The statement of policy of the Merchant Marine Act of 1936, “It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine . . .” is somewhat rhetorical in phraseology and actually ambivalent in meaning. It envisions a merchant marine that is able to meet both the demands of the military and the requirements of commerce. Experience has shown, however, that the two objectives are not necessarily compatible. The policy, as written, attempts to achieve the one at the expense of the other, regardless of which one is desired.
The military department, for example, contributes nothing toward the cost of subsidies for the merchant marine, yet would like to be able to use merchant shipping whenever it may be needed, for so long as such use may be indicated. Even the national defense features which are built into ships at the direct request of the Department of Defense are paid for by the Maritime Administration, an agency of the Department of Commerce.
The subsidized carriers, for their part, consider it essential to maintain uninterrupted service on their trade routes if they are to earn maximum profits. They are, therefore, reluctant to disrupt their commercial operations and jeopardize a tenuous position in international competition to support the military, even though they claim to be the “fourth arm of defense” and rely upon reasons of defense to justify the subsidies paid to them.
The principle of having a merchant marine supported to a measurable extent by federal funds, in partial exchange for which the ships would be available to support military requirements, first appeared in the 1916 Shipping Act and was repeated almost verbatim in the laws of 1920, 1928, and 1936. In all instances, the principle was predicated upon the then current concept of a war involving the entire nation in which the merchant marine would be requisitioned by the government. The concept of “limited war” had faded, and therefore the incompatibility between objectives which recently have come to the surface could not have been foreseen. Certainly the almost impossible situation of “business as usual,” while placing pressure on the steamship industry to support the military up to 100 per cent of its capability, was not imagined by the men who produced the policy.
Based on historic performance, a case can be made for continuing government support of American ships engaged in foreign trade. Economically, it has been shown that the return to the nation exceeds the cost of the support program, primarily in a favorable contribution to the U. S. balance of payments. Militarily, the ships have been useful in all our conflicts since 1941. They also have served the nation well in providing direct logistical support for the troops overseas in peacetime.
The forces of change are at work, however, and the merchant marine of the future increasingly will be oriented toward commerce and trade, and correspondingly will be less useful to the military for limited wars such as Korea and Vietnam. It would appear that henceforth the justification for the fleet will be in terms of economic benefits, rather than of potential use as a military auxiliary.
Recent Military Experience with Merchant Shipping
The future military need for merchant shipping can be estimated most effectively by a glance at recent experience.
The Vietnam experience, as a specific instance of limited war, deserves careful thought:
The capabilities of the government-owned and government-operated ships in the Navy’s Military Sea Transportation Service (now renamed Military Sealift Command) to support the military in Vietnam were exhausted shortly after the initiation of hostilities in 1965.
All the commercial ships offered to the Department of Defense for charter were taken, but the supply was limited. No emergency requisitioning of American flag ships was authorized, although the President held the war powers for such action. Requisitioning is necessarily a highly charged political matter, and because many factors beyond strictly military supply considerations are involved, it may be preferable to avoid using this authority.
Government procurement regulations were followed to the maximum extent practicable, and therefore ships were chartered at the lowest prices. Many owners complained that this policy hurt the government because only the least efficient ships were offered. Whether these owners had better ships, which they would have presented had higher rates been paid, or would have capitalized on the situation to buy better ships for charter to the government, is not germane to the issue. The fact is that MSTS did charter, at rates acceptable to the owners, a number of the most modern cargo ships under the American flag. It would appear, on balance, that the action of MSTS in abiding by the procurement regulation did not harm the war effort, and only the marginal operators, whose ability to survive in any case was doubtful, felt any serious effects from the enforcement of the regulation.
Many of the old ships chartered in 1965 have been withdrawn from service as the military’s demand for them has diminished. The actual number of ships in operation decreases month by month, and the ability of the merchant marine to assist the military in any future operation is very much open to question. Unless the present trend is corrected speedily, it is even possible that present supply procedures, favoring use of American flag merchant ships, will be jeopardized.
Ships from the National Defense Reserve Fleet were reactivated, beginning in the fall of 1965, and some served until mid-1970. Without these ships, which eventually numbered 172, the troops in Vietnam could not have been supported.
World War II, though not limited, also provided important lessons for present day conventional warfare situations.
Well before the United States became involved in the fighting, but after hostilities had commenced in Europe, ships had been selectively requisitioned by the government. Most of those chosen were passenger carriers needed for conversion to transports for assault troops. The declaration of war in December 1941 resulted in the entire American merchant marine being mobilized and operated as a government activity until the end of the conflict. The contribution to the total war effort made by the merchant ships, both those already in existence and those built during the war period, was enormous. Without that contribution, logistical support of the United States forces around the world would have been impossible.
The conclusion seems inescapable: The military needs merchant ships to support overseas operations.
It is unlikely, however, that the military’s requirements in the future will be met fully by the privately-owned American merchant marine without requisitioning action by the White House. Requisitioning, as already stated, is a political matter, and therefore is not a foundation in limited war upon which to build firm plans. A dependable alternative capability must be provided.
Against the background of this conclusion, it is appropriate to examine the merchant marine concepts of the United States.
The ideal may be summarized thus: The nation needs a merchant marine composed of the finest, safest, and most efficient ships afloat, operated on essential foreign trade routes in active competition with non-American carriers, and supported as necessary by subsidy grants from the United States government.
This guiding purpose is expressed in the statement of policy of the Merchant Marine Act of 1936. However, this statement is vague about the kind of shipping to be created and operated. Up to enactment of the merchant marine laws of 1970, the administrative interpretation of the law was to support the liner fleet alone. Bulk carriers, tankers, and dry-cargo tramps were excluded from subsidy, despite the fact that these ships might be operated exclusively in the foreign trade of the United States performing transportation essential to the economic life of the nation.
One reason for this partiality toward the liners is that in 1936 there were no American flag tramps, or bulk carriers, operating in the foreign trade. Other reasons are the chronic shortage of money for subsidy and the belief that liners, being common carriers of package goods, serve a more representative group of United States citizens than do the bulkers and tankers, which are chartered by industrial shippers, and the question arose as to the extent to which subsidy should go—did it cover water transportation only, or did it reach to land transportation too, where high costs constituted a serious problem.[1]
Operating subsidy as established under the Merchant Marine Act of 1936, is not an unmixed operating blessing. Sailings are restricted to fixed routes, the numbers and types of ships in an operator’s fleet are prescribed, accounting procedures and company investments are subject to government scrutiny, and limitations are imposed on the sale of ships. The United Fruit Company provides an example of a company which built ships under subsidy but refused the operating differential subsidy because the limitations of the contract interfered seriously with the accomplishment of its purposes in owning ships. Likewise, to maintain the flexibility they believe indispensable to economic success, Sea-Land Service and Seatrain Lines have resisted operating differential subsidies. In August 1970, the United States Lines permitted its subsidy contracts to expire and embarked on a new program of operation over a combination of routes it deemed to have the maximum potential for profit.
