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A CH-46 helicopter from the USS San Diego (AFS 6) exercises with the 29,820 ton SS Lash Italia of Prudential-Grace Lines off the Atlantic Coast in December 1972. One of a dozen large, fast self-sustaining barge carriers under the American flag, the 820-foot Lash Italia has a service speed of 22.5 knots. Ships such as she, with their small crews of professional civilian seamen, would be particularly useful in naval or military support roles.
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J- he constantly changing economic, political, and military challenges facing the United States indicate that we Americans must alter our thinking about maritime matters. Our practice since the First World War of waiting until war or national emergencies before responding with massive merchant ship building or reserve ship call-ups is dangerous.
We should recognize that we will always have to face the danger of wars or other military involvements, with their attendant requirement for massive movements of men and material. Perhaps more importantly, from now on the United States can expect also to be confronted by peacetime economic and political crises involving the highest stakes. Such political and economic struggles can be more detrimental to the United States than many a war. The way they are resolved could decide whether this nation will be able to continue as a world leader, or perhaps even to maintain its safety as an independent community.
Future confrontations may revolve around such issues as the use of military assistance, the threat of economic coercion, and political machinations by blocs of nations seeking to bring pressure on other nations. The United States, because of its central role in international affairs, has already had to face up to the pressures and problems these new challenges present. In the Mid-East oil crisis, in which our oil supplies from this area were cut off, we saw proof that nations will seek to use their natural resources to apply pressure upon the United States in support of their political goals. And this danger increases as the United States becomes dependent on more and more foreign nations for some vital resource or service.
It is important that the United States strengthen its ability to counteract these coercive efforts by other nations. One of the ways to accomplish this is through a strong, balanced, and versatile United States merchant marine; that is, one adequate not only to meet the nation’s normal maritime needs but also one prepared for the many possible missions it may be called upon , to perform.
With a large and modern merchant marine in operation under her own flag, the United States would have a wider range of options in future emergencies and military conflicts than she has now. Should a primary source of supply be closed to the nation, U. S. ships | could be shifted to other sources of critical materials, wherever they may be. It would enable the United States to shift its ocean transportation requirement from short supply lines to—if necessary—more distant sources without an interruption.
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Unless the U. S. private shipping fleet is maintained at adequate size, the United States will be at the mercy of not only those foreign nations who control the vital I raw materials we import, but also of those whose ships transport those materials to the United States. Not until the United States has acquired again a strong • shipping capacity, will we have done everything possible to reduce the dangers of having to depend on foreign shipping for the critical materials needed to maintain our country’s safety.
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The United States will have to abandon its outmoded concept of the merchant marine as a small peacetime industry that can quickly be enlarged and shifted about to meet emergency needs. This concept is based on the experience of the past, when we embarked on massive new building programs, as in the two world wars. In the Korean and Vietnamese conflicts, we resorted to the lay-up fleet of ships left over from the World War II program to provide the bottoms needed.
In a future conflict, the battle may be decided before the United States could build new ships. The reserve fleet is no longer a viable alternative, since its few remaining vessels are worn-out. In a short conflict, the United States would have to depend on its "off-the- shelf” merchant marine, a merchant marine which, under present circumstances, is inadequate to meet such a challenge.
In spite of the high level of competence and training of U. S. merchant seamen, it would be difficult today for the merchant marine to adapt to a role as a naval auxiliary, for the simple reason that the Navy and merchant marine are not working together on a day- to-day basis as they should. To correct this, the Navy could employ merchant ships and crews to provide part of the Fleet’s logistic support, 25 percent across-the-
181
A Union Leader Looks at the Merchant Marine
board, perhaps. This would ensure that both naval and Merchant seamen were trained and fully prepared to work together in times of emergency.
The need for the U. S. merchant marine to become a naval auxiliary in peace as well as in war—an auxiliary fleet in constant readiness to fulfill its national defense mission—can be met most successfully by adapting the Navy’s peacetime operations to the full-time use of merchant vessels in a Fleet support role. In this manner, the nation would achieve tremendous national security benefits, while the merchant marine would be provided with a new and expanded source of sustained employment.
In a crisis, the longer it takes the merchant fleet to accomplish the transition to the role of naval auxiliary, the greater the risk the Navy runs of being handicapped by insufficient support and thus being unable to discharge the fundamental naval mission of protecting men and material moving to combat zones.
