<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

                                       OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM         TO

                         Commission file number 0-10474

                      IEA MARINE CONTAINER INCOME FUND III
                       (A CALIFORNIA LIMITED PARTNERSHIP)
             (Exact name of registrant as specified in its charter)


          California                                        94-2717330
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                           Identification No.)

         444 Market Street, 15th Floor, San Francisco, California 94111
  (Address of principal executive offices)                     (Zip Code)

                                 (415) 677-8990
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X  No
                                      ---   ---
<PAGE>   2
                      IEA MARINE CONTAINER INCOME FUND III
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                      REPORT ON FORM 10-Q FOR THE QUARTERLY
                         PERIOD ENDED SEPTEMBER 30, 1996

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   PAGE
<S>                                                                                                                <C>
PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

          Balance Sheets - September 30, 1996 (unaudited) and December 31, 1995                                     4

          Statements of Operations for the three and nine months ended September 30, 1996 and 1995 (unaudited)      5

          Statements of Cash Flows for the nine months ended September 30, 1996 and 1995 (unaudited)                6

          Notes to Financial Statements (unaudited)                                                                 7

Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations                    10


PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K                                                                           12
</TABLE>




                                        2
<PAGE>   3
                         PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements

          Presented herein are the Registrant's balance sheets as of September
          30, 1996 and December 31, 1995, statements of operations for the three
          and nine months ended September 30, 1996 and 1995, and statements of
          cash flows for the nine months ended September 30, 1996 and 1995.




                                        3
<PAGE>   4
                      IEA MARINE CONTAINER INCOME FUND III
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      September 30,    December 31,
                                                                          1996             1995
                                                                      -------------    ------------
<S>                                                                   <C>              <C>
                   Assets
Current assets:
     Cash, includes $136,054 at September 30, 1996 and $212,798
         at December 31, 1995 in interest-bearing accounts            $  136,405       $  212,918
     Short-term investments                                              626,096          625,000
     Net lease receivables due from Leasing Company
         (notes 1 and 2)                                                 325,951          408,952
                                                                      ----------       ----------

              Total current assets                                     1,088,452        1,246,870
                                                                      ----------       ----------

Container rental equipment, at cost                                    3,747,258        6,678,748
     Less accumulated depreciation                                     2,604,347        4,660,856
                                                                      ----------       ----------
         Net container rental equipment                                1,142,911        2,017,892
                                                                      ----------       ----------

                                                                      $2,231,363       $3,264,762
                                                                      ==========       ==========

     Partners' Capital

Partners' capital:
     General partners                                                 $    2,664       $    4,657
     Limited partners                                                  2,228,699        3,260,105
                                                                      ----------       ----------

              Total partners' capital                                  2,231,363        3,264,762
                                                                      ----------       ----------

                                                                      $2,231,363       $3,264,762
                                                                      ==========       ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        4
<PAGE>   5
                      IEA MARINE CONTAINER INCOME FUND III
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              Three Months Ended             Nine Months Ended
                                                        ----------------------------    -----------------------------
                                                        September 30,  September 30,    September 30,   September 30,
                                                            1996            1995            1996            1995
                                                        -------------  -------------    ------------    -----------
<S>                                                      <C>            <C>            <C>              <C>
Net lease revenue (notes 1 and 3)                        $157,011       $220,910       $  522,541       $  838,974
Other operating expenses:
   Other general and administrative expenses                9,475          7,110           27,911           33,666
                                                         --------       --------       ----------       ----------
     Earnings from operations                             147,536        213,800          494,630          805,308
Other income:
   Interest income                                         12,706         12,424           34,310           43,545
   Net gain on disposal of equipment                       73,368        122,814          276,268          341,024
                                                         --------       --------       ----------       ----------
                                                           86,074        135,238          310,578          384,569
                                                         --------       --------       ----------       ----------
     Net earnings                                        $233,610       $349,038       $  805,208       $1,189,877
                                                         ========       ========       ==========       ==========
Allocation of net earnings:
   General partners                                      $  8,674       $ 15,071       $   17,853       $   30,142
   Limited partners                                       224,936        333,967          787,355        1,159,735
                                                         --------       --------       ----------       ----------
                                                         $233,610       $349,038       $  805,208       $1,189,877
                                                         ========       ========       ==========       ==========
Limited partners' per unit share of net earnings         $   7.50       $  11.30       $    26.25       $    39.04
                                                         ========       ========       ==========       ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        5
<PAGE>   6
                      IEA MARINE CONTAINER INCOME FUND III
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                         Nine Months Ended
                                                 ----------------------------------
                                                  September 30,       September 30,
                                                      1996                1995
                                                 ---------------     --------------
<S>                                                <C>                <C>
Net cash provided by operating activities          $   640,752        $   947,375

