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STATEMENT OF EARL SHEPARD_Resumed

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Mr. SHEPARD. May I ask one question before we adjourn?

Several unions are represented here at this hearing, and I would like to ask whether we are in the right meeting?

Mr. GILES. Several unions were invited. I am glad you are here and from my point of view you are in the right meeting.

Mr. SHEPARD. May I ask for my own benefit—we received a wire from you which was in answer to a wire we sent to you the day before yesterday in the evening. In your wire you said that if we would come to this meeting, certainly our position would be heard.

Mr. GILES. That is right.

Mr. SHEPARD. Second, the New York Times this morning carried an article stating that public hearings regarding this issue would be held tomorrow. My understanding I have not consulted my colleagues--my understanding was that this meeting was in response to some of the telegrams we sent. I got that from your wire.

Mr. GILES. The question as to whether I am holding a public hearing solely because I received two wires from union officials--my answer is that that is not correct. I considered the day before I got the wires from Messrs. Hall, Gleason, and Calhoon, I was considering the other day in talking with our staff and others, including shipowners, and Continental, as to how we could resolve any ships that might be unresolved or be in controversy and it was decided that we would have to have such a meeting. I simply added on as invitees the union representatives, by the wires I sent yesterday.

So far as our agenda, we are going to each of these ships in controversy and then following that we will be glad to hear you and we will have ample opportunity to hear from any union representative, shipping association or any shipowner.

I am prepared to stay here the rest of the day and on into the evening if necessary.

The answer to all your questions is that we are glad you are here. You are invited and I am particularly glad in view of your telegram, because I want you to see precisely what we are doing and how and why we are trying to make these decisions.

We will now adjourn for lunch and I hope all of us will be back at 2 o'clock.

(Whereupon, at 1:05 p.m., the hearing recessed to reconvene at 2 p.m., the same day.)

AFTERNOON SESSION

Mr. GILES. All right, gentlemen. Let us resume our session.
Mr. Henry Dowd is now here with us.

I believe, Mr. Dowd, we are taking up the Marine. Before we adjourned, we had discussed the Elomar.

Mr. Dowd has stated his position with regard to the ship Marine, stating that he had offered it for the gulf area only rather than gulf or North Atlantic operation.

Continental has declined the account, and we did not hear from Continental on the Marine.

Mr. Stovall?

STATEMENT OF L. C. STOVALL-Resumed

Mr. STOVALL. On the Marine, Mr. Giles, the vessel was offered gulf loading only, with March 10 to 25 lay days. We have chartered in the March 15 to 30 position some 103,000 tons of American-flag tonnage, which fully covers that position.

Mr. GILES. In the latter half of March?

Mr. STOVALL. Yes, sir. Therefore, despite the fact that the vessel was offered outside of tender conditions with gulf loading only, her dates would make it impossible for us to utilize the vessel.

Mr. GILES. What do you mean, it would make it impossible?

Mr. STOVALL. There is no further cargo in the March 15 to 30 position, having chartered the full amount of U.S.-flag tonnage for that position.

Mr. GILES. For the gulf?
Mr. STOVALL. For the gulf and Atlantic.

Mr. Giles. How about your foreign-flag shipping? Are you fully committed on all foreign-flag shipping for that period ?

Mr. STOVALL. Yes, sir, we are. Mr. GILES. Now, I want to be sure that our facts are clear about this. We are talking about the latter half of March, and that is the period, Mr. Dowd, for which you offered the Marine?

Mr. Down. Yes, sir.

Mr. GILES. For the latter half of March, you have booked all of your shipments, both foreign flag and American?

Mr. STOVALL. Yes, sir. In accordance with the shipping schedule presented to the Maritime Administration and deemed fair and reasonable, again, I say, in order to give the maximum U.S. participation, a quantity of 212,000 tons, being split evenly over the four shipping periods, was allocated for the March 15 to 30 position.

That quantity has been fully booked, now, with 103,500 tons of American flag and the balance foreign flag.