The Peacetime Challenges Facing the Maritime Industry
But, while some attention has been paid to the merchant marine in relation to the crisis of war, it is the other challenge, that presented by the crises that °ccur in peacetime, that has been almost totally ignored. The U. S. merchant marine will have a pivotal tole in many of the foreseeable peacetime economic and political crises.
The United States has become increasingly dependent on other nations not only because of our growing need for raw materials, but also because U. S.-based multinational corporations have moved essential manufacturing enterprises abroad, as in the case of a substantial share of our electronics production. In addition we are dependent on foreign companies to provide important services on products used in the U. S. market, such as refining oil and liquifying gas for shipment to this country. Our dependence on foreign goods and services has grown dramatically in the last decade and is likely to continue. The chart below indicates the grave U. S. dependency on foreign raw materials:
Every time we import an essential item because we do not produce it ourselves, or because we produce 't in insufficient quantities, the United States becomes object to coercion by the foreign nation in control of that resource. The impact of such coercion depends, °f course, on many factors, such as diversity of supply sources, the ability of the United States to do without die product or to develop a substitute, or the ability °f the producing nation to withstand the economic 'mpact of a long-term suspension of its trade with the
United States. It is likely that most foreign nations could establish effective boycotts of the United States, at least for short periods, which would have a strong economic impact on our nation.
Increasingly, however, foreign suppliers (many of them developing nations) of commodities vital to our survival are banding together to unify their strength in the quest of common goals. Thus, a boycott of the United States by any supplying nation may eliminate our ability to get a variety of critical materials until an accommodation can be reached with the complaining nation.
Many nations possessing leverage as suppliers to the United States are seeking ways to use this power for their economic or political gain.
All of these hazardous problems are aggravated by the extreme U. S. dependence on foreign-flag ships. This dependence has reached 95 per cent of our total seaborne trade and is even higher in the movement of bulk products where, at this time, the risk to the United States is the gravest.
Most alarming is the trend by producing nations, particularly the Middle Eastern and South American oil states, to build their own fleets and mandate their export cargo for their own flag ships. Iraq, Egypt, Libya, and Syria have all announced plans to establish their own tanker fleets to carry their oil exports. Venezuela, Kuwait, and Saudi Arabia have similar goals. Already these nations have committed themselves to significant new ship-construction projects and several
Essential Raw Material Imports of the United States[1][2]
Percent of U. S.
Raw Materials Consumption Imported
182
Merchant seamen aboard the 33,200 ton tanker SS Erna Elizabeth rigging a fuel line between their ship and a ship of the U. S. Navy. The experiment with the 17-knot Erna Elizabeth, which took place in 1972, appears to have been a success. The author proposes that the Navy place more reliance on commercial ships for its auxiliary purposes.
have reserved parts of their oil exports for their own vessels. In this situation, the same nation can cut us off from essential raw material imports while denying to us the shipping necessary to seek other sources of supplies.
The United States’ fleet could thus be shut out of this trade unless it can develop bilateral arrangements similar to the recent agreement with the Soviet Union. But these pacts will be meaningless if there are no U. S. vessels available to participate in the trades.
The real answer to a threat created by the U. S. dependence on foreign-flag vessels is a strong U. S. fleet which will enable the United States to continue to receive cargo from alternative sources. We seem to have national guilt feelings about taking the necessary steps to protect our nation and assure ourselves of maintaining an adequate U. S.-flag merchant marine.
To reverse this dangerous situation, we must rebuild the U. S. merchant fleet. The erosion of this fleet in the past several decades has left it incapable either of providing a large backup to the Navy in emergencies or of having the strength to provide necessary U. S. shipping services in peacetime.
Only recently, with the passage of the 1970 Merchant Marine Act, has this nation begun to show an understanding of the need to reverse the fleet’s decline and once again to build and maintain a modern, versatile merchant marine.
The Need for a New Maritime Program
The dismal facts which accompany the U. S. fleet’s decline between 1946 and the present have been recited many times. While they provide no real insight into why the U. S. fleet has been so decimated, they do indicate how far the U. S. fleet had fallen by the 1970s.
The U. S. fleet, the largest and finest in the world in 1946, now is only the world’s seventh largest, and far from the newest.