The liner segment of the merchant marine, in the statement of the ideal, is to be largely self-supporting. Operated in direct competition with foreign, lower-cost carriers, the American ships are not expected to earn their expenses fully, and subsidy is needed to offset the losses. The cost of subsidy, both for operation and construction (about $429 million was appropriated for fiscal 1971), is ideally expected to be recouped in large measure through corporate and individual income taxes, thereby resulting in a merchant marine support program which costs relatively little. The objective, unfortunately, has not been achieved; in 1968, for instance, corporate income taxes paid by American steamship companies receiving subsidy amounted to only $2,552,000 compared to subsidy expenditures of approximately $205 million.
The ideal further postulates that the merchant marine is to be available to serve as a military auxiliary whenever needed. Modern ships, manned by competent seafarers, are to provide the immediate logistical support needed for overseas military operations. The subsidy becomes a sort of insurance premium, paid annually by the nation to guarantee a fleet for the military. This is, or was during the period from 1965 through 1968, the attitude of the Pentagon as expressed in numerous comments at the peak of the demand for shipping to Vietnam.
The reality of today’s American shipping must be contrasted with these ideal concepts embodied in the Merchant Marine Act of 1936.
Without attempting to assign responsibility for the present state of the American merchant fleet, and considering only the existing situation, these facts emerge:
There were, on 30 September 1970, only 220 cargo ships under subsidy (as well as seven combination passenger/cargo liners) and of these, only 181 have been built since 1945. The balance is comprised of ships of World War II vintage, and they are competitively obsolete.
The unsubsidized liner fleet, on 30 September 1970, consisted of 216 ships, all except 32 of World War II construction. Three of the new ships were built for the domestic trades: the Ponce de Leon operates from New York to Puerto Rico; the Hawaiian Enterprise and Hawaiian Progress sail between California and Hawaii. The Adm. Wm. M. Callaghan, a gas-turbine powered ship, is under charter to the Military Sealift Command. All four were built in 1967 or later. The remaining 28 post-war ships belong to the United States Lines, whose subsidy contract expired in August 1970.
The tramp fleet is obsolete and non-competitive, and numbered only 64 ships on 30 September 1970. All 64 date from 1945 or earlier. The fleet survives only because there is a moderate amount of economic aid and military cargo which is reserved by law to American ships, and these vessels are offered for such business. The dependence of the tramps on military cargo is illustrated by the fact that on 30 September 1970, 43 of the 64 ships were chartered to MSC.
The bulk carrier fleet, with one exception, is comprised of World War II ships, mostly rebuilt, but small and non-competitive on the open market. There were 41 bulkers in the American fleet on 30 September 1970.
The tanker fleet, as of this same date, was made up of 279 ships, employed almost exclusively in the coastwise trade under the protection of the cabotage laws. The exceptions are voyages for the military to overseas destinations.
In addition to the above, on 30 September 1970, there were two refrigerated ships, six coastal cargo ships, and 19 large passenger ships, all but six inactive, and with little prospect of being returned to service.
A word about the two refrigerated ships is in order. They were owned by the United Fruit Company which for years had operated the only “reefers” under the American flag. The decline in the “reefer” fleet has resulted in part from the diversion of perishable cargoes to refrigerated containers transported in the big containerships. The Department of Defense was the only charterer of American-flag refrigerated tonnage, and even it had switched to containers for the bulk of its perishable cargo movements. It may therefore be concluded that American foreign commerce has suffered no handicap by the disappearance of the refrigerator ships.
The “ready reserve” concept of the subsidized liner fleet held by the Pentagon in 1965 was that during a limited war, while making a number of their most modern ships available to the military, the subsidized carriers would maintain almost normal operations on their trade routes.
The reality, however, was quite different. The ships initially offered to the military in the summer of 1965 were predominantly the oldest and least efficient in the American merchant marine. The more modern subsidized ships were retained in their regular services. While it is true that some of the newer ships were offered to the Military Sea Transportation Service, the charters were of short duration, and at the first opportunity these new ships were returned by their owners to their normal services. Their MSTS tasks were assumed by the old C-2 and C-3 types.
Forecast for the New Fleets
A new problem has arisen which makes the old ideas about the “ready reserve” seem comparatively unimportant. The current trend in liner shipping is toward integration into complete transportation systems based on all cargo being handled in containers and transported by a carefully interrelated variety of trucks, railroads, and ships. The ships become indispensable links in the chain, and they must be designed specifically to carry the containers and operated on very taut schedules permitting no reductions in the frequency of sailings.
Because of the high productivity of the container ships and other new ships, even the most optimistic forecasts support the belief that fewer ships will serve the major trade routes in the future. Furthermore, these ships, though large and fast, will be completely dependent upon port facilities for loading and discharging. It appears, therefore, that the container ships probably will not be offered voluntarily by their owners for charter by the military in times of limited war.
The very nature of the fleet proposed for the future American merchant marine raises questions as to the support for the military which reasonably may be expected from it.
The direction in which program planning for the rejuvenated American merchant fleet is going, and the understandable emphasis on commercial employment in a competitive situation, may be seen in the new ships proposed by the Maritime Administration. Seven designs have been released at the time of this writing, of which two are container carriers. One is a 72,000-ton bulk carrier, one is a medium-large tanker (in the range of 70,000 to 120,000 tons deadweight), one is a break-bulk ship, one is a large general-purpose tramp, and one is of the “lighter aboard ship” (LASH) design.
It is anticipated that the container and LASH ships will be accepted by American liner companies and integrated into their transportation concepts. The break-bulk ship, given current patterns of American trade, probably will receive little acceptance while only a small number of general-purpose tramps will be ordered unless operating differential subsidy for true tramp service is authorized. Without detailed analysis of all these designs, it is dangerous to make any generalizations, but it does appear that the military will find only the moderate-sized container ship, the LASH, and the general-purpose tramp ship to be readily adaptable to its needs. The prompt availability of these ships, especially tramps employed in the cross-trades, will be a determining factor in assaying the true value of these ships for support of the military.
The Unavailable Ships
It has long been assumed that because the tramps are not committed to fixed routes and have no regular customers, they will be available promptly for charter by the military.
Once again, the reality has proven to be different from the concept.
In the past, tramps not under long-term charters have been available, but they have been the oldest and least desirable ships in the American merchant fleet. Now that they have passed twenty-five years of age, they are disappearing rapidly.
Tankers (or liquid bulk carriers, as distinguished from the dry-bulk and general purpose dry-cargo tramps) are available to the military on almost precisely the same basis as other ships. But many of the tankers built since 1945 have been designed for the coastwise trade, and are rather highly specialized, with numerous small tanks in which to carry a diversity of oil products. Some have compartmentation to accommodate up to 25 different grades. Their adaptability to military needs, therefore, is questionable, even when they are readily available, for military requirements are usually for a maximum of three grades in one ship.