Mr. GILES. What is the balance ?

Mr. STOVALL. 213,300 tons is the total amount booked, of which 103,000 is American flag.

Mr. GILES. I see. Mr. STOVALL. There are no waiver applications for this period, Mr. Giles.

Mr. GILES. I understand that. But I would like to clarify a point in my mind, as well as to explain more clearly the point we have got here.

I want Captain Goodman to explain this shipping schedule matter.

As I recall, Captain, when we first consulted with Continental, we suggested that it would be desirable to spread their American shipping requirements over the entire period of time involved, over February and March, rather than, for example, attempting to bunch it all up in February, or even bunch it up in March.

So would you clarify the details of that, and your understanding of the general approach that you thought was proper?

Mr. GOODMAN. Yes. That is correct, Mr. Giles.

We agreed, in trying to work out an orderly schedule with Continental, that rather than to permit them to bunch all of their tonnage in February or in March, we wanted an equal distribution of tonnage,

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and they went out on that basis on the U.S. gulf and Atlantic in four
different time periods.

Am I correct? Or was it three?
Mr. STOVALL. Four equal periods.

Mr. GOODMAN. Four equal periods, which we at the time were fully in agreement with, and I am still in agreement that that was a very reasonable policy to follow, which allowed all shipping available in the next 60 days to participate, rather than any one concentration.

The same thing applied to the west coast, even though there was just a small amount of tonnage, 150,000. But that, too, was spread over equal periods.

This particular issue of Mr. Dowd's with the Marine—just listening to Continental up to this moment, I hadn't realized that their entire quota for that particular quarter was already booked, and as such, I must say that Continental, on that particular issue, is in accordance with the understanding, and the agreement, and the terms for that period in relation to this particular ship.

Mr. Down. Could I comment, Mr. Giles ?
Mr. GILES. Mr. Dowd.

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STATEMENT OF HENRY R. DOWD-Resumed

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Mr. Down. I think we are cutting fine lines, here. When we get down to this, I don't think Continental can schedule this close. If you get down to a ship scheduling U.S.-gulf, you have a time differential of 5 to 7 days.

I am sure if they examine their program and the estimated time of arrival, they could switch around 40,000 to 50,000 tons either to first half March or second half March. I don't think the ships run on that schedule. I don't think the programs are handled that way. I think they are being quite arbitrary about it because it suits their conveni

Mr. GILES. Mr. Dowd, is this point correct, that the tender that was put out in the last 5 days did not specify this particular period of March?

Mr. Dowd. I don't have the tender in front of me. I don't recall, sir.

We looked at it as 500,000 tons to be scheduled in a relatively short period in February and March. And there were relatively protracted terms, and the owners couldn't keep their terms for February, and it was never our understanding that there was any definite schedule set as to how much American would be sent in the beginning or end of February, the beginning or end of March.

If that had been the case, some of us might have rearranged our schedule, but we had no knowledge of this.

Mr. GILES. You understand, Mr. Dowd, that in our initial discussions we did recommend, on our part, that they spread this evenly over these 2 months.

What is your comment on that, as a general approach that we adopt here in Maritime? Do you see anything wrong with that as a general principle that we suggested they follow?

Mr. Dowd. No. As a general principle, I think it is wise to spread out the program over a period, but I knew there were going to be efforts made to accommodate American shipping.

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American shipping is much more limited than foreign ships. On all Public Law 480 cargoes, all the foreign missions always give preference in dates and positions to the American vessels so that they can live up to the requirement of 50 percent.

There are two ways to approach it. If you approach it on a negative position, you can find reasons that might sound valid when you analyze them, but in the course of negotiations in business, they don't stand up.

I think this is a negative approach.

Mr. GILES. Well, Mr. Dowd, how about your point of the gulf only? Isn't that outside the tender terms?

Mr. Dowd. On gulf only, I also would like to comment on that.

One thing I would like to say: Mr. Oberschall, the last witness, condescended to have shipping excluded. He mentioned he had certain very strong personal reasons, for which he should be admired, for not pushing for the Russian business. He lost his family in Hungary and has no desire to.