It is outweighed not only by the flag-of-convenience fleet of Liberia and the traditional merchant marines of Norway, Britain, and Japan, but more importantly by America’s chief military rival for control of the
oceans, the Soviet Union. The Soviets’ massive met- chant shipbuilding program began to pay dividends m 1973, as the Soviet fleet passed the U. S. fleet in tonnage and is now twice as large in number of ships. Signifr cantly, the Soviet merchant fleet also carries more than 50 per cent of Soviet cargo, which is in keeping with the long-established practices of major maritime nations.
While many of the Soviet ships are also smaller than would be economically viable on more competitive transoceanic trade routes, they are well suited to pro- vide cheap transportation in Soviet coastal and inland waters. They are also well adapted to further Soviet economic and political interests in out-of-the-way underdeveloped areas. Having now built up this fleet of small vessels, the Soviets are turning to large ships.
The U. S. fleet as a whole carries only about five per cent of U. S. cargo tonnage, with the bulk segment carrying only two per cent of the cargo available to this class of vessels. Even the U. S. liner cargo had been steadily reduced, though most of the U. S. liner companies were receiving operating subsidy assistance from the federal government.
The American shipbuilding industry, also once the world’s finest, had slipped to twelfth place in the 1960s' U. S. vessels were being turned out at such a low rate they could not by any means replace the ships being scrapped, and this at a time when vessel production should have been expanding to meet the dramatic rise in the country’s foreign commerce.
Thus, as the years passed, the American fleet’s share of the country’s trade gradually diminished. At the same time, foreign-flag vessels increased their hold on
U. S. cargo; today they control every type of U. S. cargo except high-valued liner shipments. And even here, the U. S. superiority is threatened.
Yet statistics alone cannot explain the causes for the decline of the U. S. merchant marine. The underlying reasons for this decline are many and diverse.
One has already been pointed out, namely, the nation’s preoccupation with the concept of the merchant Marine as solely a quick reserve industry to be called upon and expanded in an emergency, but neglected at all other times. While all Americans recognize the critical importance of the merchant marine in war, few think of it as a necessity in peace. This is in marked contrast to many foreign nations, where the merchant marine is vigorously promoted by public policies designed to ensure a strong merchant marine. For over a hundred years the American merchant marine has suffered from the nation’s apathy in periods of peace.
Another reason for the deterioration of the private shipping fleet is the inflexibility of the 1936 Merchant Marine Act in adapting to the changing trade patterns, technologies, and other factors essential to a competitive merchant marine. The 1936 Act was designed only to provide operating and construction subsidy assistance for the passenger and liner segments of the U. S. fleet. No aid was accorded under the Act to bulk vessels, oil tankers, and similar vessels.
Merchant seamen at work. Top left, the deck department: Gilbert Payton, an ordinary seaman, on his first voyage aboard the USNS Cossatot; top right, two men reporting aboard the Cossatot, an old T-2 tanker of the Military Sealift Command, are greeted by the gangway watchman. Above the engine department: Diego Fernandez of the cargo ship SS African Sun prepares to light off a boiler. Bottommost picture, the steward department: George Elliott, chief cook of the container ship SS Seatrain Main, chopping onions for frying.
The subsidy program was suitable for its time, but lt remained unchanged until 1970. In the meantime, after the Second World War, a change in the mix of cargoes gradually began to take place. Where once liner cargoes and passengers had dominated the ocean trades, liquid and dry bulk cargoes began to be a greater and greater proportion of the traffic and in the late 1960s carrying these cargoes became overwhelmingly the larger part of the maritime industry’s work, worldwide. Hundreds of ships became necessary to serve U. S. petroleum needs alone. Yet not one of the many vessels regularly engaged in the petroleum import trades was
184 U. S. Naval Institute Proceedings, Naval Review 1974
a U. S.-flag ship.
After the Vietnam War ended, most of the nation’s bulk carriers, mainly old freighters and T-2 tankers, were scrapped, without replacement. During the 1960s it became clear that the nation’s maritime program had outlived its usefulness and needed to be completely updated.
The failure of the 1936 Act was perhaps best illustrated by its lack of support for a bulk-carrying fleet. The only government programs that provided any support to this vital fleet were the Cargo Preference Law of 1954 and the Act of 1904 covering military cargo. The 1954 Cargo Preference Law required that at least half of U. S. government-generated cargo, primarily bulk goods and raw materials, should be moved in U. S. ships.
