Page 71: of Maritime Reporter Magazine (February 1998)

LEGAL UPDATE

Consolidating Government Cargoes by Art Dimopoulos, contributing writer

The Maritime Administration (MarAd), Military Sealift

Command (MSC), General

Services Administration, U.S.

Department of Agriculture (USDA) and the Agency for International

Development (AID) are consider- ing consolidating government- impelled cargoes on privately owned U.S.-flagged vessels that are on long-term time charter to the MSC.

The plan, still in its conceptual stages, does not envision MSC ves- sels competing with commercial

U.S. flag ships, but with foreign flag ships currently receiving car- goes for foreign destinations.

In 1997, MarAd granted 374 waivers for cargo movements involving Ex-Im Bank transactions totaling 152,547 metric tons.

USDA and AID cargoes shipped on foreign flag vessels accounted for about 310,281 metric tons of pack- aged commodities.

The government's objectives in consolidating cargoes include the following: enhancing support of the U.S. flag merchant marine; bolstering and attracting available skilled merchant mariners; enhancing services for U.S. inter- est in remote areas of the world; prudent utilization of government resources; and trimming govern- ment transportation costs from the present $11.6 billion level.

As noble as these ends are, the means are not without criticism from several U.S. industry sources.

Given that privately owned ves- sels on charter to the MSC could potentially be competing and given preference over domestic line haul carriers involved with foreign-flag service carriers, concern is war- ranted.

Indeed, through pooling arrangements, slot charters and other type of intermodal arrange- ments, the envisioned plan is not without consequence.

Critics of the plan have warned that the possibility of unfair cargo manipulation to the detriment of certain carriers could substantially impact cargo operations.

The government has requested feedback from the industry in voic- ing its concerns and helping forge equitable solutions toward achiev- ing the above-mentioned goals.

February, 1998

Interested parties desiring to be on a working group, mailing list or to merely voice their opinions should contact the Maritime

Administration, Office of Cargo

Preference, 400 Seventh Street,

S.W., Washington, D.C. 20590.

Correspondence may be addressed to Thomas W.

Director, Office

Preference, e-mail: [email protected].

Harrelson, of Cargo tom.harrel- yohnCranei

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