Bulk dry cargo carriers have not been used in the past to support American military operations to any extent, and this condition probably will not alter perceptibly. Their real function is related directly to the civilian economy.
The Effective United States Control Fleet
Aside from the subsidized and unsubsidized American flag fleets, a third one, the “Effective United States Control” fleet deserves special comment.[2]
The concept, as it has been widely publicized, is that ships owned mainly by American capital[3] (400 of all types on 31 December 1969) and registered under a friendly foreign (predominantly Liberian) flag, can be used as logistical support units in time of emergency. These ships belong to two categories, the first of which includes some old ships which were transferred for economic reasons to foreign registry in order to survive for a few more years. The second category consists mainly of new ships, built abroad and registered under a foreign flag, but voluntarily committed to the effective control program, often to gain the war-risk insurance coverage which is offered by the Maritime Administration. These ships, for the most part, are tankers and dry-bulk carriers.
Two important reservations must be entered in evaluating the support role of these ships. The first is that they will be available only when requisitioning of United States-flag ships is authorized. The second is that the composition of the effective control fleet is such that it will have only minor value to the military. As of June 1970, the fleet consisted of:
275 tankers of all types (254 are “major types”)
87 dry-bulk carriers
9 refrigerator ships
1 coastal cargo ship
23 multi-deck, break-bulk ships, all over 20 years old
5 passenger ships, all at least 25 years old.
The effective control fleet is operated to some extent in the existing foreign trade of the United States. For instance, many oil refineries import their crude oil supplies in company-owned foreign-flag ships. Diversion of these ships to any other trade would damage the national economy. Similarly, some of the tankers in this fleet are used exclusively (for example the 327,000 deadweight-ton Universe Ireland and her five sisters) in supporting the industry of a specific foreign country. If a major war involved both the United States and that foreign nation as allies, the ships would have to be retained on their peacetime routes. No augmentation of the supply capability for the United States would be possible in such circumstances. Furthermore, it is highly unlikely that the coastal trade would be opened to ships of the effective control fleet, even in wartime, if current attitudes foretell the future with any accuracy.
The NATO Shipping Pool
A fourth source of shipping in an emergency, the “NATO pool” of shipping, is predicated upon the idea of a general war in which the NATO partners would participate to the extent of their resources. The merchant fleets of the NATO countries would be available to support the alliance’s military operations. Inasmuch as NATO includes the major shipowning nations of Europe, in theory this “pool” would be able to meet almost any major emergency. Support from this pool, however, was not expected (and has not been given) in the instance of a single-nation war (i.e., a war involving one member of NATO and any other nation outside the NATO realm).
The concept probably is viable, given the premise of a war of the type envisioned. For a limited war, however, this pool is not now, and will not be in the future, a dependable resource. Individual ships of registries included in the NATO pool have been, and it is expected will be in the future, available to the U. S. military in small numbers, as their owners offer to charter their ships to the U. S. government.
The National Defense Reserve Fleet
A fifth possibility, the National Defense Reserve Fleet of the Maritime Administration, consists at present of ships built during World War II, and therefore all ships in the fleet are over 25 years old. The ships reactivated for Vietnam service were the best in the fleet, but they have served up to four and a half years on various routes to Southeast Asia, and their value for another reactivation is already open to question. The Reserve Fleet is obsolete in all respects, and by 1978 should not be considered among our assets, for thereafter it is planned to spend no more money on whatever ships still remain in that fleet. As of 31 July 1970, the fleet contained 415 bottoms which were being preserved against possible emergency requirements. Of this total, 214 were held for the Navy, leaving 201 for the possible augmentation of the merchant fleet. Only 134 of the 201 hulls were of the Victory type and immediately usable as cargo carriers. The remaining 67 include 38 Victory troop-ships and 29 assorted types, ranging from ocean-going tugs to a cable ship and a coastal refrigerator ship. The Victory ships are the ones expected to be retained until 1 July 1978.
The Gloomy Prospect
The shipping resources potentially available to the United States military, therefore, in order of value, can be divided up as follows:
The active, United States flag, privately-owned merchant fleet, currently consisting of approximately 900 ships, with more than 60 per cent of these exceeding 20 years of age. The liner part of this fleet, some 470 ships, is being converted to container carriage, and by 1972 it will consist almost exclusively of containerships. The container fleet that is emerging is consistent with world patterns. By 1973-74, an English forecast predicts there will be 201 containerships throughout the world, with an annual capacity of over 2 million containers. These 201 ships, only a minority of which will be American, will displace about 763 existing conventional break-bulk ships. (See Fairplay International Shipping Journal, 2 April 1970, p. 5.) The tanker fleet under American registry is just adequate for the coastal trades, and that is unlikely to change even if we include any new ships designed and built specifically to haul oil from the North Slope of Alaska to ports in the continental United States.
That tanker fleet probably will be made up of large ships, with a minimum size of 70,000 deadweight tons. Thus the only small, moderate draft ships to be ordered will be those built for charter to the Department of Defense. Moreover, the prospect is that the responsiveness of this fleet to military demands will have to be limited, because all of these tankers will have been integrated into the industrial life of the nation as a “flexible pipeline.”
The dry-bulk carrier fleet is unlikely to become very large. President Nixon proposed a subsidy for this type ship, and indicated the intention to make these ships competitive on the world market. In the implementing legislation which was passed by the Congress late in 1970, provision was made to extend federal aid to bulk carriers. At the time of writing, seven shipowners had indicated their interest in building between 21 and 23 oil/bulk/ore carriers. (At the same time, they had stated they might be willing to undertake to construct up to 18 tankers, each of 75,000 deadweight tons or larger size.)
But, as already mentioned, the military need for dry-bulk carriers is very small and the decline of this fleet, if it should come about, would pose no direct problems to the military in meeting overseas transportation requirements.
The American flag tramp fleet will survive only by virtue of a specific congressional mandate. Without some form of subsidy, it will decline to very small dimensions. The prospects at this time do not appear to be bright.
The National Defense Reserve Fleet, by 1975, will consist principally of the 123 ships surviving the Vietnam reactivation, plus 16 old amphibious transports (LPA) which are held by the Maritime Administration and could be converted to cargo carriers. In reality, the 16 transports should be discounted altogether, because the cost of rebuilding them is so great as to be uneconomical. Estimates made in 1968 varied from $2 to $6 million, depending upon the magnitude of the conversion, and even with the most expensive job the ships still would be small, and old. The civilian market doesn’t need them. If the military services do need them, there is a good chance they will prefer them as they are.
