FreightWaves Classics: US Steel had an “in-house” shipping company

0

In 1910, James A. Farrell was an executive at US Steel Corporation, which at the time was the second largest steel company in the United States. Farrell determined that it would be more profitable for U.S. Steel to own its own fleet of freighters to transport steel products rather than charter cargo space from shipping companies.

Therefore, US Steel founded the Isthmian Steamship Company for the stated reason to reduce US Steel’s freight shipping costs. The company was named “Isthmian” for the Isthmus of Panama, in honor of the United States’ recent construction achievement, the Panama Canal.

Farrell established the headquarters of the new company in London for two reasons. He wanted to take advantage of Britain’s respected name in the maritime industry, and also benefit from its long history of maritime experience. British Federal Steam Navigation Co Ltd has been contracted to manage Isthmian Steamship. The company has traced its own roots back to 1782 and the British East India Company. Isthmian Steamship’s US transactions were handled by the Norton Lilly agency.

The January 1937 issue of US Steel News features an illustration of an Isthmian Steamship Company ship.  (Image: industrialhistoryhk.org)
The January 1937 issue of US Steel News features an illustration of an Isthmian Steamship Company ship.
(Image: industrialhistoryhk.org)

Ships of the Isthmian Steamship Company

The company’s first ship was the SS Bantu, a British vessel launched in 1902 and purchased by US Steel. By 1914 the company had purchased six additional ships – Kentra, Buenaventura, Santa Rosalia, Charleton Hall, Craston Hall and the freighter Crofton Hall. All were strong British steamers.

However, after World War I began in August 1914, Farrell had the ships under the American flag, because until the United States entered the war in 1917, it was a neutral nation.

On January 30, 1930, Isthmian Steamship Company was organized as a separate company, rather than a subsidiary of US Steel. However, US Steel still owned the company. While nearly 30 ships were then registered as Isthmic ships, US Steel retained SS Steel Chemist, SS Steel Electrician, SS Steelmotor, and SS Steelvendor.

Of the ships acquired by Isthmian Steamship Company, three were sunk during service in World War II.

Sell ​​the business

From its inception as a separate company in 1930 until 1956, Isthmian Lines (company name has been updated) continued to expand its business and generated enviable revenues and profits. However, on March 6, 1956, US Steel sold Isthmian Steamship Company to States Marine Lines. At that time, U.S. Steel said it sold Isthmian Steamship Company because the company’s overall utility had declined and the line carried only a small percentage of U.S. Steel’s exports. According to Ralph Blough, who at the time was Chairman of the Board of US Steel, “US Steel’s need for these vessels was over”.

This advertisement provides extensive information about the Isthmian Steamship company.  (Photo: picclick.com)
This advertisement provides extensive information about the Isthmian Steamship company. (Photo: picclick.com)

States Shipping Company

States Marine Corporation acquired Isthmian Lines, Inc. and its 24 vessels from US Steel for $30 million. Observers believed US Steel management had made a wise business decision. Many ships in the Isthmian Lines fleet were obsolete, and if US Steel hadn’t sold them, it probably would have had to replace them in the near future.

The acquisition was major news in the world of shipping “because it was the biggest shipping purchase in memory.” The acquisition of Isthmian’s ships made States Marine the largest unsubsidized American flag carrier.

One of the ships of the United States Navy - Isthmian Lines.  (Photo: WE Frost/States Marine - Isthmian Lines Facebook page)
One of the ships of the United States Navy – Isthmian Lines. (Photo: WE Frost/States Marine – Isthmian Lines Facebook page)

Henry Mercer, who was president of States Marine in 1956, thought there was a growing demand for American-flagged ships. He sought to acquire a fast fleet to replace the States Marine’s use of “time charter” vessels. According to Marine Insight’s definition, in a time charter, a shipowner leases a vessel from a charterer for a set period of time, and the charterer is free to sail the vessel to any port and carry any cargo, subject to legal regulations.

Mercer also noted that States Marine had acquired Isthmian’s global network of agents and resource contacts, as well as Isthmian’s reputation for service, which was unrivaled in the international shipping industry.

States Marine Lines continued to operate until the early 1970s. Like many shipping lines of the time, States Marine failed to make the transition from bulk freight to bulk container freight. Its last list of corporate officers dates from 1974.

James A. Farrell

James A. Farrell in 1920. (Photo: Los Angeles Times)
James A. Farrell in 1920. (Photo: Los Angeles Times)

A major businessman of his day, Farrell served as president of U.S. Steel Corporation from 1911 to 1932. Under Farrell, U.S. Steel grew “by a factor of five during his presidency”. It became the first billionaire company in US history. Farrell was also a champion and pioneer of export markets; he greatly increased steel exports from the United States (largely through the establishment of the Isthmian Steamship Company).

The success of Isthmian Steamship Company led Farrell to invest in several other shipping ventures. Eventually, he and his sons ran three influential companies in the industry – Argonaut Lines, Robin Lines and American South African Lines (ASAL).

These companies may be featured in a future FreightWaves Classics article.

Share.

About Author

Comments are closed.