Page images

Mr. GILES. Thank you. I was under the impression there was some area where you might get together. Let me ask, is there any number of days—well, the 15th is not far off. Let me ask you this way: you would need to settle this here today or tomorrow?

Mr. OBERSCHALL. I pretty much would have to have it, yes.
Mr. GILES. I understand the situation, I think.

Mr. OBERSCHALL. Frankly, there is a possibility of chartering to India today from the same position, from the gulf only, and any delay in this would work to the shipowners disadvantage.

Mr. GILES. Well, I have gone into this because I wanted to try to consider the substance of the case aside from the mere technicality of the action, but as I understand it you really are not in a position to give any leeway here to Continental on this time.

It does seem that way to me, again forgetting the precise language of the tender and considering the substance of Continental's position, it does seem to me I could not waive not only the wording of the tender which in and of itself has its value and should be respected by both parties, I think, but on the merits of it, I could really ask or urge Continental to make a judgment here today or tomorrow on this.

So, on the basis of what I have heard, I would indicate my conclusion at this point and it is a tentative conclusion subject to our further checking out and going over it all either this afternoon or in the morning. I would indicate my conclusion that I believe your offer not being in compliance with the tender was rejected by Continental with appropriate cause.

Now, that is my tentative conclusion at this point and I appreciate very much your being here and the very frank statements you have made as to your position. It has been very helpful.

Would you like to say anything else at this point ?
Mr. OBERSCHALL. No, thank you, sir.
Mr. GILEs. Thank you very much, Mr. Oberschall.

Before we take up the next specific case, ladies and gentlemen, I would like to indicate we are not going to complete all matters before lunch and I would like to suggest that we will adjourn at 1:15 and return at 2 unless I hear strenuous objection. We have a cafeteria on the third floor just beneath us and I am suggesting that if we could do it, it would be helpful. If there is a feeling among the parties, or the group, against it, then we will have the full hour.

I see some heads shaking affirmatively on the hour. All right, we will adjourn at 1 and return promptly at 2. I would like to urge the shipowners involved in these specific matters to be here as well as the Continental.

We will go as far on Marine as we can. I understand Mr. Dowd is here now.

I want to announce what I think are now our totals that I was fumbling with awhile ago. We didn't have them added up as to the ships now in issue. That totaled 165,000 tons. For a grand total added to those definitely chartered it gave us a figure of 476,900 tons.

We have referred generally to this tonnage. In metric tons, that is 1,500,000 tons. As you know, when we get down to business in charters, we deal in long tons and the Continental for an equivalent of 988,000 long tons, one-half of that is 494,000; 494,000 is 50 percent and that is what we would endeavor to get American-flag shipping for if it is available. As of right now, not having made a final decision on Mr. Oberschall's case, I will announce to you that to the best of our knowledge and according to our records, in any event 17,100 tons cannot be in issue-17,100, I get that by subtracting 476,900 from 494,000 and those figures are in long tons.

Mr. Dowd, would you please come forward ?

I appreciate your coming down on relatively short notice, Mr. Dowd.



Mr. Down. My name is Henry R. Dowd. Mr. GILES. Mr. Dowd represents Oceanic Petroleum Carriers, Inc., which has offered the Elemir, a T-2 tanker for the amount of 10,700 tons, and the Marine, a T-2 tanker, owned by U.S. Shipping Corp. Both of those vessels were rejected by Continental Grain Co.

Mr. Dowd, thank you for coming, and will you just go right ahead and state the facts of your offer as you know it and any conclusion you may have for us.

Mr. Down. I apologize for not being here at the original call, but the plane was delayed by fog.

The Elemir, A T-2 tanker, was offered to list a cargo of 16,000 tons, 5 percent, from the U.S. North Pacific to Nakhadka, a Siberian port. At the preliminary negotiations as to terms and conditions, with McLoskey & Co., acting on behalf of Continental Grain Co., we agreed on terms and conditions and then we were advised that the receivers, the U.S.S.R., were not agreeable to accepting tankers into port. This was approximately on January 28. We have the original communications.

We then with that ship tried to secure other business as a ship is due on the west coast in 10 days. Again yesterday we offered it to Continental on the terms of the Maritime Administration. They again informed us the ship could not be accepted, because the receiver, U.S.S.R., was unwilling to use tankers in a North Pacific port.

