THE GOOD OLD DAYS ARE GONE, but many in the U.S. maritime industry have yet to figure that out. Unfortunately, the Commission on Merchant Marine and Defense
hasn't learned either.
The seven-member commission was appointed by President Reagan in 1986 to suggest ways to maintain a U.S.-flag merchant fleet adequate to meet military needs in time of war. Its final report, released last week, is less a compendium of promising ideas than a stirring call for a return to the 1940s, when the hundreds of cargo ships built during World War II gave the United States the world's largest merchant fleet.Warning of grave danger to U.S. security unless the U.S.-flag fleet is strengthened, the report calls for spending $13 billion - that's right, $13 billion - to build 244 new merchant vessels over the next 10 years. That would increase the size of the active U.S. fleet by two-thirds. The report calculates the net cost of the proposal at only $5.9 billion, claiming that it will lead to a surge in economic activity, but the benefits it foresees - a $43 billion boost to the gross national product, 100,000 new jobs and $6 billion in new tax payments - are hardly credible.
The conclusion that more ships are needed is no surprise, coming from a
commission on which a majority of members - a union leader, a shipyard executive, a maritime academy trustee and the government's chief dispenser of ship subsidies - have an obvious interest in more government aid to build and operate ships. What is surprising is that they would endorse a solution so
oblivious to political reality. The only commission member with ties to
neither the Defense Department nor the maritime industry, former United Airlines Chairman Edward E. Carlson, observed rightly in a supplemental statement that the program would be stillborn, "given the massive federal budget deficit, a general reluctance to raise taxes and ever-increasing claims on government spending."
The commission proposes putting most of the $13 billion into a build-and- char ter program, under which the government would pay to construct the ships and would then lease them to private ship lines. It is less helpful in suggesting what these ships might carry.
Heavy ship orders already herald the next glut of containerships, and tanker rates, while firm, are not exactly soaring. The militarily useful ships the commission wants the government to buy would be smaller than is efficient for commercial operation. Only heavy government operating subsidies, or dirt- cheap charter rates, will enable U.S. carriers to run so many vessels at a profit.
The U.S.-flag merchant fleet has continued to shrink in recent years, due to high costs, stiff foreign competition and the trend toward operating fewer but larger vessels. Past government policies, which subsidized inefficiencies and left carriers that had accepted federal construction aid bound by bureaucratic rules long after the aid ceased to be available, have contributed to the fleet's decline.
The commission's report ignores these and other areas in which relatively inexpensive changes in government policy could make a difference. By failing to address the commercial viability of U.S. shipping and offering no politically feasible program, the Commission on Merchant Marine and Defense has ensured that its report, like the many that have come before it, will gather dust.