So it takes discipline and it takes some thinking to come up with how should freight be classified and priced. What is a good simple tariff structure that keeps everybody in business. Mr. MURPHY. I don't think it can be simple. I think by the very nature of the cargo movements, it's complex. And if we try to oversimplify, we're going to hurt things. Mr. JESSEN. I don't think it can be simple, but I think, again, speaking about shippers in our organization you will find I think as many opinions as there are shippers. I think most will agree that they desire simplification and it could be along the lines of the, possibly of the customs descriptions. I think one of the things that has to be said about tariffs and rates and so forth and again as a result of many discussions that we have had, sometimes I think we shippers create the wrong impression of always seeming to scramble for the lowest possible rates. In our discussions there was a word that appeared in, I think, somewhere in the Omnibus bill, about suggesting the lowest possible rate-we suggested the lowest practical rate, because we as shippers are aware that the average income of carriers is nowU.S. carriers-about 4 percent including a subsidy. And if you remove the subsidy, we all know the numbers, it's less than zero. So while we do want to be reasonable, and we feel that the carriers and the shippers do have to be protected because we mutually are working on international trade and the carrier industry exists for the international trade to exist. But again, I'm just saying, we do want to be reasonable, and I feel it too often that we create the impression of always asking for the lowest possible rate we can get. We do not knowingly ask for noncompensatory rates. Mr. MURPHY. Gentlemen, thank you very much. We appreciate the extra time that you've devoted to assisting us in this operation. I'm delighted we came to New York. The next time we'll use your hall. The subcommittee will stand adjourned. [The following was received for the record:] Hon. JOHN MURPHY, NATIONAL EXPORT TRAFFIC LEAGUE INC., Committee on Merchant Marine and Fisheries, House of Representatives, Longworth House Office Bldg., Washington, D.C. DEAR MR. MURPHY: During the testimony given by the National Export Traffic League in New York on November 9, 1979 you asked the League to develop its thoughts on how the U.S. Shippers' Council could become the watchdog to assure that rates are not so high or so low as to be unjustly discriminatory as between ports. We believe a properly constituted U.S. Shippers' Council developed along the lines proposed by the International Traffic Committee of the New York Chamber of Commerce and Industry could perform this function. The Shippers' Council would have one committee devoted primarily to ports and port related problems: "The work of the Port Committee will be conducted through regional sub-committees. In the pursuit of their interests, sub-committees could meet with federal, state, and/or local government units concerned with port creation, development and management. The committee will focus its attention on all port related issues with emphasis on all matters pertaining to Port development, terminal locations and general investments in port facilities, cranes and container port tariffs handling in and out, detention, demurrage and free time, documentation and flow of paperwork; the environment and local legislation." In addition, the Shippers' Council would have a Export Liner Service Committee that would address possible discriminatory ocean freight rate practices of the shipping companies. Discriminatory rates or practices which affect ports also affect the shippers who wish to use those ports. Some current problems Committees of a U.S. Shippers' Council could address are: 1. The Howland Hook terminal.—This Terminal has no rail service and is subject to higher truck rates than Jersey/Brooklyn piers. The shipping companies currently using the Howland Hook Terminal are American Flag; the truck and rail situation has retarded the use of these U.S. owned and operated shipping companies. A regional sub-committee of the Port Committee could help resolve this problem. 2. Conrail rate disparity among North Atlantic ports on piggy-back service from the Midwest.-Conrail published rates favor certain ports so much so that there is a clear case of discriminatory rate levels. The Port Committee could address this problem at the national level. 3. Differences in ocean freight rates between Charleston, S.C., and Norfolk, Va.-If the ocean rates are not equalized and in some trades they are not, shippers will use one port over another based solely on ocean freight rates. The Export Liner Service Committee could address this problem. Thank you for the opportunity to comment on the proposed legislation. Very truly yours, C. F. GETTZ, President. [Whereupon, at 1:41 p.m., the subcommittee adjourned.] OMNIBUS MARITIME BILL TUESDAY, NOVEMBER 13, 1979 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MERCHANT MARINE, COMMITTEE ON MERCHANT MARINE AND FISHERIES, Washington, D.C. The subcommittee met, pursuant to notice, at 9:40 a.m., in room 1334, Longworth House Office Building, Hon. John M. Murphy (chairman of the subcommittee) presiding. Present: Representatives Murphy, Anderson, and Oberstar. Staff present: Carl Perian, Larry O'Brien, Peter Kyros, Gerry Seifert, Ronald Losch, and Elizabeth Coker. The CHAIRMAN. The subcommittee will come to order. This morning, we continue our consideration of H.R. 4769, a bill "to revitalize maritime policy, reorganize certain Government agencies, and reform regulation of maritime affairs in the United States." The subcommittee has held 15 days of hearings in Washington and has already held field hearings to give us the opportunity to hear the views of those persons who have difficulty coming to Washington. Pending maritime regulatory and promotional reform provisions seek to accomplish the fundamental purposes of promoting the foreign commerce of the United States and developing and maintaining an effective and competitive merchant marine. Today, we welcome the testimony on the specifics of the pending reform proposals and on whether these proposals are the best means of fulfilling our objectives of improving our ocean transportation system to the American public. We are particularly pleased to receive testimony from the Council of European and Japanese National Shipowners' Associations, known as CENSA. Last year, we found it most helpful to receive testimony from CENSA on H.R. 11422, which was a legislative attempt to make the most significant changes to the maritime regulatory system since the Shipping Act of 1916 became law. We