At the present time, the ship is without employment and heading for the west coast.

Mr. GILES. Mr. Dowd, may I ask just one question before we hear from Continental!

Could either one of these ships get in position on the east coast or the gulf?

Mr. Dowd. Elemir is for loading on the west coast and to arrive on the east coast would be a substantial loss, it would be catastrophic. The Marine is loading on the U.S.gulf.

Mr. GILES. Excuse me. I was thinking both were from the west coast. The Marine is from the gulf?

Now, you have explained your offer there on the Elemir. Would you explain your offer on the Marine?

Mr. Dowd. The T-2 flag Marine was offered for a cargo from the U.S. gulf only loading March 10 to 25.

After negotiations with the Continental, we agreed on the basic terms and were informed that the ship could not be chartered because their commitments for these days were filled and they could not use additional tonnage. This was approximately January 31.

Again yesterday we offered the vessels and were informed this vessel could not be used because it was not in accordance with the terms of the Maritime Administration tender.

Mr. GILES. Thank you, Mr. Dowd.
We will now hear from Continental.
First, Mr. Stovall, let us hear what you have to say on the Elemir.

Mr. STOVALL. On the Elemir-Mr. Dowd's original offer, I believe, was made against our first tender of January 8. The offer was made without vacuvators—a tanker on the west coast without vacuvators, with, I believe, also the stipulation that vacuvators were not available for the ship.

Mr. GILES. If we could, I would rather focus on the last offer. I was speaking of an offer made during the last 5 days? Mr. Down. Yes, sir.

. Mr. GILES. I am not saying it is not relevant to the total overall consideration but at least first I would like to refer or restrict this to the offer now before us.

Mr. STOVALL. The vessel is unworkable at Nakhadka inasmuch as our contract prohibits the use of tankers for this port. It is physically impossible—it is outside the contract terms and, if we should charter a tanker for this port we would be in breach of our contract.

Mr. GILES. Why is it impossible ?

Mr. STOVALL. The buyers state it is impossible because the facilities are not suitable to accommodate a tanker. They have excluded and will not allow the utilization of a tanker. Even though tanker was not allowed in the original contract, we again approached the buyers after Mr. Dowd's vessel became available

in the latter part of January. Again we approached the buyers, and they absolutely refused to use a tanker at Nakhadka.

Mr. GILES. You mean you went back to them?

Mr. STOVALL. We went back and urged them to use this vessel. We gave them the vessel's size, the draft, we gave the vessel's characteristics

Mr. GILEs. Do you have copies of any cable or correspondence that you can submit for the record ?

Mr. STOVALL. Captain Goodman is in possession of a telegram and a letter written by SOVFRACHT in Moscow, certifying to their inability to use tankers at Nakhadka.

Mr. GILES. Will you briefly state the substance of that and then we will

Mr. GOODMAN. I will read the pertinent part. We are not very keen on handling tankers, because they slow down the discharging of cargo. We do not object to your shipping by tanker (small tankers preferred) to Black Sea ports. However, we absolutely cannot accept tankers in Nakhadka. You have noted that we ourselves have not chartered any tankers for our grain shipments or any from Australia.

Mr. GILES. That is from whom to whom? Mr. GOODMAN. From SOVFRACHT—I am having a little trouble with the Russian-it is from SOVFRACHT, and it is addressed to Messrs. Continental Grain Co.

Mr. GOODMAN. The chartering operation of Russia.
FROM THE FLOOR. What is the date of that?
Mr. GOODMAN. January 21, 1964.
Mr. GILES. Is there any other item of correspondence?

Mr. GOODMAN. I see nothing else. There may be something in this great volume of papers and I may have missed it.

Mr. STOVALL. I believe the excerpt of the contract says that this shipment to the Far East

Mr. GILES. Would you put that specific reference in the record at this point?

Mr. STOVALL. This is an excerpt from the contract between Continental Grain Co., and the buyers, dated January 2, 1964, which states in part:

Shipments of grain to the Far East by tankers are excluded.

I would like also to add, as I stated before, that subsequent to the contract and again on the second offer of the Elemir, we approached the buyers as late as January 27. I will read their reply to you.