My assessment is that the ships in the National Defense Reserve Fleet should be considered for use only in time of direst need. The cost of activation and operation will be excessive in every way, and dependability will be marginal. (It cost $99 million to activate 162 ships for Vietnam.)
The Effective United States Control fleet will be available only in the event that requisitioning is authorized—an unpredictable circumstance. Even assuming favorable action on a request from the Department of Defense to requisition ships, those which might be obtained from the effective control fleet would be large tankers or dry-bulk carriers, neither of great use to the military in direct support of overseas combat operations.
The NATO pool will be available only in time of a NATO war. Individual ships registered in NATO countries may be chartered by the military if they are offered voluntarily by their owners, but it is not expected that the number of such ships will be substantial.
Some conclusions seem to follow from this survey. For limited war, the U. S. merchant marine in 1972 and thereafter will not provide the sealift needed by the Department of Defense. Hence, the Department of Defense must acquire and operate a fleet with which to meet emergency requirements at the outset. The arguments in support of the second conclusion are compelling.
Continued primary dependence by the military upon the American merchant marine cannot be justified, given the commercial trends now being manifested in today’s ship designs and the manner of their operation.
The subsidy policy of the United States has failed to produce a merchant marine with true commercial vitality which can compete effectively on foreign trade routes. At the time of this writing, it is known that the subsidized operators depend, to an unspecified extent, upon military and economic aid cargo reserved by law for carriers of American registry, rather than competing aggressively with foreign shipowners for genuinely commercial cargo. In reality, they look upon the Department of Defense as a benevolent godfather providing cargo to be carried at freight rates which will compensate for high American costs without making any allowances for the operating subsidies paid by the Maritime Administration.
This attitude has not created a merchant fleet tailored to fit military needs, but rather the military has been expected by the American shipowners to accept whatever ships might be offered. The industry, significantly, never has promised any specific standard of performance, modernity, or ready availability of ships they may offer to the military for charter.
Military Need and the Merchant Fleet
The patterns of commerce, both domestic and foreign, are increasingly specialized, and ships must be designed and operated to satisfy the needs of commerce. These needs are not necessarily in harmony with the requirements of the military.
The Department of Defense has an overwhelming mandate to carry out national military policy. It must have access to readily available shipping resources which will permit it to quickly meet its responsibilities so as to satisfy the military need.
What, then, is the “military need” for shipping?
“Military need” is defined as the requirement for shipping which exceeds normal direct logistical support and therefore involves some disruption to established commercial shipping practice.
Routine logistical support of military installations overseas does not constitute “military need” in the sense of the definition above. This service can be, and is being, provided in large measure by established steamship lines, or by the existing small fleet operated by the Navy’s Military Sealift Command (MSC).
There are various levels of “military need.” One is that established by the temporary increase of forces overseas, such as the Berlin build-up in Germany in the early 1960s, which requires sudden, massive increases in immediate logistical support. Ideally, such a surge in demand would be met by the MSC fleet, with a very large proportion of the buildup cargo being booked to commercial carriers on an opportune basis.
Some pressure may be necessary to obtain the required commercial tonnage. This can create a delicate situation, because disruption, even though temporary, may cause serious reactions among shippers who can, and often do, transfer their business permanently to foreign flag lines that are not subject to such demands.
The greater the capability of the Navy’s MSC fleet to absorb these surge demands, the smaller the impact upon the commercial carriers. It follows that, if commercial carriers want (and should be able) to offer reasonably firm assurances to their customers that service will not be upset by these temporary priority demands, they must accept the existence of the MSC fleet and its use in routine logistical support shipping. They often do not accept this obvious necessity.
American liner services now carry about 24 per cent of the tonnage, and about 29 per cent of the dollar value, of liner-type cargo moving in U. S. foreign waterborne commerce. With the increasing use of containers by all shippers and the consequent specialization of ships, reduction of fleet sizes, and integration of ships into “transportation systems,” the ability of the established liners to provide more space for the military will be reduced significantly. This again demonstrates why a Military Sealift Command fleet is needed to provide the surge capability.
Unsubsidized liners obtain, in some cases, 60 to 70 per cent of their tonnage lift from military cargo. Consequently these companies provide very little surge capability for the military, particularly if the immediate military need is remote from the trade routes they serve. It is, therefore, in the national interest that these carriers obtain a much larger, more truly commercial patronage, so that when withdrawn from trading to meet military needs, they could then lend significant emergency tonnage to the military. The solution to this exceedingly difficult problem, however, is now and will continue to be beyond the purview of the military.
The merchant marine laws of 1970 will permit presently unsubsidized carriers to establish tax-deferred reserve funds for the construction of new ships. The intent is to make it possible for all American operators in foreign trade to acquire ships at the lowest cost and, thereby, to facilitate competition with the ships of other nations. How effective this incentive will be in inducing these operators to engage in direct competition with foreign carriers is not yet predictable. Certainly, a combination of tax-deferred construction reserve funds, if combined with a government charter-and-build program and rapid depreciation of the investment in the ship, would give Americans the ships they need at costs comparable to those of their competitors.
Closely related to the issue of encouraging construction of ships is the need for ships to support a long-term, large-scale overseas operation of the magnitude of Vietnam or Korea. In this case, “military need” means cargo movements well in excess of normal logistical shipping capability, with potentially significant disruption to established American flag liner services for a protracted period. Under these conditions, reactivation of ships from the National Defense Reserve Fleet will be essential, but, as has been pointed out already, this is a practical possibility for only the next seven years. Foreign flag ships will have to be used to replace the American ships withdrawn from their normal routes. Whether it would be feasible to leave the American ships on their routes and to use foreign flag ships for the direct logistical support of the military, would depend upon the attitude of the world toward the involvement of the United States. Considering the experience of the Vietnam period, including the world-wide demonstrations against American policy, no reliable predictions can be made as to the use of foreign shipping in direct support of the military.
Short of formal requisitioning of American ships, which would make the effective control fleet available, any foreign ships offered to the United States military would be on a strictly opportune basis, at the discretion and goodwill of the owner. There can be no guarantee that the crews of these foreign ships will sail to the war zone. One may point to the experience of the Military Sea Transportation Service with the Marilena P, a Greek ship chartered for a voyage to South Vietnam in 1965. The owners were willing to send the ship to the war zone, but the crew refused to take the ship there, despite the offer of bonuses. In regard to the effective control ships, it is probable that the ships would be sailed as ordered. Nevertheless, it is unrealistic to assume that in all circumstances the foreign crews of these ships will respond unhesitatingly to the directives of the United States’ military authority. It would depend upon the situation at the time, whether or not the war happened to be acceptable to the crew concerned. There is only a hope, not a solid assurance. How, then, can the “military need” be satisfied?
In the case of a temporary buildup, no formal action would be feasible to force commercial carriers to provide space for military cargo. Shipping resources held by the Navy’s Military Sealift Command, plus the services of established carriers on their normal trade routes, augmented by opportune charters, would have to suffice.
