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Worldwide, commercial shipping experienced a difficult year during 1983. American steamship companies were not immune to the prevailing economic malaise, but some favorable developments lifted a comer of the pall of gloom. Two large cruise ships were ordered from a Pacific coast shipyard; a subsidized company and another operator of both American and foreign-flag ships were spun off by their conglomerate parents amid expectations that they would prosper in independence; two shipowning corporations proposed that the Maritime Administration buy out their operating differential subsidy contracts well ahead of the expiration dates; the first oceangoing coal-burning ship built in the United States in more than a half-century entered service; and a new ship-repair facility was opened in Portland, Maine.
On the opposite side of the ledger had to be entered the collapse of two small companies and the action of a major liner operator which sought protection from its creditors under Chapter 11 of the Bankruptcy Act; the launching of the last ship built under construction differential subsidy, marking the end of a policy maintained by the U. S. Government for almost 50 years; and the unsuccessful attempt to sell two shipbuilding yards which had no contracts.
In the halls of Congress, debate continued on a proposal to reserve cargo for American-flag ships, but no action was taken. Bills were passed by both House and Senate which would change the methods of regulating the foreign waterborne commerce of the United States, but differences were so great that reconciliation of the proposals proved impossible within the limits of the calendar year.
Taken all in all, 1983 was a time of challenge for American shipping.
Worldwide Shipping
Economic recession underlay the continued problems faced by ship owners around the world. Many ships went into lay-up awaiting more favorable conditions, with the peak being reached in May when 1,725 ships of 100.5 million tons deadweight were idle. On 1 December 1983 there were 1,689 ships of 80.28 million tons deadweight in lay-up. Included in this total were 422 tankers of 63.15 million tons deadweight. Dry cargo carriers lying empty numbered 1,267, of 17.13 million tons deadweight.
The dry bulk carrier fleet in the 19721982 decade grew from 3,539 units of 108.5 million tons deadweight to 4,987 ships of 194.4 million tons. The U. S. flag flew over only 19 bulkers of 591,900 tons deadweight in 1982, in contrast to the 32 ships of 701,000 tons deadweight ten years earlier.
These figures have more significance when applied to the growth of merchant fleets during the last decade. According to Wilhelm Wilhelmsen, a Norwegian shipowner, the world fleet expanded from 290 million gross tons ten years ago to 425 million gross tons in 1982, but the volume of world trade changed very little. The result was a huge surplus of ships of all types. This created highly uneconomical competition for the disproportionately small number of cargoes, with the inevitable result that ship earnings declined precipitously.
At the end of 1982, there were 574 privately owned, U. S.-registered ships, averaging 23 years in age.
Shipbuilding and Ship Repair
Throughout 1983, shipbuilders worldwide were in the throes of a serious recession. In this economic climate, and burdened by the highest paid labor force in the maritime world, American shipyards generally fared poorly in 1983. Heavy reliance was placed on Navy orders, including those from the Military Sealift Command (MSC) for conversion of merchant ships to meet the requirements of the Rapid Deployment Force. Bath Iron Works had the melancholy distinction of building the last ship under the construction differential subsidy program initiated under the Merchant Marine Act, 1936. The Falcon Champion, a 666-foot, 33,600 tons deadweight petroleum products tanker, was launched on 10 September. National Shipbuilding and Steel Company, of San Diego, delivered the last tanker ordered by independent (nonoil company) owners.
Two shipyards in Baltimore were
placed on the market. Bethlehem Steel Company offered to sell its Key Highway ship repair yard, closed since 31 December 1982, but the only interested party, Baltimore Marine Industries, was unable to raise the required $55.7 million before the deadline of 15 September. Fruehauf Corporation, the Detroit-based conglomerate, is the parent company of Jacksonville Shipyards, Inc., and Paceco, Inc., a manufacturer of dockside container cranes. It announced on 1 December that it wished to sell its subsidiary, Maryland Shipbuilding and Drydock Company (Baltimore), which it has owned for the last 15 years. At the end of 1983, the yard was repairing three ships and four barges, and had no long-term orders.
Todd Shipyards consolidated its Texas operations into one facility in Galveston. Its only other activity in the Gulf was at New Orleans. The company acquired Bethlehem Steel’s repair yard in San Francisco during 1982, which made some of the already-owned Alameda property redundant. The Brooklyn repair plant also was on the market.
General Dynamics Corporation and MSC signed a contract on 15 May for construction of five commercial-type, roll-on/roll-off ships to become part of the Rapid Deployment Force. The $775 million contract was said to be the most costly order ever placed with an American yards for a merchant-type vessel. The keels for the first two ships were laid on 16 September; delivery of those two ships is scheduled for March and June 1985. They will be 671 feet long, with a deadweight of 22,700 tons.
The T-AKX program will bring 13 ships into the Navy: five ships acquired from Maersk Lines, of Denmark, and converted in Beaumont and Baltimore by Bethlehem Steel Company; three ships chartered from Waterman Steamship Corporation and converted by National Shipbuilding and Steel Company (NASSCO) in San Diego; and the five General Dynamics ships. The total cost of the program was said by the Navy to be about $1.7 billion.
The Energy Independence, first seagoing ship since 1921 designed and built in the United States as a coal-burning steamer, loaded her first cargo of 36,000 tons of coal in Norfolk, Virginia, on 8
August 1983. The hull is 665 feet long, 95 feet in width, and has a maximum fresh water draft of 32 feet. Fully loaded, |he vessel has a speed of 14.75 knots, and •s driven by a steam turbine plant of
10,0 shaft horsepower. She is operated from Norfolk, Baltimore, and Philadelphia to Somerset and Salem, Massachusetts, and will make 60 trips a year. She wHl consume 250 tons of coal fuel on each round trip. A self-unloader, she can discharge in about ten hours; loading requires about 12 hours. Jointly owned by New England Electric and Keystone Shipping Co., of Philadelphia, the ship represents an investment of $78 million. She is operated by Keystone.
Another coal-burning steamer became Part of the U. S. merchant fleet in February 1983, when the 128,000 tons deadlight bulk carrier Jade Phoenix was delivered to her owners, Phoenix Companies of Texas. Built by Avondale Shipyards in New Orleans as a liquefied natu- ra' gas carrier, the vessel was not accepted by her prospective owners, El f’aso Corporation, because of defects in ’he gas-storage tanks. El Paso had ordered three ships; all were rejected and lay idle for more than two years before they were bought by the Phoenix Compares, of Houston, Texas. One of the ’hree, El Paso Columbia, was badly damped while being towed to Canada; her ultimate fate is still under study. The El Paso Cove Point, renamed Jade Phoenix, and her sister, El Paso Savannah, renamed Golden Phoenix, were sent to South Korea where they were converted 'nto bulk-oil carriers. In 1982, it was reported that the cost of the modification of the big ships—they are 981 feet long, 140 feet in beam, and have a draft of 57 feet— Was $20 million each, but no Final figure ^as released. The boilers are designed to hum either coal or oil. On her maiden commercial voyage, the Jade Phoenix carried 110,000 tons of wheat from Tacoma, Washington, to Egypt.