Though often described as a failure, the Cargo Preference Act was a success because it meant the difference between no cargo and bare survival for the U. S. fleet. While the vessels in the fleet did grow older and fewer during this period, it is likely that without the 1954 Act most of them would have been scrapped or sold abroad years earlier. As it was, many of them were kept active and were thus available to carry much of the cargo to Vietnam.
The success of this program in minimally sustaining the U. S. fleet, at a time when all other government maritime programs were ineffective, indicates that this is a vital means of keeping the fleet in operation.
Finally, the effectiveness of the entire government maritime program was constricted by its small size, which made meaningful ship construction and operating assistance impossible.
A closely related problem has been the corresponding decline of U. S. shipyards. U. S. yards, which were the biggest in the world in 1946, suffered a deep postwar depression. Many yards closed, and those remaining open drastically curtailed their operations. New building was rare since the entire world had the opportunity to buy war-surplus U. S. ships through the Ship Sales Act, passed in 1946. Most of the major merchant fleets of the world got their start after the war through the U. S. ships sold under this Act.
Because both foreign and domestic operators had ready-made U. S. war-surplus vessels available, there was little need for them to order new ones. This was particularly true of the privately owned A merican-flag fleet, which had operated these vessels throughout the war and now had first crack at them when they were put up for sale.
At the same time, the rest of the world’s shipyards were being rebuilt. Germany, Japan, Norway, Italy, and many other nations patterned their yards after America’s. With the technical help of U. S. engineers and
with U. S. financial support, they could build yards with all the improvements learned by the United States during the war.
It is interesting to contrast the postwar government policies in our shipbuilding and airplane construction industries to illustrate why U. S. shipyards have had such difficulty. After the war, the United States aided the revival of shipbuilding industries around the world- But the government provided little aid to foreign ain craft manufacturers, looking upon the U. S. airplane industry as a vital security industry which must be protected and its technological lead enhanced. As a result of this government policy, U. S. airlines and airplanes are now dominant throughout the world, whereas U. S. shipping has been steadily eroded by cheap foreign competition fostered by the aid of the United States.
The failure of the United States to recognize the security importance of the merchant marine left this nation’s shipbuilding industry in a precarious econoink condition. If the industry had been protected as the aircraft industry was, it is likely that U. S. shipyard5 (like our aircraft producers) would have been the world’s leaders.
American yards remained depressed throughout the 1960s and ship production continued to decline. Ship5 were turned out one at a time, and in many years, all U. S. yards together turned out fewer than 15 majot commercial vessels. There was little cause to moderni# the yards as they grew obsolete, as the rate of ship building would not sustain the modernization costs
By the late 1960s, the American shipyards that werC still operating were seriously outmoded. In contrast, the major foreign shipbuilding nations were building vessels in series. They employed new techniques °* assembly-line production and welding that speeded shipbuilding and further reduced costs. None of these innovations were introduced as quickly in American yards and, as a result, U. S. shipbuilding costs steaM' rose.
The cost differential between U. S.-built and foreign' built vessels thus became an important factor in the growing unwillingness of prospective American ship operators to operate under the U. S. flag. Construction subsidy rates of 53 per cent were common, meaning that a ship that cost only $23 million in a foreign cost $50 million in an American yard. For a U-®' shipowner who had to compete for cargoes witho11' subsidy, this differential was simply too large to make operation under the American flag attractive. As 3 result, many U. S. operators had their vessels bud1 foreign and registered under runaway flags, such 35 Liberia and Panama.
The problem for U. S. shipbuilders was not that the)
185
A Union Leader Looks at the Merchant Marine
lacked the competitiveness or the ingenuity of their foreign counterparts. Rather, they were faced with severe handicaps. Their shipyards were older than foreign yards. In addition, U. S. shipowners, many of them large U. S. multinational corporations, built their vessels abroad to gain the tax and operating benefits this offered. Finally, like every other product built in America, American ships are more expensive than foreign ones, because they are built by workers who have the highest standard of living in the world. While U. S. shipyards, through innovative modernization programs, have dramatically narrowed the shipbuilding cost differential in recent years, they are still not fully competitive with foreign yards.
In spite of the dollar devaluations and fast rising foreign costs, it still costs more to build the same vessel in the United States than it does abroad.
The shipbuilding subsidy awards under the 1970 Act highlight this. In 1969, the construction subsidy rate was above 50 per cent of the U. S. cost. Today, it is 39 per cent and is scheduled to drop to 35 per cent by 1975.
