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American President Companies Ltd. operates container shipping services by container ships on Pacific and Indian Ocean trade lanes, conducts transportation services between major Asian and North American cities and commercial centers, and serves the transportation needs of North America with an intermodal transportation network that includes rail, trucking, and freight brokerage and consolidation services. The company is considered one of the most efficiently operated shipping companies in the world.
The Pacific Mail Steamship Company, predecessor of the American President Companies Ltd., was founded in 1848, two years before the transcontinental railroad was completed; its founding at this time provides American President Companies its claim as the oldest continuously operated steamship company in the United States. Pacific Mail set out to carry mail from the Isthmus of Panama to the Oregon Territory. In 1867 it began the first regular shipping service between the United States and Asia, carrying passengers, cargo, and mail between the western United States, China, and Japan. The company's wooden ships, weighing 2,500 gross tons, used steam power to drive paddle-wheels set amidships; the paddle-wheels were augmented by twin square-rigged masts.
In 1921 Pacific Mail was acquired by Dollar Steamship Lines, a company founded in the early 1900s by lumberman Robert Dollar, who established a fleet of steam schooners to carry his lumber from mills in northern California and Oregon to cities and railheads in southern and central California.
Dollar Steamship Lines established around-the-world shipping services in 1925 and expanded those services up until 1938 when, staggering under the combined effects of the Great Depression, chronic labor unrest resulting from the Depression, and debts incurred through building its fleet, the company was on the brink of bankruptcy. In 1938 the Federal Maritime Commission, arranged a subsidy to keep the company solvent; later that year, the Commission released the company from its debt in return for 90 percent of the Dollar Steamship Lines' common stock. The services of the Dollar Steamship Lines were considered vital to the United States in light of the rise of fascism in Europe and the Sino-Japanese war in the Far East.
On November 1, 1938, Dollar Steamship Lines's new board of directors changed its name to American President Lines Ltd., which sometimes is referred to as APL; the name change was due in part to the company's practice, which continues today, of naming its ships after American presidents. American President Lines' fleet saw service activity during World War II, as several ships were sold to the U.S. Navy for troop transports and others operated as 'Liberty Ships' to transport materiel for the war effort.
After the war the company was involved in a costly and bitter seven-year court battle that resulted in its acquisition in 1952 by Ralph K. Davies, a former executive of Standard Oil of California who had begun buying shares in American President Lines in 1944. By 1952, Davies owned 11 percent of the outstanding shares of the company, becoming its largest minority shareholder. On October 29, 1952, a group of investors led by Davies--APL Associates--outbid two other investor groups, including one led by R. Stanley Dollar, a son of Robert Dollar, and paid $18,360,000 for the Federal Maritime Commission's controlling interest in the company. Davies became chairman of American Presidents Lines, a position he held until 1971, and he merged the APL Associates with Natomas Company, a gold-dredging firm that grew to become an oil and gas exploration company and, in 1965, the parent organization of American President Lines.
When Davies took control of the company, American President Lines was a leader in providing cargo and passenger services between the Pacific Northwest of the United States and the Far East and offered around-the-world services for cargo and passengers. The company had recently launched its efforts in intermodal shipping, when it acquired more than 1,000 small shipping containers in 1951. In intermodal shipping, large containers are packed with cargo at its source and moved--by truck, train, or ocean-going vessel--to the cargo's destination without being unpacked. American President Lines purchased its first partially containerized ships in 1961; 12 years later, fully containerized vessels were entering its fleet.
In a retrenchment in the mid-1970s, under the leadership of Chandler Ide, who became head of Natomas by succeeding Davies in 1971, American President Lines discontinued its around-the-world freight services and passenger services to concentrate on its Pacific and Indian Ocean lines, but it also began to parlay its capabilities in containerization into a North American intermodal network. In 1979 the company introduced the first container train, with service between the West Coast and New York, under the trade name 'LinerTrain.'
While building that land-based intermodal network, American President Lines built the ship President Lincoln, the first of three C9-class, diesel-powered container ships it would build through the 1980s. The President Lincoln entered American President Lines' fleet in 1982, the same year the company introduced its 45-foot high-cube shipping container to the industry.
American President Lines was spun off from Natomas as an independent, publicly held company on September 1, 1983, in part as a result of a hostile takeover attempt on the company by Diamond Shamrock. The spinning off of the company separated Natomas's real estate and oil and gas ventures, which led the company in different directions through the 1970s in their own burgeoning growth. The growth of that company and American President Lines made them incompatible for future relations, so the companies went their separate ways. Consequently, American President Lines became an independent company, coming full-circle to the type of company it had been in the mid-1950s. Financial specialist W. B. Seaton, who was then president of American President Lines, was named chairman and chief executive officer.
In 1984 and 1985 American President Companies introduced innovations such as lightweight rail cars that could accommodate two shipping containers stacked one on top of the other--a 'double-stack' system--for its LinerTrain; 48-foot-long containers for use in North America; and high-cube, wide-bodied refrigerated containers. Also in that period American President Companies acquired two new J9-class diesel-powered container ships and acquired three freight brokerage firms in the United States that were managed by its new subsidiary, American President Domestic, later called APL Land Transport Services.