Other conversions kept a few American shipyards operating. Pennsylvania Shipbuilding Company, of Chester, on 3 November was awarded a second SL-7 ship (once owned by Sea-Land Service, Inc.) to be adapted to the needs of the Rapid Deployment Force. The contract price was $49.2 million. Pennsylvania earlier had won a contract to convert an SL-7, and in part because, a yard spokesman said, that job was being done “under budget, and will be completed three months ahead of its due date of June 30, 1984,” the company was assigned the second ship. The yard expected to deliver this conversion nearly a year ahead of the due date of February 1986.
In 1982, when Avondale Shipyard (New Orleans) contracted to convert an SL-7, the Navy included an option to allocate two additional ships of that type. The option was exercised on 3 November 1983; completion of these two conversions is scheduled for November 1985 and March 1986, at a total cost of $87.9 million.
Concurrently, Avondale rebuilt the
137,0 tons deadweight tanker Columbia (originally named Arkas), which had been badly damaged in an explosion while the ship was in New Orleans in April 1982. The cost of reconstruction was estimated at $48 million, of which 75% was covered by a mortgage loan guaranteed by the Maritime Administration. When she is returned to service early in 1984, the Columbia will be employed in the domestic trades.
NASSCO was allotted its third contract to convert an SL-7 on 25 October. To be completed by 31 October 1985, this conversion will cost $44 million. Actual shipboard work will commence on 1 July 1984.
In June, this shipbuilder delivered to American Tankships, Inc., the 37,500 tons deadweight tanker Hunter Ar- mistead. Her owners said this probably would be the last unsubsidized tanker to be built in the United States if the subsidies granted for construction of tankers intended for the foreign trade are repaid and these ships are permitted to enter the unrestricted domestic trades. The Hunter Armistead is diesel-powered, 658 feet long, 90 feet in beam, and has a loaded draft of 36 feet. The keel was laid on 10 June 1982; she was launched on 29 January 1983, and was delivered on 21 June. She has double bottoms, clean segregated ballast tanks, an inert gas system, a sewage treatment plant, a back-up steering system, and collision-avoiding radar. She is, therefore, adaptable for operation anywhere in the world.
American Shipbuilding Company in 1982 won the contract to build five 30,000-ton tankers for Ocean Product Tankers, Inc., which would charter them to MSC. The shipyard, on 18 October 1983, subcontracted with Avondale to build the forebodies of these five ships, using basic materials furnished by American. Avondale’s charge of $47 million covered only labor and overhead costs.
An interesting rebuilding program reached fruition during 1983. The tanker Chemical Pioneer, a specialized, turbine- driven carrier of 35,000 tons deadweight designed to transport a variegated cargo of chemicals in her 48 separate tanks, was delivered by Newport News Shipbuilding and Dry dock Company to Union Marine Transport Company on 29 September, when the $109,686,024 reconstruction project was completed. Construction loans up to 75% of this cost were guaranteed by the Maritime Administration.
The stem section, engines, and bridge were part of the containership Sea Witch, which was in collision with the tanker Esso Brussels on 2 June 1973. The containership was so extensively damaged that for a time she appeared to be destined to the breakers. The burned-out hulk, however, was purchased by a joint venture of Union Carbide Corporation and Marine Transport Lines, and all usable elements were repaired and upgraded, while a complete new forebody was constructed. The components were joined together to form one of the most advanced chemical carriers in the world. The renamed Chemical Pioneer can carry 9.2 million gallons of liquid cargo in her tanks, almost half of which are clad with stainless steel. Many of these tanks also
have stainless steel heating coils. To be employed in the domestic trade and made available to any shippers of bulk chemicals, the ship can accept “parcels” as small as 48,000 gallons.
A new ship repair facility, jointly owned by the city of Portland and the state of Maine, and operated by the Bath Iron Works, was opened with appropriate ceremonies on 10 December 1983. The former Maine State Pier was converted into the facility with funds from a $15 million bond issue approved by the electorate in November 1981. The remainder of the $31.7 million investment was put up by Bath Iron Works. A floating dry- dock, obtained from the General Services Administration, has a 25-ton capacity crane on each sidewall. The first contract calls for overhaul of three Spruance class destroyers at a cost of $67.7 million.
The small shipyards, both at tidewater and on inland waterways, were moderately busy during 1983. Halter Marine, Inc., of New Orleans, built a replica of a 19th century stem-wheel river steamer, with the innovation of a diesel-electric plant to turn the big wheel. The Creole Queen was designed to carry tourists and visitors to the New Orleans Fair (May to October 1984) on two to four-hour excursions. She is 189 feet long, 40 feet in beam, and has a depth of eight feet. Three diesel engines of 300 brake horsepower each produce 900 kilowatts to drive the two 350 horsepower electric motors that turn the wheel.
Marinette Marine Corporation, of Marinette, Wisconsin, in October delivered the largest deepsea seismographic research vessel ever built in the United States. The Shell America is 300 feet long overall, 59 feet in beam, and on a design draft of 19 feet has a full load displacement of 5,340 long tons. Her cruising speed is 15 knots. A ship’s company of S3 will be quartered in 28 cabins, each With a private bath, telephone, radio, and heating/air conditioning controls. Owned by Shell Research, Inc., a subsidiary of Shell Oil Company, the Shell America Will be employed in worldwide exploration of hydrocarbon deposits. To facilitate research, special attention has been devoted to assuring ultra-quiet operation °f the diesel electric propulsion plant, diesel generators, and air compressors. A helicopter landing platform is mounted above the cable reel deck.
Subsidized Tankers
Because of the surplus of tankers Worldwide and the reduced demand for petroleum and its products, tanker owners experienced difficulty in surviving in 1983. Among the 231 tankers registered in the U. S. are 29 modem, relatively large tankers which were built during the past decade with financial assistance in the form of federal subsidies. By accepting construction subsidy and then seeking operating differential subsidy contracts, these shipowners lost the privilege of participating in the protected American coastwise trade. The Maritime Administration has permitted many of these subsidized ships to suspend receipt of operating differential subsidy payments, and concurrently to repay a proportionate share of the construction differential subsidy, and thereby to qualify, for not more than six months in any year, for admission into the domestic trades—primarily in the transportation of oil from Alaska to the Lower Forty-Eight. The owners found very few opportunities to charter their expensive ships in the foreign trade, and therefore sought in 1982 and again in 1983 to repay the entire construction subsidy, with interest, and to terminate the operating subsidy contracts. If these two requirements were met, the 29 tankers would be free to operate indefinitely in the comparatively lucrative Alaska oil- transportation business.
The argument between the subsidized and unsubsidized owners has been prolonged and bitter, reaching into the halls of Congress, but as 1983 came to an end no final action had been taken by the Department of Transportation or by the Congress. The Navy sought to avoid involvement, but has said many times that it needs tankers smaller than 90,000 tons deadweight in order to carry out its military missions. Few of the 29 subsidized tankers meet military specifications.
Military Sealift Command
Because of the worldwide economic recession and the resultant low freight rates, and the overtonnaging of the major trade routes, cargo reserved for Ameri- can-flag ships has assumed a dispor- portionate importance to U. S. steamship companies in their struggle for survival. Military cargo, by law limited to government-owned ships and ships of U. S. registry, has a further attraction for shipowners in that it is “high-rated”—i. e., the freight rates are lucrative. Competition for military cargo therefore is very keen.