Cash flows provided by investing activities:
   Proceeds from disposal of equipment               1,122,439            973,527

Cash flows used in financing activities:
   Distribution to partners                         (1,838,608)        (2,120,200)
                                                   -----------        -----------

Net decrease in cash and cash equivalents              (75,417)          (199,298)

Cash and cash equivalents at January 1                 837,918          1,116,858
                                                   -----------        -----------

Cash and cash equivalents at September 30          $   762,501        $   917,560
                                                   ===========        ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                        6
<PAGE>   7
                      IEA MARINE CONTAINER INCOME FUND III
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


(1)   Summary of Significant Accounting Policies

      (a)     Nature of Operations

              IEA Marine Container Income Fund III (A California Limited
              Partnership) (the "Partnership") was organized under the laws of
              the State of California on January 3, 1980 for the purpose of
              owning and leasing marine cargo containers. The managing general
              partner is Cronos Capital Corp. ("CCC"); the associate general
              partner is Smith Barney Shearson, Inc. CCC, with its affiliate
              Cronos Containers Limited (the "Leasing Company"), manages and
              controls the business of the Partnership.

      (b)     Leasing Company and Leasing Agent Agreement

              Pursuant to the Limited Partnership Agreement of the Partnership,
              all authority to administer the business of the Partnership is
              vested in CCC. CCC has entered into a Leasing Agent Agreement
              whereby the Leasing Company has the responsibility to manage the
              leasing operations of all equipment owned by the Partnership.
              Pursuant to the Agreement, the Leasing Company is responsible for
              leasing, managing and re-leasing the Partnership's containers to
              ocean carriers and has full discretion over which ocean carriers
              and suppliers of goods and services it may deal with. The Leasing
              Agent Agreement permits the Leasing Company to use the containers
              owned by the Partnership, together with other containers owned or
              managed by the Leasing Company and its affiliates, as part of a
              single fleet operated without regard to ownership. Since the
              Leasing Agent Agreement meets the definition of an operating lease
              in Statement of Financial Accounting Standards (SFAS) No. 13, it
              is accounted for as a lease under which the Partnership is lessor
              and the Leasing Company is lessee.

              The Leasing Agent Agreement generally provides that the Leasing
              Company will make payments to the Partnership based upon rentals
              collected from ocean carriers after deducting direct operating
              expenses and management fees to CCC. The Leasing Company leases
              containers to ocean carriers, generally under operating leases
              which are either master leases or term leases (mostly two to five
              years). Master leases do not specify the exact number of
              containers to be leased or the term that each container will
              remain on hire but allow the ocean carrier to pick up and drop off
              containers at various locations; rentals are based upon the number
              of containers used and the applicable per-diem rate. Accordingly,
              rentals under master leases are all variable and contingent upon
              the number of containers used. Most containers are leased to ocean
              carriers under master leases; leasing agreements with fixed
              payment terms are not material to the financial statements. Since
              there are no material minimum lease rentals, no disclosure of
              minimum lease rentals is provided in these financial statements.

      (c)     Basis of Accounting

              The Partnership utilizes the accrual method of accounting. Revenue
              is recognized when earned.

