Sven Salén1 was born in the Swedish city of Borås in 1890. He finished his studies at the business school in nearby Gothenburg in 1910. Salén continued to study languages and international business and landed his first job at Göteborgs Handelsbank. However, only a few years later in 1915, Sven Salén bought his first ship. Apart from his interest in shipping, he was a professional sailor, who would later in his life compete in two Olympic Games. He was also interested in music and one of his best friends was the Swedish troubadour Evert Taube. In 1916, Salén bought another two ships, which carried pulp to Spain and wine on the return voyage, cargoes that quite accurately coincided with the comparative advantage of each of the two countries. Still, the records tell us that Sven Salén, at the end of the First World War was back at the starting point, with no ships and not a lot of money. In the early 1920s Sven Salén got back into business, freighting paving stone from Bohuslän to Gothenburg.
1 A Fruitful Relationship
Because of Sven Salén’s interests in sailing, he met the slightly older Norwegian Carl Matthiesen at the sailing club Göteborgs Kungliga Segelsällskap. Not only did they share this interest, they also shared an entrepreneurial streak. Unlike Sven’s father who was a public official, Carl’s father, Christian Matthiesen, had started a lumber business in the last decade of the 1800s. The story goes that on a train ride from London to Newcastle, Christian met with the British banana importer A. Roger Ackerley. Inspired by this meeting, Christian got an idea, and soon he produced wooden boxes for the British company Elders & Fyffes, partly owned by the banana giant United Fruit, in exchange for the sole rights to import bananas to Norway. The commercial activities started in 1905, when 3 tons of bananas arrived in Norway. Christian would soon get the nickname Banan-Matthiessen.
Christian’s banana business grew rapidly. In order to expand it further, Christian’s son Carl, at the age of 23, was sent to Gothenburg, 300 km south of Oslo to explore if the Swedes would have a taste for bananas. In 1909, Carl established The Banana Company AB, which soon changed name to the better-known AB Banan-Kompaniet. At that point in time the banana was almost unknown in Sweden, as unknown as it had been in Norway just a few years earlier. The first banana cargo arrived at Gothenburg in 1909 all black and frozen, and only a small amount of the sorry shipment could be sold. The bananas which arrived in a good state were well appreciated, but most bananas that arrived at Swedish ports were too ripe, frozen, or damaged in other ways. Since the Swedish market was interested in bananas, Banan-Kompaniet built up a logistical operation with their own quays to ensure fast distribution, since there were no cooling houses at the time. But the core problem remained – the bananas that arrived at the quay were already damaged.
Carl was therefore looking to improve maritime banana transport. Sven Salén was a suitable candidate. Carl Matthiessen’s knowledge of and connections to the banana industry complemented Sven Salén’s knowledge of shipping. Together they decided to develop the import of bananas to Sweden and Scandinavia, taking on more control of the maritime transport than previously. Sven chartered in the ship Caledonia in 1922 to transport bananas from Rotterdam to Malmö and Stockholm2. Sven and Carl established a line Rotterdam-Ghent-Antwerp-Stockholm, serviced by three ships, as well as Rotterdam-Gothenburg-Oslo, serviced by two ships, what we today would call a feeder service. To Rotterdam, the bananas were delivered with United Fruit’s banana carriers.
Brokers: From Klaveness to Orion
Torvald Klaveness established his company in 1946. His family had a background in shipping and his wife’s father was the head of Banan-Matthiesen, who in turn was connected to Sven Salén. He started brokering reefer ships and also bought the reefer Balao, built at the Drammen shipyarda. In the early 1960s, he focused on brokerage rather than ship-owning, in order to not be exposed to the vagaries of the shipping markets.
Klaveness had employed our respondent Alv Thomassen as its sole reefer broker already in the 1960s, but the business grew to the point that by the mid-1990s, there were seven. Thomassen recalls that in the early days the focus lay on finding tonnage for a particular cargo and that this later changed to the reverse, that is to say, find cargo for a particular ship. Klaveness was an international operation that worked with both Lauritzen and Salén, despite their rivalry, and also the banana companies.
During the late 1990s the upper management of Klaveness decided to sell its reefer brokerage arm to RS Platou. The brokers were unhappy with this decision and instead decided to start their own operation to be known as Orion. They approached Jan Olaf Tonnevold, a former investor in the reefer segment to be a part-owner.
