U.S.-Flag Fleet To Double In The Last Quarter This Century

Waterborne U.S.-foreign trade will increase by more than 130 percent, and the U.S.-flag merchant fleet is expected to more than double both its deadweight tonnage and percentage of market share in the last quarter of this century, a study commissioned by the Maritime Administration (MarAd) indicates.

The report, entitled "Merchant Fleet Forecast of Vessels in U.S.- Foreign Trade," includes a 27- page Executive Summary, a detailed Final Report, and three appendices. It was prepared for MarAd under a $90,000 contract by Temple, Barker & Sloane, Inc.

(TBS), management and economic counselors of Wellesley Hills, Mass. In its introduction, TBS noted the forecast of vessel requirements for U.S.-foreign trade, 1975-2000, was derived f r om a new methodology, described as much more precise than was ever before possible. The new fleet forecasting procedures were used in conjunction with a MarAd cargo study, "A Long-Term Forecast of U.S. Waterborne Foreign Trade, 1976-2000," released in November 1977.

The fleet forecast is expected to provide important inputs to various segments of the U.S. maritime industry, including steamship companies, shipyards, and port authorities. "In addition," the report said, "Government agencies can use an expanded fleet forecasting capability to help allocate research and development funds as well as gain insight into the impact of alternative policy decisions." The importance of this capability as a policy-planning tool is emphasized in connection with the study's projection of substantial growth for the U.S.-flag fleet. In forecasting an increase in the U.S.-flag share from 5.3 percent in 1975 to 11.7 percent in the year 2000, the report noted this projection "was largely the result of forecast increased support for U.S.-flag tankers and drybulk carriers . . . Although liner type vessels account for the majority of vessels to be built (during the forecast period), on a deadweight basis they represent a much smaller portion.

"Since the dry-bulk vessel and tanker forecasts are heavily dependent on future Government policy to maintain the projected growth, U.S. shipyard activity to support this construction is very sensitive to assumptions regarding Federal maritime policy." The foreign trade considered in the forecast includes oceanborn commercial cargoes and military and non-military shipments under U.S. cargo-preference laws, but not military cargoes for the U.S.

Armed Forces or U.S.-Canadian commerce moving within the Great Lakes. (Liner trade via the St. Lawrence Seaway and Great Lakes is included.) In the near future, MarAd's Office of Commercial Development expects to hold an industry briefing to obtain comment and feedback on the study. Specific findings in the study regarding the projected world fleet required for U.S.-foreign trade in this quartercentury include: • While the forecast indicates that trade will increase over 130 percent, it will be carried by a world fleet only 10 percent larger (based on the number of vessels) than the 1975 fleet serving U.S.- foreign trade.

• There will be an increasing reliance upon more sophisticated liner type vessels in the future.

During the next 25 years, the number of partial containerships will increase nearly sevenfold, while the number of full containerships will triple. The number of general cargo ships is projected to decrease over the same period by 60 percent.

• Because of the reliance on super tankers as offshore terminals become available, the total number of tankers required to serve the U.S.-foreign trade actually decreases 15 percent over the forecast period. At the same time, the annual capacity of the tanker fleet more than doubles.

• These shifts toward more sophisticated vessels result in significant changes in the composition of the world fleet . . .

• In every ship type, increasingly larger vessels will be built.

The largest increases occur in LNG carriers and tankers which increase in average size by 133 percent and 113 percent, respectively.

The smallest increase, 14 percent, occurs in barge carriers.

The average increase in deadweight per vessel for the whole fleet is 71 percent.

• The average deadweight of new construction for the world fleet will continue to increase consistent with recent historical growth . . . One exception is tankers, where replacement requirements for large numbers of small vessels will cause the average size of tanker construction to drop significantly after 1985.

• Not only are vessels expected to increase in size over the forecast period; they are also becoming more efficient. The average annual increase in productivity is expected to be just over 1 percent.

The largest increases are for partial and full containerships at 2 percent and 1.9 percent, respectively, and the smallest increase, 0.2 percent, is for combination carriers.

If the forecast U.S.-flag share levels are achieved, the number of vessels in the fleet would increase by nearly 200. This equates to a 75-percent increase in the number of vessels in the fleet and a 108- percent increase in deadweight.

New construction activity will also be high, with a total requirement of 474 vessels or approximately 19 vessels aggregating 2 million deadweight tons per year between 1976 and 2000, TBS said.

Other specific findings in the report regarding the U.S.-flag fleet include: • The U.S. merchant fleet engaged in foreign trade is expected to grow substantially over the 1975-2000 period. The 2000 fleet is p r o j e c t e d to be 442 vessels totaling 18,420,000 deadweight tons, compared to 251 vessels in 1975. This growth is a function of both an increase in trade of over 130 percent and an increase in U.S.-flag share from 5.2 percent to 11.7 percent.

• The greatest emphasis in U.S.-flag fleet development is expected to be on non-liner type vessels. The number of these vessels is projected to nearly triple, and on a deadweight basis to increase fivefold.

• The increase in liner type vessels will more closely parallel the growth in trade which results f r om the U.S. market share, remaining approximately equal to the 1975 U.S.-flag liner shares.

• These shifts in emphasis will result in a significant change in the composition of the U.S.-flag fleet.

• U.S.-flag vessel new constructions are p r o j e c t e d to increase over the forecast period. In the 1976-1980 time period, constructions will average about 11 vessels per year. This figure will exceed 25 per year by 2000 if the projected U.S.-flag share is achieved.

• The U.S.-flag fleet reflects a substantially different profile than the world fleet. The differences are most apparent when viewed in the context of liner type vessels (general cargo, partial and full container, and barge-carrying ships) and non-liner type vessels (neobulk and dry-bulk carriers, combination carriers, LNG carriers, and tankers). In 1975, 49 percent of the vessels and 27 percent of the deadweight tons of the world fleet were liner type vessels, while comparable U.S.- flag fleet figures were 82 percent and 64 percent, respectively.

• These differences can be explained by the past emphasis on the liner service in the U.S. maritime policy. The 1970 Maritime Act, which extended subsidy benefits to non-liner vessels, has begun to affect the mix of vessels in the U.S.-flag fleet. This has become apparent in the 1975 U.S.- flag fleet distribution, and is reflected heavily in new construction activity (forecast)' from 1976 to 2000.

Copies of the Executive Summary are available upon request to the MarAd Office of Public Affairs, Room 3895, U.S. Department of Commerce, Washington, D.C. 20230. Limited copies of the Final R e p o r t , "MERCHANT FLEET FORECAST of Vessels in U.S.-Foreign Trade," are available f o r review in the same office.