Mr. Oberschall, it is true, also said he would just as soon have other business.

Mr. GILES. Excuse me. I want to state what my understanding was of what he said.

I did understand that Mr. Oberschall had offered this on the terms he did, and if that could be found acceptable he would definitely take the business.

Now, is that your recollection? Mr. Bowd. He would, yes, for this reason. He has very little option at the present time to keep his ship employed elsewhere, and the American T-2's are taking this business as minimum profit compared to other business, which doesn't enter into it.

Mr. GILES. On this, let's let Mr. Oberschall speak for himself. He made it clear to me that he wanted the business if it could be accomplished on the basis he offered.

He also, and I accept this as his personal situation, not prejudicing what you may feel for your situation he also made it clear that he did not feel strongly about this particular job offer, here.

Now, you certainly are not governed, as a matter of precedent, by his feeling on that.

Now, you may go ahead, please, sir.

Mr. Down. The reason he had no preference for this business is that today you have India business, which you have the opportunity of returning with cargo, which makes the voyage more profitable. Therefore, he felt that if he does not take the Russian grain business, he will probably obtain the Indian business today.

Now, the reason I think Continental should allow gulf loading only, in spite of the tender terms, which were not considered in detail by us-it was a rather abnormal condition—but in most cases the supply is waived.

In cases of any quantity such as this, where you have 200,000 tons of shipping loading in 1 month, I see no difficult in allocating. They know approximately how much tonnage is moving from the gulf.

It might be 50,000 tons to 150,000. Therefore, as a minimum of 50,000 tons, they can definitely take three American ships for gulf loading only. That is more than have been offered for only gulf.

It does not limit their flexibility. They don't need flexibility on every ship; 200,000 tons is very easy to allocate this definite amount for gulf.

The majority of cargo moves historically from the gulf. It is not customary for other chartering firms to ask for the option to load on the range or the gulf.

In addition, we have a specific reason, we have two good reasons, for not going to USNH with a tanker.

No. 1, at the Continental terminal in Norfolk, we are assigned to go there, and it costs us 75 cents a ton to load. It is a self-administered terminal by Continental, and they arbitrarily set the rate of loading at 75 cents.

Everywhere in the U.S. gulf where we have our option to select a stevedore, it costs us 20 to 25 cents a ton. That is a difference of 50 cents a ton it costs us with a tanker to go to Norfolk. On a cargo of this size, it is $8,000. We don't think this is a burden the ship should accept to obtain this business.

Mr. GILES. Mr. Dowd, many other shipowners have accepted that term, haven't they?

Mr. Down. There haven't been many tankers chartered on this business,

I believe. Mr. GILES. You mean this reference you made applies only to tankers?

Mr. Down. That is correct, sir. Mr. Giles. All right. Let me ask you this question, Mr. Dowd. What is your comment-we have been talking to the substance of what would be good business or what would be feasible on the part of Continental. Now let's focus on what I would call the technical point or the ground rules.

What is your comment, now, on the desirability or the feasibility, on my part, or the justification, for, in effect, changing the ground rules here for one case? Would you just comment with respect to that?

Mr. Down. I believe the ground rules have been so flexible for the last 3 weeks—I am underestimating; for the last month we have been negotiating terms and program in general. The last bulletin issued by Maritime Administration was dated January 31.

Now, I believe there have been three or four revisions prior to this. Another revision I don't think would change the general tempo and basis of negotiations.

Mr. GILES. Well, you are correct. I don't agree with your exact choice of words about the ground rules being changed. That is not accurate. Mr. Down. Pardon me. I will change that.

Mr. Giles. We have, as everyone knows, over a period of weeks had to make adjustments or decisions on one detail after another. And I think that changes, if you would call them that, have been more in the nature of our making the decision the first time.

Then I think we also have the situation, Mr. Dowd, of where we have made these clarifications or made these decisions, as being applicable across the board for all shipowners.

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