In addition, some shipbuilding awards have already been made at below 39 per cent. Four 89,000-ton tankers are being built at 36.5 per cent subsidy, and three 125,000 m[3] liquified natural gas (LNG) vessels are being built at subsidies of only 16.5 per cent.
This, as well as other ship construction, particularly the contract signed in 1973 with General Dynamics, at Quincy, Massachusetts, for four LNG vessels (totaling almost $400 million) without subsidy indicates that substantial progress has been made in reducing the gap ■ti shipbuilding costs. There is still a gap, however.
Another major problem area that has inhibited the growth of the U. S. merchant marine in recent years has been the divisiveness of all segments of the nation’s Maritime industry. Instead of working together to cornet its problems and to turn the corner toward a revived and competitive U. S. merchant marine, the rndustry in the past divided its limited strength and ^as able to achieve little.
Often when U. S. operators were able to develop efficient and innovative shipping techniques, such as Ughter-aboard-ship (LASH) and LNG ships, they were not the first to capitalize on their commercial use. U. S. operators were able, however, to introduce and bring t0 fruition the use of container vessels, creating the oaost highly capitalized commercial shipping operations tn maritime history.
by 1970, it became apparent that a coordinated set °f maritime goals ascribed to and strongly supported by the entire maritime industry was the primary need *f the decline of the U. S. fleet was ever to be halted.
It was at this critical point in the history of the
U. S. merchant marine that the disparate and often quarrelsome segments of the industry were able to join together and achieve the passage of the 1970 Merchant Marine Act.
The 1970 Merchant Marine Act
Maritime Council, which was established under the aegis of the Maritime Administration. Under the theme of "Ship American,” the Council is developing programs to make shippers and the public aware of the need to use and support the U. S. merchant marine. More importantly, it serves as a badly needed forum for the exchange of ideas and resolution of some of the industry’s many problems.
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Since 1970 the Merchant Marine Act, the National Maritime Council, and other developments, particularly the U. S. bilateral shipping arrangement with the Soviet Union, have helped to alter significantly the dismal U. S. maritime outlook. But the battle remains far from won.
If the merchant marine is to fulfill its responsibilities as a naval auxiliary and as a peacetime shipping force for use in emergencies or when others take economic 1 actions against this country, then more steps must be taken.
The Merchant Marine as a Naval Auxiliary
The Merchant Marine Act of 1936, still the basis for U. S. maritime policy, sets forth the proper role of the merchant marine as a naval auxiliary. Section 101 of the Act says: "It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine . . . capable of serving as a naval and military auxiliary in time of war or national emergency
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The mandate of Congress in setting forth this m>s' sion for the U. S. merchant marine has been fulfill only in wartime. It is essential that in times of both peace and armed conflict, the U. S. merchant marine and Navy operate together in sealift, cargo carriage and resupply missions.
There are advantages the United States could g;llfl from greater employment of the merchant marine a naval auxiliary. Among them, it would allow tbc Navy to devote more funds to combat vessels. Britain provides a good example of this cooperation and bJ- a long and successful tradition of close and continuonj Navy-merchant marine cooperation through its R°)‘ Fleet Auxiliary, which mans logistic landing sh|Ps' underway replenishment ships, tugs, and salvage ship5’
a procedure which Soviet maritime forces have also now adopted. In this respect, the U. S. Navy should stop handling jobs that can be carried out as effectively and as dependably by privately owned, civilian-manned vessels. Under the American system of private enterprise, the Navy should provide non-combat supply and cargo carriage support missions only when the merchant marine has proved itself incapable or unwilling to perform the task. Civilian-manned private vessels could perform the same mission as naval vessels, but with somewhat reduced crews. During periods of peak activity, most members of a private crew could serve to a dual capacity, such as a messman aiding in a refueling operation. By so employing merchant vessels, the Navy can provide itself with both additional ship flexibility and significant cost savings over the exclusive use of similar cargo ships with naval crews. For instance, by using merchant vessels to support the Navy, the Service would have available for charter a wide range of vessels that could be used as the mission required. The Navy could use LASH, Seabee, roll-on/ roll-off, and high-speed container vessels, as the requirements arose. It could release them when the need passed. This would be an improvement over the present charter and build” program of the Military Sealift Command. If it continues its present program the Sealift Command will be locked into vessels that could prove less useful in the future, but which nevertheless would have to be kept in operation even though new °r different types of merchant vessels might be available and better suited for a mission.