In the event of an operation on the scale of Vietnam or Korea, it would be necessary to requisition ships, even if often they would be the wrong kinds of ship—non-self-sustaining container ships, for example. The political and foreign trade implications of requisitioning are recognized, but by 1972 the resources of the merchant marine will be insufficient to meet military needs and simultaneously to maintain normal commercial operations. To reduce the political impact and to make requisitioning for a limited war a realizable concept, legislation is needed to define precisely the relationship between the United States military and the merchant marine, as well as to define the obligation to be a “ready reserve” which accompanies subsidy benefits, the mechanics of requisitioning, and the financial responsibility the government will assume when ships are requisitioned for use.
A word of caution is offered. The burdens of ownership under United States registry or under subsidy contracts must not be made so heavy that operators will avoid them by placing their ships under foreign flag, or will abandon shipping as an enterprise altogether. The government, if it intends to use the privately-owned merchant fleet as a military auxiliary, must accept the financial obligations this concept imposes. Furthermore, military planners must realize that the effective control fleet has very little potential as a support force. The nature of this fleet (predominantly tankers and bulk carriers) precludes any substantial direct contribution to the military. Even substituting effective control tonnage for ships requisitioned by the United States will not produce any benefits to the military, because the capabilities of the requisitioned ships and those of the effective control ships differ markedly.
Does “military need” justify requisitioning, despite the drawbacks? The answer to this question is complex and of critical importance to the nation.
Routine logistical support rendered the military by United States flag common carriers is, in essence, commercial service. Military cargo shares space with privately-owned goods, and usually delivery is made to ports selected because of their commercial significance.
Requisitioning disrupts this important aspect of military support. A decision to requisition American shipping must involve the Secretaries of Defense and Commerce, and probably the Secretary of Transportation, as well as the President, and should be made only after considering all the factors affecting the military priority. Aside from politics, these are the adverse implications of requisitioning on a large scale:
Disruption of established patterns of American liner service on essential foreign trade routes.
Distortion of normal logistical support service, by removing American ships from these essential foreign trade routes on which they often carry military goods to overseas bases.
Immediate increase in payments to foreign carriers to provide transportation of U. S. waterborne foreign commerce.
Probable long-term reduction in the status of U. S. shipping as a dependable mode of sea-carriage, with the consequent diminution of the earning power and economic strength of these American operators.
Magnification of present dependence of United States industry on foreign flag shipping, primarily affecting the liner services. After every stoppage affecting United States flag ships, about 5 per cent of the shippers who transfer their business to foreign liners elect not to return to American carriers when normal operations resume. The wholesale requisitioning of ships might very well increase this percentage.
On balance, then, it would seem that the historic position of the White House in not authorizing requisitioning has been correct.
But wisdom of the past may not be the proper guide for the future, because the capability of the American merchant fleet is declining at a dangerously fast rate just now. Look at these statistics:
On 30 September 1970, there were 840 American-flag ships, of which 779 (536 dry cargo types and 243 tankers) were of a size sufficient to operate over any ocean route in any conditions of trade, and therefore might be considered as having some potential value to the military. Further scrutiny reveals that of the dry cargo ships, 319 were built prior to 1946, and have maximum sea speeds of 17 knots. Using the 1968 building program rate of eleven new ships a year, it was calculated that by 31 January 1972 there would be only 213 liner-type ships, 127 tankers, and 17 bulk carriers under 25 years old flying the United States flag.
On 30 April 1970, the Military Sealift Command had 148 ocean-going ships of all types under charter, or about 19 percent of the ships with military potential. In the future, it is probable that this chartered fleet will be reduced to about 120. If this number (120) were to remain constant, and the 1968 forecast of ships under 25 years of age were to prove accurate, only 237 ships of all types would be available to meet the demands of commerce after the military had taken its 120 ships. With so small a fleet, it is clear that the resources of the privately-owned fleet are insufficient to provide any significant number of ships for a sudden military requirement.
Proposals to Provide Additional Shipping
Some method of providing additional shipping must be devised. One possibility is to adopt a systematic program by which the Military Sealift Command would agree to charter each year a fixed number of new ships which, though built for general purpose trading, would incorporate in their design certain features which would make them particularly responsive to military requirements. Charters would be for a single five-year term, so that annually a number of relatively new ships would be released to commercial service under the American flag. This charter-and-build program should be accompanied by accelerated depreciation, so that when the charter expired, the ship would have a book value exactly equivalent to what a foreign-built ship of similar specification would have after five years of operation. The charter hire paid by the government would have to be adequate to make the depreciation an attainable goal. Legislation to authorize this program would be required, inasmuch as no comparable arrangement now exists.
This proposal is advanced for two reasons: first, the Department of Defense would profit by having the use of the most modern ships built to meet military need while incorporating efficiency and economy; and second, the assurance of a five-year charter, at rates which would include rapid depreciation, would be economically inviting to prospective tramp ship owners. The difference in earning capacity in the tramp trades between a new ship and a five-year-old one is negligible; the difference between a ship built at American rates and one built at world prices is formidable.
A second possibility, which is much less acceptable if the national defense is considered by the government to have priority over commercial needs, is to have the Military Sealift Command purchase ships built under the subsidy program from 1960 onward, and put them into service in its fleet. This would create a fleet of semi-obsolescent ships for the government to operate at increasing cost as the age of the ships mounted. This would, perhaps, be less expensive than building ships for military needs, but it would perpetuate the concept that the military must “make do” with the rejects of the commercial fleet.
A third possibility, and one that should prove attractive to the industry, is to rephrase both building and operating subsidy contracts to provide for specified payments in addition to charter hire, to be made to owners of ships acquired or operated with government financial assistance, in the event that the Secretary of Defense called them into military logistical support work. This payment would compensate for operational losses sustained from cancelling a voyage and for the cost of reestablishing the ship in a regular trade. This provision would take the place of requisitioning. Shipowners would volunteer for this program and they would be bound for five-year periods, renewable by agreement. If no demand were placed on a ship owner for one or more ships of his fleet, no compensation would be paid. For his part, the Secretary of Defense would not be obligated to accept every ship that was offered for this type of “ready reserve,” and thereby would be able to build up a modern and truly responsive kind of fleet on which the military could place full reliance.
It is believed that the first and last possibilities outlined above would be most effective in accomplishing the desired result of providing modern shipping for the military. No financial estimate has been developed, but it seems unlikely that these programs would cost any more than present subsidy and government chartering programs combined.
