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Garmatz and others, it is very clear in any event that we are headed toward a shipbuilding program which will invite nuclear power much more than in the past?
Admiral JAMES. The fundamental bar to achieving a nuclear merchant ship program from the point of the operator is, of course, the economic considerations. In my statement I endeavored to point out that the estimates are that when you reach this minimum of 70-percent utilization and a maximum of 60,000-shaft horsepower, you have reached the crossing point of the curves where then it becomes economically practicable.
I do believe that these figures of 60,000-shaft horsepower and 70percent utilization could be further reduced, and I believe that the requirement for lesser horsepower is greater in the merchant marine than it is for the 60,000 or greater shaft horsepower.
So I feel, indeed, that through the efforts of manufacturers that this can be brought about. I was disappointed to hear yesterday that the trend in the Atomic Energy Comission is toward a limitation of 150,000-shaft horsepower as representing perhaps the practical point, but I truly believe that perhaps that has been overwhelmed by some of the developments in the manufacturers themselves.
Mr. PELLY. Then is it true that your members to whom you have been referring as studying various types of ships and various means of operations, in order to try to eke out a profit and reduce the cost of subsidy to the Federal Government, certainly have had some very revolutionary changes in design of your ships?
Admiral JAMES. We feel so, sir; and of course the container ship which is another major development is another indication of what I might call a technological explosion in merchant ship design.
Mr. PELLY. It seems to me that in this time of tribulation for American flag service it points up very much the need for research and study and experimentation. It will be a sad day for me if the Savannah is laid up because I think that it is one of the means of discovering answers to some of the problems that you and others in the steamship industry have been looking for.
Thank you for a very fine statement.
Mr. DOWNING. Mr. Jones of North Carolina.
Mr. JONES. I have no questions.
Mr. DOWNING. Mr. Mosher.
Mr. MOSHER. Thank you, Mr. Chairman.
I agree with my colleagues that this is a very impressive statement, Admiral. I notice that particularly on page 4 there is considerable emphasis on vessel speed. Do I understand that your implication is that there is a correlation between high speed and its ability to attract premium cargo?
Admiral JAMES. In the case of liner vessel operation, sir, this is in-. deed a fact and this is perhaps the fundamental reason behind what I had tried to draw out here as a trend toward these higher speeds.
We believe that the higher speed American constructed ships that are characterizing our liner fleet today have something to offer to the shipper that practically no one else in the world today has in the numbers of ships that we have. We would hate to see this advantage lost. Mr. MOSHER. So that if the economics is the most important consideration here, speed is a very important factor in that consideration?
Admiral JAMES. In our trade certainly. There are other trades where speed is less than an important consideration.
Mr. MOSHER. I have been handed a note here which refers to a study conducted by the Maritime Administration a few years back concerning the relationship between the ship speed and freight revenues. Do you have any idea what the current status of that study is?
Admiral JAMES. No, sir. I am a relative newcomer to this industry, and I am not aware either of your original study nor of any developments on it, but certainly it sounds worthy of investigating.
Mr. MOSHER. As I understand, the Maritime Administration made an in-house study and reached the conclusion that the relationship between high speed, early delivery, cargo value and cargo freight rate fully supports the expectation that high-speed ships can and will attract premium cargoes.
In other words, I believe the Maritime Administration has an inhouse study of its own which would support your position here this morning.
No further questions.
fr. DOWNING. Mr. Grover.
Mr. GROVER. I have no questions.
Mr. DOWNING. Mr. Reinecke.
Mr. REINECKE. Admiral, yesterday we were told that the AEC only intended to spend about $100,000 on maritime reactor development. Do you feel that this is a fair approach to the problem on the part of the Government?
Admiral JAMES. No, sir. I join with Mr. Shaw who made that statement, and stating that he couldn't achieve very much for $100,000.
Mr. REINECKE. Do you or does your organization have any recommendations as to the type of development that should be undertaken by the Government in this direction?