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The strengthening of the U. S. merchant fleet to Serve the nation’s naval forces would, of course, expand the maritime industry in many ways that would be 'mportant to the success of the military in wartime.
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The protection and use of merchant ships is enhanced by ships constructed to U. S. survivability standards and possessing national defense features, such as self-unloading capabilities and strengthened decks. The more such ships, the better.
U. S.-flag ships are manned by officers and crews who, in many cases, are former Navy personnel or are actually members of the U. S. Naval Reserve. The more such experienced crews, the better.
Moreover, every commercial U. S. vessel we add to °ur fleet means new tax, new employment, new balance
of payments, and new economic benefits for the United States.
Recently, a highly successful experiment involving the SS Ema Elizabeth, a civilian-manned U. S.-flag tanker of 33,200 deadweight tons, vividly demonstrated the potential within the U. S. fleet for coordinated action with the Navy. For sustained periods, the 17- knot Ema Elizabeth refueled U. S. naval vessels both in the Caribbean and Mediterranean. The vessel and her private civilian crew were warmly commended by the naval officers in charge of the exercises. More exercises of this type and experiments in other kinds of operations will bolster the merchant marine’s ability and experience in the support role.
The United States can take a giant step towards attaining a self-sufficient U. S. merchant marine naval auxiliary capacity by abandoning the now outmoded and ever-dubious concept of an "effective control” fleet.
Of course, all countries in NATO expect to use one another’s ships in a war. But, aside from our own, no country plans on having the use of third-flag ships to support its armed forces. Yet the Defense Department expects to have the use of third-flag effective control ships and, because of that expectation, sees little need for a standing U. S. commercial fleet capable of meeting a major portion of our country’s peacetime and emergency shipping needs.
The argument favoring the effective control concept has been used for years to downgrade the importance of maintaining a strong U. S.-flag merchant marine. This concept states that because American owners have hundreds of vessels registered abroad, these vessels can be counted on to come to the United States’ assistance in an emergency. This belief is based on a pledge these owners sign in return for U. S. war risk insurance.
There are a number of reasons why the effective U. S. control (EUSC) fleet cannot be depended on by the United States in an emergency.
One is that for the most part the EUSC fleet is not presently operating in the U. S. trades. Rather, the effective control vessels are engaged primarily in the European and Japanese trades. They could be freed from these trade routes to serve the United States only at the expense of our allies’ shipping needs. Thus in a wartime emergency, the United States would be able to withdraw only a few of these vessels for use in the
U. S. Naval Institute Proceedings, Naval Review 1974
U. S. trades.
Moreover, many EUSC vessels are too large to enter either U. S. ports or the primitive ports found in many potential war zones. This is especially true of the numerous deep-draft supertankers in the EUSC fleet.
Finally, the effective control doctrine is unproved and cannot be regarded as a reliable support for the nation’s security. The United States should not wait for a major crisis, when these vessels may be needed, to find out that the concept of effective control doesn’t work. The United States should place its confidence in a proved bet, the U. S.-flag merchant marine, rather than gamble on ships that may turn out to be, indeed, not effectively under our control.
Whether these vessels actually are effectively controlled by the United States depends on many factors.
For example, the nation that the vessel is registered in, under international law, controls her legally and may not allow her to return to the U. S. flag.
The foreign crew that mans an EUSC vessel controls her actually. If they will not sail their vessel to the United States or to a war zone, there is nothing the United States can do, save dispatch a scarce naval vessel to seize the ship. Even then, this cannot always be done.
The nature of the emergency has much to do with a foreign vessel’s availability. A U. S. owner of a foreign-flag tanker is not likely to risk having his vessel blacklisted in Middle Eastern oil ports because she came to the aid of the United States in an oil crisis caused by a supply cutoff.
It seems unlikely that effective control shipowners who have registered their vessels abroad to avoid U. S. laws and obtain higher profits would voluntarily come back under the U. S. flag at a time of national crisis or war, when the greater profits would lie in chartering their vessels to the highest bidder, whether he be an American or a foreigner.
Plainly, EUSC vessels are not dependable in an emergency. They represent an untried and a highly risky alternative to the maintenance of a strong U. S.-flag fleet.
