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Steamship Lines (CASL) and the American Merchant Marine Institute (AMMI) on the proposed layup of the NS Savannah. CASL is composed of 13 U.S.-flag liner companies who have operating subsidy contracts with the Government. These companies own some 280 liner ships which serve essential trade routes throughout the world. They are presently engaged in a major vessel replacement program which has resulted in a fleet which includes the most modern and technologically advanced liner ships in the world.

The competitive position of U.S. flag vessels is largely dependent upon our ability to outstrip foreign flag ships in the development and application of new technology cargo movement systems. The potential efficiency and economy of nuclear fueled ships is great and we have a major interest in the Government's policy in this area.

Your committee was instrumental in developing the national policy which led to the building of the NS Savannah and your continued interest in the operation of the ship and concern over the decision to lay her up effective August 20 of this year is such that there is no purpose in my reviewing the basic facts of the situation.

By any reasonable measure, the cost of continued operation of this unique ship is considered small. The fact that it is not making a profit in commercial operation should not be a matter for concern or criticism, for the vessel was conceived as a prototype which was never contemplated to be economically competitive; rather, was to demonstrate the peaceful application of nuclear power to the world. The ship has been and could continue to be eminently successful in achieving this intended purpose.

It has demonstrated the operational feasibility of nuclear powered merchant ships.

It has provided an operational vehicle for training and exercising specially skilled professional crews.

It has visited many ports of the world and opened them to transit by nuclear powered ships.

It has dramatically displayed to over a million and a half on-board visitors and millions of others in foreign ports U.S. technological leadership in the nuclear field.

In my opinion, a decision on future operation of the Savannah depends upon the answers to two questions:

1. Is there a commercial future for nuclear powered merchant ships?

2. If the answer is "yes," then can the continued operation of the Savannah make a contribution to such a program?

We are convinced that the answers to both questions are yes. The answer to the first question depends upon how soon capital and fuel costs of nuclear powerplants will be competitive with fossilfueled plants. The date when this will occur cannot precisely be determined. On the basis of current developments in this technology, I feel certain that that state of the art can be reached within the next decade and possibly very much sooner.

A forward looking program on the part of the Government, such as that proposed in H.R. 160, and I believe it is now labeled H.R. 3811, by Representative Garmatz, and other similar bills, would do much to advance the technology and experience needed to accelerate this date.

It is significant that Secretary of Transportation Alan Boyd in his testimony before the Senate Commerce Committee on May 1, 1967, advocated an expanded and accelerated Government nuclear research program which **** may include the construction of one or more vessels." From this, it would appear reasonable to conclude that Government studies indicate the commercial feasibility of nuclear propulsion.

In a report to the AEC dated January 31, 1967, the Maritime Administration indicated that nuclear plants will be competitive with conventional propulsion systems when there is a requirement for 60,000 or more shaft horsepower and when ships reach 70 percent utilization that is 70 percent of their time is spent at sea rather than in port.

The development of new methods of handling conventional liner cargo and the application of new technology such as automatic hatch covers have already greatly reduced port time. The container and barge ships under construction or to be contracted for this year should easily achieve the 70 percent utilization. The requirement for 60,000 shaft horsepower has not yet been reached but may arrive sooner than even experts in the industry anticipated.

It was originally thought that nuclear propulsion would have its first economic application in very large tankers or bulk carrier traversing long distances. Further study and experience with the Savannah has indicated that this probably will not be the case, for despite their vast size and to some extent because of it, these ships travel at relatively slow speeds and require plants of relatively low horsepower. Horsepower requirements go up extremely fast as ship speeds increase. A few statistics may help put the situation in perspective. Most of the better World War II built line vessels operated at speeds of 15 or 16 knots and required only 6,000 shaft horsepower. Ten years ago, new ships built by the CASL companies generally had cruising speeds of around 20 knots and required only 10,000 to 14,000 shaft horsepower. The maximum shaft horsepower of ships built in 1957 was the 17,500 shaft horsepower incorporated in large C-4's built for the trans-Pacific trade.