are particularly pleased today to receive testimony from our major trading partners on H.R. 4769, a bill which deals comprehensively with the maritime policy of the United States. Mr. Shaw, if you would proceed. STATEMENT OF BRIAN PIERS SHAW, CHAIRMAN AND CHIEF EXECUTIVE, FURNESS WITHY & CO., LTD., AND CHAIRMAN, COUNCIL OF EUROPEAN AND JAPANESE NATIONAL SHIPOWNERS' ASSOCIATIONS, ACCOMPANIED BY KRISTIAN VON SYDOW, CHAIRMAN OF THE BOARD, BROSTROM REDERI AB, GOTHENBURG; JOHN HENRY DE LA TROBE, CHAIRMAN, HAMBURG-SUD (COLUMBUS LINE), HAMBURG, FEDERAL REPUBLIC OF GERMANY; HENRY O. KARSTEN, M.B.E., DIRECTOR, OVERSEAS CONTAINERS LTD.; I. ROSS-BELL, SECRETARYGENERAL, COUNCIL OF EUROPEAN AND JAPANESE NATIONAL SHIPOWNERS' ASSOCIATIONS; AND RONALD CAPONE, COUNSEL Mr. SHAW. Mr. Chairman, thank you very much for your welcome. On behalf of my colleagues and myself, may I say how very grateful we are for the opportunity to appear before the subcommittee and present testimony. Mr. Chairman, my name is Brian Piers Shaw, and I am chairman and chief executive of Furness Withy & Co., Ltd. I testify today as chairman of the Council of European and Japanese National Shipowners' Associations. I am accompanied by Mr. K. von Sydow, chairman of the board of Brostrom Rederi AB, Gothenburg; Dr. J. H. de la Trobe, chairman of Hamburg-Sud, Columbus Line, of Hamburg; Mr. H. O. Karsten, director of Overseas Containers Ltd., OCL; and Mr. I. Ross-Bell, secretary-general of CENSA, as well as by Ronald Capone, Esq., our counsel. The Council of European and Japanese National Shipowners' Associations is most grateful to your subcommittee to have the opportunity to present its views on H.R. 4769. This bill, a refinement and expansion of the exploratory bill, H.R. 11422, of the previous Congress, is the first purposeful attempt to effect comprehensive revision of the laws and administrative procedures of the United States relating to economic activities in liner ocean commerce since enactment of the Shipping Act in 1916. Previous attention to the subject has been either piecemeal or purely exploratory, and if this endeavor fails or produces the wrong answer, U.S. shipowners and those of their foreign colleagues serving the American foreign trades may well find themselves back at the starting gate with nothing internationally acceptable accomplished and another long, hard, uphill slog before them to achieve the essential task for modernizing outdated U.S. shipping legislation. Your initiative has brought us all to the threshold of success. As vitally interested foreigners, we congratulate you and offer any assistance we can give in your present endeavor to bring us all fully into the 20th century and prepare us for the 21st century. Your committee's extensive explorations of this subject are of special importance not only to American shipowners and other foreign trade interests, but also to CENSA and its members, who comprise the national shipowners' associations of the free world's major maritime nations-Belgium, Denmark, Finland, France, Federal Republic of Germany, Greece, Italy, Japan, the Netherlands, Norway, Sweden, and the United Kingdom-and individual liner operators or container consortia from most of these countries. CENSA shipowners own and operate an aggregate of 179 million gross registered tons of the world's shipping and serve shippers in practically all countries of the world. In CENSA's view, there is much to be applauded about certain concepts of H.R. 4769 and your committee's assessment of the industry's needs, both domestic and foreign, in order that shippers be served effectively in every country trading with the United States. There are also concepts and provisions in the bill which CENSA agrees, as your chairman has observed, need further study and revision, particularly, from our point of view, all the cargo preference aspects. We testify today in a spirit of cooperation to try to play our part in this essential task. May we begin with what we, in common with our Governments' regard as three overriding general considerations. They concern the economic, energy and security aspects of today's realities in the free world in general and the Western alliance in particular. In the first place, most of our countries are now faced with increasing evidence of a prolonged and persistent economic downturn. This situation will be exacerbated if shipping services continue to operate at uneconomic load factors requiring higher freight rates than would otherwise be necessary. This inefficiency can be mitigated by the right to rationalize services, which is largely denied shipowners in international trade involving the United States of America at one or other end of the trade route. This is counterproductive to your and our interests at any time, but particularly at this time. As regards the energy crisis, after the quadrupling of crude oil prices in 1973, the price of heavy fuel oil has skyrocketed at an average of another 80 percent between the first of January and the middle of July of this year; that is, from U.S. dollars, $77 to $139 per ton. Further steep increases are, as we all know, in the pipeline. Modern liner vessels are large units which consume massive quantities of fuel while at sea. The daily oil consumption of a 30,000-ton container vessel varies from 120 to 250 tons, depending on whether the propulsion is a diesel engine or turbine. Fuel costs represent some 50 percent of fixed operating costs, and it follows that sharp rises in the cost of bunker fuels add substantially to the cost of transportation. Against this background, can your and our fleets afford the luxury of nonrationalized services? Finally, it is a matter of grave concern that the United States continues to be at loggerheads with its Atlantic community allies and Japan in the vital area of ocean transportation. This security aspect must weigh very heavily on all of us. We have testified before your committee in the recent past and you know who we are; we shall not take up your valuable time in repeating our philosophy, aims and objectives, which are, anyway, on your record. Let us move on without delay to outline to you how we, as vitally interested representatives of your trading partners in maritime transport, see the development of events in maritime relations between our countries. We have been truly impressed and much encouraged by the depth of perception in your country over the last 2 years for the need for change of your shipping legislation. Your committee, as we would expect, has been the frontrunner in sensing this mood and grasping this nettle. But since you did so, two important developments have occurred. In chronological order, the first was |