              The Partnership has determined that for accounting purposes the
              Leasing Agent Agreement is a lease, and the receivables, payables,
              gross revenues and operating expenses attributable to the
              containers managed by the Leasing Company are, for accounting
              purposes, those of the Leasing Company and not of the Partnership.
              Consequently, the Partnership's balance sheets and statements of
              operations display the payments to be received by the Partnership
              from the Leasing Company as the Partnership's receivables and
              revenues.



                                                                     (Continued)

                                        7
<PAGE>   8
                      IEA MARINE CONTAINER INCOME FUND III
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


      (d)     Financial Statement Presentation

              These financial statements have been prepared without audit.
              Certain information and footnote disclosures normally included in
              financial statements prepared in accordance with generally
              accepted accounting procedures have been omitted. It is suggested
              that these financial statements be read in conjunction with the
              financial statements and accompanying notes in the Partnership's
              latest annual report on Form 10-K.

              The preparation of financial statements in conformity with
              generally accepted accounting principles (GAAP) requires the
              Partnership to make estimates and assumptions that affect the
              reported amounts of assets and liabilities and disclosure of
              contingent assets and liabilities at the date of the financial
              statements and the reported amounts of revenues and expenses
              during the reported period.

              The interim financial statements presented herewith reflect all
              adjustments of a normal recurring nature which are, in the opinion
              of management, necessary to a fair statement of the financial
              condition and results of operations for the interim periods
              presented.


(2)   Net Lease Receivables Due from Leasing Company

      Net lease receivables due from the Leasing Company are determined by
      deducting direct operating payables and accrued expenses, base management
      fees and incentive fees payable to CCC, the Leasing Company, and its
      affiliates, from the rental billings payable by the Leasing Company to the
      Partnership under operating leases to ocean carriers for the containers
      owned by the Partnership. Net lease receivables at September 30, 1996 and
      December 31, 1995 were as follows:
<TABLE>
<CAPTION>
                                                           September 30,   December 31,
                                                               1996           1995
                                                           -------------   ------------
<S>                                                         <C>            <C>
Lease receivables, net of doubtful accounts
     of $213,164 at September 30, 1996 and $198,828 at
     December 31, 1995                                       $470,051       $634,228
Less:
Direct operating payables and accrued expenses                 70,852        141,780
Damage protection reserve                                      73,248         69,808
Incentive fees                                                   --           13,688
                                                             --------       --------
                                                             $325,951       $408,952
                                                             ========       ========
</TABLE>


                                                                     (Continued)

                                        8
<PAGE>   9
                      IEA MARINE CONTAINER INCOME FUND III
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


(3)      Net Lease Revenue

         Net lease revenue is determined by deducting direct operating expenses
         and management fees to CCC and the Leasing Company, from the rental
         revenue billed by the Leasing Company under operating leases to ocean
         carriers for the containers owned by the Partnership. Net lease revenue
         for the three and nine-month periods ended September 30, 1996 and 1995,
         was as follows:
<TABLE>
<CAPTION>
                                             Three Months Ended            Nine Months Ended
                                        ----------------------------  -----------------------------
                                        September 30,  September 30,  September 30,   September 30,
                                            1996           1995           1996            1995
                                        -------------  -------------  -------------   -------------
<S>                                       <C>            <C>            <C>            <C>
Rental revenue                            $235,248       $472,996       $873,641       $1,555,488

Rental equipment operating expenses         36,788        130,906        196,082          360,018
Base management fees                        41,449         79,555        155,018          260,871
Incentive fees                                --           41,625           --             95,625
                                          --------       --------       --------       ----------
                                          $157,011       $220,910       $522,541       $  838,974
                                          ========       ========       ========       ==========
</TABLE>


                                        9
<PAGE>   10
Item 2.       Management's Discussion and Analysis of Financial Condition and
              Results of Operations

1)    Material changes in financial condition between September 30, 1996 and
      December 31, 1995.

