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CRITICAL ISSUES IN MARITIME TRANSPORTATION

1982

Prepared by the

MARITIME TRANSPORTATION RESEARCH BOARDCommission on Sociotechnical Systems

National Research CouncilAccession ForNTIS GRA&IDTIC TAB F]JUnannouncedJustification

National Academy Press Distribution/Washington, D.C. 1982 .. itbuility... Availability Codes

Avail and/or I

is Special

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NOTICE: The project that is the subject of this reportwas approved by the Governing Board of the NationalResearch Council, whose members are drawn from thecouncils of the National Academy of Sciences, the NationalAcademy of Engineering, and the Institute of Medicine.The members of the committee responsible for the reportwere chosen for their competences and with regard forappropriate balance.

This report has been reviewed by a group other thanthe authors according to procedures approved by a ReportReview Committee consisting of members of the NationalAcademy of Sciences, the National Academy of Engineering,and the Institute of Medicine.

The National Research Council was established by theNational Academy of Sciences in 1916 to associate thebroad community of science and technology with theAcademy's purposes of furthering knowledge and of advising

- the federal government. The Council operates in accor-dance with general policies determined by the Academyunder the authority of its congressional charter of 1863,which establishes the Academy as a private, nonprofit,self-governing membership corporation. The Council hasbecome the principal operating agency of both the NationalAcademy of Sciences and the National Academy of Engi-neering in the conduct of their services to the govern-ment, the public, and the scientific and engineeringcommunities. It is administered jointly by both Academiesand the Institute of Medicine. The National Academy ofEngineering and the Institute of Medicine were establishedin 1964 and 1970, respectively, under the charter of theNational Academy of Sciences.

This is a report of work supported by the UnitedStates Coast Guard and the United States MaritimeAdministration under provisions of Contract MA 81SAC-10043 with the National Academy of Sciences.

Inquiries concerning this publication should be :,.4r dssed to:

Maritime Transportation Research BoardNational Research Council2101 Constitution Avenue, N.W.Washington, D.C. 20418

Printed in the United States of America

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PREFACE

The Maritime Transportation Research Board (MTRB) wasorganized in 1965 by merging two activities of theNational Research Council. One predecessor organization,the Ship Hull Research Committee, was formed during WorldWar II as the Committee on Ship Steel to examine theserious problem of cracks in welded ships. The'other, theMaritime Cargo Transportation Conference, was formed in1953 to work on problems of containerization and mechani-zation. For nearly 40 years the MTRB and its forerunnershave been addressing a broad range of problems ofsignificance to the U.S. maritime industry.

As MTRB meets to consider projects appropriate forfurther study, it must determine the order of importanceof these projects. To set such priorities, guidelines areessential. The Congress has established broad objectivesfor the merchant marine. However, specific programs havenot been fully effective in achieving congressionalintent. Regrettably, there is no consensus on specificpolicies, and programs have not been fully effective inachieving the objective. There are, however, a number ofrecognizable basic issues which would have to be con-sidered in the formulation of a meaningful nationalprogram. These issues represent the judgment of the MTRBmembers based on their professional experience. Conse- "1quently, these issues are not the result of systematicresearch by the MTRB. They can be termed the criticalissues in maritime transportation, and in this report MTRBidentifies them, along with several related concerns.

The range of issues is broad and the need for furtherexamination is urgent. It is not suggested, however, thatall are appropriate for study by MTRB. Issues involvingthe creation or alteration of basic policy are moreproperly addressed through the political process. Onlythose issues whose resolution may be approached throughresearch are suitable for MTRB's consideration. In suchcases MTRB could serve as a neutral forum, conducting andevaluating the research associated with the policy issue.

The current critical issues as perceived by MTRB, andpresented here, are intended to be of assistance toplanners and managers in both government and industry.

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Planning Committeeof the

MARITIME TRANSPORTATION RESEARCH BOARD(as of June 1982)

:' JOHN F. WING# Chairman# Managing Officer, Transportation.Consulting Division, Booz, Allen & Hamilton Inc.,

Bethesda, MarylandWILLIAM M. BENKERT, President, American

Institute of Merchant Shipping, Washington, D.C.A. DUDLEY HAFF, Consultant, Annapolis, MarylandJAMES A. HIGGINS, Partner, Stanley Associates, Washington,

7: D.C.CLIFFORD M. SAYRE, Manager, International Division, Trans-

portation and Distribution Department, E. I. DuPont deNemours & Company, Wilmington, Delaware

ERIC SCHENKER, Professor of Economics and Dean of theSchool of Business Administration, University ofWisconsin-Milwaukee, Milwaukee, Wisconsin

JULIAN H. SINGMAN, President, Maritime Institute forResearch and Industrial Development, Washington, D.C.