Military Sealift Command (MSC) solicits bids from U. S.-flag operators twice yearly for the six-month periods from 1 October to 31 March and 1 April to 30 September. Carriers are ranked by the
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rates they propose, and cargo is assigned as the ships are available. American Coastal Joint Venture Inc. (AMCO), a new, two-ship company which its competitors claimed had been formed solely to carry military cargo, submitted the low bid for the October 1982-March 1983 period. When the bids for the April-Oc- tober 1983 semester were opened, Sea- Land Service and United States Lines (USL) were in the first and second places, while AMCO and Trans Freight Lines (TFL), a newcomer, were in the third and fourth slots. TFL asked the Federal Maritime Commission to examine the low rates, citing the almost 50% reduction from the levels they had offered six months earlier. AMCO attempted to get a court order assuring it of the same proportion of cargo it had carried in the earlier semester. Neither of the aggrieved parties received support from these agencies.
The importance to the commercial carriers of the MSC business is explained by the fact that about two million tons of military cargo move on the North Atlantic route. Outbound to Europe, liner service ships recently have been loaded only to about 60% of their capacity, but have been filled on the homeward trip. The containers needed for the westbound voyages had to be transported empty when no military cargo was available. The parent of USL reported that in 1982 MSC offerings accounted for 26% of its revenues, whereas no other single customer was the source of as much as two percent of its revenues during that year.
Tonnage offered to South Korea was
380,0 tons; to the Philippines, 361,000 tons; to Okinawa, 225,000 tons; and to Japan, 276,000 tons—approximately half of the volume moving to Europe.
Under the law, no single carrier may transport more than 67% of the military cargo during any six-month period. If the low bidder does not have a ship ready to load when the military cargo is ready, it is placed aboard the second low bidder’s ship, and so on up the ladder of rates.
The U. S. Naval Ship Stalwart, first of twelve ocean surveillance ships being built by Tacoma Shipbuilding Company at Tacoma, Washington, was launched on 24 July, and her unnamed sister slid down the ways in late December. On completion, these ships and their sisters will be operated by the MSC, and will be manned by civilian crews. The Stalwart was the first ship built in the United States in accordance with the Japanese- developed system of zone outfitting. Most of the equipment, piping, wiring, and other components are installed in modular units before they are assembled within the hull. This system is applicable to series-constructed vessels, and is expected to save both time and money.
Adding to the Navy’s support fleet and also increasing the participation of MSC in direct Navy operations, three stores ships have been acquired from the Royal Navy for approximately $10.5 million each. The first two ships, the Lyness and the Tarbatness, were renamed Sirius and Spica. The most recent transfer was the Stromness, renamed Saturn, which was turned over to MSC control on 18 April 1983. The ship will carry about 40,000 different items of general stores and will haul enough supplies to support 15,000 men for one month.
Cargo Preference
A consequence of the worldwide recession has been the marked reduction in the flow of ship-transported goods moving in international commerce. Shipowners of many nations have clamored for years to have their governments reserve at least a portion of the waterborne trade for national-flag ships. The United States has required since 1904 that military
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cargo be transported in U. S.-owned or U. S.-registered ships. This practice was extended in 1954 to apply to one half of those cargoes financed through appropriations approved by the Congress. It was hoped that this would stimulate new construction, and while this has been true to some extent, insufficient shipping capability exists in the U. S.-flag fleet to carry all the reserved cargo. Groups profiting from the sale of their products to the government as part of these aid programs have protested regularly against this form of cargo preference, claiming that they are denied a market because the agency handling the transaction must pay, out of the total appropriation, the high freight rates charged by the American ships.
Other governments around the world have programs of cargo preference which range from an attempt to restrict both import and export cargoes to national- flag shipping, at one extreme, to arbitrary delays in port for foreign-flag vessels in the effort to discourage their participation in the trade, at the opposite extreme. Without entering into the debate on cargo Preference, the following events affecting U. S.-flag shipping in 1983 are reported.
President Ferdinand Marcos of the Republic of the Philippines issued Executive Order 769 in January 1982, with effect from 1 June 1982. This order reserved 80% of all non-government cargo in both the import and export liner trades for Philippine-flag carriers and ships registered under the flag of the bilateral partner. No bilateral agreement exists between the U. S. and the Philippines. The decree was viewed by the American shipping community as an effort to impose limitations on the export trade of the United States. Inter-government talks on the subject were initiated, but were discontinued in February 1983. In October 1983, the Federal Maritime Commission began consideration of a proposal to suspend indefinitely the outbound tariffs of the two Philippine-flag carriers offering sailings from U. S. ports. This would have the effect of barring these operators from transporting any cargo originating in the United States and destined to ports visited by the Philippine ships. No final action had been taken as the year ended.
Another impasse in shipping relations developed about the same time with Venezuela, which began strict enforcement of its cargo reservation system in 1982. The United States recognized Venezuela’s right to promote its merchant fleet, just as does this country, but insisted that U. S.- flag carriers in that trade be protected. Temporary accommodation was reached early in 1983, but permanent settlement to the dispute proved elusive, and on 31 December 1983 the issue was still seeking a solution. The two American carriers, Delta Line and Coordinated Carib- ben Transport, were operating to Venezuela, but there was neither stability nor permanence to the basis of their activity. Another round of talks was scheduled for the spring of 1984.
On 14 December, Coordinated Carib- ben Transport submitted a petition to the Federal Maritime Commission in which it claimed that Ecuador was discriminating against its ships by denying them entry to the port of Guayaquil, and restricting them to Manta. According to the petition, the reason advanced by the Ecuadorean Government was that the cost of the harbor development had to be distributed equitably among the ports of the country. Harbor revenues depended upon the number of ships calling, and the fiscal situation demanded equalization of calls between ports. The real reason, however, the petition sets forth, was to promote business for two Ecuadorean-flag carriers as well as for privately owned companies whose ships were registered under the Ecuadorean laws. The matter was under consideration by the Federal Maritime Commission as 1983 came to an end.
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The sale to Egypt of one million tons of bagged flour was negotiated in 1983. The Department of Agriculture claimed that this was a commercial transaction, and therefore cargo preference did not apply, despite the fact that it involved “payment in kind” by the U. S. government. Political and legal pressures were brought against the department as a result °f this decision, and on 24 February it was announced that the White House had directed that one-half of the flour shipments be allocated to American ships, if they were available. In August, by contrast, the Department of Agriculture routinely approved using U. S.-flag ships to carry one half of a shipment of 18,000 metric tons of salted butter and 6,000 metric tons of processed cheese which the government had sold to Egypt.
Cash transfer aid, in which the federal government advances money to a foreign nation, and the recipient uses the funds to Purchase what it needs from U. S. sources, has been controversial insofar as >t concerned the application of the “SOSO” law. A suit brought in December 1983 in the U. S. District Court in Washington, D. C., by the Council of Ameri- can-Flag Ship Operators, the Maritime Institute for Research and Industrial Development, and the Transportation Institute against the Department of State and Ihe Agency for International Development charged them with failure to comply with the cargo preference law in these cash transfer transactions. The suit was based on an opinion by the General Accounting Office in 1980 which held that lhe cash transfer system did not come under the cargo preference regulations because the funds were “not advanced in connection with the furnishing of equipment, materials, or commodities, as specified in the law.” The plaintiffs asked the court to reject this opinion as erroneous, and to enjoin both State and AID from “failing and refusing to apply the Cargo Preference Act to cash grant and cash transfer programs for Israel established pursuant to the Foreign Assistance Act.”