      As discussed in the Registrant's report for the year ended December 31,
      1995, the Registrant entered 1996 with a view towards accelerating the
      disposition of its container fleet. During the first nine months of 1996,
      the Registrant increased the quantity of container disposals in response
      to the slower growth in containerized trade and its impact on the
      container leasing industry. Accordingly, 1,186 containers were disposed
      during the first nine months of 1996, contributing to an increase in cash
      generated from sales proceeds. At September 30, 1996, 19% of the original
      equipment remained in the Registrant's fleet, as compared to 33% at
      December 31, 1995, comprised as follows:
<TABLE>
<CAPTION>
                                20-Foot    40-Foot
                                -------    -------
<S>                              <C>         <C>
Containers on lease:
     Term leases                   137        10
     Master lease                1,045       164
                                 -----       ---
         Subtotal                1,182       174

Containers off lease               146        25
                                 -----       ---

     Total container fleet       1,328       199
                                 =====       ===
<CAPTION>

                                                 20-Foot              40-Foot
                                            ----------------     -----------------
                                            Units        %        Units       %
                                            -----       ----        -----    ----
<S>                                         <C>         <C>        <C>       <C>
Total purchases                             7,257       100%       890       100%
     Less disposals                         5,929        82%       691        78%
                                            -----       ---        ---       ---

Remaining fleet at September 30, 1996       1,328        18%       199        22%
                                            =====       ===        ===       ===
</TABLE>


      Net lease receivables at September 30, 1996 declined when compared to
      December 31, 1995. Contributing to this decline were favorable collections
      of the Registrant's lease receivables, a diminishing fleet size, and its
      related operating performance.

      During the third quarter of 1996, distributions from operations and sales
      proceeds amounted to $729,884, reflecting distributions to the general and
      limited partners for the second quarter of 1996. This represents an
      increase from the $483,670 distributed during the second quarter of 1996
      due to an increase in distributions from sales proceeds. The Registrant's
      efforts to dispose of the remaining fleet should produce lower operating
      results and, consequently, lower distributions from operations to its
      partners in subsequent periods. However, sales proceeds distributed to its
      partners will continue to fluctuate in subsequent periods, dependent on
      the level of container disposals.



                                       10
<PAGE>   11
      The statements contained in the following discussion are based on current
      expectations. These statements are forward looking and actual results may
      differ materially. Indicative of the cyclical nature of the container
      leasing business, containerized trade growth slowed in the last quarter of
      1995, and excess inventories began to develop. This slowdown has resulted
      in reduced equipment utilization and lower per-diem rental rates in the
      container leasing industry during the first nine months of 1996. However,
      as a result of the Registrant's policy of disposing off-hire containers,
      utilization at September 30, 1996 averaged 87%, an increase from the
      average utilization rate of 86% at December 31, 1995. Additionally, during
      the first nine months of 1996, the Leasing Company implemented various
      marketing strategies, including but not limited to, offering incentives to
      shipping companies and repositioning containers to high demand locations
      in order to counter the market conditions. Ancillary revenues have fallen,
      and free-day incentives offered to the shipping lines have increased.
      These leasing market conditions, combined with the Registrant's disposal
      of containers, are expected to adversely impact the results from
      operations through the remainder of 1996 and into 1997.


2)    Material changes in the results of operations between the three and
      nine-month periods ended September 30, 1996 and the three and nine-month
      periods ended September 30, 1995.

      Net lease revenue for the three and nine-month periods ended September 30,
      1996 was $157,011 and $522,541, respectively, a decline of 29% and 38%
      from the same three and nine-month periods in the prior year,
      respectively. Approximately 31% and 34% of the Registrant's net earnings
      for the three and nine-month periods ended September 30, 1996,
      respectively, were from gain on disposal of equipment, as compared to 35%
      and 29% for the same three and nine-month periods in the prior year,
      respectively. As the Registrant continues the disposal of its containers
      in subsequent periods, net gain on disposal should contribute
      significantly to the Registrant's net earnings.