To kick off the venture, Orion received five or six vessels to exclusively manage from Tonnevold. In the early 2000s, business was good, but the profit went down in 2006 and 2007. Because of the decline and consolidation of the independent reefer operators, many brokers started to leave the reefer segment. Orion experienced that the spot market, which was particularly important to the brokers, had shrunk. Seatrade and Green Reefers also started to use in-house brokers. Furthermore, Trade Winds reported that “Reefer brokers have been forced to stand aside as exporters and ship owners tie up tonnage themselves”b. Therefore, the three brokers Espen Harr, Peter Oyen, and Morten Saetre wound up Orion but continued to do business separately. Orion’s demise meant that there were few reefer brokers left in the market, Ocean Reefer Services in the UK was one.
Notes: a Borgen, P.O. & Heieren, R. 2011, Made in Drammen: industrihistorie fra en østlandsby med hovedvekt på perioden 1870-1970, Drammen : Drammen Rotary, p. 123. Available at: <https://www.drammen.kommune.no/Books/made%20in%20drammen/files/assets/basic-html/index.html#page1>; b “’Madness’ reigns in the reefer zone”. TradeWinds 29 January 2010.
Soon after the business was established, Sven Salén started to invest in tonnage for the new lines, since there was a lack of suitable tonnage that could be chartered in. The first ship was the steamer Chr. Matthiessen bought in 1923 which was rebuilt for transporting bananas, and she was followed by three more ships bought in 1926-1929: Jamaica, Sigrid Matthiessen, and Sverre Nergaard 3. Moreover, they were upgraded to ventilated fruit carriers and heating equipment and insulation were installed to prevent the cargo from chilling injury in the winter months. The relatively short distances and the cool climate made the operation viable but lacking refrigeration the spoilage was nevertheless considerable. Bremerhaven was soon added as a port where Salén picked up bananas.
Coinciding with this development of logistical operations, the Swedish banana consumption grew rapidly from 465 tons in 1920 to 10417 tons in 1930. This was of course not only due to Salén’s shipping operation. Banan-Kompaniet promoted the banana through advertisements of various kinds, and they developed their land facilities: in 1928, Banan-Kompaniet built a terminal at Stockholms Frihamn, comprising their new headquarters, new cold storage facilities, repacking space, and exclusive rails to carry the cargo to the hinterland.
Given Banan-Kompaniet’s position as the sole importer of bananas and the success of their product, it was time to invest. In 1931, the first newbuilding was delivered to the company – a ventilated fruit carrier called RH Sanders, that was rebuilt in 1932 with a refrigeration plant. During the 1930s, an important financial connection was established with Jacob Wallenberg and the Enskilda Bank, which became Salén’s main lender for the procurement of new vessels. The RH Sanders was not used on Salén’s lines but chartered to an Italian shipping company for transport of bananas from Somaliland to Genoa. During a voyage, she was struck by fire and scrapped after only two years in operation. During the 1930s, Salén continued building the fleet with 20-30-year-old, second-hand ships, for example Lillie Matthiessen, Sandhamn, Carl Matthiessen, Banana, and others.
The fruitful encounter between Carl Matthiessen and Sven Salén had kickstarted a new venture which replaced the third-party operators’ lines with new lines with dedicated fruit carriers. They were struggling with technological issues and a lack of know-how regarding how to best carry bananas from the Continent.
2 The Transatlantic Trade
Sven Salén, now confident in his shipping competence to transport bananas short sea, decided to extend his operations and start his own banana imports from Central America. He ordered the reefer Sandhamn 4 at Öresundsvarvet, Landskrona, but unfortunately the building process coincided with the inception of World War II. Banana imports were discontinued and the ship was laid up upon delivery in 1941.
The banana trade was reestablished in 1945, when a cargo of 2000 tons of bananas was imported from the Canary Islands for resale to the Soviet Union. At this point, Sven had become the sole owner of Banan-Kompaniet, while Carl stayed on as the managing director. To fulfil the objective of importing bananas across the Atlantic, Carl Matthiesen went to the US to negotiate with United Fruit, the largest banana company in the world, while Sven Salén chartered in tonnage for the trades across the Atlantic. At this time Carl and Sven had a good reputation at United Fruit – Carl being not only the son of Banan-Mathiessen but also the one who developed the Swedish market, and Sven as a competent ship-owner. Since the encounter between Carl and Sven, more than 20 years had passed. It’s also likely that with anticipated but uncertain post-war growth, United Fruit saw the benefits of augmenting its capacity with third-party tonnage. Wartime tonnage losses and the high capital cost of owning all its vessels are also relevant factors. In any case, United Fruit was willing to let Salén transport some of its transatlantic quantities.
