SKINNER REVIEWING REVISIONS IN WATERMAN SUBSIDY PACTS

SKINNER REVIEWING REVISIONS IN WATERMAN SUBSIDY PACTS

In an unusual move, Transportation Secretary Samuel K. Skinner is reviewing Waterman Steamship Corp.'s plan to revise and lengthen its subsidy contracts.

The Waterman application was approved earlier this month by the Maritime Administration, but Mr. Skinner - on his own motion and without explanation - last week decided to review the case.His action automatically postpones "until further order" the May 31 effective date of the Waterman plan.

An industry source said Mr. Skinner's decision is "unexplained, unexpected and unprecedented . . . It's unclear what the secretary had in mind."

Marad approved a subsidy contract extension of about five years for Waterman vessels operating on its primary trade routes between U.S. Atlantic and Gulf ports and ports in the Middle East and South Asia. The contracts were due to expire next year.

Those routes were combined into one route and the maximum number of subsidized sailings reduced to 16 from 58, reflecting the line's actual performance in recent years, Marad said.

James W. Pewett, attorney for Waterman, noted that "no one filed a request" for Mr. Skinner's review and he had "no idea" what the reasons for the review might be.

"That makes it difficult to address whatever concerns he might have," he said.

Comments are due by May 24.

Referring to the possible delay in the contract consolidation, Mr. Pewett said a "great deal of planning has already been done."

There is a potential timing problem, he said, because linked to the contract revision is the "critical need to get on with Waterman's barge replacement program."

Only one carrier, Sea-Land Service Inc., raised an objection to the Waterman application. Sea-Land called it a "piecemeal" approach that could endanger industry efforts to preserve an industry consensus on an overhaul of the entire operating subsidy program.

Marad pays subsidy to U.S.-flag operators to offset the cheaper operating costs of their foreign competitors.