The difficulties facing the military in assuring itself of adequate shipping to support emergency operations overseas may be traced to the aforementioned decline of the merchant fleet. President Nixon, in the fall of 1969, made a number of proposals, eventually enacted into law, to reverse that trend. One widely heralded proposal was to treble the output of subsidized ships built each year. This is a long overdue step, but it will not solve the problem of the merchant marine by itself, even if it is successfully taken. Some think that this goal may not be realized. For an example, American shipyards may have the capability to increase their production, but in June 1970 the Maritime Administrator stated that an investment of $100 million or more would be needed to create the capability to deliver the ships proposed under the Nixon program.
The Position of the Tramp Fleet
Because tramps are not committed to any particular trade route and have no customers who depend upon them for regular sailings, they comprise that segment of the American merchant marine which, at least in theory, is best able to answer the military demand. The Nixon proposals did not contain any specific mention of the American tramp fleet, and therefore it may be concluded that no firm decision has been reached about its future. Presently, tramp owners buy used liners. Unfortunately all that are offered for sale are ships over 25 years old, economically obsolete and mechanically worn out. The tramp fleet cannot be improved this way. What is needed, if a tramp fleet is to be maintained, is to develop new, productive, and highly competitive ships which can find employment in the world market and still have the capability to serve the military. At the same time, some way must be found to encourage American tramp operators to compete energetically for commercial cargoes on the world market.
A favorable decision on the question of maintaining this fleet also involves considering the problem of subsidy. American tramps cannot survive on world-market charter rates if the cost of acquiring ships is approximately double that of the foreign operators. It is an “either-or” situation; either subsidize, or allow the owners to buy their ships abroad with full permission to participate in carrying any cargo available on the American market except for the coastal trades.
In view of the worldwide emphasis being placed on dry bulk carriers, it appears unlikely that any large number of general purpose tramps will be built by American operators. It further appears unlikely that sufficient funds will be appropriated to pay any subsidy to the tramp fleet. Likewise, it is improbable that the charter-and-build scheme previously outlined in this essay can be extensive enough to provide more than six or eight ships a year. Even tax-deferred construction reserve funds will create new ships only after a number of years. Of course, there will have to be sufficient revenue to permit the tramp owners to make deposits in such funds.
Fundamentally, the issue is this: Will the United States encourage a tramp fleet that can earn its way in the world market and derive its revenue from non-American charters? Will American tramp owners be permitted to obtain their ships at costs which will actually be no greater than those of their foreign competitors? Will the American flag fly over modern, efficient, and truly competitive ships? To accomplish these objectives, either subsidy or freedom to follow the practices of the tramp operators worldwide must be granted to American tramp owners.
The Bulk Carrier Fleet
Attention is given in the new merchant marine act to the bulk carrier fleet which, for the first time, is eligible for both operating and construction differential subsidies.
As part of the effort to stimulate interest in economical ships, the Maritime Administration has solicited ideas from two American shipyards for a variety of types, including bulk carriers. The Newport New [sic] Shipbuilding and Drydock Company suggested the Nomad, a 27,000-ton dry bulk carrier to cost about $12 million. It would have large hatches which offer some military advantages. The Bath Iron Works offered the Kennebec, a 21,000-ton bulk and general cargo ship estimated to cost about $11.9 million to build. This ship and the Nomad possibly could be modified to include portable decks on which vehicles could be stowed, an idea which has been incorporated into the design of a number of European bulk carriers. The problem of loading and unloading would remain, unless lift-on/lift-off cargo gear were installed in the ships. The service speed of 16 knots would be acceptable to the military for resupply, but probably not for the initial deployment of troops and equipment. The designs for similar ships prepared by the Maritime Administration itself are intended to provide a criterion by which to evaluate both plans and costs. Although developed independently, they appear to be fairly closely related.
There is, as has been stated before, little direct need by the military for bulk carriers as such. Large, highly automated, non-self-sustaining bulkers which specialize in transporting such commodities as ore, grain, and fertilizers do not fit into logistical plans for combat support. In times of limited war, the production industries of the United States which support the military effort will continue to rely, as they do in peacetime, upon foreign flag bulk carriers. Any decision to maintain a bulk carrier fleet, therefore, must be made on the basis of economic need rather than on any assumption of a military requirement.
The Tanker Fleet
The oil industry is the largest owner and the only user, excluding the Military Sealift Command, of tankers of American registry. Tankers therefore are built to meet the needs of the oil companies to provide maximum economy in transportation: high speed discharge, economical cruising speed, size predicated upon facilities in the oil ports served, and shipboard cargo segregation fixed by the refineries and distribution points. Because tankers serve only one industry, subsidy has not been paid in the past, and the new law does not include tankers as a specific type of ship to be aided.[4]
Military insistence upon tankers too small to be commercially acceptable means that the military need for ships not larger than about 35,000 deadweight tons will have to be met with military resources. Experience during the Vietnam War showed that this size ship, though twice the size of the old T-2, gave the petroleum supply directorate complete flexibility and acceptable economy. The small coastal tankers of the T-1 type were found to have such limited capabilities, and were able to meet so small a demand, that their disappearance will cause no problems.
The trend in industry tankers is toward the very large ships and several 225,000-ton ships are under contract now in American shipyards. Each of these very large ships will replace several older and smaller tankers. Like the container ships, the tankers increasingly will become essential elements in a larger transportation system. The vital nature of petroleum to the United States’ economy precludes diverting any significant number of these ships from their assigned trade routes. Any diversion would have to be compensated for by placing foreign flag tankers on the routes previously served by the American ships. This may not be politically possible (witness the furor over the abortive proposal to grant domestic trading rights to the tanker Sansinena, an American-built, but Liberian-registered, tanker owned by an affiliate of the Union Oil Company).
Passenger and Troop Ships
Passenger ships, as an essential medium of transportation, have disappeared from the major trade routes, having been displaced by jet-propelled aircraft. The same statement applies to the military transports; all troops today are flown to overseas destinations. Because there seems to be no economic justification for passenger ships, they are not recommended for subsidy under the Nixon proposals, and undoubtedly will be retired altogether within a few years. The Navy’s troop carriers (not the amphibious transports) have been placed in the National Defense Reserve Fleet. It is unlikely that any replacements will be procured.
Merchant Marine Manpower
Any discussion of the capability of the United States merchant marine to do more than it is doing now must consider the problem of manpower. In 1965, when the Vietnam build-up began, the average age of American mariners was 45, and there is little evidence that this average has been reduced since then. To the contrary, it is more likely that the age has increased by one or two years.
There were, on 1 August 1970, altogether about 38 thousand shipboard positions, excluding those on the Great Lakes and those provided by the Military Sea Lift Command’s ships. At least 100 thousand seamen were available to fill these positions.
Since, as a result of the long vacations granted under the employment agreements with the unions, illness, emergency shore leaves, time devoted to upgrading training and licensing and awaiting ships, it takes approximately 1.9 men to fill each billet, there is, at least on the face of it, a pool of men sufficient to fill another 13,000 jobs on about 300 ships. Beyond that, in time of emergency, the seamen will forego vacations for a year or two, although eventually they will have to take time off. It is possible that in the event of a major need, as was experienced in 1965-1966, the ratio of men to jobs could be cut to about 1 to 1.75, but any more optimistic forecasts are not based on realistic acceptance of the facts of seafaring life.