Salén’s own ship, the now four-year-old Sandhamn, was put to work carrying bananas. In 1946, she arrived in Gothenburg from Puerto Armuelles in Panama. But at the arrival, disappointed stevedores saw that the cargo was already turning, in other words, maturing. The reason, according to the captain, was that Sandhamn had just carried apples from Australia and that the fruit had emitted ethylene gas, causing the bananas to ripen. All efforts to ventilate were in vain since the gas had made its way into the insulation in the cargo holds. To save something of the valuable cargo, urgent measures were needed. The cargo was transported to Stockholm, and the edible bananas were packed in boxes and sold, while the others were thrown on a barge and disposed of. When Sven Salén saw the cargo, his facial expression was allegedly unchanged. From Carl Matthiessen he had learned how to look stoic in the face of rotten bananas. This is just an anecdote, but points to a more general assessment of Sandhamn – that it was not a total success from a technical perspective5.
Salén and Mathiessen had developed a functioning transport system in Northern Europe and took the first steps to develop a Transatlantic trade in the 1940s. The technological competence of Salén was fair, but nothing compared to that of United Fruit. But with this partnership with United Fruit, Salén was well-positioned for the decades of growth to come.
Atlanttrafik was another Swedish specialized reefer company that was set up and owned by shipping liner interests: Broströms and Trelleborgsa. Both owners had planned to enter the segment and decided to collaborate. Six reefers were delivered from 1946 starting with the Blue Ocean, followed by two more in 1953. During the 1960s, the Sea class, comprising five larger sister ships to Salén’s Hispaniola were deliveredb. At the time Atlanttrafik started a line carrying meat from Australia to the US East Coast and general cargo back. Another four, significantly larger, vessels were added in the 1960s to service this line. They were operational until 1974, when Atlanttrafik bought three partly containerized cargo vessels with reefer container capacity.
Note: a “En svunnen epok: Kylfartygsflotta under svensk flagg”. Svensk Sjöfarts Tidning 1987/47, p. 14-19 and “Den svenskflaggade kylfartygsepoken”. 1987/49, p. 17-21; b The Blue Ocean had a capacity of over 200 000 cbf and did 17.5 knots at banana draught, while the Sea class had a cargo space of 270 000 cbf and a speed of 18 knots.
3 The Route to Global Leadership
In the 1950s and 1960s6, global trade developed in all cargo categories, and refrigerated and frozen products followed the general development. Salén was well positioned in the market with a burgeoning business relationship with United Fruit and contracts regarding other types of cargo.
As presented in the previous parts, Salén had already embarked on limited in-house technological developments that led to the newbuildings RH Sanders and Sandhamn. However, the relationship to United Fruit would dramatically accelerate Salén’s technological competence. The close relationship between United Fruit and Saléns and the mutual trust that had been established led to the latter gaining access to the drawings of United Fruit’s reefers in the late forties. Saléns could also study and inspect the ships as much as they liked. This knowledge-transfer enabled Saléns to catch up in technology and its next newbuildings reflected this.
These were the Arawak class consisting of five ships built in 1952-1956 at three Swedish shipyards7. They were designed for banana transports from Guatemala, Honduras, and Colombia to Rotterdam, Bremerhaven, and occasionally Gothenburg. A round trip took five weeks and the backhaul was generally in ballast. These ships were slightly larger and faster than the Sandhamn. They featured a patented air circulation system developed at United Fruits and the cargo holds were designed more uniformly to make refrigeration as well as loading easier8. The vessels could also satisfactorily handle frozen cargo, unlike Sandhamn.
Given the competence that Salén had come to acquire within the field of refrigerated transport, it embarked on a strategy to continuously renew its tonnage and incorporate improvements as a way to stay ahead of the competition. The tonnage renewal was primarily aimed to increase efficiency and cater to the growing transport and quality demands of United Fruit. The A-series, B-series, and San-series all mirrored these objectives. In 1962, the fleet comprised about 35 ships, but by the end of the 1960s it would be over 100.
