Chapter IV 



FACILITATING TRANSPORTATION 

 AND TRADE 



Waterbome transportation — lake, canal, coastal, and intercontinental — 

 is an integral part of the U.S. national economy and is essential to the sup- 

 port of defense requirements. However, while about 90 percent of our 

 foreign trade cargo moves by sea, U.S.-flag vessels carry less than 6 percent of 

 this total, and projections indicate that this percentage may decline even 

 further. 



While only one-fourth of the world's merchant ships are more than 20 

 years old, approximately three-fourths of American merchant ships are at 

 least that antiquated. In the next 4 years, much of this aging merchant fleet 

 will be scrapped. Yet, the United States is now producing only a few new 

 ships a year for use in our foreign trade. Building costs for American ships 

 are approximately twice those of foreign shipyards, and U.S. production 

 delays are often long. Operating expenses also are high by world standards, 

 and labor-management conflicts have been costly and disruptive. Figure 

 IV-I indicates the trends in numbers and tonnages of the world's major 

 merchant fleets. 



Policy To Improve the Merchant Fleet 



The President, in a message to the Congress in October 1969, recognized 

 the seriousness of the situation confronting the U.S. merchant fleet and 

 proposed a 10-year corrective program which he described as a program of 

 challenge and opportunity for all segments of the maritime industry. Noting 

 that both Government and industry must work together to rebuild the 

 U.S. merchant fleet, the plan which was outlined to accomplish this aim 

 would not increase subsidy expenditures during the current fiscal year. By 

 emphasizing multiyear commitments and standardized ship types where 

 feasible; it is expected that U.S. production rates can be accelerated, and 

 costs per unit reduced. The President expressed confidence that the ship- 

 building industry could meet the challenge; however, it was also indicated 

 that if the challenge were not met, then the subsidy portion of the admin- 

 istration's program would not be continued. 



Construction of an average of 25 general cargo ships, three dry-bulk 

 carriers, and two tankers per year for the 1970's is planned, although the 



51 



Mumble's icebreaking tanker SS Manhattan completed an historic transit of 

 the Northwest Passage in 1969. Data gathered during voyage will permit 

 evaluation of the potential of the Arctic as a commercial shipping route. 



