Page 14: of Maritime Reporter Magazine (September 15, 1978)

MarAd Study Examines

Shipping Policy Options

The Maritime Administration (MarAd) has released an exten- sive study on the liner segment of oceanborne shipping which ex- amines three national maritime policy alternatives and projects their probable impact on Ameri- can-flag operators in the nation's foreign trade over the next 10 years.

The options considered are that (1) the status quo be maintained, (2) the policy be modified to en- courage more competition among merchant fleets of the world, or (3) the policy be changed to per- mit greater cooperation between

American and other national flags carrying general cargoes.

The study on "The U.S. Mer- chant Marine and the Interna- tional Conference System" was prepared by Harbridge House,

Inc., under a contract let in Au- gust 1977 by MarAd, an agency of the U.S. Department of Com- merce.

Robert J. Blackwell, Assistant

Secretary of Commerce for Mar- itime Affairs, said in announcing the results: "We expect this anal- ysis to be extremely useful in ex- ploring the various policy alter- natives which the Federal Gov- ernment is considering to end the chaos and restore stability to our liner trades. It is both timely and objective. For that reason,

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Systems Inc. it should be a valuable tool to the Administration's Interagency

Task Force which is studying maritime policy, to members of the Congress in their considera- tion of a number of bills designed to remedy the situation, and to the shipping lines in long-range planning."

Mr. Blackwell stressed that "our purpose is not to advocate specific policies but rather to project the expected consequences of alterna- tive courses of action, with special emphasis on topics of immediate concern to the Maritime Admin- istration and the U.S. merchant marine, to which we provide Fed- eral support under the Merchant

Marine Acts of 1936 and 1970."

The report noted that the U.S.- flag liner fleet, consisting of some 270 vessels operated by commer- cial firms, is fairly new, generally well managed, and highly innova- tive. "Yet," it said, "the fleet is in a precarious economic position, for by and large the rate of return is not commensurate with the in- vestor risks and, as a result, dis- investment rather than reinvest- ment is a real possibility."

The report said U.S. policy on world trade is unique regarding liner conferences, the associations of shipping operators which es- tablish the rates, terms, and con- ditions of liner cargo carriage.

The reference is to the Shipping

Act of 1916, under which confer- ence carriers in the U.S. to for- eign trades may operate only within open conferences; that is, they may not exclude any would- be joiners. The rest of the world has generally opted for closed conferences where existing mem- bers may refuse the entry of new applications. The 1916 Act also forbids the use by conferences of measures designed to balance sup ply with demand and/or to obtain cargo via rebating and other eco- nomic practices.

The study examined these ap- proaches to the shipping confer- ence question:

Proposals to continue present policies—maintain the status quo, continue to rely on the Shipping

Act, approve shipping pools and equal-access agreements on a case-by-case basis, and generally support the open-conference sys- tem.

Proposals to increase competi- tion— remove the antitrust ex- emptions of conferences, abolish the Federal Maritime Commission or reduce its regulatory jurisdic- tion, disapprove pooling agree- ments, remove Government rate control, and decrease Government cargo preference.

Proposals to increase coopera- tion — permit increased pooling arrangements, authorize closed conferences, and permit shipper councils; adopt a UN code of conduct for liner conferences and implement Government cargo al- location and equal-access agree- ments. (continued next page) 14 Maritime Reporter/Engineering News