Now, barely 10 years later, many ships under construction will have operating speeds of 24 to 25 knots and require 24,000 to 26,000 shaft horsepower. Just last week, the Maritime Administration announced its approval for the construction of the LASH-type barge ships for two CASL companies-Prudential Lines and Pacific Far East Lines, Inc. These ships will have 32,000 shaft horsepower installed.

Both these companies studied the possibility of nuclear propulsion for the present LASH ships and will consider it further in future types of ships, particularly if later designs are of larger and faster ships. The significance of these figures is that maximum horsepower requirements for CASL ships have doubled in a decade and average horsepower requirements have more than doubled. Some of our companies are presently considering ships that would require about 60,000 haft horsepower. It certainly seems reasonable to expect that a number of such ships will be built within the next decade and that nuclear propulsion will become an economic reality.

If a significant number of nuclear powerplants-say 30-were ordered today, I believe that initial costs would drop to a point that

ships of substantially less than the 60,000 shaft horsepower figure set would be competitive with fossil-fuel powered vessels. I do not foresee such an order in the near future, but do believe that the faster we proceed, the sooner we will enjoy the benefits of quantity production. With nuclear propulsion so fast approaching economic feasibility, it is essential that the United States retain its present leadership both for the well-being of our merchant fleet and to insure that our manufacturers obtain a large portion of the world market for marine nuclear units.

I might comment aside from my statement, Mr. Chairman, to the effect that, when nuclear power was first developed and put into the Savannah, there was an immediate enthusiastic response on the part of many of our member companies to embrace this new process of propulsion. At the time when we first entered into it, there were all of the safeguards provided in the manner in which the ship was crewed, the manner in which shoreside organizations were set up, in the cost of these, and in the effects of many of the potential reporting processes that would have to be followed. When the full impact of this cost was realized by our member companies, the initial enthusiasm for this program was significantly diminished. As a consequence there has not been the enthusiasm over the past several years to look at nuclear propulsion. However, there has been some significantly impressive developments by manufacturers of nuclear reactors that have made it clear that the crew sizes can be significantly reduced with the newer models of reactors from what used to be required or estimated as being required. This was in the order of 60 to 70 people on American ships, which is significantly greater of course than the conventional ship of some 35 to 40. Today there is the prospect of this being reduced to the order of 40 to 45 personnel. Also some of the mystery that enveloped or enshrouded the whole concept of nuclear power has been eliminated in the actions of the Savannah primarily in going about the world and eliminating much of the prior concern that people had originally when nuclear power signified only one thing, the gruesome experience of Hiroshima and Nagasaki.

I think the significant thing is the number of countries that the Savannah has visited where there has been acceptance of the ship. Within our own Nation there has been greater acceptance as epitomized by a recent development when the Savannah was in New York in an event that once could not previously have occurred, but which was recently accepted as a routine operation of American ship, even though it be powered by nuclear power.

With regard to the second question, we believe that the Savannah can continue to make major contributions to our merchant marine. It is important to maintain continuity in our nuclear development. The layup of the Savannah would result in the closing of support facilities at Galveston, Tex., and the dispersal of highly professional crews trained at great expense.

It would appear probable that the reactivation of support facilities and the retraining of crews for the nuclear ships which Secretary Boyd and Chairman Garmatz propose building might well cost more than the continued operation of the Savannah.

In addition, the commercial feasibility of future nuclear ships will depend upon their ability to trade between all major world cargo cen

ters. The Savannah must be continued as a precursor of the ships to come in opening up ports. While this has been successfully done in most of Europe, there has never been a nuclear ship in most of the ports of Asia or in any of the ports of South America and other areas such as Africa.

Finally, we have a continuing need for the technological data and operational experience that can be obtained only through the actual operation of a nuclear-propelled ship. This might even further reveal opportunity for still greater reduction in crew sizes, might adjust the problem of insurance which now is a major economic consideration.

There have been many proposals regarding the nature of future Savannah operations. Whether the ship should continue on commercial freighter service, resume its earlier programs of demonstration cruises, or be converted to a Government of private trade fair ship requires careful study by your committee.

