DEPENDENT FEDERAL MARITIME ADMINISTRATION

TUESDAY, JULY 25, 1967

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON MERCHANT MARINE OF THE

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C.

The subcommittee met at 10:15 a.m., pursuant to recess in room 1334, ongworth House Office Building, Hon. Edward A. Garmatz (chairan of the committee) presiding.

The CHAIRMAN. The meeting will please come to order.

The witness this morning is the Honorable Alan S. Boyd, Secretary f Transportation.

Some of the members hadn't had the opportunity at the last meeting > ask questions of Mr. Boyd, so we will continue this morning. Mrs. Sullivan.

Mrs. SULLIVAN. Thank you, Mr. Chairman.

I have just a couple of questions I would like to ask the Secretary. n your testimony last week Mr. Secretary, on pages 11 and 12 you alked about the new container ships and containerized cargoes that would be handled by railroad on both ends of a voyage.

You mentioned too that they would be using this kind of shipment ather than going through the Panama Canal. Do you really see a uture for this kind of containerized cargo?

STATEMENT OF HON. ALAN S. BOYD, SECRETARY OF TRANSPORTATION; ACCOMPANIED BY PAUL L. SITTON, DEPUTY UNDER SECRETARY OF TRANSPORTATION, DEPARTMENT OF TRANSPORTATION; AND CARL C. DAVIS, GENERAL COUNSEL, MARITIME ADMINISTRATION, DEPARTMENT OF COMMERCE-Resumed

Secretary BOYD. I think I would have to say "Yes." I don't know to what extent, Mrs. Sullivan. Of course, you recall that in my testimony I was quoting.

Mrs. SULLIVAN. Yes.

Secretary BOYD. And these reports were made by people engaged in the business who are attempting to set up this sort of operation; so that I would say that at least the freight forwarding industry has some belief that there is a future for it. I have no idea what the volume will be.

Mrs. SULLIVAN. Do you know whether the charges on the railroad transportation would be prohibitive or in excess of what is expected? Secretary BoxD, No, I have no idea. I believe they will be set by

the Interstate Commerce Commission and I am not sufficient miliar with the rate structure to know whether there has bee application for a joint rate involving this type of traffic.

There are many different approaches as I understand it. : which would involve on operation similar to unit trains which sh reduce costs and therefore rates.

Mrs. SULLIVAN. We on our subcommittee on the Panama Caa. well as this full committee are interested in this and there are s being made now of future growth and need of an enlarged Pa Canal, possibly a sea-level canal.

I wondered if a trend toward this end for cargo, at least that inating in the United States, would reduce pressure on the canal Secretary BOYD. We are participating in some studies on the t growth of the canal or the future traffic that would utilize the Our figures up to this point tend to indicate a substantial grow world traffic through the canal. I have no way of knowing whether factor has been cranked in for overland traffic.

Mrs. SULLIVAN. If this developed it could really take away ther for a new canal.

Secretary BoYD. I think, Mrs. Sullivan, that certainly in term U.S. foreign trade the area where we expect the largest volume crease to develop will be bulk cargo and railroads are not going participate in that movement. I don't believe that we will have tra shipments of bulk.

Mrs. SULLIVAN. There have been discussions on how much inc in rates or tolls would affect the canal traffic growth. The study we have had brought before us has shown that the cargo that w suffer the most from toll increases would be our own American || culture, cotton, wheat, and corn, because there were not alter for shipping those products while there would be for other type

cargo.

The reason I am asking these questions is that this container. ship idea is still in its infancy, is it not?

Secretary BoYD. Oh, I think so. I think we are are just o threshold now of cargo container development.

Mrs. SULLIVAN. Now, I have had rumors that on some of the that have been built there is probably going to be trouble because won't accept them especially on the east coast. Now, I know th not your problem but I am throwing it out now because I think a problem for everyone interested in shipping whether it be in country or abroad. Before these ships are really built in any gr number, isn't there some way that someone in Government could meetings of management and labor to plan not for just tomorrow. for the distant future so that these ships could be built with all confidence in the world that they would be accepted by the men have to load and unload and handle them?

