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FreightWaves explores the archives of American Shipper’s nearly 70-year-old collection of shipping and maritime publications to showcase interesting freight stories of long ago.
In this edition, from the April 1978 issue of American Shipper, FreightWaves revisits a speech from the DuPont export and import manager at the time. It gives a look at shippers’ feelings at the time regarding a new U.S. maritime policy.
‘No one is protecting the shipper’
The article started with this disclaimer: American Shipper seldom publishes the full text of speeches, but the address delivered by Jesse C. Jessen, export/import manager of E.I. du Pont de Nemours & Company, Inc., at the Northwestern University Forum in New York March 14 merits such handling. The text is remarkable for its clarity of expression, simplicity of form, and relevance. Jessen expresses the shipper viewpoint, and lists specific points which must be treated before shippers give their consent to legislation to authorize closed conferences in the U.S.
When Paul Richardson first asked me to participate in this Conference and express a “shipper’s view of the U.S. Maritime Policy,” I was at first exhilarated to be able to espouse some of my favorite themes of rate simplification, minibridge, anti-dual rate Conferences and microbridge. But, then I began asking myself, my shipping peers, carrier executives, Conference chairmen and government representatives questions including the following:
• What is the U.S. Maritime Policy?
• What is it designed to achieve?
• Is it intended to benefit U.S. business? World business?
• Is it intended to benefit U.S. ocean carriers? All carriers?
• Is it intended to benefit the United States nation or the entire world?
• How does it impinge on other Maritime Policies throughout the world?
I have carefully listened to and read the words of Senator Inouye, Congressmen McCloskey and Murphy, Robert Blackwell of the Maritime Administration, Karl Bakke of the FMC and competent carrier leaders such as Ed Heine of U.S. Lines, Conrad Everhard of Dart Containerline, Charles Hiltzheimer of Sea-Land and many others. Finally, I have reread the Shipping Act of 1916, the Webb-Pomerene Export Trade Act of 1916, the Merchant Marine Acts of 1936 and 1970 and related Acts. Also, the UNCTAD Code of liner conducts and related material — a United Nations development.
The stated summary of the various U.S. Maritime Acts appears to be as follows:
- Further a well-balanced Merchant Marine (U.S.).
- Promote commerce of the U.S.
- Aid national defense (U.S.).
This summary limits the intent of the U.S. Maritime Policy almost entirely to benefit U.S. carriers, national defense and to a limited degree, U.S. business. As a dedicated U.S. citizen, I support these aims, but it highlights a very important fact. It places the U.S. Maritime Policy in conflict or competition with that of virtually all of the 153 other nations in the world. A world which is growing in population, number of countries, national pride, and demand for a place in the sun as never before.
There was a time when the world’s traders, the Phoenicians, Norsemen and Portuguese, and then the great U.S. clipper ships operated to distribute finished products and machinery from more developed to less developed nations in return for inexpensive raw materials, food and finally inexpensive petroleum products. This usually resulted in a positive balance of trade for the developed nations and highly profitable carrier operation despite any inefficiencies.
But, now the situation has changed. World trade is no longer a luxury. It is now a necessity — no nation, and particularly, the U.S. can survive without imports of minerals or goods unavailable in that country and with exports to pay for them.
National pride and apparent opportunities for profit have led most countries or entrepreneurs in those countries to build ships and support them by subsidies, artificial loading preferences, and regulations designed to restrict so-called third flag carriers. This, in a sense, brings us where we are today, with a slightly over tonnaged problem, leading to claims of rebating, and relatively lower rates by non-Conference carriers (mostly non-U.S. flag). This, in turn, leads to submerged rate competition within Conferences, and a morass of rates designed to confuse and camouflage charges rather than bring them forward in a simple tariff basis. The result is
that the 18 remaining U.S. flag liner carriers have an average return on investment of less than 52 including subsidies, and less than zero if subsidies are removed.
Let’s look at some disturbing statistics
At the end of World War II, the U.S. Merchant fleet was the largest in the world, with close to 5,000 ships, but has had such difficulty competing that now there are only 575 privately owned U.S. flag ships out of 23,200 in the world — a frightening 2.5%. Fleet statistics in tons capacity between 1970 and 1977 compared to Japan and Russia are discouraging:
Country Change
Japan +81%
Russia +76%
U.S. -23%
In 1975, U.S. flag carriers transported 31 million tons, or 5.1 percent, of the 612 million tons of waterborne cargo that moved in our foreign trade. This was a substantial drop from the 41 million tons and 6.5 percent participation attained in 1974 and the 11.12 in 1960. During the past 10 years, U.S. flag carriage has averaged only 5.6 percent of the U.S. export/import trade.
The comparatively low level of U.S. flag carriage is due primarily to the lack of a modern bulk carrier fleet, plus the use of ships of other flags by some American entrepreneurs. Last year, of the nearly 295 million tons of tanker cargos moved in U.S. foreign trade, only 13.7 million tons, or 4.6 percent, was carried by American-flag vessels. One bright spot — U.S. flag liner companies in 1975 accounted for 136 million tons, 302 of American liner shipments.
What does this year bring?
• Prudential Lines selling 702 of their ships to Delta.
• AEL purchased by Farrell Lines.
• PFEL declaring bankruptcy.
• U.S. Lines taken over by McLean after years of availability.
The future is even gloomier. Reliable reports indicate Russia currently has on order or under construction at least 300 ships — while U.S. companies have only 51. At present, 61 modern Soviet container and Ro/Ro ships are operating between 30 U.S. ports and 36 foreign ports of which only four are in Russia. The Soviets, however, do not grant similar privileges to U.S. flag ships, or those of other nations. Operating agreements established with other nations are discriminating in that they either restrict or totally preclude third flag participation by others.
Click here to read the entire speech and the rest of the April 1978 issue.
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