Admiral JAMES. At this point, sir, we do not possess the technical skill to direct any such development. We are essentially the customer for a vehicle. We put the vehicles that are offered to us by those in the shipbuilding industry and in the Maritime Administration to their intended purposes. This is not a completely accurate analysis of our role because we do indeed have great influence on the nature of these ships, but certainly there is need for development in the reactor field, and I am distressed, however, that the Atomic Energy Commission may not proceed with this with vigor. If they go the route of $100,000 a year for study which I think was what Mr. Shaw indicated yesterday, we would be sitting around for a long time waiting for those refinements that he perhaps would like to see in the program.
While that program has not been sponsored by infusions of appropriations, certainly the industries that are producing reactors have not been standing still, and I think you will hear some of these developments later on.
Mr. REINECKE. Does it seem reasonable to your organization that perhaps if the Government were to accelerate high-speed shipping capabilities, using high power that is obtainable through nuclear propulsion, that they might to some degree at least replace the concept of the FDL approach to having fast deployment of material?
Admiral JAMES. Frankly, I don't see too much of a relationship between the two. We hope that the FDL will never be a competitor with
the merchant fleet, and we have the assurance of the Secretary of the Navy to this effect, so that I don't believe the two have too much relationship.
The application of nuclear power to support ships in the Navy has not been embraced. We have limited it to warship types because of the complexities of getting the necessary appropriations, so that ultimately maybe way down the road there might be a nuclear-powered FDLS, but I would hate to speculate on this.
Mr. REINECKE. I was speaking in terms of developing a FDL type of ship that might not necessarily be deployed around the world but might be available for deployment from the United States, but in developing this type of ship the fallout that would come to the merchant marine would allow the merchant marine to move rapidly into the nuclear field.
Admiral JAMES. The design studies produced from the three final competing companies for the FDL program have developed elements that will certainly have an application to merchant ship construction. We are looking to the ultimate revelation of what has been offered to see where commercial payoffs might be achieved.
Mr. REINECKE. The FDL has a 5 to 10 percent utilization factor whereas you are striving for 90?
Admiral JAMES. Yes, sir; but the considerations are vastly different.
Mr. SCHADEBERG. This is a matter of information, Admiral. At what point is the human element involved in the economy of operating a ship? You talk about 90 percent time at sea as a possibility. What time do the men that are on the ships in the merchant marine have to spend ashore? I mean is it possible to go up to 90 percent?
Admiral JAMES. Yes, sir. We truly believe so. Much of the time, of course, that is presently spent in port is spent in ports away from home for the crews. By minimizing the time that is spent in foreign port, the effect is of no significance because the man is away from home anyway. I would not be fully aware of the program of operation of these ships as to the time off that the crew would have when they returned home. Certainly this is a factor. I am sure that our people have considered this in the development of their designs of these newer ships.
Thus far, from the very simple fact that it has not been raised as a problem, I don't believe that it is a problem, but I cannot give you a more precise answer.
Mr. SCHADEBERG. Thank you.
Mr. DOWNING. Mr. Roth.
Mr. ROTH. I have no questions.
Mr. PELLY. Mr. Chairman, may I ask one question?
Mr. DOWNING. Mr. Pelly.
Mr. PELLY. Is it true that utilization of air travel for replacing crews is now being practiced? I think the fishing industry, for example, flies a new crew out and back. I also think that this procedure was contemplated when they were talking about building the nuclear icebreaker. Therefore, I believe there is no real problem as far as crew is concerned.
Mr. SCHADEBERG. If you had a double crew, it would increase your costs, though.
Mr. PELLY. You would have a crew go on the payroll when one went off. It would be just a transfer of crews by air to wherever a ship was so that to the contrary it may save considerable cost.
Admiral JAMES. Certainly this is a practice that is in being, both in the fleets that you speak of and the Navy has made great use of this approach. You know also that during the period of paucity of men to man the merchant fleet here during the recent breakouts from the reserve fleets, we have had to do just as you have been describing, largely, however, to actually fully man the ships rather than to replace
Mr. PELLY. Of course, if they have an American ship with a Chinese crew out in Formosa, they don't bother about those amenities that cover utilization of American crews on American ships. The Navy also sometimes forgets those ships.
Admiral JAMES. We are constrained from forgetting in this area, sir. Mr. DOWNING. Admiral, the counsel has several questions he would like to ask you.