The quality of cargo involved is signif- tcant: about two million tons of com, wheat, sorghum, and soybeans, valued at approximately $910 million. Not included in the suit, but clearly a target for the U. S.-flag carriers, is the military equipment which Egypt plans to buy with an additional cash grant of $835 million.
On 27 December, it was reported that Israel agreed to use U. S.-flag ships for 0ne-half of the cargo moving under the cash transfer program. The earlier reluctance was said to have been a misinterpretation: the Congress was late in making funds available, and no commitments could be made during that time of uncertainty. Officials in the U. S. Government also explained that Israel, the largest recipient of this form of assistance, had undertaken to use U. S.-flag ships “even without the compulsion of the statute despite the substantial extra-cost of using American vessels.”
On 27 December, the Maritime Subsidy Board obeyed a U. S. District Court order to authorize six tankers to carry preference cargo while still drawing operating differential subsidy payments. The Board also directed the Maritime Administrator to prepare a rule to require government agencies to consider the total cost to the federal government of using ships of national registry to haul those reserved cargoes. Congress, in the opinion of the board, “clearly intended that these cargoes be transported in American ships, charging close to world rates, with the difference in revenues required to earn a “reasonable incentive to carry those cargoes” being paid in the form of operating differential subsidy.
This decision by the Maritime Subsidy Board was challenged by independent (i.e., non-subsidized) carriers, who forthwith sought a ruling on this issue from the U. S. Court of Appeals. One argument advanced for the court’s consideration was that accepting bids with the subsidy excluded “creates an inequity in the bidding process between subsidized and unsubsidized vessels that could lead to less efficient subsidized vessels taking business in the preference trades from more efficient non-subsidized vessels by virtue of the subsidy paid.”
As the year ended, the issue was pending in the court.
International Agreements
At midnight, 16 December 1983, the three-year-old agreement for sharing cargo moving between the United States and the People’s Republic of China (PRC) expired. Implicit in this termination was cancellation of the permission enjoyed by U. S.-flag ships to enter 20 mainland China ports and for Chinese ships to call at 55 ports in the United States.
The United States was unhappy with the agreement because of Chinese reluctance to make commitments to assure the apportionment of cargo which had been promised. The available evidence convinced Federal Maritime Commission Vice Chairman Thomas F. Moakley that the PRC controlled the flow of cargo “to benefit their own, state-controlled car-
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rier,” and had “expressed clear animosity toward any type of collective rate making in its trades.” Negotiations to effect a new agreement to replace the one expiring on 17 December began in Beijing on 29 August. When it was perceived that additional time would be needed to attempt to reconcile conflicting issues, the agreement was extended 90 days.
In theory, the agreement guaranteed the merchant fleets of each nation one- third of the cargoes moving in both the liner and the bulk trades, but in practice U. S.-flag ships lifted only about 12% of the liner cargo, and almost none of the bulk business. The trade never reached the levels anticipated in 1980, and it was notably depressed in 1983. Shipping men considered that little revenue would be lost as a result of the expiration of the agreement. No further negotiations were in contemplation as the year ended.
The Code of Conduct for Liner Conferences, sponsored by the United Nations Conference on Trade and Development and strongly supported by the less developed countries which either had fledgling merchant fleets or aspired to be shipowning nations, became effective on 6 October 1983. Fifty-eight countries controlling 28.7% of the world’s liner tonnage ratified the code. The United States did not ratify this agreement. Without U. S. participation, a German maritime consultant commented that full success was not possible. Despite these dismissals, worry among carriers persisted because of the fear that operations will be made more difficult, and therefore more costly to the shipper. Opinion generally still was reserved at the end of 1983, and an attitude of caution prevailed in the American liner community.
Steamship Company Affairs
American Atlantic Line: For the first time since the collapse of Pacific Far East Lines in 1979, the Maritime Administrator found it necessary to initiate foreclosure proceedings against an American steamship company. On 1 March 1983, American Atlantic Line, a subsidiary of American Marine Industries, of New
York, notified the Maritime Administration that it was redelivering its three ships, built under construction subsidy and financed through government guaranteed mortgages. A payment of $800,000 due on 1 March was not made, and on 3 April Maritime Administration paid $12,999,023 (which included $652,731.42 in interest charges) to Chemical Bank of New York, the mortgage holder. On 11 May, appropriate steps were taken by Maritime to have the U. S. District Court in Jacksonville declare the company bankrupt and to order liquidation.
The difficulties which finally overwhelmed American Atlantic Line arose from the fact that the Brazilian Government refused to grant the three U. S.-registered ships “flag status and equal access” to cargo moving in the United States-Brazil-Amazon trade. This barred the American ships from carrying southbound cargo in a trade for which they had been designed and built. Although a general understanding on commercial pooling had been reached between carriers after three years of delay, according to Ronald C. Rasmus, president of American Atlantic Line, the Brazilian line which carries 95% of bilateral cargo refused to conclude the pooling agreement.
AMCO: American Coastal Joint Venture, Inc., as described elsewhere, was low bidder for military cargo for the six months that ended on 31 March 1983. It was third lowest for the succeeding semester, behind USL and Sea-Land Service. AMCO complained that its prestige had been tarnished by rumors spread by its competitors, and sought in vain an injunction to assure itself of a substantial share of military cargo. Its failure in court was followed in April by a temporary withdrawal from service of both its ships. On 26 May, however, AMCO resumed sailings, and maintained its advertised movements throughout the remaining months of the year. William B. Keely, president of AMCO, said that on each outbound voyage his ships were sailing about with 70% of their cargo capacity in use, including about 100 containers of military cargo. The military business, according to Mr. Keely, accounted for
about 20% of the ships’ capacity.
American Heavy Lift Shipping Co.: Formed in 1978 by a partnership of Gulf Oil Corporation and the Hansa Line, of Germany, American Heavy Lift Shipping Company built two small vessels, the John Henry and Paul Bunyan, under construction differential subsidy and put them into worldwide charter service. The ships had derricks with lifting capacity of 216 tons, outsized hatches and bow and stem ramps to accommodate exceptionally heavy, bulky or otherwise unusualsized cargo.
Gulf bought out Hansa Lines’ share about a year after Peterson Brothers, of Sturgeon Bay, Wisconsin, delivered the second ship to the operating company. In 1980, American Heavy Lift applied unsuccessfully for an operating differential subsidy. Several of the big projects abroad which the ships had hoped to serve “failed to materialize,” and the general economic recession “caught up” with the ships, a spokesman explained. The John Henry was laid up in 1981, and the Paul Bunyan has been chartered only occasionally. Prospects for the employment of the ships, which cost $33.4 million to build and on which the government paid a subsidy of 42%, were said to be very bad.
In light of these gloomy forecasts, on 30 August 1983, Gulf requested permission from the Maritime Administration to sell the ships to a Philadelphia enterprise which had arranged for their purchase by Supersea Transportes Maritimos, Ltda, of Rio de Janeiro. The ships would be registered under the Panamanian flag and used to support offshore petroleum fields along the coast of Brazil.
Final disposition of the case had not been made by 31 December.