The six ships in the A-series, starting off with the Atlantide in 1960, were proudly described as the largest banana carriers at the time. An innovation of the last three ships in the series, was that cranes at each hatch replaced the derricks that had always been there in the past. Yet another innovation was an automated refrigeration system which reduced the need for crew for monitoring. This system proved itself to the extent that several of the earlier vessels were retrofitted. Developments on the refrigeration side were the result of collaboration with the Swedish refrigeration company Stal. Salén thus successfully tapped into Swedish industrial know-how, similar to Lauritzen’s relationship with Atlas. The close working relationship between Saléns (and its successor Cool Carriers) and Stal continued all the way into the nineties. Simultaneously, the B-class was built for Salén in France9 – the first reefers built by Salén outside Sweden. The names of the ships, the Bolero, Barcarolle, and Ballade, were inspired by music, a strong passion for Sven Salén.
In 1967, a series of four “San” ships were built, San Blas, San Bruno, San Benito and Tasmanic at Eriksberg shipyard, that at 408 000 cbf were slightly larger than the A’s. Apart from new developments in refrigeration technology10, these were the first ships that were not adapted for carrying bunches of bananas, since the banana companies had started packing bananas in boxes. As a side note, because of this, the banana branding was carried out in the production areas, which led to United Brands establishing a common brand for all markets from 1967: Chiquita. Furthermore, the San ships were improved regarding hull design. They had a bulb which improved their resilience to storms and large waves. This became obvious on the first trip of San Benito, which left Gothenburg for Wallhamn, loaded 140 cars, and sailed for Halifax. The trip to Halifax was unproblematic, but when the ship was heading from Halifax to Guayaquil in Ecuador, a severe storm broke out. The captain reported that the ship handled it better than the A-class vessels. Still, the speed of the ship through the storm was no higher the 5-7 knots. It reached Guayaquil 21 February, slightly less than a month after leaving Gothenburg, and loaded about 200 000 cartons of bananas.
This fleet expansion was coupled with market development. Positioned with modern reefers for United Fruit’s traffic, Salén also had the production means to serve a wider customer base. Not all of Salén’s fleet was constantly tied up by United Fruit’s cargo flows, which led to diversification and business development in the 1950s and 1960s. In the 1950s, Salén began transporting bananas from West Africa to the Soviet Union, and it was also during this decade when the transport of apples and pears from South America, and also from China, became significant. The 1960s meant a focus and penetration of the reefer traffic to the Far East, with fish, meat, and fruit. The first cargo to Japan was a shipment of squid and red snapper from the Canary Islands in 1961 with the ship Hispaniola. Salén became a key partner to Japanese fishing companies who fished in the Atlantic. Since Salén’s ships could carry the produce back to Japan, the utilization of the trawlers could be maximized. At this point in time, Japanese fishing companies still had limited transport capacity. This also led to the Japanese getting a taste of Salén’s sleek, white, seemingly profitable reefers. Morover, Japan had sourced their bananas from Taiwan, but in the early 1960s it gradually opened up for banana imports from Ecuador, and in 1963 the import obstacles were removed. Salén was well-positioned and became a main transport provider for bananas to Japan from Ecuador. A particularly exotic cargo from Salén’s perspective was the shipments of whale meat from the Japanese whaling vessels near the Antarctic to Japan, and there are even reports about a cargo of exotic animals – a kind of Noah’s ark.
Transatlantic, a large Swedish shipping company, and Salén had for a long time collaborated in the reefer trades and in the early 1960s they decided to build ships together to use them on the common trades. Some ships were from the A-series. In 1968, there were six ships in the jointly owned company Transal, and it was reported in Salénnytt that about 25-30% of all the fruit from Australia to Europe was transported with the company’s tonnage11. A new company was set up in Australia to handle relationships to Australian growers and explore new market opportunities.
In the mid-1960s a new collaboration was started with Sunkist, an exporter of citrus. In 1964, 200 000 boxes of citrus were transported for Sunkist, a volume which grew from year to year. A main trade was to European continental ports via St John in New Brunswick, Canada. The business opportunity for Salén arose since the liner conferences could not guarantee delivery to the consumer markets on Mondays, which led to opportunities for reefers, which could offer a flexible service that suited the market and was more customer-friendly than the incumbent liner companies.
Towards the end of the 1960s, the core of the reefer division was transport of bananas from Central America to the European continent. Other main trades were fish transports from the Atlantic to Japan, meat, fish and fruit from China to Mediterranean and Baltic ports, and meat and fruit from Australia to Europe.
During the 1950s and 1960s, the reefer division expanded rapidly, but Salén also grew in other business areas. In the 1950s, the company invested in oil tankers, which was a new and very profitable business area throughout the 1950s and 1960s. In the 1960s, investments were made in the dry cargo segment. This forceful expansion is partly attributable to the entry of a new CEO, Sture Ödner, when Sven Salén passed away. Sven Salén’s sons Sven and Christer Salén took over as overseeing owners, but Sture Ödner was a strong CEO with ambitious plans to expand. The company also didn’t want to be entirely dependent on the reefer segment.