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MARITIME TRANSPORTATION RESEARCH BOARD

Members

ALLEN E. SCHUMACHER, Chairman, Chairman, American HullInsurance Syndicate, New York, New York

WILLIAM M. BENKERT, President, AmericanInstitute of Merchant Shipping, Washington, D.C.

JAMES G. COSTELLO, President, Universal Maritime ServiceCorpiration, New York, New York

LOUISE M. DuVALL, Attorney-at-Law, Long Beach, CaliforniaFREDERICK P. EISENBIEGLER, President, Sun Transport, Inc.,

Aston, PennsylvaniaC. L. (Larry) FRENCH, President, National Steel & Ship-

building Company, San Diego, CaliforniaA. DUDLEY HAFF, Consultant, Annapolis, MarylandARTHUR J. HASKELL, Senior Vice President, Matson Navigation

Company, San Francisco, CaliforniaJAMES A. HIGGINS, Partner, Stanley Associates, Washington,

D.C.HENRY S. MARCUS, Associate Professor, Massachusetts

Institute of Technology, Cambridge, Massachusetts* CLIFFORD M. SAYRE, Manager, International Division,

Transportation and Distribution Department, E. I.DuPont de Nemours & Co., Wilmington, Delaware

ERIC SCHENKER, Professor of Economics and Dean of theSchool of Business Administration, University ofWisconsin-Milwaukee, Milwaukee, Wisconsin

JULIAN H. SINGMAN, President, Maritime Institute forResearch and Industrial Development, Washington, D.C.

NATHAN SONENSHEIN, Assistant to the President, GlobalMarine Development, Inc., Newport Beach, California

JOHN F. WING, Managing Officer, Transportation ConsultingSDivision, Booz, Allen & Hamilton Inc., Bethesda,.: Maryland

CHARLES V. WOOTAN, Director, Texas TransportationInstitute, Texas A&M University, College Station,Texas

Liaison Representatives-J

JAMES G. GROSS, Deputy Associate Administrator forResearch and Development, Maritime Administration,U.S. Department of Transportation, Washington, D.C.

CLYDE T. LUSK, JR., Chief, Office of Merchant MarineSafety, U.S. Coast Guard, Washington, D.C.

JOHN S. GARDENIER, Office of Research and Development,U.S. Coast Guard, Washington, D.C.

PAUL B. MENTZ, Office of Advanced Ship Systems MaritimeTechnology, Maritime Administration, U.S. Departmentof Transportation, Washington, D.C.

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JOHN J. NACHTSHEIMl Executive DirectorMICHAEL E. GAFFNEY, Senior Project ManagerRICHARD W. RUMRE, Executive Secretary, Ship Research

CommitteeS. ANN ANSARY, Administrative AssistantDORIS J. SORENSEN, Administrative Secretary

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i CONTENTS-

" PageNumber

INTRODUCTION 1

CRITICAL ISSUES 4

CRITICAL ISSUE 1: CARGO 5

CRITICAL ISSUE 2: NATIONAL SECURITY 7

CRITICAL ISSUE 3: FEDERAL POLICIES 9

CRITICAL ISSUE 4: SHIPBUILDING 11

CRITICAL ISSUE 5: PRODUCTIVITY 13

CRITICAL ISSUE 6: HUMAN RESOURCES 15

CRITICAL ISSUE 7: MARITIME SAFETY 17

CRITICAL ISSUE 8: DOMESTIC SHIPPING 19

CRITICAL ISSUE 9: PORTS AND HARBORS 21

CRITICAL ISSUE 10: INTERMODALISM 23

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INTRODUCTION

The U.S. merchant marine is relatively small by indus-trial standards, but it plays a large role in national andinternational affairs. In time of war its service isvital. In time of peace it has a positive effect on thenation's balance of payments and economic well-being.

The Congress has mandated that the United States havea merchant marine to carry its domestic waterborne com-merce and part of its foreign waterborne commerce, and toserve the armed forces during national emergencies. Themandate is expressed in the Shipping Act of 1916 and theMerchant Marine Act of 1936. This Act and its amendmentshave established the regulations, financial aids, andpromotional programs designed to improve the competitiveposition of the maritime industry relative to its foreigncounterparts.