American Marine Lines Co., (AML) was formed by a group of investors to compete with Sea-Land Service, Navieras de Puerto Rico (the trade name of the operating company set up by Puerto Rico Marine Management, Inc.) and Trailer Marine Transport (TMT) on the route between Newark/Philadelphia/ Baltimore and San Juan, Puerto Rico. A single ship, Caribe Enterprise, was ac-
did
eamings were $43 million; for the first ee quarters of 1983, its net revenues u-ere 510.8 million, reflecting the contin- jj. 8 economic recession which has af- med shipping worldwide, lar 6 ^res‘dent Monroe, last of the three 8e containerships built by Avondale, as delivered to APL on 29 March. * ese ships were sold to the Bank of merica for a total of $215 million, and
quired, and sailings were scheduled on a •en-day frequency. The tariff filed with *he Federal Maritime Commission did not stipulate the ports in the United States from which the ship would sail. Rates set forth in the tariff were lower than those of tae established carriers.
On 1 January 1983, the Caribe Enterprise sailed from Philadelphia, precipitates a dispute between the established operators and the new carrier. It was al- ®ged that the tariff was misleading, in fnat it failed to show definitively that all cargo would move through Philadelphia, he containers from Newark and Baltimore being trucked from those cities to niladelphia. A vigorous presentation was made to the Federal Maritime Com- m'ssion by the three big companies, but 1Qn of AML’s tariff. On 22 March, how- ^Ver, it was reported in a trade journal nat the Caribe Enterprise had suspended Service because of engine trouble.
The Caribe Enterprise was built in y45, and converted to a container carrier y insertion of a new midbody in 1969. n her first voyage for AML, the ship Carried only 19 containers. The second filing from Philadelphia was loaded 'Alth 24 containers, but for the third trip a J?a* of 71 containers was put aboard, ne fourth voyage originated at Newark, and was booked for 100 containers. En- ?!ne problems were encountered on the c\vark/Philadelphia leg, and the voyage j. as cancelled so that repairs could be ef- ^ctuated in Brooklyn. She was returned p Service and scheduled to sail from niladelphia beginning 19 May, but that °yage was cancelled.
At year’s end, no further action by the tl'Pany had taken place, and no addi- °nal reports had been published in the rade journals.
American President Lines: In an event. I year for the company, American Present Lines (APL) was divested by its . arent, Natomas Corporation, in August d became independent under the name ■j, American President Company, Ltd. e steamship company had a fleet of 15 itainerships and 5 multipurpose ves- s. APL holds an operating differential sidy contract, valid until 1997, which . ays about $45 million a year. In 1982,
thri immediately leased back for 25 years. Authority until 1 June 1984 was granted to APL by a law passed late in 1983 to purchase up to three ships from foreign sources. All work required to bring the ships up to American standards must be performed in U. S. yards. No money accumulated in the capital construction fund may be used for the purchases.
A lightweight railroad train to carry containers from Seattle, San Francisco, and Los Angeles to inland destinations was designed for APL by the Budd Company and built by Thrall Manufacturing Company, of Chicago Heights, Illinois, at a cost of $8.8 million. APL is the first steamship company to own railroad rolling stock. The train will consist of 39 articulated, low-profile cars, each of which can accommodate two rows of five containers, for a total lift of 300 boxes. Westbound, the trains will be loaded by Trans way International Corporation, of New York.
By selling the President Eisenhower and the President Roosevelt to Delta Lines, APL received $7.1 million, which it applied immediately to payment of construction costs of the three ships delivered by Avondale.
Delta Line: Delta Steamship Line, Inc., was acquired from Holiday Inns by Crowley Marine International, of San Francisco, in late 1982. Various objections to the purchase were registered, but
Secretary of Transportation Drew Lewis gave final approval to the transaction in late January 1983. To eliminate one argument against its operation under subsidy, Crowley disposed of its holdings in two Venezuelan shipping companies in April 1983. Headquarters of Delta Line, under Richard F. Andino, senior vice president and general manager, were moved from
New Orleans to New York.
In January 1983, Delta proposed to the Maritime Subsidy Board (MSB) that its operating differential subsidy contract be “bought out” by the government. Delta asked that it be paid $525 million in the next five years, and calculated that this would save the government $75 million otherwise payable under the existing contract. Delta would acquire 14 diesel-powered, foreign-built ships to be registered under the American flag and manned by crews of 18, in contrast to its present fleet of 24 ships staffed by 32 to 41 men each. Considerable opposition was demonstrated by competitors and maritime labor unions. On a technical issue of alleged improper contact with members of MSB, the chairman rejected the proposal on 3 April, but permitted Crowley to make a new offer after three months. This action was ratified by the Maritime Administration on 23 May 1983.
(Continued on page 221)
U. S. Merchant Marine in 1983 (Continued from page 97)
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Delta applied to the Administration for Permission to buy three containerships r°m APL, stating that these vessels v’°uld be used in the West Coast of South America trade. A vigorous but futile pro- *Cst was lodged by Coordinated Caribbean Transport, Inc., the operator of a bon-subsidized service to Guayaquil, Ecuador. Delta’s application was approved on 17 July. Only two ships, the resident Eisenhower and the President Roosevelt, eventually were acquired and renamed Santa Paula and Santa Rosa.
The Santa Rosa and Santa Paula are bPy containerized and self-sustaining mips with spaces for 950 twenty-foot Containers, of which 166 are refrigerated, ne ships were scheduled to sail from i hiladelphia, Charleston, and Miami P°ugh the Panama Canal to Guayaquil, Ecuador. Cargo destined to Peru and mle was to be transshipped to feeder j^ssels. The first sailing of the Santa noia was on 7 November, followed by be Santa Paula on 21 November. Fort- njghtly departures thereafter were sched- led. (Delta Line had 12 ships in lay-up rhis time, but none of the ships was u% containerized.)
A new proposal for subsidy “buy out” .p’pS submitted by Delta on 18 August, be company would build ten new ships ° '>000 to 1,600 containers (20-foot SlZe) capacity, and would earmark $35 Jb'Uion “to ease labor’s transition” from ( e more numerous fleet and larger crews 0 the streamlined operation envisioned, p. mturn, the government would pay ( e'ta $525 million in five years. An al- mative would be for a “buy out” of 25 million, but only five new ships °uld be acquired and no fund for labor ^°uld be set aside. Several challenges L.m maritime labor unions, the Ship- ^t'lders’ Council of America, Coordi- p ed Caribbean Transport, and the to°Uncil of American-Flag Ship Opera: rs were filed with the Maritime Admin- mtion. No decision on the Delta pro- °mi had been reached by 31 December. Q arrell Lines: Farrell Lines, which .Plated in the United States/Australia/ Zealand service from the 1960s, j "drew from that overtonnaged route in mtary 1983. The four ships assigned to this service, Austral Entente, Austral Envoy, Austral Pioneer, and Austral Puritan, were sold to United States Lines for use in that company’s North Atlantic operation. The total sale price of the ships was about $150 million including debt, mortgages, and equity capital. For Farrell, the transaction was expected to improve its financial position for 1982 by $35 million, compared to 1981. Regular service on Farrell’s routes to West Africa and the Mediterranean was continued without interruption.