I wonder if you know whether anything like that has been to any great extent.

Secretary BOYD. Not to my knowledge, Mrs. Sullivan. I can' you about the areas where the Department of Transportation jurisdictation and responsibility. We are moving in this dire with rail management and rail labor. In my judgment this is n

que situation. It is rather the collision between automation and

S.

Mrs. SULLIVAN. Well, the rumor that I heard was that the east st labor was insisting upon opening and unpacking all these connerized cargoes. If this is true then everything that is won in one tance is lost in another.

Secretary BOYD. I haven't heard that, but if it is true it will kill itainerization on the east coast.

Mrs. SULLIVAN. Then would you agree with me that there is a great ed for a meeting of minds to plan for the future before these new velopments get too far?

Secretary Bord. Very definitely. Of course, one of the really tough oblems, Mrs. Sullivan, is trying to find a time when there is not ne sort of labor dispute then current so that people can sit down d talk objectively about the future. Too often we run into the probn that there is something sitting on the back burner. When you try get people to express their honest opinions about what might be ne and what the future holds, you find that they are forced by rcumstances into previously stated positions which have to do with eir relation to the wage dispute or manning dispute or something that type. It is very difficult to find any sort of a quiet period noways where you can talk.

Mrs. SULLIVAN. Well, it seems to me and I don't know if it is the ity of this committee but I would think that it should be the duty of is committee as well as you or anyone in your capacity in planning or the future that this is going to have to be worked out so that ese container ships in the future will not displace any of the men ho are working today. I think if the leaders in labor and the leaders mong the shipowners as well as Government would get together and ake these plans with their eyes wide open for what is going to hapen in the future, we would probably have a great deal less trouble 1 getting it accepted.

Mr. PELLY. Mrs. Sullivan, would you yield for a comment?

Mrs. SULLIVAN. Yes.

Mr. PELLY. On the west coast the longshoremen and management ave worked together for years to adjust to automation and containerzation. They worked out a program satisfactory to both parties-labor nd management. I see no reason why a similar agreement couldn't be vorked out on the east coast, too.

Mrs. SULLIVAN. This is what I have heard, that it is going to work and has been worked out on the west coast, but our trouble is that we have gulf ports and ports on the eastern coast that are not very happy wer this.

I wouldn't believe that anyone would go into the building and the normous cost of changing the mode and method of transportation without really sitting down and discussing this with all those who would be concerned with the future.

Thank you very much, Mr. Boyd and Mr. Chairman.

The CHAIRMAN. Mr. Reinecke.

Mr. REINECKE. Thank you, Mr. Chairman.

Mr. Boyd, you mentioned last week when you were here that no one would give you a rationale as to why it is repugnant to this committee to build overseas.

Secretary BOYD. Yes, sir.

Mr. REINECKE. I sat here through almost all the hearings and. not sure that you were satisfied, but just to be sure that none of speechwriters are going to be able to say that no one on the Hone could answer your charge, I would give you why it is repugnant t First of all, the impact of spending many millions of dollars seas is a direct slap against our economy and loss of tax base in c payroll income tax as well as corporate income tax which would re a substantial portion of that payment to the United States the effectively reducing the apparent cost differential of the ships.

Likewise, I am not sure that the incentive to build overseas is as g as you have indicated simply because, if they build to our spe tions, that cost differential will not be as large as might appear.

Secondly, there would be loss of employment which is a very ser thing and certainly the problems that we are having in all of cities recently indicates that there is room for skilled and uns employment. Your proposal would be shipping jobs overseas. Likewise, there would be a loss of related job skills that would trained by an expansion of the shipbuilding industry.