Mr. DREWRY. Admiral James, I think it was clear from Mr. Shaw's testimony yesterday that progress in this field is going to depend upon a high degree of cooperation among the various interested elements among the reactor manufacturers and shipping companies; in other words, is there a market for the thing?
You stated a little earlier in your statement that for a time the liner companies were not very much interested because it looked as if it presented too many complications to justify the expense or even the adventure of going into a new field. I understand that about a year ago the Maritime Administration sent inquiries to 56 U.S. ship operators to determine if there was a current interest in building and operating nuclear powered merchant ships.
I also understand that 30 companies replied, representing 76.6 percent of the tonnage polled, expressing a desire to build and operate a nuclear ship if the economics of their particular operation would permit. Five of the 30 companies stated that they would like to have a combined total of 51 nuclear ships in operation within the next 10 years.
The American Export/Isbrandtsen Lines' proposal for three highspeed nuclear container ships accounted for three of the 50-some ships mentioned. Then the other companies were Prudential, who apparently has expressed an interest in relation to the LASH, Waterman which has expressed an interest in a freight, as Grace has, and Maritime Overseas which is one of the major tramp companies.
Of that group of five, two of them are you members, Prudential and Grace. Do you have any comments as to the extend to which their plans or thinking have extended, and, in fact, what is the thinking and planning within your membership generally?
Your statement didn't seem to me to get down to anything very hard. It was more as if the Government were to move this thing ahead far enough then there would be an increase of interest in the liner companies.
Admiral JAMES. Well, I think that the position of our companies with certain clear-cut exceptions has been one of waiting to see what
the new model Cadillac is going to look like. There has been stimulation of interest along these lines by the two companies you have named and by others, by American Mail Line and by the American President Lines and by the United States Lines, who have all conducted examinations into the possible utilization of nuclear power in their new ship programs.
Yet it all comes to the point where the uncertainty of the economic capabilities to operate these ships at profit, which is our business, has no yet been clearly demonstrated by known developments. We ourselves have no ability or capability of sponsoring these developments. They will take the investment of corporations such as General Electric and Westinghouse and Babcock & Wilcox and perhaps others. We are hoping and waiting for the day when this curve of economic feasibility crosses the curve of potential loss to whip up the enthusiasm for this program in a much broader field.
I can assure you that this matter is receiving the continuous review and attention of our member lines. It has been considered even in the new Sea Barge construction plan by Lykes. As to a precise program to embrace nuclear-powered ships, you are absolutely right. It does not exist within our membership today because neither does this economic feasibility seem to be immediately demonstrable.
Mr. DREWERY. I asked the question because judging from Mr. Shaw's testimony and the hearings that were held last year, there is sort of a dog chasing its tail element in this picture. It seems AEC is interested in proceeding if there is a market. But the market has not been making itself known until this questionnaire went out last year. When evidently a number of shipping companies embracing a fairly good spectrum of American shipping indicated they had a definite interest.
Do you know whether there has been any approach by the AEC to your part of the industry at least to discuss with you your thinking, what your objectives would be as to what kind of speed you would need, what utilization, capacity of ship, or anything of that sort? Have there been any meetings called by the AEC for that purpose?
Admiral JAMES. There have been no meetings called, to my personal knowledge, in my brief period of association which is now approaching the end of 4 years where such a collaboration between the Atomic Energy Commission and the industry that I represent could have been initiated.
The Maritime Administration has convened several conferences. Generalities have characterized these conferences rather than specifics. I can say that an individual in the Atomic Energy Commission approached me sometime shortly after my joining with CASL, knowing of my prior association with the construction of the nuclear ships of our Navy and hopefully, I presume, saw in me the possibility of accelerating the program from his point of view within the Atomic Energy Commission, but later he was removed, and I have been exposed to nothing personally, nor do I know of anything along the lines you are suggesting.
Mr. DREWRY. At these conferences with the Maritime Administration, have they been set up for the purpose of discussing the possible nuclear potential or plans or was this just an item that arose in the course of the conference?
Admiral JAMES. No, sir; the precise purpose was to discuss the application of nuclear power to merchant ship construction. They