Maritime Administration and Naval Sea Systems Command joined with Farrell Lines to test, over a five-month period, a new means of handling oversized cargoes in containers. The “sea shed” is a huge, box-like frame weighing 33 tons which is placed in the ship’s regular 40-
with
foot container slot. Outsized cargoes are lowered into the frame; as each unit is loaded, the floor of the shed is closed. The gross capacity of a shed is 143 tons. Developed by the Navy and Maritime Administration since 1980, the purpose of the sea shed is to use containerships to transport tanks and similar odd-shaped military equipment. In the Farrell tests, commercial cargo will be stowed in the sheds. Retired Admiral Harold E. Shear, the Maritime Administrator, foresaw a standard modification for containerships if the tests were successful. These modi- cations would produce “significant savings” for the Navy’s sealift program as well as enhancing the capability of the ships to increase their earning potential. The first sailing of a ship carrying a sea shed was in early November, when the
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Lykes Lines: Secretary of Transportation Elizabeth Dole on 1 February 1983 approved the application of Interocean Steamship Corporation (comprised of members of the Lykes family and executives of the steamship company) to purchase Lykes Brothers Steamship Company from LTV Corporation for $150 million. A cash payment of $85 million was accompanied by a promissory note for $65 million, payable in five years. Dividend payments were limited by the Maritime Subsidy Board to those amounts needed to service the debt. In the announcement of Secretary Dole’s approval, Lykes stated that no changes in the subsidized services were contemplated.
Its plan to purchase four German-flag containerships from Hapag-Lloyd was revealed by Lykes in late November. The Mosel Express, Alster Express, Weser Express, and Elbe Express, each with a capacity of 1,100 20-foot containers, were to be delivered to Lykes in the first quarter of 1984. The ships must be brought up to the standards of the U. S. Coast Guard and the American Bureau of Shipping. This work will be divided between American yards, which will be allocated two ships, and Far Eastern yards, which will modify the other two. According to the Lykes announcement, these four ships are to be assigned to the Pacific coast-Far East service now maintained by Lykes with two roll-on/roll-off ships.
Because Lykes has an operating differential subsidy contract, the proposal must be approved by the Maritime Administration. On 21 December, American President Lines and Sea-Land Service, both of which operate in the Pacific Coast-Asia trade, requested that the Maritime Subsidy Board order a hearing to determine the need for this expansion of the Lykes operation, whether the displacement of the two roll-on/roll-off ships by the four containerships constituted substitution or the establishment of a new service, and the impact such changes would have on Sea-Land and APL. Sea-Land noted that the approval of the application would not increase the U. S-flag share in the trade, but would be “a redistribution of cargoes among U. S.-flag carriers.” No action by the government had been announced as of 31 December.
On 16 November, it became known that Lykes proposed the early termination of its operating differential subsidy contracts, which otherwise would not expire until 1998, and cover nearly a half-dozen services from the Gulf and Pacific ports of the U. S. to all major trading areas of the world. If all Lykes’ ships were in operation, there would be 44 vessels drawing operating differential subsidy. In each of the last three years, Lykes has received from the Maritime Administration between $86.3- and $97.6 million in subsidy payments.
In his explanation to the Maritime Subsidy Board, W. J. Amoss, Lykes president, noted that the government would be obligated to pay his company a total of $3.5 billion to $4.5 billion, depending upon the number of ships actually operated, if the contract were allowed to run its full length. He proposed that the contract be terminated in eight years, during which Lykes would receive about $1-' billion in subsidy, predicated upon annual payments of $137 million. In calculating the amount of these payments, an annual increase of 9% in operating costs was expected.
By approving the proposal, Mr. Amoss explained, the government would provide Lykes with the capital needed to modernize its fleet. Lykes would build, in foreign yards, 15 new ships in the next eigh1 years. Each of these efficient and cost- effective ships would have a capacity between 2,000 and 2,500 containers 20 feet long, or their equivalent. These ships, added to the four purchased from Hapag-Lloyd, would meet company needs until 1998. Anticipated fleet deployment envisioned 19 to 20 ships in operation, one in repair status, and seven under charter, for a total fleet of 27 to 28- Except for the vessels under charter, units replaced by the new ships would be transferred to the National Defense Reserve Fleet.
Considerable opposition to the pr°' posal was registered. Sea-Land Service attacked the substance of the plan and submitted an economic study in supp011 of its criticism. Coordinated Caribbean Transport demanded a full hearing, say' ing that the application was “skimpy- The International Longshoremen’s Ass°" ciation and its affiliated Organization ot Masters, Mates, and Pilots, expressed the view that the Maritime Administrate11 lacked the authority to terminate contracts, an issue that required definite1" settlement before any other action com be taken. Pending settlement, it urge® dismissal of the proposal. Shannon Wall, president of the National Maritim® Union, declared that the Lykes proposa was a “desperate solution” to the ship replacement problem faced by the U. S- flag merchant fleet. ,
No action on the Lykes proposal h® been taken by the Maritime Administr® tion as the year ended.
Marine Transport Lines. In storm) weather on 12 February 1983, the Mot"1
Electric, operated by Marine Transport Lines and carrying 27,000 tons of coal from Hampton Roads to Massachusetts, capsized and sank in 122 feet of water 30 nnles off the Virginia coast. Hearings mto the loss, which cost the lives of 31 Members of the crew of 34, were held in Portsmouth, Virginia, for two weeks in February and again for an additional three weeks in March. The three Coast Guard officers and two National Transportation Safety Board investigators who comprised the joint board heard a number of Witnesses and examined more than 120 exhibits. The hearings were reopened in Ju'y to consider additional evidence and |o view 30 more exhibits, in part supplied by divers who made 13 dives to examine 'he two sections of the hull. The final report is expected in March 1984, and Mil deal primarily with considerations of safety, a separate report from the Coast F>uard will be forthcoming at an unspeci- 'ed date, and will deal with regulations. Marine Transport Lines was spun off y GATX Corporation on 16 March ^83. A review of the assets of the indepen- aent Marine Transport Lines resulted in an $11.9 million reduction in the book value of the fleet, which consisted of 38 ships of all types, registered in both the mted States and in foreign countries. Matson Line: Matson celebrated the Jfrh anniversary of container service to ‘‘awaii on 31 August, recalling the sail- lng in 1958 of the Hawaiian Merchant, a Partially converted breakbulk ship trans- P°rting 20 containers on deck.
Jn the fall of 1983, Matson awarded a h tnillion contract to McDermott, Inc., ,Louisiana, to build a crane-equipped arge to move containers between the awaiian Islands, supplementing the ser- lce provided by the Mauna Kea, a Mat- ^ n'°wned small containership. The arge, to be named Haleakala, will carry h containers, both dry and refrigerated, s'X’ell as 1,700 tons of molasses, because of increasing demand, the Pacity of the Mauna Kea was expanded ^rorn 220 to 230 containers. This was meved by extending the cell-guide sys- of securing the boxes, and by ^aligning the method by which the ship- j, aM crane was stowed for sea transit.
er regular route is from Honolulu to the |. on the neighboring islands of Hilo, ahalui, and Nawiliwili.
Ovi e,! Marine: Stock certificates in Cj1 Corporation, the name adopted by gden Marine Industries when it was tin n fry >ts parent, Ogden Corporals’ Were t0 fre mafrefr on 4 January of \ -^fre CM I fleet, under the direction ne Michael Klebanoff, president of the company, (a position he held before
Marine Industries was spun off) consisted of 32 ships of about 1,790,000 tons deadweight: 18 tankers, 5 bulk carriers, 3 car/ bulk carriers, 2 liquefied petroleum gas transporters, and one ore/bulk/oil vessel. Fifteen of these ships were registered in the U. S., including the just-rebuilt 137,000 ton Columbia and two new Japanese-built tankers of 50,000 tons deadweight each.