4 Salén Reefer Services on the Top of the World
The reefer division had expanded to the point that it was operating around 70 ships in 196812. Salén owned part of the fleet themselves, but many ships were held by other owners and operated by Salén.
An employment ad tells us about the competences needed at the expanding reefer division in 1968. We see that the division was highly international and that trips abroad were common practice. Language requirements were therefore of utmost importance. Salén was further looking for people with good schooling, preferably an academic background. It was furthermore stated that the business of the division was highly dependent on thorough and precise calculations. As a final note, it was written that the industry was undergoing a shift from conventional handling of cargo to a modern way of handling, and therefore a person with cargo handling know-how was sought13.
Due to the variety of transport requirements, seasonality, and the constant will to increase utilization of the ships, scheduling was a core function in the reefer division. Described as a “superhuman” task, computerized support was sought for the scheduling14. In the early 1970s, a computer was installed and it generated suggestions about what ships to employ where. According to the scheduling staff, about 80% of the computer’s suggestions were useful. These archival traces show how Salén discursively positioned itself as an advanced operator with skilled personnel with advanced technological support systems.
But materially, there were also developments. The end of the 1960s and early 1970s were marked by developments in two customer relationships. On 1 July 1969, Salén took over the chartering activities of United Fruit and the new company was called Salén Reefer Services. Its CEO was Claes-Henrik Zethelius. This led to a strengthening of the competence and know-how in Stockholm. From the start SRS employed 125 reefers, which was a much larger operation than the reefer division was used to. The company reorganized into two parts: contracts and tramp. The contract division was related to United Fruit. But the tramping division was also gradually moving towards more long-term contracts.
The relationship with Sunkist also intensified. A new contract was signed in 1969 between Sunkist and Salén for transports from Long Beach to Japan and Hong Kong. Salén, despite its higher price, managed to outcompete the liner conferences with which Sunkist had shipped most of its produce before. From the sources, the discursive positioning as a competitive, modern, new entrant in contrast to the traditional liner conferences is clear. From January 1970, the contract comprised 40 shiploads per year. The first shipload was taken with the Bolero. Sunkist preferred way of cargo handling, namely pallets, and their wish to also export their produce on pallets placed demands on Salén. Salén’s ships could be loaded with pallets, but the ships were adapted to breakbulk cargo and the entire cargo holds could not be well-utilized if loaded with pallets. Salén and Sunkist therefore started a joint project to develop the maritime transport of palletised fruit, which would result in new classes of ships. In mid-1971, a new service was inaugurated from Long Beach to Europe with palletised citrus, something which caused great interest within the industry. By the end of 1971, a new contract ensured year-round transport of citrus, although the quantities were smaller during November-February. In 1977, 100 million boxes from Sunkist had been delivered by Salén’s ships.
At the intersection of these two relationships, a new series of ships was built. Together with United Fruit, Salén ordered eight Snow ships at the French shipyard where the B-class had been built. But, United Fruit’s plantations were ravaged by hurricane Fifi, and United Fruit pulled out of the deal. Salén had to take all the eight ships, but fortunately the Franc was devaluated, which led to Salén getting the additional four ships for much less than expected. The Snow vessels were indeed state-of-the-art as their longevity proved15. Marine enthusiasts warmly reminisce about the beauty of these vessels. They were also very large at a little over 610 000 cbf. They were fast, boasting a speed of 23 knots, and were frequently called kyljagare, refrigerated destroyers. These vessels had five hatches and 22 decks of which 18 were isolated from each other resulting in the ability to manage a wide range of cargo with differing requirements in refrigeration. The advent of palletisation was coupled with the introduction of forklifts on reefers and their weight had the effect of breaking the gratings that were carefully designed to regulate the airflow. With this in mind the gratings were strengthened. Compared to previous vessels, the Snow’s had more advanced automation in regards to refrigeration; computerisation also was seriously considered, but ultimately not implemented. The Snow vessels may have been state-of-the-art for their time but they also represented a first attempt at catering for the palletised trades, in other words the Sunkist trades. In a sense, the Snow ships are a solution to the requirements of palletisation, but without compromising the possibility to take more conventional cargo.