Congressional intentions and industrial efforts not-withstanding, the stated objectives have not been met.Since World War II, the fraction of the nation's water-borne commerce carried by the U.S. merchant fleet hasdeclined, and the capability of the fleet has declined aswell. For many reasons, U.S.-flag ships have seriousdifficulties competing internationally.

The mechanisms established by the Shipping Act of 1916may have lost their effectiveness. As a result, theCommittee on Merchant Marine and Fisheries of the U.S.

. House of Representatives has held extensive hearings onthe vital issues of shipping conferences, shippers'councils, and bilateral and equal access cargo-sharingagreements.

The Merchant Marine Act of 1936 has also come underscrutiny. The Act was designed to meet the commercialmaritime needs of the depression era through two kinds ofaid: Operating Differential Subsidies (ODS) and Construc-tion Differential Subsidies (CDS). Since then, the activ-ities, organization, operation, and composition of theU.S. merchant marine have changed substantially, and thefleet faces a different set of problems.

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The 1970 amendments to the Merchant Marine Act of 1936sought to expand and increase subsidies to the tanker anddry bulk segments of the U.S.-flag fleet. However, theamendment did not stop the decline in the sizi, and capa-bility of the U.S. merchant fleet. Its goal of construc-ting 30 ships per year over a 10-year period was neverreached.

The foregoing legislation, designed to increase theproportion of foreign trade carried in U.S.-flag vessels,has failed to achieve stated objectives. The allocationof a portion of government-financed trade has helpedU.S.-flag vessels to retain only a small and steadilydecreasing tonnage share (currently less than 5 percent)of the nation's waterborne foreign trade.

A number of activities have followed. During 1978-1979, an executive branch interagency task force reviewedfederal maritime policies. Though its conclusions high-lighted important elements of the decline in maritimecapability, little resulted. The Ocean Shipping Act of1978 and the Shipping Act Amendments of 1979 dealt withcertain regulatory matters. Howeveir, the prospects forU.S.-flag carriers in the 1980s do not appear bright.

President Reagan has stressed the need for a strongmaritime industry. Early in his administration theMaritime Administration was moved to the Department ofTransportation, and the Secretary of Transportation wasdesignated the cabinet-level maritime spokesperson. Inaddition, administration officials are in the process ofdeveloping a new maritime program.

Enactment of current administration proposals forincreased Navy shipbuilding will have a significant impacton the workload available to U.S. shipbuilders. Whilethis would reverse the current decline in shipbuilding, itwould not come in time to offset lay-offs, nor would itsupport, of itself, the number of shipyards many govern-ment officials consider essential for an adequate mobili-zation base.

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Thus, the industry may encounter profound challengesduring the 1980s:

A rewriting of basic U.S maritime regulatory law

* The need to increase the competitiveness of U.S.shipping

* A reduction in or termination of federal maritimesubsidy programs

. An increased concern, both domestically andinternationally, with safety

. The necessity to rebuild old and outmoded fleets

* The need to maintain an adequate mobilizationbase of manpower, ships, and shipyards

A rebalanced relationship between the defense andcommercial sectors

The necessity for maintaining or improving ports,harbors, and waterways.

These challenges have led the MTRB to define the tencritical issues described in the next section.

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CRITICAL ISSUES

The word "critical" denotes a crisis, a turning point,or a specially important juncture. An "issue" is a matterthat is in dispute, unsettled, or about which there iscontroversy. Thus unresolved subjects which are particu-larly important to the future of the maritime industry canbe termed "critical issues."

The issues facing the U.S. maritime industry rangebroadly over defense, operations, finance, regulation,people, facilities, and equipment. To provide a frameworkfor description and analysis, these problems are treatedhere in terms of ten critical issues:

Cargo

National Security

Federal Policies

Shipbuilding

Productivity

Human Resources

Maritime Safety

Domestic Shipping

Ports and Harbors

Intermodalism

Clearly, interdependencies exist among these issues,and they are identified in the following discussions. Noattempt has been made to prioritize the issues beyondincluding them in this list of critical issues in maritimetransportation.

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CRITICAL ISSUE 1

CARGO

Background

The various federal policies designed to foster aneffective, economic, and competitive U.S.-flag merchantmarine have not been successful. During the past decade,the U.S. merchant fleet has declined to the point where itnow numbers fewer than 600 oceangoing vessels.

Concomitant with the decline in the size of the fleet,the proportion of the nation's foreign trade carried inU.S.-flag vessels has also decreased. Less than 5 percentof the nation's waterborne imports and exports, whichtotal in excess of 700 million tons annually, currentlymove in U.S.-flag ships. Of the cargoes carried byforeign-flag ships, almost 90 percent comprise strategicmaterials vital to the United States.

