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FreightWaves explores the archives of American Shipper’s nearly 70-year-old collection of shipping and maritime publications to showcase interesting freight stories of long ago.

In this week’s edition from the January 1984 issue, we look at the Rumor mill of 1980s logistics.

Have you heard the latest rumor?

Did you hear that United States Lines has canceled its giant shipbuilding order with Korea’s Daewoo yard? Did anyone share the news that Crowley Maritime was constructing a road across Costa Rica for a Ro/Ro service to circumvent the Panama Canal? Did you know that the maritime reform bill will definitely be law before February but without the independent action provision? And how about Charlie Hiltzheimer coming out of premature retirement and taking over at CAST Shipping (before it goes belly-up)?

Well, you can just forget at least three of the foregoing because they probably have no basis in truth. All of them have filtered through the rumor mill recently, and if experience serves, only one is even close to the mark. Yet they represent a mere smattering of the traffic that streaks through the international ocean carrier/shipper gossip network every day.

In no Industry are Rumors more rampant and relished than the maritime industry. A day without a rumor is a dark one indeed. There is no better phrase to begin a cable than, “Heard a rumor …,” and a surefire way to get someone to return a phone call is to leave the message: “Wanted to check out a rumor.” The choicest targets tend to be carrier financial woes, executive moves, conference entries and departures, deployment strategies, labor problems, and the glacial legislative process. Some whoppers are easy to flush out or dismiss, others prove to have contained a kernel of truth after it has died, and some persist despite repeated denials for a long, long time.

Root causes

To determine why there are so many rumors is no mean psychosociological feat. Veteran observers provided a few armchair explanations. Said one, “It’s a basically entrepreneurial industry and there are a lot of big egos. They are a small number of people and are constantly in touch through the conference system. Most of them have very few contacts outside the industry. Their whole livelihood is wrapped up in it and hence the intensity of concern with what everyone else is doing.” Added another: “The industry is very closely knit and is made up of Old Boys’ Clubs which have known each other for years. Plus, there’s an incestuousness about it. It’s common for one executive to have worked for three or four different carriers during his career.” The source pointed out that many shipping service firms in the industry are family-run and keep close tabs on their clients. Everyone knows who the “slowpay” or “no-pay” carriers are, and shippers are especially careful to monitor this information.

Further, players involved in the various facets of the industry have tireless curiosity about the strategy and projects of competitors. “It’s human nature,” a third observer quipped. “People just like to scoop each other. And maybe some of them have nothing else to do but make things up.”

Fertile ground

Indisputably, rumors find their most fertile medium in places where there are heavy concentrations of people from different companies with time on their hands. The noon-time club is perhaps the best testing ground for vague theories. Not only are the opportunities for misinterpretation rife but any shipping person worth his salt will be listening three conversations away and twist a fact or two in the process.

New York offers a broad array of industry watering holes in the Whitehall Club, the Downtown Athletic Club, and the Harbor View Club. In Washington, the maritime contingent buzzes at catered lunches in the Longworth House Office Building. San Francisco chooses the World Trade Club or the Commercial Club. Every major shipping center has the equivalent where dominoes click long into the afternoon and the walls, covered with tarnished plaques, almost seem to whisper rumors past and present.

The other locales where rumors fly fast and furiously are aboard ship and along the wharves. Said one retired steamship executive, “You can hear anything you want any day on the ship. What breeds rumors is uncertainty and there’s always a lot of that.” Because seamen and longshore gangs are not attached to a particular company for very long—and so don’t develop deep loyalties—they tend to tell each other what they know. One sailor asked this reporter recently whether there was anything to the rumor that American President Lines was pulling out of the Pacific Northwest in conjunction with Sea-Land’s agreement to leave Oakland. The two lines had decided to save money by dividing up West Coast ports of call, he had heard, and wanted to know what the implications were for union men.

Three categories

Rigorous analysis of the various types of rumors to pop up in recent months reveals three basic categories: 1) Information that has been leaked by an insider but not announced through official channels. An example would be a conference’s planned rate increase that is floated to representative shippers to gauge how the general public will receive the news. 2) Reports based on a conversation that is purely speculative but is later repeated as though it had been handed down from well-placed, omniscient, anonymous sources. At this point, the rumor has taken on a life of its own and could go anywhere, like the child’s game where a phrase is whispered around a circle and finally comes out in hopelessly twisted form. 3) Malicious gossip aimed at discrediting a steamship line, a stevedore or a freight forwarder, which can start at any time, any place. This type is most often associated with a salesperson hoping to drum up new business. Frequently, it can turn into a self-fulfilling prophecy. As the word spreads, more and more customers are tempted to desert a formerly solid company, which can easily lead to far graver troubles for the rumor victim.