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spin-off was consistent with the firm’s strategy of emphasizing service activities not burdened with heavy debt (Ogden Marine has a long-term debt of $276 million), and neither cyclical nor capital intensive. The shipowning subsidiary contributed only 12 cents a share toward the parent’s total earnings of $1.47 a share for the six months ended 30 June. The stock of the independent steamship company will be traded in the over-the-
counter market.
Sea-Land Service, Inc.: Sea-Land Service, the largest containership operator in the world and also the largest unsubsidized steamship company under the American flag, is a subsidiary of R. J. Reynolds Industries, Inc., of Winston- Salem, N. C. Its fleet numbers more than 60 ships serving 56 countries and territories, and has a book value of $1.3 billion, according to the parent company’s 1982 report. In the first three quarters of 1983, revenues were $1.192 billion; pre-tax and pre-interest earnings were $73 million.
Newspapers reported on 12 August 1983 that Reynolds was “considering the feasibility and desirability of divestment of its ocean transportation operations, including possible . . . spinoff, but . . . has made no determination with respect thereto.” (Reynolds announced on 16 February 1984 that the “spinoff” would be completed by 30 June 1984.) That there was some debate in the board room was indicated by the announcement on 8 September that Joseph F. Abely, vice chairman of Reynolds Industries, would be in charge of a special task force to investigate the feasibility and desirability of spinning off Sea-Land to Reynolds shareholders. Three days later, news reports stated that Mr. Abely would become chairman and chief executive officer of Sea-Land “if and when the containership operation is spun off.” On 7 October, the press carried the news that Charles 1. Hiltzheimer, chairman and chief executive officer of Sea-Land since 1976, was retiring, at age 56, “to pursue personal interests.” He agreed to serve as a consultant to the parent company through 1984.
Sea-Land made two significant changes in its operating pattern during 1983. On 20 May it confirmed that four ships had been assigned to call at Halifax, Nova Scotia, on westbound Atlantic crossings. The first ship arrived at Halifax on 13 June, inaugurating regularly scheduled American-flag containership service to a Canadian East Coast port. No direct sailing to Europe will be offered. The voyages will be scheduled westbound from Rotterdam to Felixstowe, Halifax, New York, Wilmington (N. C.), and Jacksonville.
On 15 June 1983, Sea-Land began offering more frequent, direct containerized service to Puerto Rico, Central America, and the Caribbean. Weekly sailings from New Orleans and Miami to Jamaica, Guatemala, and Honduras replaced the previous relay operation via either Kingston or San Juan. Direct sailings from New Orleans to San Juan also were scheduled.
United States Lines: In 1982, Daewoo Shipbuilding and Heavy Machinery, Ltd., of Seoul, Korea, announced that it had negotiated a contract with United States Lines (USL) to build 12 ships, with option for two more, for $55 million each. A revised contract between the two principals was signed on 22 April 1983. Only twelve ships were specified, and the price was approximately $600 million” for the entire program. Design changes producing greater speed made the additional ships superfluous, according to Daewoo. Technical modifications in engine design, permitting cheaper fuel to be used, also accounted for the lower unit price of construction. These 58,000 tons deadweight ships will be delivered beginning in the third quarter of 1984. They will be the largest containerships afloat, with a capacity of 4,200 20-foot containers or their equivalent. USL paid 20% of the building price immediately; the Korea Export-Import Bank provided $300 million and the remainder was still under negotiation with “a number of international banks” at year’s end.
USL became the operator of the subsidized services of Moore-McCormack Lines (Mooremack) when its parent. McLean Securities, Inc., purchased the smaller company in the closing days of 1982. During 1983, Mooremack was absorbed gradually by USL, which moved the headquarters to its corporate base in Cranford, New Jersey, switched the marine terminal from Brooklyn to USL’s facility at Howland Hook (Staten Island), set up a new division of McLean Securities under the name of United States Lines (S. A.)., Inc., and on E> November 1983 announced that the Mooremack name had been extinguished- Robert Splan, vice president of USL’S European division, was named president of the new unit, effective 1 May. Robed O’Brien, who had been president of Mooremack until it was purchased by USL, retired on 30 April.
Concurrent with these events was a complicated transaction with Farrell Lines, Inc. Four large containerships' with a total capacity equal to eight smaller ships, were purchased by USL- along with the subsidy contract which covered the ship’s operations to Austra' lia/New Zealand. No payments under the contract were to be made for at least 12 months. Service to the “down under’ nations was suspended, and the four big containerships were switched to the transatlantic route. The terminal in Ed' gland was changed from Felixstowe t0 Southampton because the Farrell ship5 were too large to use the facilities at Felixstowe.
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Farrell Lines, for its part in the transaC' tion, received an unpublicized payrnef1 of cash and 11 older, breakbulk ship5' which, by pre-arrangement, were imrnC' diately sold to Falcon I and Falcon II Sea Transport Companies. These breakbulk vessels were transferred to the Maritiu^ Administration to be used as partial paF ment for construction of tankers the Fal'
the
Pal
sum of $2,482,834.75 to meet princi- and interest payments on government
Con companies were building for charter to Military Sealift Command, The 11 ships were placed in the National Defense Reserve Fleet.
On 18 August, the New York stock exchange offered for sale to the public '3.2% of the shares of United States Lines Company, which up to that time had been held by Malcolm P. McLean, ehairman of McLean Securities, Inc., eorporate parent of USL, and William B. Rru, the president of the steamship comPany. McLean, as the majority stockholder, retained the right to name all the directors of USL.
Waterman: On 1 December 1983, Waterman Steamship Co., one of the oldest American operators, filed for protection from its creditors under Chapter 11 of the “• S. bankruptcy code. The petition hsted assets at $228.4 million and liabili- l|es at $242.4 million, and gave as rea- s°ns for the filing the existing low freight rates, overtonnaging on the trade routes Served by the company, high crew Wages, and benefits, and the financing c°sts on two of its newer ships.
George Hearn, senior vice president of 'he company, declared on 4 December ’hat the line was continuing to operate its e'§ht lighter-aboard ship (LASH) vessels, ”s operating differential subsidy contacts remained in effect, and cargo still "'as being booked. He stated that a large Mortgage payment was owed on 30 NoVember, and a temporary financial short- a8e confronted the company, but Waterman expected to “break even” during the "ext 30 days.“ Exports from the United ^’ates had dropped significantly because °f high labor costs; many multi-national ’tefnpanies, according to Mr. Hearn, now a,° much of their manufacturing overseas.
I s a result, Waterman was carrying “a ot of low rated cargo.”
Waterman’s obligations to the government were said by the Maritime Administration to amount to $128.3 million, invading the $2.5 million payment ad- 'anced to Waterman to prevent default on Certain loans.
A creditor’s committee of thirteen concerned parties was appointed by the ankruptcy court on 7 December. Waterman’s attorney confirmed a report that c°mpany executives were meeting with f’0vernment officials, who had been SuPportive.”