      Gross rental revenue (a component of net lease revenue) for the three and
      nine-month periods ended September 30, 1996 was $235,248, and $873,641,
      respectively, reflecting a decline of 50% and 44% from the same three and
      nine-month periods in 1995, respectively. During 1996, gross rental
      revenue was primarily impacted by the Registrant's diminishing fleet size.
      Average per-diem rental rates decreased approximately 3% and 2%, when
      compared to the same three and nine-month periods in the prior year,
      respectively, as they became subject to the downward pressures of an
      increasingly soft container leasing market. Utilization rates increased
      slightly when compared to the same three-month period in the prior year,
      and remained unchanged when compared to the same nine-month period in the
      prior year, as the Registrant's continued disposal of containers
      significantly reduced the number of off-hire containers unavailable for
      lease. The Registrant's average fleet size and utilization rates for the
      three and nine-month periods ended September 30, 1996 and September 30,
      1995 were as follows:
<TABLE>
<CAPTION>
                                                      Three Months Ended            Nine Months Ended
                                                 ----------------------------  ----------------------------
                                                 September 30,  September 30,  September 30,  September 30,
                                                     1996           1995           1996           1995
                                                 -------------  -------------  -------------  -------------
<S>                                                  <C>          <C>            <C>             <C>
   Average Fleet Size (measured in
       twenty-foot equivalent units (TEU))           1,838        3,519          2,303           3,953
   Average Utilization                                  90%          87%            87%             87%
</TABLE>

      Rental equipment operating expenses were 16% and 22% of the Registrant's
      gross lease revenue for the three and nine-month periods ended September
      30, 1996, respectively, as compared to 28% and 23% during the three and
      nine-month periods ended September 30, 1995, respectively. These declines
      were primarily attributable to a reduction in the provision for doubtful
      accounts, and the costs associated with the recovery actions against the
      doubtful accounts of certain lessees. Costs associated with utilization
      levels, including storage, handling and repositioning, also declined,
      contributing to the decline in rental equipment operating expenses, as a
      percentage of gross lease revenue. The Registrant's declining fleet size
      and related operating performance contributed to the decline in base
      management and incentive fees, when compared to the same periods in the
      prior year.



                                       11
<PAGE>   12
                           PART II - OTHER INFORMATION


Item 6.       Exhibits and Reports on Form 8-K

(a)   Exhibits
<TABLE>
<CAPTION>
Exhibit
   No.                Description                                            Method of Filing
---------            -------------                                           ----------------
<S>                                                                            <C>
   3(a)        Limited Partnership Agreement of the Registrant, amended and     *
               restated as of February 11, 1981

   3(b)        Certificate of Limited Partnership of the Registrant             **

   27          Financial Data Schedule                                          Filed with this document
</TABLE>



(b)   Reports on Form 8-K

      No reports on Form 8-K were filed by the Registrant during the quarter
ended September 30, 1996




-------------------

*        Incorporated by reference to Exhibit "A" to the Prospectus of the
         Registrant dated February 12, 1981, included as part of Registration
         Statement on Form S-1 (No. 2-70401)

**       Incorporated by reference to Exhibit 3.4 to the Registration Statement
         on Form S-1 (No. 2-70401)



                                       12
<PAGE>   13
                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                 IEA MARINE CONTAINER INCOME FUND III
                                 (A California Limited Partnership)

                                 By    Cronos Capital Corp.
                                       The Managing General Partner



                                 By    /s/ JOHN KALLAS
                                      ------------------------------------
                                       John Kallas
                                       Vice President, Treasurer
                                       Principal Financial & Accounting Officer




Date:  November 11, 1996




                                       13
<PAGE>   14
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
   No.                Description                                            Method of Filing
---------            -------------                                           ----------------
<S>                                                                            <C>
   3(a)        Limited Partnership Agreement of the Registrant, amended and     *
               restated as of February 11, 1981

   3(b)        Certificate of Limited Partnership of the Registrant             **

   27          Financial Data Schedule                                          Filed with this document
</TABLE>






-------------------

*        Incorporated by reference to Exhibit "A" to the Prospectus of the
         Registrant dated February 12, 1981, included as part of Registration
         Statement on Form S-1 (No. 2-70401)

**       Incorporated by reference to Exhibit 3.4 to the Registration Statement
         on Form S-1 (No. 2-70401)