1910s led to intense competition and a wave of mergers that produced giant lines in the five years before World War I. The most notorious example is the Royal Mail Steam Packet Co that from 1903 to 1931 was led by Owen Philipps (later Lord Kylsant). Within 30 years Royal Mail reached its peak, owning 11% of British fleet, and its nadir in 1931 when it was liquidified, producing a major crisis
in British shipping business circles. In a remarkable series of acquisitions Royal Mail acquired Elder Dempster in 1910, Pacific Steam in 1910, Glen Line and Lamport Holt in 1911 and Union-Castle in 1912.33 Another giant emerged just before the war, when Peninsular and Oriental apart from the Blue Anchor Line, acquired British India Steam Navigation and its extensive shipping and trading interests in India. P&O continued its acquisitions and mergers throughout the interwar period and in contrast to Royal Mail, remained the largest British shipping concern throughout the twentieth century.
Mergers and amalgamations of lines into groups under common ownership continued in the interwar period and changed the structure of British liner shipping.34 The economic crisis of the 1930s hit British shipping hard. The contraction of the tramp shipping sector (which was lost to Norwegians and Greeks) and the concentration to fewer liner companies was evident: in 1939 there were 43 British liner companies which owned 61% of the fleet. The demolition of Royal Mail, and the intervention of the British banking system to
save Britain’s largest liner concerns, brought a restructure of liner ownership in the 1930s that defined its path in the second half of the twentieth century.
As Table 2 indicates, in 1939 P&O, the Ellerman group of companies, Cunard, Blue Funnel and Furness Lines appeared in the top five positions. P&O through consecutive mergers and amalgamations became the indisputable queen of the Indian Ocean and Pacific routes; apart from British India Steam Navigation in 1914. In 1917 and 1919 it acquired another seven lines that serviced those routes. In the 1960s and 1970s P&O remained the largest shipping group of the world; after the 1970s it adjusted to the container revolution, adopted a globalised ownership, expanded to the port terminal business and diversified into the bulk, ferries and cruise sectors. In 1996 P&O Container Limited, the liner branch of the group, merged with Nedlloyd to form P&O Nedlloyd and the new company became the third biggest liner company, before its acquisition by Maersk Line. Ellerman acquired a number of smaller Liverpool lines that traded in the Mediterranean before World War I and its biggest acquisition was in 1916 when it amalgamated with Wilson Line; its importance contracted in the post- World War II period. Cunard, another giant of the “big five” of British shipping traditionally engaged in the Atlantic passenger services since 1840s, had acquired three or four lines during the second and third decade of the twentieth century. It profited largely from the demolition of Royal Mail when it acquired White Star Line in 1934. Persisting in passenger shipping, however, it eventually lost its importance in the postwar period.
The Blue Funnel (Ocean Steam Ship Company) group of companies owned by the Holt family exemplified family capitalism in liner shipping. Based in Liverpool and specialising in far eastern trade, it also profited from the demolition of Royal Mail and amalgamated with Elder Dempster which held the African trades. It continued to trade strongly well into the second half of the twentieth century. The Cayzer family from Glasgow formed the Clan Line in 1890, established the British and Commonwealth group in 1956 by amalgamating with the Union-Castle Line, another line that had belonged to the disintegrated Royal Mail group; it continued its business throughout the twentieth century. Until the beginning of the twentieth century the Furness group was one of the main British tramp shipping operators, who later diversified into liner shipping. By taking part in the acquisitions and amalgamations and
exploiting the demolition of Royal Mail of which it acquired a fair share, it proved, along with P&O, to be one of the most important shipping groups of the twentieth century; it has also been among the first British liner groups to continue operating in tramp/bulk shipping.
Liner shipping companies are associated with the most glorious part of British shipping. Liner companies owned the most famous, luxurious steamships of the latest technology. British liner steamships carried millions of passengers, and became widely known as the proud manifestation of power of the mighty British Empire which ruled the waves. Most of the owners of British liner companies, among Britain’s most powerful capitalists, were commoners who became Lords or were knighted: Lord Kylsant of Royal Mail, Lord Inchcape of British India, Sir Alfred Jones of Elder Dempster, to mention only a few. British historians have told the stories of the main British liner business.35 But liner shipping throughout the nineteenth and twentieth centuries formed less than half of the large British fleet.
In fact, it was the less glorious ships of less technological achievement that formed more than half of the British fleet which fed the industries of the Empire.
Tramp shipping formed the largest part of the British mercantile marine up to the Great War with 462 companies owning 55% of the fleet. The Industrial Revolution determined the areas in which British tramp operators developed in close connection with deep-sea export coal trade: The Northeast ports and Wales became the main hubs of British tramp-operators in combination with those of the Clyde in Scotland who were traditionally connected with the trading worldwide networks of the Scottish merchants.
In 1910 the shipping companies of the Northeast ports, namely Newcastle, Sunderland, Hartlepool, Middlesbrough, Whitby, Scarborough and Hull handled almost one third of British tramp shipping tonnage.36 Some of the most powerful British shipping families came from this area: the Furnesses, Turnballs, Ropners and Runcimans. The next most dynamic group in tramp shipping were Scottish tramp operators who handled 18% of British tramp shipping in 1910. Some of the best known Scottish tramp shipowning families were the Burrells and the Hoggarths. Wales also emerged as a generator of tramp companies. Wales drew human capital from the West Country as well and shipping companies established in Wales operated 9% of the British tramp fleet in 1910. With Cardiff
as the central port, tramp shipping thrived in the Welsh ports from Chester to Llanelli.37 The best known Cardiff tramp operators were the Hains, Morells, Tatems and Corys. London and Liverpool drew branch offices from almost all these tramp operators and both cities handled 42% of the British tramp fleet in 1910.
Table 2 indicates the evident importance of tankers and the non-existence of independent tanker owners; one of the great failures of British tramp owners was that they did not enter the tanker business. The main big tanker owners remain the petroleum companies like the Anglo-American Oil Co in 1910, British Tanker Co and Anglo-Saxon Petroleum in 1939 and British Petroleum in the post-World War II period. The new structure in the organisation of tramp/bulk shipping, were the management companies under which one finds some of the traditional British tramp owners. Denholm Management is a good example of a management company. In 1970 it managed 38 ships for 17 shipping companies including Turnbull Scott Shipping.38
Contrary to the beliefs that want family capitalism to belong only to the Mediterranean, family prevailed in both the British liner and tramp maritime business. Big liner companies might have been joint-stock companies, but ownership was usually spread among a select circle of family and friends;
families like the Cayzers, Ellermans, Brocklebanks, Holts, Furnesses and Swires retained their command over major British lines.39 The case was stronger in British tramp companies, that were family-owned companies that kept ownership and management of the companies and used intermarriages to expand and keep the business within closed circles. From the most prominent ones like the Runcimans, the Turnbulls, the Ropners, to the medium and smaller ones, kept business in the family for several generations. One of the great handicaps of British shipping, however, has been the loss of the importance of the regional dimension of maritime Britain; regions and ports that reproduced shipping entrepreneurship.