The lack of cargoes for the U.S. merchant fleet meansfewer ships, fewer trained operating crews, and fewerU.S.-flag ships available for national defense. In timesof emergency, U.S. defense and economic security arevulnerable to the policies and political exigenciesimposed on foreign-flag ships trading in the nation'scommerce.

Points at Issue

The declining economic health of the U.S.-flag fleetrequires detailed examination, free of the preconceptionsof special interests. Such an examination should consider: ]

What factors underlie the small share of thenation's import-export traffic that is carried inU.S.-flag vessels?What would be the result if joint operating

practices were instituted by U.S.-flag vesseloperators?

What alternative strategies could be developed toincrease the amount of dry bulk and tankercargoes carried by the U.S.-flag merchant fleet?

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Critical Issue 1 (continued)

What are the advantages and disadvantages ofbilateral and multilateral cargo-sharing agree-ments as means of ensuring cargoes for U.S.-flagships?

* ;How effective are U.S. government supports inpromoting increased participation by U.S.-flagvessels in the carriage of foreign trade?

"" Is the U.S. economy more vulnerable because ofthe nation's growing dependence on a non-U.S.-registered fleet of ships? What are the conse-quence s?

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CRITICAL ISSUE 2

NATIONAL SECURITY

Background

The need for U.S. merchant ships to support thenation's defense requirements has been debated since theearliest days of the Republic. As a result of thenation's experience in wars and other past emergencies,this country should maintain a strong capability.However, the cost of providing such a capability hasprevented full implementation.

Quantitative national security objectives for themerchant marine are not clear. PeLceptions differ amongmilitary experts, ship operators, shippers, those chargedwith maintaining our relations with other nations, and thelegal and regulatory community. Moreover, commercialconsiderations have resulted in merchant ship designsthat, in many cases, are not compatible with militaryrequirements.

Points at Issue

The U.S. merchant marine has performed importantservice in a number of past emergencies. Pertinentquestions on the role of the merchant marine in nationalsecurity today include:

How many and what types of merchant ships arerequired to fulfill national defense require-ments, both during periods of emergency anddeclared war?

How can commercial and defense requirements beintegrated in ship design?

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Critical Issue 2 (continued)

To what degree is the foreign-flag, U.S.-controlled fleet effective as an auxiliarymerchant fleet during times of emergency or war?

*,.What is the value of retaining merchant ships inthe National Defense Reserve Fleet and ReadyReserve Fleet for potential reactivation, com-pared to securing the ships through constructionprograms, purchases, or requisitions?

*-.Can U.S. Navy shipbuilding and conversion pro-grams be used as an incentive for the U.S.shipbuilding industry to incorporate technology-modernization programs? If so, how?

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CRITICAL ISSUE 3

FEDERAL POLICIES

Background

As a matter of national policy, virtually all govern-ments provide financial support to their merchant fleets.Direct subsidies, indirect subsidies, and special cargopreference laws are provided by both U.S. and foreigngovernments. A free market does not exist today as far asthe world shipping industry is concerned. Thus, mostelements of industry and government agree that some formof aid is necessary if the U.S. maritime industry is to becompetitive in international markets.

In addition to financial aid, federal policies impactthe shipping industries through regulatory measures. BothU.S. and foreign fleets have been subject to varyingsafety standards, antitrust constraints, freight raterestrictions, service regulations, and pollution controls.While the U.S. government has tried to impose many of itsregulations on foreign operators, enforcement has oftenbeen difficult.

The regulatory environment for maritime commerce is ina period of worldwide examination and impending change.Differences will be seen in the reporting of conferenceactivities, in tariff publications, and in the discrimina-tion of tariffs among ports, areas, shippers, or car-riers. The conditions under which consultation betweencarriers and shippers will be permitted may also bechanged. In addition, the United Nations Code of Conductfor Liner Conferences would make further regulatorychanges in international shipping by reserving shares oftraffic between trading countries for their national flagfleets.

Points at Issuew

Financial assistance to and regulations of the U.S.maritime industry are political and economic issues.Further, such assistance and regulations haveinternational overtones. There are several questions thatshould be investigated:

How do cargo preference strategies employed byforeign nations compare with U.S. policies?

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Critical Issue 3 (continued)

"° What would be the impact of a rapid eliminationof Construction Differential Subsidies?

* Are bilateral shipping agreements practical forthe United States?

* What would be the effect of the UNCTAD proposalson the U.S. maritime industry?