Gn 21 December, the Maritime Administration disclosed that on 2 Decem- °er it had made available to Waterman jmaranteed mortgages on three LASH ype vessels and 126 of the lighters used " these ships. On 21 December, the
Maritime Administration advanced $1,745,219.44 to pay insurance premiums on its ships. Throughout the year, Waterman received a total, including the December amounts, of $11,600,000 to protect the government’s interest in the ships, mortgages on which are guaranteed under Title XI of the Merchant Marine Act.
As 1983 closed, Waterman ships operated on their assigned routes without interruption.
Passenger cruise service: More than a million Americans booked passage on foreign-flag cruise ships during 1983. Billions of dollars were involved. Except for two ships operated in the Hawaiian Islands, and four combination passenger- cargo carriers in the round-$outh America trade, no American ships participated in this lucrative activity. On 12 October, however, Contessa Cruise Lines, Inc,, of Houston, announced that it had signed a contract with Marine Power & Equipment Company, of Seattle, to build two 800-passenger vessels at a cost of $230 million. Marine Power was one of 16 shipyards that bid on the work. Construction is to start in the spring of 1984, and the first ship is to be completed in May 1986. According to Dudley R. Briggs, president of the company which was formed earlier in 1983, the ships will be 543 feet long, 80 feet in beam, and will have a draft of 18 feet. They will be staffed by a crew of about 300, most of whom will be “hotel workers.” Initially, the first ship will be used in the Alaska cruise trade during the summer of 1986, and then will be based at Galveston and employed in a variety of short and medium length cruises to United States and Mexican ports.
Joseph Greenwell, president of American Flagships, disclosed on 24 November his plans to build two diesel-powered vessels each with a capacity of 1,400 passengers. Work “should begin” in the summer of 1984 at Bethlehem Steel’s Sparrows Point shipyard. The cost of the two ships was reported to be $350 million. Mr. Greenwell added that his application for government construction loan and mortgage insurance has been on file at the Maritime Administration for at least a year. As was planned for Contessa Cruises, these ships would be assigned to the coastal trades, shifting with the seasons from northern to southern cruises on both coasts of the United States.
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UNITED STATES
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Details of the financing for American Flagships’ venture are “still being worked out,” but Mr. Greenwell was confident that they would “be worked out by the time work can be started.” At
1987.
► Captain Avis T. Bailey, a 1972 graduate of the U. S. Merchant Marine Academy, was issued an unlimited license by the Association of Maryland Pilots. He the first black harbor pilot in the United States. Combined membership of the state pilot associations is approximately 1,200.
►The Pacific Coast Marine Firemen’ Oilers, Watertenders and Wipers Association celebrated its centennial annivet'
of
of
the end of 1983, however, no further indication of action had been publicized.
Navy
To expedite procurement of the ships needed for the Rapid Deployment Joint Task Force, the Navy acquired a variety of hulls from numerous sources. Part of this process was the request for offers of vessels to be converted into hospital ships. Two proposals were received. One was from a consortium of Worth Oil Transport Co., Northwest Shipping Corporation, and National Shipbuilding and Steel Co., which involved conversion of the tankers Worth and Rose City, each of about 92,000 tons deadweight. The other proposal was from Prudential Lines, Inc., in conjunction with Maryland Shipbuilding and Drydock Co., which would transform one or more of Prudential’s three LASH-type carriers into hospital ships. All these vessels were built under construction subsidy. As part of its approval, predicated upon award of the contract by the Navy, the Maritime Subsidy Board stipulated that the tanker subsidy contracts be cancelled, and Prudential would have to substitute comparable tonnage for its ships.
On 30 June, the announcement was
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publicized that the tanker consortium had been approved by the Navy, and conversion of one tanker had been allocated to NASSCO in San Diego. The contract amounted to $186 million. The option was exercised by the Navy on 19 December to convert the second tanker at a contract price of $165.4 million. Production was to start on the first ship in October 1984 with completion by 1 October 1986. The second ship is to be delivered in the second quarter of 1987.
Prudential Lines, according to press reports of 22 September, sued the Navy to stop the program. Prudential’s general counsel stated that his company was convinced that “without the Navy’s illegal manipulation of the procurement process,” Prudential would have been awarded the contract. Further, the complaint alleged that the Naval Sea Systems Command ‘manipulated” the procurement process to direct the award to National Steel. On 10 October, the U. S. District Court in Washington, D. C., was asked by the district attorney to review the record of the Sea Systems Command in its procurement of the two tankers. Prudential also carried its argument to the Senate Subcommittee on Defense Appropriations which, on November 3, was reported to have “encouraged” the Navy to look again” at the offers for the second conversion project.
As the year ended, legal and congressional action still was in suspense.
Maritime Miscellany
► The Liberty ship John W. Brown, for decades a schoolship operated by the New York City school system, is to become a maritime museum. A fund-raising project to return the ship to her original configuration is in progress.
► Abe Rapaport and Richard Gillelen are leaders in an effort to obtain a congressional charter for the U. S. Merchant Marine Veterans of World War II. These two wartime members of the American merchant marine seek parity with the Veterans of Foreign Wars and the American Legion for their organization. They also want to establish a “living” memorial to the 5,625 men who were lost during World War II; the John W. Brown or the other surviving Liberty ship Protector is considered ideal for this purpose. Headquarters of the organization are in Mr. Rapaport’s home, 1712 Harbor Way, Seal Beach, California 90740.
► The Harry Lundeberg School of Seamanship, operated by the Seafarer’s International Union at Piney Point, Maryland, was to open a $25 million school headquarters in January 1984. The new building has 300 rooms for seamen upgrading their certificates or licenses, and eight dormitory spaces for trainees taking the 14-week basic course. The school operates a 1,600-acre farm which pf°' vides everything served in the cafeteria' ► District 2 of the Marine Engineers Beneficial Association agreed to a one- year deferment of the 7.5% wage >n' crease scheduled to become effective on 16 June 1983. It also waived cost of 1>V' ing adjustments payable in June and December, and extended its existing collective bargaining agreements until 16 June sary in San Francisco on 28 October.
dinner was held in the grand ballroom the Sheraton-Palace Hotel. Honolulu’ Seattle, and Wilmington, Califomi3' where the union has branch offices, hel^ celebration dinners on 15 October, D and 13 November respectively.
► Congressman Mario Biaggi, of York, received the Admiral of the OccaI1 Sea Award, presented annually by the United Seamen’s Services for dist>n guished service to the American chant marine and maritime labor. Ttus award recognized his efforts in CongfeSS to promote the American merchant ma rine. The Congressman is chairman of ^ subcommittee on the merchant marine 0 the House Committee on Merchant M3 rine and Fisheries.
► A court-ordered opening to women longshoremen’s jobs in the port of D® Angeles resulted in the assignment of’ jobs to women who were certified 3 cargo checkers. Twenty-six jobs went women who initiated the court action; u* remaining 11 openings were to be fH'e by lottery from the applications filed 1 August 1983.
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Colonel Kendall is a recognized expert on the merchant marine; he has been writing on the su t for the Proceedings since he was a second ^eutC^jp- in the 1930s. He has worked in the commercial ping industry, been on the faculty of the Mer j0r Marine Academy at Kings Point, served as a seJ?r, staff member of the Military Sea Transportation ^ vices (now Military Sealift Command), and was ■, 1975 winner of the Naval Institute’s award of ^ „ for his contributions as an author. The fourth ed1 j of his book The Business of Shipping was pubhs in 1983 by Cornell Maritime Press.