Snow Flake’s maiden voyage was to Cape Town where she was loaded with the biggest cargo of apples, pears, and grapes that had ever been loaded on a Salén vessel in South Africa. Two weeks later part of the cargo was discharged in Hamburg, and some days later in Southhampton16. Snow Flower and Snow Land sailed for Long Beach to load palletised citrus. These state-of-the-art ships were delivered to a market that was experiencing a downturn.
5 A Market Downturn and Some New Players on the Reefer Scene
The market had turned down in the end of the 1960s due to problems that Salén had never experienced before. In Salénnytt, the employee magazine, in the end of 1968, Sture Ödner wrote that “it appears that some ship-owners, lacking other investment opportunities, have decided to build reefer ships, without knowing well the conditions for employment of these vessels. This has led to that there will be a great oversupply of reefer tonnage, which is offered to low rates. Today you can charter reefers of foreign flags to not too many percent over the daily operation costs of reefers under Swedish flag.”17 This is of course discursively constructing the other ship-owners as unknowledgeable outsiders breaking the informal norms of the industry.
Maritime Fruit Carriers (MFC) was the company that Ödner particularly had in mind. Starting out as a fishing company, the top management made the most of Israeli state subsidies and Norwegian shipyard subsidies to build up a substantial fleet of reefers. But the relationship, or antagonism, between the two companies started already in 1963, when Salén was approached by MFC, who announced that they were about to build a large number of reefers and charter them out in the market. The reefer division of Salén was shocked by this development – why would anyone build dozens of ships without paying attention to the market demand? Apart from discursively constructing MFC as lacking knowledge, this is a discursive sign that the reefer market had been quite controlled, especially from Salén’s perspective. Not only MFC, but also Japanese shipping companies and fisheries had started to expand their reefer fleets, which reduced market rates. Sture Ödner’s assessment was that the rates were not good enough for newbuildings, such as the Snow vessels, but that older ships were profitable. He further stated that the advances in cargo handling might give Salén a competitive advantage18. The new Snow ships could, however, utilize the good market for non-refrigerated dry cargo. To add to the low market rates, in early 1970, bunker prices had increased which also negatively affected Salén Reefer Services19.
MFC had by the early 1970s become a severe disturbance to Salén’s dominant position in the reefer market, having a fleet of 42 ships. They once again offered their tonnage for Salén to charter and this time Salén felt that it was necessary to accept. Mats Ruhne, a major figure within the industry, explains, “We included the ships into our fleet to control the tonnage”. The ships were chartered in for 15 years to keep them away from competitors and to maintain Salén’s dominant market position. At this time SRS was broken up and United Brands, as United Fruit was now named, went back to operating its ships. It was agreed, however, that SRS would continue to transport a large share of United’s bananas20.Another reason for the United Brands and Salén’s break-up of SRS was that the ships in SRS were of such a varying quality that many expected advantages could not be achieved21.
Japanese shipping companies and fisheries also entered the market at this time and they were, from Salén’s perspective, impossible to collaborate with, or perhaps, control. They were subjectively perceived as having unlimited funding for newbuildings and employing an overly aggressive pricing strategy. Their lack of English made informal communication difficult. Stereotypes amplified the idea that they were irresponsible newcomers to be kept at a distance, a process of othering that delayed cooperation with Japanese actors for many years.
In 1973, the year of the first oil crisis, MFC was in particularly bad shape. It was highly financially leveraged and had also tried to profit from a high exposure to the crude oil tanker segment. In 1975, with no signs of market improvements, there were severe problems with MFC and a bankruptcy was impending. MFC ships were arrested by banks, their seafarers went on strike and Salén’s MFC ships ended up on the blacklist of many customers. Salén therefore cancelled its timecharter contracts with MFC on 28 June 1975, which triggered MFC’s bankruptcy. People from Salén, headed by Mats Ruhne, went to London to solve the MFC imbroglio. This work was highly successful from Salén’s perspective, and more than 30 ships out of 42 could be kept within the Salén operation. Also, the legal side of the deal was successful. MFC sued Salén of 1.5 billion SEK due to the contract breach but was in the end entitled to only 35 million SEK when the case was resolved in 1978. Mats Ruhne became CEO of Salén Reefer Services following the successful handling of the MFC crisis and Claes Henrik Zethelius entered Salén’s corporate top management.