*•What are the relative costs and effectiveness ofvarious federal financial aids, such as directsubsidies, cargo preference laws, tax incentives,and loan guarantees?

Are there methods of financial aid that provideincentives for innovation?

What would be the impact of allowing volumediscounts to shippers similar to those allowed bycurrent rail and motor carrier regulations?

* How do environmental protection and safety-oriented rules affect the comparative costs ofU.S. and foreign shipping?

What effect would changes in federal policyregarding the conference system have on the U.S.maritime industry?

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K CRITICAL ISSUE 4SHIPBUILDING

Background

The vitality of the U.S. commercial shipbuildingindustry depends largely on the shipbuilding ordersreceived from both the U.S. merchant marine and the U.S.Navy. In 1981, a major U.S. shipyard was forced to closeits doors to shipbuilding due to lack of orders for newships. Most of the other major shipbuilding companieshave only very small backlogs. In fact, by the end of1982, only eight merchant ships will be on back-orderthroughout the entire U.S. industry.

The federal response to this situation has beenmixed. Federal policies on the size of the Navy, asexpressed in the Navy Shipbuilding and Conversion Programobjectives, are somewhat encouraging. The potentialimpact of this program remains very positive as plannednaval work may account for approximately two-thirds oftotal private sector capacity. However, timing remainsuncertain. Further, the FY 1982 budget provided no newappropriations for Construction Differential Subsidies.Furthermore, the FY 1982 Maritime Administrationauthorization bill permits U.S. ship operators to buildtheir ships abroad and still receive Operating Differen-tial Subsidies. Construction Differential Subsidy funding -has not even been requested for the FY 1983 budget.

U.S. companies do not compare well with their foreigncounterparts with respect to productivity and cost.Although U.S. shipyards have received substantial federalsubsidies, foreign shipyards have also been amply sup-ported by their own governments. Given the level of thisgovernment support and their higher productivity, foreignshipyards have quoted prices well below U.S. prices.

U.S. shipbuilders have also had difficulty retaining astable work force due to poor working conditions, adeclining workload, and a relatively low pay scale com-pared to the aerospace industry and government shipyards.

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Critical Issue 4 (continued)

Points at Issue

The U.S. shipbuilding industry should be examined todetermine whether it should be revitalized and, if so, howthis can be done. This examination should consider suchfactors as:

*- Can a national policy with respect to the needfor a U.S. shipbuilding industry, its size,capability and geographical disposition, be es-tablished? If so, how?

* What measures could be taken by public authori-ties to help U.S. shipyards become more competi-tive?

-* To what extent do the requirements of Navy ship-building programs render commercial shipyardsnoncompetitive in merchant ship programs?

* .! What are the costs and effects on shipbuilding ofenvironmental protection and occupational safetyand health requirements?

* What should be the response of the U.S. govern-ment to foreign countries' subsidies to theirshipyards? Should they be challenged, matched,or disregarded?

* What is the impact of declining merchant shipprograms on supporting industries?

* !What factors leading to successful competition byother U.S. industries in international marketsare applicable to shipbuilding?

How important are improved shipyard technologyand modernization in enhancing productivity andreducing costs? Where are the sources of capitalfor such efforts?

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CRITICAL ISSUE 5

PRODUCTIVITY

Background

The U.S. shipping industry must compete in interna-tional markets, yet it is at an economic disadvantagecompared to most of its foreign competitors. If theindustry is to improve its market position, the high costsof living in the United States must be offset by a highlevel of productivity. This can be achieved throughimprovements in operating efficiency, manpower utiliza-k.. tion, effective use of capital, and technological innova-

* tions.

Without such productivity improvements, the cost tothe public of the merchant marine will continue to behigh, and the merchant marine may not be maintained at alevel sufficient to meet defense and economic needs. Evenwhen productivity is improved through technology or newoperating methods, foreign competition can also takeadvantage of the improvements. For example, the U.S.-developed containerization system is now available for allforeign competitors to use. On the other hand, all toooften foreign fleets have themselves introduced the tech-nological innovations. In such cases, U.S. companiesshould quickly adopt the improvements so they do not fallbehind.

Subsidies used to lessen the cost disadvantages ofU.S. operators have been offset by the financial aidsprovided by other governments to their own fleets. U.S.subsidies may even have been counterproductive, acting tolessen incentives for increased productivity and placingproductivity-limiting operating restrictions on shipoperators.

Points at Issue

. There are several issues which should be addressed toidentify approaches to productivity improvements. Ifimplemented, such improvements could increase U.S.competitiveness in international shipping markets:

What are the opportunities for and constraints on -1improved balance in the use of capital, manpower,improved operating methods, and new technology?