Admiral Zumwalt has pointed out the benefits a strong U. S.-flag merchant fleet would have for the Navy: ", . . planning for the protection of tankers at sea in the event a threat develops would be greatly enhanced by having large numbers of ships under the U. S. flag in times of peace. The Navy has a greater requirement for merchant ships than is generally recognized.”[4]
A strong peacetime merchant marine can provide the Navy a versatility it does not possess at the present time. The use of LASH and Seabee vessels could dra-
matically expand the number of harbors that could be resupplied by the Navy. The use of fast modern merchant vessels could provide the Navy with resuppl)’ j vessels equal to the task of being able to sail at sustained high speeds with the increasing number of nu- | clear naval vessels in operation. These and many other fringe benefits could flow from a greater naval support role for the merchant marine.
This is a goal that must be pursued immediately by the U. S. maritime industry and the government, and it is one which will benefit both the national defense and the merchant marine.
The Necessity to Carry Essential Imports in U. S. Ships
Right now it is important to ensure that a maj°[ share of essential imports be carried in U. S. vessels-
To the American merchant marine, the importance of carrying this cargo in U. S. vessels goes beyond national security. Since the passage of the 1970 Act. the merchant marine has come to realize that sustained cargo is the only way to achieve a healthy and compel five merchant marine. And only by mandating that vital raw material cargoes, such as oil, be carried ifl U. S. ships can this sustained cargo be assured.
The decline of the U. S. fleet in the past has becfl primarily due to the lack of assured cargo for U.$- vessels. This problem was accentuated when new ship contracts were being sought under the 1970 Act. b£' cause no cargo for these new and highly efficient vessel* could be assured, they could not be considered secut£ financial investments, and new ship construed011 lagged. The problem has since been solved temporarily, but legislation such as the oil import bill would g°3t' antee the availability of cargo and would ensure co11' tinued strong new shipbuilding.
We have thus set as one goal the generating 0 steady and substantial cargo for these new vessels. Tb|S is the meaning of "sustained cargoes,” and include petroleum and other basic import commodities.
In recent months, legislation has been introduce to guarantee that a major portion of U. S. oil imporP are carried in U. S. ships.
The legislation, H.R. 8193, was introduced by C°fl gresswoman Leonor Sullivan (D.-Mo.). It would {C i quire that 20 per cent of U. S. oil imports, rising t0 | 25 per cent on 30 June 1975, and 30 per cent on -’l j June 1977, be carried in U. S.-flag vessels.
The legislation would cover all petroleum imp°tlS’ j and the percentage would be figured by geograpl'11 region, so that U. S.-flag vessels could participate 1,1 both short and long hauls.
A Union Leader Looks at the Merchant Marine 189
U. S. vessels could be used under the bill "when available at fair and reasonable rates” much as they are used under the Cargo Preference Act of 1954. If sufficient U. S. tonnage is not available on 1 December of the year preceding the dates listed above, to carry that percentage, then the Secretary of Commerce has the authority to waive the law’s requirement until enough U. S. tonnage becomes available.
From 4,000 to 8,000 seafaring jobs, as many as 15,000 shipbuilding jobs, and nearly 45,000 jobs in related fields would be created by this legislation.
It could reduce the projected drain on the U. S. balance of payments for the transportation costs of U. S. oil imports by 15 to 20 per cent by 1980. The balance- of-payments deficit is reflected in the instability of the dollar and the current inflation crisis.
Our environment will be better protected through the use of American-flag ships which have the most stringent manning and safety standards in the world.
This legislation and all other efforts to secure a greater share of U. S. cargoes for the U. S. fleet have been strongly opposed by foreign-flag shipping groups who wish to see the U. S. merchant marine kept as small and as uncompetitive as possible. These are the same foreign-flag operators who today carry the majority of U. S. dry and liquid bulk imports, and who use the effective control doctrine to stymie U. S. efforts to build its own merchant fleet.
The chief spokesman for these foreign shipping interests is the so-called Federation of American Controlled Shipping, largely made up of the major U. S. operators of foreign-flag vessels, including many U. S. oil and bulk ore companies. The Federation has for two years devoted its best efforts to opposing the establishment of a form of oil cargo preference for U. S. ships. This Federation, while professing to be "American,” actually is dominated by multinational oil companies, and members’ foreign ships outnumber their American vessels both in number and in tonnage.
U. S. multinational oil companies have made it clear that they do not owe allegiance to any country. This applies to their vessels as well, particularly in an emergency.