The company continued its growth with the launching of a $500 million capital expansion program in 1986 that included the purchases of five new C10-class container ships and new rail equipment, and provided enhancements for its shipping terminals and computer systems. A year later, in 1987, the company moved to double the size of its Oakland, California, port facilities.
In a move that expanded the range of its intermodal service, American President Companies in 1988 launched a door-to-door truck load transportation service for domestic freight in the United States. The 'Red Eagle' service was started to complete with over-the-road truckload carriers. These moves through the 1980s were directed by Seaton, who had come to the company through the Natomas organization.
Seaton was highly critical of American President Lines and was considered an outsider in the shipping industry when he was named president of the company in August of 1977; however, he was given the Admiral of the Ocean Sea Award by the United Seamen's Service--considered to be one of the industry's most prestigious 'insider' awards--in 1989 for having established American President Companies as a leader in the industry. The United Seamen's Service, a benevolent professional association for seafarers, sailors, and dock men, cited Seaton's emphasis on the Pacific and Indian Ocean trade routes, intermodal services, and electronic and information services as areas in which he extended his company's leading position in the industry. Seaton retired as chairman and chief executive officer of the corporation on January 2, 1992.
American President Companies went through a restructuring in the second and third quarter of 1990 that resulted in the departure of Donald C. Orris, the president of American President Domestic Company; the move also forced the company to both consolidate and refocus several of its services. Orris was replaced by Timothy J. Rhein, formerly president and chief executive of American President Lines; the unit under Rhein's leadership was renamed APL Land Transport Services Inc. The restructuring reportedly cost the company $60 million in the fourth quarter of 1990, and Robert Dahl, then the company's chief financial officer, left his position. The cost of the restructuring caused American President Companies to report a $60 million loss for the year in 1990.
American President Companies launched double-stack intermodal train services between the United States and Mexico in the 1980s to connect the Ford autombile plant in Hermosillo, automotive component manufacturers in Mexico with Ford's automobile component suppliers in the United States. And in 1991, in a move to capitalize on the possible free trade agreement between the United States and Mexico, American President Companies established its double-stack train service from Mexico City to Chicago, Illinois, for general freight and auto supplies headed for Chrysler operations in Mexico. That move was seen as putting American President Companies in the position to take advantage of an expected increase in trade between the United States and Mexico.
Also in 1991 American President Companies spent $78 million to buy back 3.8 million shares of its stock from Itel Corp., a transportation equipment leasing company based in Chicago that held nearly 21 percent of American President Companies' stock. Itel Corp. was considered by some likely to take over American President Companies from 1988 until that stock sale.
By 1992, American President Companies was operating a fleet of 20 full container ships--each of which, clinging to corporate tradition, is named after an American president--and a network of foreign-flag feeder vessels that change in number due to requirements in the trade. The company's ships sail under the U.S. flag. The 20 ships have a nominal international transportation volume of over 20,000 40-foot equivalent units (FEU's) and range in maximum speeds from 21.1 to 24 knots.
The company operates more than 100,000 dry containers, consisting of 20-, 40-, 45-, 48-, and 53-foot containers; 5,800 refrigerated containers; and 50,300 trailer chassis. The company also operates a network of trains in conjunction with major railroads and operates more than 1,000 double-stack rail cars.
American President Companies keeps track of its fleet of containers, chassis, and trains through its APL Information Services, Ltd. subsidiary, which uses a system of main-frame and mini- and micro-computers linked through a telecommunications network with its ships and offices in North America, Asia, and the Middle East. Those computer systems book cargo and generate bills of lading; track and control rail cars and containers; pre-plan the loading of containers onto ships; and route ship, rail, and truck movements, while providing customers the ability to access information on the location and status of their cargo via touch-tone telephones, personal computers, and facsimile machines.
American President Companies' largest customer for its international transportation operations is the government of the United States, which was responsible for approximately eight percent of the company's 1991 consolidated revenues of $2,448,680,000. The company reported that its 1991 revenues from the U.S. government were increased substantially because of increased shipping for the Persian Gulf War. The company bids competitively on its contracts for the U.S. government.
John M. Lillie succeeded Seaton as chairman and chief executive officer of American President Companies in January of 1992. Lillie, a former chief executive of Lucky Stores Inc. was considered even more of an outsider than was Seaton when he took the company's helm. Lillie was forecasting growth for the company in 1992 but concedes that American President Companies is facing a number of uncertainties in its key markets and that U.S.-flag carriers continue to be uncompetitive with foreign carriers because of restrictions placed on them by the U.S. government. Lillie also noted in a statement to shareholders that, as a part of the U.S. government's continued retreat from subsidizing domestic industries, the United States' operating differential subsidy for shipping companies will end on December 31, 1997; this will likely make U.S.-flag carriers less profitable in competition. Those changes, coupled with increasing challenges in intermodal and international trade and with increasing competition from foreign-flag carriers, are expected to continue to place strong demands on the leadership of the oldest continuously operating steamship line in the United States.
Principal Subsidiaries: American President Lines, Ltd.; American President Domestic Co.; American Consolidation Services, Ltd.; Eagle Marine Services, Ltd.; APL Land Transport Services Inc.; American President Trucking; APL Information Services, Ltd.; American President Real Estate Company, Ltd.
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