Reference your inquiry regret to inform that it is absolutely impossible for us to accept 1,600-ton tanker offered by you in Nakhadka. Explained to you before cannot accept tankers at this port as there is no elevator there and direct discharge to track cars impossible due to absence of necessary facilities. This is the reason why we provided in our contract that no tankers should be directed to Nakhadka.

This was subsequent to the second offer.

Mr. GILES. All right, Mr. Stovall, would you state—it is not clear in my mind—what is your precise understanding concerning the physical conditions or the lack of them or the facilities or lack of them as to why Nakhadka cannot use the tanker?

You have stated the conclusion and I understand the conclusion and it is very clear in the letters that this is a stated conclusion, but could you elaborate on that? What facility does a tanker ordinarily have to have to ordinarily discharge its cargo?

Mr. STOVALL. Not having visited the port of Nakhadka, it would be difficult for me to state within any degree of accuracy what the facilities are composed of or exactly why the rejection was made. However, the rejection was made and has been reconfirmed and it is a part of our sales contract—that tankers are excluded and cannot be utilized.

Again, as late as yesterday after chartering the vessel Niagara, we received a communication which reads:

Thanks for explanation, however, you have not informed us about chartering tanker Niagara besides chartering tankers to Nakhadka not allowed by our contract. Please explain.

Of course, the Niagara is a bulk carrier. Mr. GILES. Thank you, Mr. Stovall. Mr. Dowd, for my own purposes as well as the others here, generally, who

may not know nearly as much about shipping as you do, could you indicate to us your understanding of what minimum facility at Nakhadka would be necessary in order to utilize your tanker? Would there have to be an elevator or tank cars?

Mr. Down. The biggest problem in accepting a tanker for any port is knowledge on the part of the receivers. Many tankers for discharging require less equipment than dry cargo vessels, because the tankers contain vacuvators.

The big problem of getting countries to accept it is one of education. I believe what would be necessary would be some delegate to go to Nakhadka and explain how we would carry out the discharging of the cargo. It has been carried out in various ports, such as Chittacong.

I don't think the problem is discharging. It is a question of educating the receivers. I understand Continental's position.

Mr. GILES. Are you saying by your last statement that you accept at face value the information that Continental has as to the refusal of the buyer to take the tanker and what you are raising is that the buyers simply don't know enough about it or haven't gone into it sufficiently on the physical facts?

If they did do that, they would have a different view? Is that your opinion at the moment? Mr. Dowd. That is correct.

Mr. GILES. Mr. Dowd, in view of the Soviet agency's position on this, do you have any request or suggestion as to what approach or what specifically we might do in order to make an effort to educate the buyers in such short time or sufficient time to be meaningful here in terms of your offer and getting your particular ships lined up? What I am asking is, is there anything really practical under all the circumstances that either you or Continental-I better not say the Maritime Administration, let me say the Bureau of Public Roads—is there anything any of these people could do in the next few days?

Mr. Down. We feel that we paid the price for education on the ship and we can restrict it to try to obtain the Russian business for the last few weeks. At the moment, I see no solution to having this ship accepted by Russia, but I think there should be a followup as there will be future sales in following months and I don't think we should let the issue die on discounting tankers for Nakhadka.

Mr. GILES. To indicate a tentative conclusion at this time on my part, it would seem to me on the basis of all the facts, we have heard, and views expressed, it seems to me as a tentative conclusion that Continental is justified in this particular case in having to decline your offer.

Would you think that would be an unreasonable conclusion on my part?

Mr. Down. Under normal transaction procedures they have declined it and they are the agent.

Mr. GILES. As I said, this is my tentative conclusion at this point. All these matters we will check over very carefully before making final decisions.

I would like to say at this point we would greatly appreciate any suggestions you might have for us as to what followup we can make or how we should do it. I think you made a good suggestion in the light of possible future contracts, and future sales. We would like to have your further specific thoughts on that in the event we can do anything further with regard to proper education on the value of the tankers.

Mr. STOVALL. Continental Grain fully endorses Mr. Dowd's suggestions, and here again, if there is anything we can do to assist, we would be glad to do it for future sales.

Mr. Giles. We will have to adjourn.

« PreviousContinue »