Page 31: of Maritime Reporter Magazine (November 1984)

Witness a study done by the re- nowned accounting firm of Arthur

Andersen & Co. They gathered fi- nancial data from 15 of the largest inland barge companies. In 1980, these companies earned an aggre- gate profit of $130 million on $1.1 billion in revenue. In 1982, these same companies lost $30 million. In 1983, they lost over $40 million.

Mind you, these are among the larg- est companies. You can imagine how the little fellows have fared. Bank- ruptcies abound. The downward spiral is unmistakably clear.

What happened?

The industry is dependent upon bulk products, largely petroleum, coal and grain. All three commodi- ties are depressed.

President Carter's disastrous grain embargo savaged this indus- try. We carried 46 percent of all U.S. grain for export. In 1980, before the embargo was imposed, the U.S. shipped 20 million metric tons of grain to the USSR. That went to zero until last year when this admin- istration signed a new agreement with the Soviets for 8-12 million metric tons. It will be very difficult to recapture the market share we once had. The Soviet government, to protect its own interests, has diversified its purchases to include

Australia, Canada and Argentina.

The economies of western Europe and Japan have lagged the robust recovery of the American economy.

As a result of that and fissures in the

OPEC cartel, the world is awash in petroleum. Demand is slack and transportation of the black gold is down.

What has been good for the

United States has hurt the barge industry: energy conservation has taken hold. Last year, demand for electricity actually went down for the first time in our history. And, with it, domestic coal consumption slowed. Barge traffic suffered.

Overhanging all this is a vast sur- feit of equipment in the industry.

New tax laws brought hordes of investors ... physicians, dentists, attorneys . . . into barge owning partnerships used to shelter their income. We are about 15 percent overbuilt.

Understanding its importance and its troubles, I have been asked to address, "What is the role of the federal government in the water- ways industry?" That depends on who you talk to.

My old friend Dave Stockman, director of the Office of Manage- ment and Budget, says the federal government should recover between 70-100 percent of all federal expen- ditures on the waterways and the ports.

Senator Abdnor and Senator

Stafford believe the federal gov- ernment should recover 100 percent of federal capital outlays for inland projects and 30-100 percent of port development.

The Interstate Commerce Com- mission believes that the Panama

Canal Act is outmoded and rail- roads can own barge lines.

Bob Roe, Congressman from the 8th District of New Jersey, believes that the industry should pay a third of the cost of inland capital projects, no inland operation and mainte- nance costs, 50 percent of superport development and no port operation and maintenance costs.

President Reagan believes that the maritime industry is "important in peacetime and critical in times of conflict," but has done so little as to consign that statement to an empty rhetoric bin.

So, you see what the federal gov- ernment's role is depends entirely on who is talking. Let me tell you what I believe.

I want first to persuade you that we have every reason to be proud of and pleased with our nation's over- all transportation system. Indeed, our domestic transportation system is one of the most highly develop- ed—and envied—in the world, pro- viding the foundation upon which

American economic growth pro- gresses—or declines. Our prosperity as a nation is due in large part to the success of that system, and to the two hundred years of ever advanc- ing technology, combined with old- fashioned know-how which has en- abled us to build such a formidable network of highways, railroads, air- ways, pipelines, and last, but not (continued on page 36)

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November 1, 1984 35