The hand-off

Of course, people have different ways of handling a hot rumor and this depends largely on their position in the corporate hierarchy. Some toss it to everyone they talk to because they like that momentary glow of being more in-the-know than the next guy. They may label it as hearsay and provide a few reasons why it can’t possibly be true, but they’ll pass it on nonetheless. A more responsible sort will share unconfirmed reports only with trusted colleagues or well-informed sources. A decision as to its likelihood will be made on the spot and no more will be said. Still, others make it a policy never to repeat gossip that they haven’t checked first with the principals involved.

How, for example, did the rumor about the halt of United States Lines’ new building in Korea get started and what path did it follow before becoming old hat? Rumor has it that Sea-Land executives were talking with Daewoo people about plans of their own when someone asked an indirect question about progress on the USL order. What came back was a funny-sounding answer and no more was said. But the next day, a top Sea-Land man flew in from Tokyo and put the question squarely to a higher-up. His reply was “no comment,” and the cable traffic fairly hummed with the latest “news.” New York was apparently the first to be told but within a day it had spread to the West Coast (at a Port of Long Beach reception in San Francisco, it was on the tip of everyone’s tongue) and Europe heard it by that night. United States Lines, of course, loftily refused to comment and the rumor rippled on.

Helpful warnings

Shippers tend to take the grapevine very seriously, especially where the financial status of a steamship line is concerned. “I try not to repeat these kinds of rumors. If I hear something that sounds strange, I go right to the top and ask them straight up. Most turn out to be fractionally true. … It’s wishful thinking by their competitors,” said one traffic manager. Carriers are constantly having to vouch for their solvency. Because there are built-in incentives to fall behind on payments for certain services, “slowpay” companies are not unusual but they do bear the cost of rumors from their stevedores, tug operators, other suppliers of service.

A case in point is the rumored demise of Seatrain that cropped up regularly for more than a decade before the steamship line finally bit the dust. Yet when Sea-Land withdrew from the Transpacific Freight Conference of Japan/Korea several years ago, a Japanese shipping newspaper reported that the line was teetering and called the move its “death knell.” A Denver-based shipper said, “There are no major changes that we haven’t gotten some kind of rumor of ahead of schedule. It may not have been completely accurate but we believe where there’s smoke, there’s fire. And that helps us plan.” This is particularly true with conference rate increases, he said. Several times he successfully staved off a hike by making vigorous protests in advance of the formal announcement.

Fast, accurate

A chemical shipper noted, “There are no secrets in this industry longer than 48 hours. We live and die on getting pieces of information and getting them promptly. Tell me something and I can verify it within two hours no matter what it is.” Accuracy and speed of information exchange are particularly vital in the charter market. Fully half of all transactions are made with the understanding that terms and rates remain confidential. This inevitably leads to a lot of loose talk that is difficult to verify and the average broker spends hours separating grain from chaff. The greatest volume of gossip emerges from the Baltic Exchange in London where shipowners and brokers swap juicy rumors the way kids do baseball cards. Instant communications have simplified the process of pinning down the facts. Those seasoned in chartering make a habit of talking to major centers of activity worldwide several times a day in addition to exchanging dozens of cables.

But if you don’t have widely scattered sources you can trust, there’s not much you can do. Said one well-connected broker, “Salesmen for brokers need to know a lot more than salesmen for liner companies or agents. There’s not much knowledge required to sell container space and that lack of knowledge leads to a lot of rumor mongering.”

Truth quotient

Exactly how many rumors turn out to be true is a matter of opinion. Estimates range from one in a million to roughly 50% but the median hovered around one in four. Most agreed that more often than not there is an element of truth in all but the tallest of tales. Interestingly, people seemed to have forgotten rumors that were more than a few months old. No one contacted by American Shipper could even suggest a candidate for “the biggest whopper that didn’t come true.” Asked to reel off the five latest rumors, however, sources offered a wealth of material that took this reporter hours of overtime and a fat phone bill to get to the bottom of. “The art in this industry is being able to sort them all out,” summed up one oracle. “I watch them carefully. I’ve learned not to become overheated but many times there’s something there. It’s an ingredient that those who are successful in this industry have to pay attention to. They have to because of the very nature of the industry.”

FreightWaves Classics articles look at various aspects of the transportation industry’s history. Subscribe to our newsletter!

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