Should the demand be greater than the number of seamen can meet, one could either man the ships with U. S. Coast Guard personnel or set up a manpower pool under Selective Service and draft men specifically for work aboard merchant ships. There are problems either way, but the drafting of men for merchant marine duty appears to be a more efficient use of manpower than using the Coast Guard, inasmuch as combat training would not be given to the merchant seaman. Neither system has ever been used for American merchant ships. Perhaps, by establishing a specific draft category for merchant seamen, and using the union training facilities, the problem of recruitment, training, assignment, and monitoring of performance could be simplified. Draft-age men applying for merchant marine duty would have to be approved by the Selective Service System.
If the decision is reached to use military men to crew merchant ships, the Coast Guard, rather than the Navy, is recommended as the source of manpower, for that Service has a long history of involvement in merchant marine matters and has legal responsibility for passing on the competence and performance of seamen. It is a logical extension of Coast Guard responsibility for the merchant marine.
Future Military Sealift Command Fleet
Because it has an overwhelming responsibility to provide the capability to respond to military emergencies wherever they may involve the United States, it is necessary that the Department of Defense, through its Military Sealift Command, acquire its own fleet of ships, of types and total number adequate to meet the need.
This recommendation is predicated upon the fact that, neither now nor in the foreseeable future, will the privately-owned American merchant marine be able to provide the immediately available sealift which the military establishment must have if it is to meet its responsibilities to the nation.
Based on experience in supporting the operations in Vietnam, the Military Sealift Command fleet should consist of ten containerships, ten multi-purpose ships, ten barge or lighter carriers, and nine tankers.
The ten containerships should each be of approximately 16,000 deadweight tons, capable of convoy speeds of at least 20 knots, with a capacity of about five hundred 20-foot containers, and equipped with sufficient gantry cranes to handle all containers without assistance. It is pertinent to note that though fully self-sustaining ships of the sort described can be loaded and unloaded most efficiently when berthed adjacent to adequate marshalling areas, they can also discharge to lighters while lying offshore and can be incorporated into the “Ship-Helicopter Extended Discharge System” (generally referred to as SHEDS).
There are excellent reasons for this recommendation for such ships. The commercial trend to the use of containers for overseas transportation has been paralleled by the military. On 1 July 1970, it was reliably estimated that between 50 and 60 per cent of military cargo was transported in containers. The proposed fleet of the Military Sealift Command must have the capability to move military cargo of all types (general cargo, ammunition, refrigerated goods, and vehicles up to medium truck size) in containers or racks. Further, these container-carrying ships must be equipped to handle their own cargoes without having to depend upon shore facilities or floating cranes provided by the port, a capability that many new, privately-owned container ships do not possess.
The so-called SHEDS plan envisions using heavy-lift helicopters to fly containers of cargo from ship to supply depots or distribution points inland directly from the anchorage without the necessity of handling cargo from ship to lighter to beach to truck to depot, or of expanding primitive ports to meet military needs, or of building ports from completely undeveloped harbors. If SHEDS is adopted, the need for lighters and barges will be reduced substantially, with a consequential effect upon the Military Sealift Command fleet.
The decision to use SHEDS is still pending, but should it be favorable, and should the commercial contractor be able to provide enough high-capacity helicopters, it would be possible to halve the requirements for the LASH and Seabee type ships. Another benefit from SHEDS would be that the shore-based helicopters, not being attached to or dependent upon any one ship, could be used to discharge all ships equipped with gear which could position the containers for lifting by the “flying cranes.” It should be apparent that the helicopter discharge system is both expensive and complex, and therefore its use in future wars probably will be determined by the conditions prevailing in the ports selected for support of combat activity. There is no question about the practicality of the system; the problem is to balance all the many factors to determine whether, in known circumstances, the system can meet the military need. Any recommendation concerning SHEDS which is based solely on theory would be valueless; it must be predicated upon the situation confronting the logisticians at the time that supplies must be delivered to troops in combat.
The ten multipurpose ships (roll-on/roll-off, helicopter, container, and general cargo carriers) should each be of approximately 45,000 measurement tons capacity.
These ships will meet the need for versatility, and will transport much of the equipment which the containerships cannot accommodate. This type of ship is under active study by the Military Sealift Command at the time of this writing.
The ten barge (Seabee) or lighter (LASH) carriers would primarily be used to deliver harbor and patrol craft, as well as cargo preloaded in lighters and barges and destined to points up a river or canal system.
These ships would provide, among other operations, the service now afforded by the fleet of LSTs operated by the Far East Command of the Military Sealift Command. If the military version of the lighter/barge (which would be self-propelled and intended for beaching, retracting, and access through a ramp bow) were adopted as standard equipment for all the Services, it would be possible to continue the tasks now accomplished by the venerable LSTs, but with greater efficiency and economy. Concurrently, additional functions could be assigned to the lighters and barges, which should be capable of being used for coastal towing, intra-harbor transfer, river movements, and offshore floating reserves.
The commercial owners of similar ships plan that their lighters or barges be non-self-propelled, to be used for intra-harbor and canal or river operations only. There appears to be no obstacle, however, to designing a military version which will fit into either the LASH or the Seabee carriers. Furthermore, the lifting capacities of the cranes or elevators in these ships are (and should be) such that there would be no need for any other heavy-lift ships or for heavy-lift facilities in undeveloped ports.
The nine tankers would be of 25,000 to 35,000 deadweight tons, with a maximum draft of 35 feet; their sea speed should be at least 16.5 knots.
In all likelihood, because there is little demand by the tanker industry for such relatively small ships, the prospective owners, if the ships are obtained on a charter-and-build program, would insist upon either twenty-year (i.e., full life expectancy) charters or a rate which would amortize their investments during the currency of the charters. There would be nothing inconsistent with good business practice to charter for the life of the ship. These nine modern tankers would replace the 15 obsolete and uneconomical T-2 tankers of World War II vintage now operated by the Command. They also would take over the work of the useful little coastal tankers of the T-1 type, which have also become obsolete.
Commercial tankers have proven to be most economical when operated at speeds around 16 to 16.5 knots but this commercial speed may not be sufficient. In tankers designed and built for support of the military, higher speed can be provided if the Department of Defense is willing to underwrite the greater cost.
The program will be costly. The following estimates are offered to suggest the magnitude of the expenditures:
10 container ships, at $20 million each | $200 million |
10 multi-purpose ships, at $25 million each | $250 million |
10 barge/lighter carriers, at $30 million each | $300 million |
9 tankers, at $11 million each | $ 99 million |
39 ships, total | $849 million |
Some economies from mass production of a single type perhaps might be realized, although the above figures already represent some refinement of estimated unit costs based on standard design and building practice. Allowing for improved construction techniques, perhaps a further overall saving of six to eight per cent might be achieved by awarding all ships of a single type to one yard.