In the late 1960s and early 1970s, Salén had also expanded rapidly in the oil tanker segment. Salén together with the Swedish state, became the owner of the Götaverken shipyard in 1971 and became a controlling owner of Kockums Shipyard in the following year. After the oil crisis, both the shipyards and the oil tanker segment started to bleed. To avoid collapse, Salén had to get out of the shipyard segment.
6 Palletisation and Maximal Flexibility
As a way to convince the Swedish state to buy the remaining part of Götaverken from Salén, Salén offered to build six reefers at the shipyard. The ships were highly flexible and could load boxes, pallets, cars, and containers on and under deck. The experience of the Snow vessels taught Saléns the need to optimise deck heights and to rationalise the configuration of the Winter vessels. They had a capacity of 608 000 cbf, almost as large as the Snow ships; there was no market demand for even larger vessels. The ships had strong cranes (with a capacity of 16 tons). They were so called open hatch ships with very large hatches in order to eliminate the need for horizontal movements within the cargo holds. Similar ships with open hatches had been introduced for the transport of paper reels in North America and from Sweden in the mid- to late 1960s. Multi-pallet loaders, lifting up to 12 pallets a time, were developed for the Winter type ships, intended to increase cargo handling speed with 100%.
During the 1970s, there were many discussions within Salén about the technological development of the reefer industry. Salén Reefer Services’ preferred method was palletisation, which rationalized cargo handling over breakbulk handling. But although some customers were interested in palletisation, for example Sunkist, others were not. In some countries, stevedores were inexpensive and boxes were an easy to handle size, compared to pallets which required infrastructure, such as pallet trolleys, and competence. Salén Reefer Services tried to convince its customers to see the benefits of the pallet. In some cases, it worked. For example, in 1979, the first pallet of citrus was loaded from Buenos Aires. However, in an interview with Mats Ruhne in 1975 in Salénnytt, he stated that “Regarding bananas there has been no development the last 15 years, which is due to the advanced cargo handling with elevators and conveyor belts.” Banana companies were not, at this time, interested in palletisation, since they had already found their preferred way of handling cargo – boxes, conveyor belts, and elevators. The mixed cargo handling techniques on the exporter side and uncertainty about the future way of handling cargo led Salén Reefer Services to always construct flexible ships.
Discussions were held about another form of unitisation: containerisation. Salén saw the container as a too large unit for reefer cargo, on the customer side. In other words, no customers would like a full container of some fruit, but the right unit size was rather the smaller pallet. Also, the container was much more expensive than a wooden pallet, and to move a refrigerated container inland required excess containers, since a reefer ship seldom stayed in port a long time. However, Salén closely followed the developments of refrigerated containers in order to not keep all of their eggs in the same basket. They knew that United Brands had experimented with carrying bananas in refrigerated containers since 1972, when they introduced a twice-weekly service between Cortez, Honduras and Gulfport, Mississippi, employing two small self-sustaining cellular reefer vessels. Salén was therefore eager to gain knowledge in the field. They initiated a collaboration with Sea Containers, the pioneer in containerization, and Standard Fruit. In 1981, they inaugurating a two-ship service operating between Honduras, Guatemala, and Texas. Each ship had a capacity of 325 Twenty-foot Equivalent Units (TEU)22. However, containerization was only seen as interesting in short sea shipping, and Salén Reefer Services emphasised that although they were not strangers to containerization, their strategy to work with palletisation of fruit trades remained unaltered. Thus, Saléninvest discursively positioned itself as a company that was going to focus on palletised cargo – not containers, although containers could be carried on the weather deck.
During the 1970s, Salén Reefer Services also invested in port infrastructure. In 1975, Salén entered as an investor in an existing cold store in Hong Kong. In 1979, a new cold store was built in Sharjah in the UAE, by the quay in Port Khalid. And in 1980, a new fully palletised cold store was built in Eemshaven. There were also other ventures. For example, in 1981, SRS bought 50% of the French fruit importer Dunand & Cie, which could increase the utilization of Salén’s fleet.