Let me simply urge that when the most profitable mode of operation is decided upon you utilize every resource to insure that this valuable national asset is not abandoned. If we act in haste, and layup the Savannah just 96 days from today-I prepared this to present yesterday. It is 95 days, just to show how rapidly time gets away from us, if we layup this Savannah today we will surely repent this shortsighted expediency for years to come, both through loss of our dominant position in nuclear propulsion and increased total cost in the future.

Mr. DOWNING. Thank you, Admiral. You bring a tremendous amount of experience to this committee, and I believe you were on active duty when the Savannah was launched, were you not?

Admiral JAMES. I was privileged to be present on that occasion at the New York Shipbuilding Co., with Mr. Teale and others of that corporation, yes, sir.

Mr. DOWNING. Mr. Mailliard.

Mr. MAILLIARD. Thank you, Mr. Chairman.

Admiral, some of the things that you say here, most of which I agree with, might need some documentation because they seem to be a little bit at odds with some of the things that other people have said.

For example, how much do we really know about the specific plans for the layup insofar as they would affect the facilities and personnel at Galveston?

Admiral JAMES. I am not able to bring you any factual information on this point, sir. We just hear the speculation that inevitably the facility at Galveston, having no continued purpose in support of nuclear ships, would be at least decreased in capacity, if not totally laidup. I would have to defer to people more knowledgeable for a firm answer.

Mr. MAILLIARD. Unless I have missed something in these hearings, the record is curiously free from any real detailed breakdown as to the estimated cost of layup, and I thought perhaps you have been able to discover some information that we don't seem to have in our record.

It is hard for the committee to make any sensible judgment without knowing a little bit more about what the plans really are, at least more than we now know.

Admiral JAMES. We have not been made privy to the Maritime Administration's program in this respect. We hope that ultimately it may not be necessary to even calculate the cost because it may not ever happen.

Mr. MAILLIARD. Well, of course, the justification for laying up the ship is wholly, as far as I know, budgetary. Nobody has contended that they think it's a good idea to lay her up for any reason other than cost. I hope somewhere before we finish these hearings we get some cost figures in here that are real enough to see whether the estimates of continuing the operation are, as I strongly suspect, somewhat loaded and maybe the estimates of laying her up are a little unloaded. I think that is all I have. I think it's an excellent statement. Mr. DOWNING. Mr. Pelly.

Mr. PELLY. Admiral James, reference in your testimony to the fact that the utilization of nuclear propulsion would probably best be adapted to large fast vessels which would be in active operation 70 percent of the time recalled to me the testimony one time of west coast labor leader Harry Bridges who appeared before this committee. We asked him, and I think he was in a very good position to know, how in the world we are going to continue to operate a merchant marine with the losses that were being sustained? Mr. Bridges said, "Run faster ships, run bigger ships, have them load and unload quicker, and keep them in port for shorter times and have them at sea most of the time."

Well, it seems to me that what we are now discussing ties in very well with his advice. We are leading up to a point now where, of necessity, we must come to nuclear propulsion. Would you agree?

Admiral JAMES. I would agree with Mr. Bridges completely. I think this is the direction in which our ships even in the conventionally powered area are tending, and nuclear power would accelerate that trend.

May I suggest one ship that I did not mention only because at the moment it has not yet been offered for bid. The Lykes Steamship Co. have what we call the Sea Barge carrier which will be a ship of great size and capability. They are estimating over 90 percent utilization of this ship because of the nature of the transferral of cargo from ship to shore through the discharge of barges. When you get to the point of 90 percent of utilization; namely, the ship 90 percent of its time at sea, you begin to get an even higher payoff so that in the conventional area we have this trend, and certainly it could be accelerated by the application of nuclear power.

Mr. PELLY. Is the Lykes Bros. new vessel similar to the ones that you referred to that will be constructed by the Prudential Lines and Pacific Far East? Is it a similar type of operation?

Admiral JAMES. It is similar in the type of operation, yes, sir; but the manner in which it is achieved is rather significantly different. Mr. PELLY. Are they going to be pretty fast ships?

Admiral JAMES. These ships will be 24 to 26 knots and the Lykes ship has not been fully determined as to speed, but it will be comparable to that and conceivably it might even be a little higher.

Mr. PELLY. In other words, whether or not we are ready now to build some new nuclear powered vessels as proposed by Chairman

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