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• "What effects do the various types of federal aidhave on productivity?

* How can technological improvements be identifiedand implemented which will increase the competi-tiveness and operating efficiency of U.S.-flagvessels?

What are the impacts of employment contracts onshipboard productivity?

What are the advantages and disadvantages ofcustomized ship designs vis-a-vis standardizedship designs in terms of shipyard productivityand ship operating efficiency?

- Are U.S. shipboard manning levels appropriatewith regard to safety, required functions, andthe typical manning levels of foreign competitors?

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-; CRITICAL ISSUE 6

HUMAN RESOURCES

Background

The poor economic health of the U.S. maritime industryleaves it poorly equipped to attract, develop, and moti-vate high-caliber, creative managers. In addition, heavyforeign competition and reduced government financialsupport will tax the skill of the most able managers.

Furthermore, the declining economic health of theindustry will further reduce seagoing and shipyard employ-ment. This can have a serious impact on the quantity ofskilled personnel available to the indutry. On the otherhand, there is substantial room for improvement in thequality of life at sea and in shipyards to attract andretain able personnel.

Given the rapidity and proliferation of change in theindustry, it is questionable that current managementresources will adequately serve the industry in developing .new policies and strategies. Innovation in addition toexperience will be required. At the same time, a con-tinuing decline in the total jobs available in theindustry makes it difficult to maintain sound training,pensions, and job satisfaction programs.

Points at Issue

The U.S. maritime industry's human resources, bothmanagers and operating personnel, are being severelychallenged. The following questions should be addressed:

What kinds of and how many managers andtechnicians will be required in light of changingdemands?

How can the availability of sufficiently trainedoperating crews, both licensed and unlicensed, beensured?What are the most serious problems in recruiting, Itraining, and retaining shipyard workers?

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Critical Issue 6 (continued)

Where will maritime human resources come from? jHow can they be recruited, trained, developed,and retained?

*_-To what extent can existing personnel be upgradedand retrained?

* To what extent should management resources fromoutside the industry be employed?

* Are changes in shipboard organization,motivation, responsibilities, and man-machineinteraction seen as opportunities for, orbarriers to, an improved quality of life?

Are new forums needed for management and labor toaddress mutual objectives?

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CRITICAL ISSUE 7

MARITIME SAFETY

Background

Maritime accidents of many categories are frequent andaffect a high volume of tonnage, despite the safety ini-tiatives of international, national, and local authori-ties. Moreover, the potential for castastrophic accidentsinvolving hazardous cargoes is increasing. Public bodieshave attempted for many years to address these safetyproblems through regulatory action, primarily focusing onphysical solutions to the problems. Extensive researchand development has been undertaken in such areas asvessel design, equipment, redundancy, construction, andoperation, and yet maritime safety remains far below

optimal levels.

Recently, attention been given to the human aspects of jmaritime safety. Licensing of seagoing personnel hasexisted for many years, but only lately has attention beengiven to the effects of personnel qualifications, training,

and experience on safety. Because of the difficulty inaddressing these issues, and in some cases the nebulousnature of the problems to be solved, research on thepersonnel aspects of maritime safety has been sparse,sporadic, and uncoordinated. An integrated approach tothis aspect of safety is a principal need of the maritimeindustry.

Points at Issue

The global shipping recession of recent years has putsevere pressure on operating budgets. In consequence,maintenance levels have been lowered in some companies,and experienced senior technical managers have transferredto other fields. These events have coincided with a risein worldwide casualty rates, suggesting the need toinvestigate a possible causal connection. In addition,there are other questions that require attention:

Can a systematic program for maritime safety,based on reasonable safety objectives andmeasures for evaluating performance, bedeveloped? If so, how?

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Critical Issue 7 (continued)

. What is the best method to increase the level ofsafety consciousness within the maritimecommunity?

* What methods can be effectively used to attackthe problems of casualties associated with humanfailure?

What methods can be productive in examiningcasualties associated with inadequate vesselstandards for operating, crewing, and maintenance?

How can the needs for vessel traffic control andship maneuverability improvements be determined?

How can information pertinent to the shipboardcarriage of hazardous materials be made availableto all concerned with carrier and public safety?