Conclusions
Certain conclusions may be drawn from the foregoing analysis of the present and future status of the American merchant marine as a potential military auxiliary.
There is a definite and continuing need by the military for merchant ships to provide logistical sealift in times of emergency overseas.
The national policy concerning a merchant marine does not define precisely what is expected of the merchant fleet in time of emergency, nor does it deal with the problems presented by limited wars conducted in an environment of “business as usual.” Part of the present confusion over the extent to which the subsidized element of the merchant marine is to augment military-operated sealift stems from this deficiency. This national policy must be re-written in a realistic fashion, must be very specific as to obligations, and above all must be absolutely clear in its meaning.
The present merchant fleet is inadequate in size and variety simultaneously to supply the military’s need and to maintain “business as usual.” The situation is critical now, and will deteriorate even further because of the unavoidable time lag between contract and delivery dates for new ships.
It is desirable to keep the American flag merchant fleet employed in foreign commerce at all times short of general war. Economically, American ships help to reduce the outflow of dollars, and thereby contribute to the financial stability of the nation. It is advantageous to the United States, therefore, that the number and capacity of American ships be increased. Concurrently, the military will gain as the fleet is enlarged, because of the improved capability to divert ships to support “brush fire operations” without disrupting their normal services and surrendering their hard-won trading positions to foreign competitors (all too often from the NATO and other allied nations).
Ships now forming the National Defense Reserve Fleet are all obsolete, small, and slow. The last of them will become candidates for scrap in 1978, and therefore cannot much longer be counted as assets. No plans for replacing this fleet have been approved. The magnitude of this fact, and its repercussion on logistic thinking is made evident by noting that 162 ships were reactivated from the National Defense Reserve Fleet to support the Vietnam operation.
The policy of reserving military and certain economic aid cargoes for American ships has served its purpose, in the sense that some ships from the tramp and the moderate-size tanker fleets have been available during both the Korean and Vietnam operations to augment the capability of the Navy’s Military Sealift Command and its predecessors. The policy has not resulted in the construction of any new dry cargo ships or in any announcements of plans for such construction. Termination of these forms of cargo preference and substitution of some form of direct and adequately administered subsidy appears to be not only warranted in the public interest, but long overdue.
A modern tramp fleet potentially could provide the immediate augmentation of the Navy’s Military Sealift Command which an overseas emergency would require, without disrupting integrated transportation systems which have been developed with much labor and great expense. However, the tramp fleet, to be responsive to military need, must have up-to-date ships. It is realistic to conclude that general purpose tramps will not be built on speculation, even if construction subsidy is provided for some years to come. The need, however, is for new ships within the next year or two. These new ships must be able in all ways, financial as well as mechanical, to compete in world markets for a fair share of the tramp kind of cargoes available. American tramp owners therefore must be free to buy their ships wherever they can be obtained, in precisely the same manner that tramp owners around the world are free to purchase tonnage. Existing restrictions against the use of foreign-built ships (except for the coastal trade) must be repealed.
As presently constituted, the tanker fleet is marginally useful in military logistical support. If current trends continue, the fleet of the future will consist of types which cannot be employed satisfactorily for direct combat-support missions. Despite this lack of responsiveness to the military call, the continued existence of a modern and highly efficient tanker fleet is in the national interest, because of the critical importance of liquid fuel to the domestic economy, which must support the military effort.
The fleet of ships operated, and to be operated, by the Military Sealift Command must be adequate, in size and variety, to meet the “surge” requirements of sudden military emergencies. This fleet, between emergencies, must be employed in the public interest as prudent management would dictate, so that the cost of maintaining the fleet is held to a minimum. The national maritime policy is deficient in that it does not address this matter, and who should carry military cargo (especially dry cargo) has become a major point of contention between segments of the industry and even between the industry and the government. This policy, therefore, must be rewritten exactly to stipulate the purpose of the Military Sealift Command fleet and the priority assigned to it in carrying military cargo both in time of emergency and in time of peace.
A “ready reserve” fleet composed of modern, efficient, and productive liner ships must be created to provide the military with a known quantity of ships to augment the sealift directly controlled by the Department of Defense. This ready reserve fleet should embody those characteristics essential to handling military cargo.
The concept of “national defense features” in new ships has been allowed almost to atrophy. It must be revitalized and supported through the military budget. Ships built for American registry to be included in the ready reserve must be responsive to the military need, but at the same time they must not be burdened with features of no economic value which actually reduce their earning power to a significant extent. If it is absolutely necessary in the national interest that these defense features be placed in a ship, even at the expense of commercial cargo earnings, then the Department of Defense must pay both for the feature and the losses in cargo earnings during the life of the ship.
The disappearance of the National Defense Reserve Fleet as a potential augmentation force almost automatically solves the problem of the absence of many additional seafarers to man the ships. As envisioned, the merchant marine of the future will have no idle ships standing in reserve. Augmentation of military sealift will come about through a realignment of operating ships, and, when the ships are employed in new tasks, their crews will be, too. Because there will be no large fleet of old ships to be reactivated and remanned, the manpower crisis of 1965-1967 should not occur again.
The shipbuilding industry of the United States has been shrinking since World War II. It is uncertain whether or not it can provide the ships so urgently needed, both for the Military Sealift Command and the privately-owned industry. The times are too urgent to wait for years for gradual, economical modernization and enlargement, and the cost of quickly bringing the industry up-to-date is enormous. Clearly some changes in national concepts about the sources of American flag ships are in order.
These conclusions do not pretend to be solutions to the problem of a merchant marine that must both earn its way in commercial competition, and still be available to serve as a military auxiliary whenever the need may arise; rather, they are a synthesis. This problem, though unique in modern maritime history, is not insoluble if prejudice and self-interest are put aside, with the national welfare being given first consideration.
[1] The provisions of the merchant marine laws of 1970 implementing the recommendations of the Nixon program will partially alleviate the subsidy discrimination now in effect by extending direct subsidy to the bulk carriers. Deferred taxation of construction reserves, a privilege formerly enjoyed by subsidized liners only, will be extended to all operators of ships in foreign trade. This may encourage expansion of the merchant fleet. See p. 354 of Naval Review 1970.
[2] See “The United States Effective Control Fleet” by Lieutenant (j.g.) Sidney W. Emery, Jr. in Naval Review 1970.
[3] About 70 per cent of the ships of the EUSC are controlled by American money.
[4] According to the Maritime Administration, which is entertaining requests from owners of tankers, it appears that tankers may qualify for subsidy under the new law if they engage in foreign trade.