In an interview, Mats Ruhne explained that in 1982, structural changes in the reefer market were perceived and McKinsey were hired to do a study about the global reefer market. According to McKinsey, SRS was considered to be quite good within its particular niche. A success factor was seen as the ability to offer various transport solutions to their clients and to continue to develop the successful palletisation concept23. The Winter ships were the core of this flexibility. Based on this analysis, more ships were ordered, the eight ships in the Spring class. Each had a capacity of 430 000 cbf, which was smaller than the earlier ship types. They had open hatches, a high flexibility, and a higher container capacity – 93 Forty-foot Equivalent Units (FEU) or 215 TEU. The ships were built in three different shipyards, Koyo Dockyards, KESC and Hyundai. The ordering of the Spring vessels showed that palletisation was still the preferred concept. To get an understanding of Salén Reefer Services’ discursive construction of their preference for pallets, we will quote a section in SRS brochure Keep Cool:
The problem of unitizing cargo can be solved in different ways. By simple, task-oriented systems that can be implemented without excessive cost. Or by expensive systems that are both sophisticated and complex.... A container system cannot meet the requirements for flexibility in the refrigated-goods market. Container shipments call for return cargoes, efficient ports and large investments. And these are not feasible in many of the localities from which refigerated goods are shipped. The cost of energy is another problem. The most competitive port-hole container requires 50% more energy per unit of goods than the corresponding space aboard a reefer ship. Integrated plug-in type containers require four times as much energy. But one of the biggest problems when it comes to containers is simply this: As a cargo unit, the container is too big for most consignees.... The palletised load is a better alternative than the container. The pallet system is simple and practical. If it’s used consistently it meets today’s demands for efficiency. In addition, it requires less investment and can thus generate much higher yields than an expensive container system. Most important of all, palletised cargoes meet the specific demands of shippers of refrigerated commodities for fast adaptation to seasonal changes and fluctuations in volume.... Which is why we are convinced that for most trades the future lies with palletised cargoes. Not with containers.”24
When the ships were delivered, SRS controlled a fleet of 80 ships. In the same year, a new organization was created with four business areas. The only new business area was the TransPacific division which carried citrus from US west coast to Asia and containers from Asia to the US West Coast. The ordering of the Spring vessels is remarkable, since Salén was at this time undergoing a significant reconstruction. That Mats Ruhne gained the approval to purchase the vessels symbolizes the power of division managers, the perceived centrality of the reefer division, and perhaps the lack of oversight within the company.
In 1984, United Brands left Salén after a 50-year long relationship. In the end of the 1970s, Salén handled 40% of UBs traffic, although only 3% went to Scandinavia. In the early 1980s, United Brands direct chartered ships and forced Salén to take over these ships to high charter rates in exchange for keeping the transport contract from the Americas to Europe. However, United Brands received another bid from Lauritzen, and broke the contract with Salén.
In the early 1980s, the group was diversified and divisionalised, and every year the divisions received a clean slate, and therefore did not have to take responsibility for incurred losses. During the last decades the company had diversified and expanded significantly, and the investments in the shipyards had been costly, as well as the tanker division that had been bleeding since the first oil crisis. During the final years, the central management tried to sort out the situation but it was too late. The poor performance throughout the group forced the company into bankruptcy on December 19, 1984.
From a fruitful encounter between a banana importer and a ship-owner, Banan Kompaniet and later Salénrederierna first established market dominance in the Nordic countries and then gradually developed its Transatlantic business with United Fruits. In the 1960s, Salén’s reefer division became the world leader in maritime reefer transport. They collaborated with shippers, learned from them and developed ships and cargo handling techniques. During the years, Salén built up significant technological expertise, which was fuelled by newbuildings. To remain a market leader, new classes of increasingly modern ships were developed. The market was looking better and better until the end of the 1960s, but new entrants and significantly higher bunker costs made the 1970s difficult. In the 1960s Salén described itself through discourse as a modern, high-tech, global market leader with state-of-the-art ships. It prided itself subjectively of being the biggest, of the strong relationship to the major fruit company United Fruit, and of its innovative cargo handling techniques – focused on optimizing pallet handling. It also discursively described the competitors as newcomers who were unknowledgeable and invested irresponsibly. The organization had the high degree of self-confidence that comes from being the market leader. Through the adverse market in the 1970s and early 1980s, Saléns continued full steam ahead to renew its fleet and develop. The results were neither sustained nor highly positive since the end of the 1960s, but neither were there any major losses within the reefer division. The reefer division was never questioned within Saléns but was seen as a core area where investments should be made. However, given the liberal investment policies at Saléninvest, due to the divisionalized structure, Salén’s reefer division invested significantly in the end of the 1970s and early 1980s. This is quite a different to the situation within the organization that will be described in the following section – Cool Carriers. It was a viable reefer operation that followed Saléninvest into the abyss, which is why it was possible to resurrect it so quickly. Looking ahead it might be interesting to compare this story with that of Lauritzen, which of course did not go into bankruptcy but where another event struck the reefer division in the mid-1980s – namely the McKinsey report.