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CRITICAL ISSUE 8

DOMESTIC SHIPPING

Background

Since colonial times, the domestic shipping industryhas played an important role in the United States, movingcargoes along the nation's coasts, on its inland water-ways, and on the Great Lakes. The inland waterwaysprovide low-cost, energy-efficient service for bulkchemicals, petroleum products, coal, grain, sand, andgravel. Iron ore, coal, and grain are important bulkcargoes on the Great Lakes. Petroleum products,chemicals, grain, and coal move in large volumes on thecoastwise system.

A long series of private and public harbor improve-ments, lock and dam projects, and channel dredgingprojects have provided the infrastructure for domesticshipping. Much of this infrastructure is, however, nowoutmoded, and large investments will be required fornecessary improvements. On the inland waterways, oldlocks impose capacity restraints, as do available facili-ties at riverfront ports. For coal alone, sufficientfacilities will be needed by the year 2000 to handle aprojected 130 million tons.

At the same time it is facing requirements for capitalinvestments, domestic shipping is experiencing heavycompetition from landside trucks, railroads, and pipe-lines, as well as high costs of ship replacement and highlabor costs. Moreover, waterway user charges wererecently imposed on some domestic vessels, and areexpected to increase.

Points at Issue

The domestic shipping industry plays a critical rolein the nation's economy, especially in moving bulk mater-ials in a low-cost and energy-efficient manner. To ensureits continued health, the current and future problemsfacing the industry must be examined, including:

What are the capacity requirements for thedomestic waterways?

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Critical Issue 8 (continued)

•.What will be the effect of user charges ondomestic shipping?

* 'How can adequate sources of funds be secured forfunding lock and channel improvements?

* iAre U.S. cabotage laws ensuring adequate andefficient transportation service to thenoncontiguous states and Puerto Rico?

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CRITICAL ISSUE 9

PORTS AND HARBORS

Background

U.S. seaports are facing challenges arising from suchlegislation as the Clean Water Act and from innovations inthe handling and moving of cargo. Larger vessels designedto reduce unit costs require deeper harbors and ship chan-nels, more maneuvering space, and more sophisticated andcapital-intensive port facilities than were needed in thepast. Consequently, in many ports, the approach channelsand facilities are physically obsolete, inadequate, orunsafe for modern ships.

Harbor dredging and port maintenance are now performedby the federal government, which is considering charginglocal organizations for the costs of these services.Should the government do so, the economic impact would besubstantial, particularly for smaller U.S. ports. Thesesmaller ports are less able to handle the high interestcosts and the large capital requirements needed to makemajor improvements in facilities. The position of thesmall ports is made even more difficult by the fact thatthey are facing a declining share of traffic, given thatlarge ships, to maintain their productivity levels, mustlimit the number of their ports calls.

These limited port calls cause a consolidation oftraffic at a few major ports, and give rise to anotherproblem: truck or rail movements to and from terminalscan be severely restricted at metropolitan waterfrontlocations. Ports, as the link between water and land,must have adequate access to land transportation. Abottleneck on either the land or water side of a terminalcan severely reduce a port's competitive position.

Points at Issue

I.. The following issues are faced by ports:Are there more economical but environmentallysafe methods for disposal of spoil from dredgingL and maintenance of channels and harbors?

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I

Critical Issue 9 (continued)

To what extent should the federal costs ofimproving and maintaining harbor channels beshifted to nonfederal public bodies?

* Should local authorities or the federal govern-ment have the authority to decide which ports areto be deepened and maintained?

'* If nonfederal interests must pay for dredgingimprovements and maintenance, should the reim-bursement process be based on a port-by-port userfee or a uniform charge imposed and collected bythe federal government?

* Should all users of improved channels pay fees,or only those large vessels carrying commoditieswhich directly benefit from deeper-draft water-ways?

* How could the current lengthy administrative anddecision-making processes for approving andfunding dredging projects be streamlined?

* Should federal loan guarantees be provided tolocal entities for channel-dredging revenue bonds?

* What are the appropriate methods for dealing withenvironmental and siting problems associated withpetroleum and hazardous-cargo terminals?

What are the regional economic impacts and

national defense implications of consolidating or

relocating ports?

* What relative effect would user charges have onthe traffic, employment, safety, and economics of.. ;.various ports?

*_ What are the long-term impacts of diversion ofU.S. cargo to foreign ports?

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. . * ,. . . ,

CRITICAL ISSUE 10

INTERHODALISM

Background

Cargo movements in the past consisted of a series ofseparate activities. Today, with the advent of contain-erized cargo operations, cargo movement must be viewed asa system which requires integration to achieve maximumeconomic efficiency. As an integrated system, goods aretransported by various modes in a unified series of oceanand land linkages. These linkages are especially evidentin Land-Bridge and Minibridge movements.

