MSC ASKS COMMISSION TO BLOCK SEA-LAND SPACE-CHARTER PLAN

MSC ASKS COMMISSION TO BLOCK SEA-LAND SPACE-CHARTER PLAN

The Navy's Military Sealift Command wants the Federal Maritime Commission to get an injunction to block the space-chartering plan involving 12 huge U.S.-flag containerships once owned by United States Lines Inc.

Sea-Land Service Inc. acquired all 12 ships last month. It is chartering three of them to Trans Freight Lines and another two to Nedlloyd Lines. Each of the three carriers will, in turn, charter space on the vessels under their jurisdiction to the other two lines participating in the agreement.The reason for the Navy's concern is that TFL and Nedlloyd have agreed not to bid on or carry any U.S. government cargoes.

The Sealift Command said that will restrict competition among carriers for military cargoes. By law, such shipments must move entirely on U.S.-flag vessels. All 12 of the ships will operate under U.S. flags, even though TFL and Nedlloyd are both foreign-owned.

This is the second request to the commission asking it to block the agreement between the three carriers. Earlier, Farrell Lines Inc. asked the

commission to reject the proposal or enjoin it on grounds that it involves the transfer of assets - through the charters to Nedlloyd and TFL - and could reduce competition and produce unreasonable cuts in service or increases in rates.

Farrell also asked Transportation Secretary James Burnley to block the plan on grounds that the chartering of U.S. ships to foreign companies requires the permission of the secretary of transportation.

The MSC said the agreement between the three carriers blatantly and unreasonably restricts its ability to solicit and obtain ocean transportation services from TFL and Nedlloyd by prohibiting them from bidding on military cargo.

The availability of U.S.-flag capacity has been significantly reduced in recent years, the MSC said, particularly in the wake of USL's filing for bankruptcy in late 1986.

USL had been a major carrier of defense cargoes from U.S. Atlantic and Gulf ports to northern Europe.

In the fiscal year that ended Sept. 30, 1986, for example, Sea-Land and USL carried all the containerized defense cargoes on that route. USL handled about 1.3 million tons and Sea-Land 780,000 tons. That produced over $87 million in revenue for the carriers.

In fiscal 1987, USL hauled 153,428 tons, before its demise, and Sea-Land accounted for more than 1.5 million tons. That produced a total of some $147 million in freight charges.

Newcomers such as Topgallant Line carried the remainder of the 2.3 million tons, but its capacity and those of similar recent entrants is insufficient to replace that lost by the termination of USL's operations, the Sealift Command said.

The MSC said approval of the agreement would result in Sea-Land's carrying the majority of the military cargoes at potentially higher rates because it would reduce the number of lines vying for military cargo under the competitive bidding system used.