Mr. William Tavoulareas, President of Mobil Oil Corporation, expressed this view not long ago on a nationwide NBC television program on the energy crisis. He said: "I’ve never been faced with the situation where I’d say to myself, I’m only going to be a good citizen of one country because if I do that I am no longer being a multinational oil company.”
Despite the fact that this legislation would still leave the majority of the oil trade to foreign-flag vessels, these operators are not content to take anything less than the 95 per cent they already have.
It is vital to the security and economic well-being of the United States that a major portion of this cargo be shifted to U. S. vessels.
Toward the end of 1973, the Commission on American Shipbuilding, a Presidential body established in 1970, reported on the necessity for American cargo preference for U. S. energy imports to ensure the maintenance of a viable U. S. fleet. The Commission concluded: "Cargo preference for efficient and competitive U. S. built, U. S.-manned ships should be applied to cover all fuels imported from foreign sources by waterborne transportation. This step will not only strengthen the shipbuilding industry but will also provide the United States with positive control over the transportation of cargoes critical to national welfare and security. Without the market assurance afforded by cargo preference, the shipyards face the continual problems of inability to attract capital investment and repeated periods of decline during which the trained labor force is lost.”
Summary
21973 figure.
Iron Ore 32
Petroleum 332
Lead 44
Asbestos 85
Bauxite 87
Nickel 88
Manganese Ore 99
Chromite 100
Cobalt 100
Rubber 100
Tin 100
[2]U. S. Life Lines Imports of Essential Materials—1969 Logistic Plans Division, Office of Chief of Naval Operations, Department of the Navy
The 1970 Merchant Marine Act set up new ground rules for operating and promoting the U. S. merchant marine. These rules were effective, flexible, and designed to accomplish one goal—the rebuilding of the U. S. merchant marine.
In the short time since its passage, the 1970 Act, which amended the 1936 Merchant Marine Act, did or led to five important things:
► It opened the operating and construction differential subsidy programs to all types of U. S. vessels in the foreign trades, including bulk vessels and tankers, thereby providing a stimulus to the construction of vessels necessary to carry U. S. ore and energy imports. Over 25 tankers and oil/bulk/ore vessels have already been ordered under this innovative program.
► It allowed U. S. ship operators to set up construction reserve funds for all vessels in both the domestic and foreign trades. These funds permit the operator to deposit his profits in a reserve fund, where they will not be taxed, as long as they are used for new shipbuilding. While this benefit is not as attractive as the tax loopholes enjoyed by U. S. multinationals who build ships abroad, it provides an incentive to American operators to build under the U. S. flag.
► It set goals for gradually making U. S. yards more efficient, through a yearly reduction in the level of the construction differential subsidy.
► It aided U. S. shipyards by allowing for negotiated procurement, a process which permits the shipowner and shipyard to negotiate the vessel price rather than having the shipowner request sealed bids. The result of this innovation has been a more flexible shipbuilding program that is further increasing the success of the 1970 Act.
Spurred by the resulting new orders, U. S. yards have undertaken modernization programs involving millions of dollars. And for the first time, series ship construction in U. S. yards is a reality, not only for small vessels but for supertankers.
► In the joint efforts of all segments of the maritime industry that attended the passage of the Act and in the renewed hope that followed its passage, representatives of the maritime industry have found a new vehicle in which they can work together for the common good of the industry. Maritime labor, management, and the government have joined together in the National
[4] Italics supplied.
In the coming years, the economic and military challenges facing the nation could test our merchant marine to the fullest. If we build a merchant marine that will stand the nation in good stead in the future, we can face these challenges with confidence.
A balanced U. S. merchant fleet, composed of an adequate number of all types of vessels, must be built and maintained to meet the peacetime and emergency shipping needs of the United States.
The peacetime naval support role of the merchant marine must be significantly broadened, so that the merchant marine participates fully in all phases of the Navy’s resupply and sealift missions and is thus always trained to back up the Navy in wartime.
The United States must abandon the outdated and uncertain policy of depending on an "effective control” foreign-flag fleet for the nation’s emergency shipping needs.
Legislation must be passed that will guarantee that a major share of U. S. energy imports are carried in U. S.-flag ships.
Finally, the United States should negotiate further bilateral shipping arrangements with other states that trade with the United States, in order to assure that the United States has a substantial share of the transportation of its own vital import trades.