The Shipping Act of 1916 provides the basis forregulation of shipping service. As this law was designedfor break-bulk cargo, its applicability to containerizedcargo operations should now be reassessed. Many partici-pants within the maritime industry consider the law out-moded. Specifically, they advocate the use of intermodalthrough rates--single rates for combined land-sea move-ments. The problem which remains is how to regulate andresolve the conflicting interests of the various ports,carriers, and shippers.

Some shippers and port managers are concerned aboutthe effects of the intermodal rates advocated by car-riers. The shippers object to adding ocean and inlandrates together, without any reductions in the total ratescharged or improvements in the services provided. Theshippers are also opposed to tying arrangements for theinland portion of cargo movements. Furthermore, there ismuch disagreement over which federal agency should regu-late the intermodal traffic. At present the railroads areregulated by the Interstate Commerce Commission, while thesteamships are under the jurisdiction of the FederalMaritime Commission.

Points at Issue

The emergence of cargo movement as an integrated sys-tem of ocean and land linkages requires careful assessmentof a number of significant questions:

Who benefits and who is harmed by combinedsea-land through services such as Land-Bridge andMinibridge systems, and to what extent are theybenefited or harmed?

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Critical Issue 10 (continued)

• Are intermodal or through rates equitable to allparties in the transport system? Do they improvethe administrative efficiency of the totalland-sea transportation system?

- Can regulatory responsibility residing indifferent agencies be coordinated or unified?

* Do intermodal systems discriminate againstcertain geographic areas? If so, is this anatural economic consequence of intermodalism?

- Are current shipping regulations compatible withcontainer and other intermodal systems?

. Can present container systems be improved? Iscontainer ownership in the proper hands for themost economical system?

. Are port facilities staying abreast of the needsof intermodal systems?

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T 7

Unclassified

SECUWY CLASSIFICATION OF THIS PAGSE~a WO Wm _________________

REPOR DOCUMENTATION PAGE aBKPitC BL oI1. =EPONT MUM89R GL OV? ACCION~ -NCIPlgENYS CATALOG NUsME

4L TITLE (md&*Nhiid) S. 1T'P9 OF NZPomT. pG~ CI COVEREDList of critical issues for

Critical Issues in Maritime Transportation planning purposes - annualS. PERFORMING OR. 111100111 NUMBER

IAAJTN@Re) 8. CONTRACT OR1 GRANT MUMSR.

Planning Committee of the Maritime Transporta- MA8SA104tion Research Board PoR~EEET RJC.TS

PERFORMING ORGANIZATIO01 %NC AND ADDRESS s.PI"lEEET RJC.TSKMaritime Transportation Research Board AREA 6 WORKC UNIT NUMBERS

National Research Council2101 Constitution Ave., Wash., D.C. 20418

U.S. Department of Transportation July 1982

Maritime Administration IS. NUMBEROF PAGES40Seventh Street, aS.W., Wa sh., DC 20590 24 +viii ~'1 uf

1.MONITORINGAGNYMNCAARSSl tnn COW11 NO)I.SCRTCLS.(teMP"

ISO. ~CASPIC ATIONI DOWNGRADING

06. DISTRIBUTION STATEMENT (alibis. R~pwrt

Distribution of this report is unlimited

17. DSlT RkiSUTION ST AT am N T (of the aoerct untoed to Block ",.It dOtI~t~tt he., Ripen)

It. SUPPLEMENTARY NOTES

Financial support provided by the Department of Transportation

IS. KEY WORDS (Commu roeel. odE. #I neceoevy and lemity~ by blckA mwior)

2S. A TRACT rCmwam.. lrow olo of owow me.e IdE~etify~ by Week mAl)

THIS REPORT DESCRIBES AND DISCUSSES THE TEN MOST CRITICAL, CURRENT ISSUESIN THE FIELD OF MARITIME TRANSPORTATION AS PERCEIVED BY THE NATIONALRESEARCH COUNCIL'S MARITIME TRANSPORTATION BOARD. THE TEN ISSUES, INNO PRIORITY ORDER ARE: CARGO, NATIONAL SECURITY, FEDERAL POLICIES,SHIPBUILDING, PRODUCTIVITY, HUMAN RESOURCES, 1j4RITIME SAFETY, DOMESTICSHIPPING, PORTS AND HARBORS, INTERI4ODALI SM.

oo ~Pm 147 awU OF 1 ko e isO RoSoLgTa UNCLASSIFIEDRECUfIAT? CLASFCATION OF TONS PAGE (Wh-O. ~we

/I