The balance of payments is apparently important enough to President to confine the amount of purchasing that the tourists overseas and I think it should be important enough to the Depar of Commerce or the Department of Transportation-where I bo won't be to see that this is an important factor to invest that mor the Ameriacn economy rather than in a foreign economy. Likev believe we would be weakening the shipbuilding industry and shipbuilding capacity.

You have indicated that you would increase the industry f 10,000 to 20,000 jobs. I don't see why we can't increase it from! to 30,000 jobs. I see no reason why we should not take a totally "A ica First" attitude on this thing and retain this economic activit our own country.

Finally, I believe there would be a further decline in morale of whole merchant marine industry which is already at a very low I don't expect you to agree with that, but for one I want to say th least you were told by one person that there is a sensible answer. I not too familiar with your background. Had you ever been invo in any maritime affairs before?

Secretary BOYD. No, sir. June of 1965 was my first participati maritime affairs.

Mr. REINECKE. Up to that time you were involved in the FAA that right?

Secretary BOYD. No, sir; Civil Aeronautics Board.

Mr. REINECKE. On page 2, referring to the Federal support or of a Federal program, you said "We are told that the death of industry, or its continued decline, would be a tragic blow to our tary and economic strength," and finally you say, "I have bee that, unlike most other similar problems we face, the only sol

and so forth.

Don't you believe these things?

Secretary BOYD. Yes, I believe that part of it. However, what It: to point out, Mr. Reinecke, was that there are a number of diffe

nterests in the maritime industry each of which says, "You have got o do things my way or else we will see to it that you don't have a program." And this is what I think is rather unusual—you face a sitiation of conflicting interests and each interest says, "It's got to be my vay or no soap."

I have not run into that in the other phase of transportation with which I have been involved for a great many years.

Mr. REINECKE, I am sure this is a normal administrative leadership problem and a man of your capacity can probably solve this. I guess primarily on the basis of expanding the merchant marine and shipbuilding capacity of this country to show all segments of the industry that they will get a greater share if they will go along with some of these recommendations that have been made such as in the MAC report, I got the feeling that you didn't really believe this because you say, "We are told," and "I am told."

Secretary BoYD. Those were predicates for the conclusion I made. Mr. REINECKE. I realize that, but I wonder if they are your conclusions or somebody else's. We want somebody who is very much interested.

Secretary BOYD. Mr. Reinecke, I have stated further in my testimony that I think the merchant marine of the United States is an essential part of our transportation system. I do not think it is the only part of our transportation system and I do not believe for 1 minute that the total Federal resources or anywhere near all of the Federal resources apportioned to transportation should go in the merchant marine.

Mr. REINECKE. I didn't think anyone suggested that.

Secretary BOYD. I just want to be clear. If your concern is whether I believe in the U.S. merchant marine, let me say on the record. "Yes, I believe in a strong U.S. merchant marine."

Mr. REINECKE. On the ship construction proposal you indicate a level of about 30 ships for 5 years. Have you any reason to believe that. the Bureau of the Budget will recommend the funding of 30 ships? Secretary BoYD. I made a statement here the other day, Mr. Reinecke, that if this total program were to be adopted by the Congress, I was prepared to commit the administration.

Mr. REINECKE. Thank you. That is very interesting.

You mentioned 30 ships depending upon the mix of types.
Secretary BOYD. Yes, sir.

Mr. REINECKE. I presume this means that you have surveyed the overall capacity of the American merchant marine and compared the estimated requirements-then from this you decided that there are certain types where our needs are greater than others. Is there such a survey in existence?

Secretary BOYD. Well, we didn't do it that way. I think that is a fair statement, but the way we looked at it was-where is the trade growth? The growth is in bulk movements, the replacement requirements are both bulk and liner. We attempted to develop Government investment levels which I am prepared to commit to develop a mix of vessels which would enable us to increase our capacity in both the liner and bulk cargo trade.

Mr. REINECKE. In other words, we are really looking at this as a