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And the problem, or the question I have in my mind at the moment, on your specific case, is that it appears I would be making a departure from our so-called ground rules for one case or for one owner and one ship.
I am just suggesting that the point is there, apart from these other, more substantive matters that you have raised.
But I would like to hear from Continental now.
Setting aside, for the moment, our ground rule, our technicality of the tender, I would like to hear from you on the major point Mr. Dowd made, that really you can work this out, that you are in a position of just taking advantage of a “technicality
And I believe what Mr. Dowd is really saying, if I can interpret his point-he did not use these words—is that but for the difference in the cost to Continental of American shipping, or using his ship, but for that difference Continental would, as a matter of ordinary business practice, and for its own ordinary convenience, really not have any difficulty in working him in on the last half of March, notwithstanding that your schedule has already been completed, as we initially agreed with Continental would be a proper schedule.
Mr. Stovall, would you comment on that?
Mr. STOVALL. Mr. Giles, I would like to say that when this program was first scheduled, and having been in Washington and having discussed the program with you people, it was made clear to us that the American shipping schedule must be in complete accord and in complete conformance with the foreign shipping schedule.
Therefore, with some 840,000 metric tons to move in a period of 2 months of the USNH or gulf, again realizing the logistical problems, which the interior as well as the seaboard elevators face, it was deemed fair and reasonable to spread this quantity evenly at approximately 210,000 tons in each 15-day shipping period. That would mean that some 200,000 tons would fall in the last 15 days of this contract period; namely, March 15-30.
Flexibility must be maintained in order to properly schedule and in order to properly execute a contract of this size.
The interior and the seaboard elevators must be aware of the quantities that are going to move through the ports for any 15-day period. The purchase of the grain, the movement from the interior, is something that Mr. O'Neill can comment on.
But in the chartering activities, whether it be commercial or Government sponsored, a 15-day shipping period is normally adopted.
Under Public Law 480, in many cases the foreign missions will purchase grain prior to chartering of freight with optional load and they know the Ioading range. In our particular case, with the immensity of the program, at the time the schedule was set up, it was impossible to determine. The only fair way to allow the maximum amount of U.S. tonnage to participate was to spread it evenly.
Therefore, 210,000 tons was allocated for a March 15–30 shipping schedule, and we have chartered 103,500 tons American, which is 50 percent in that period.
We made no application for waiver in that period, and I see no way that we could deviate at this time.
Mr. GILES. Mr. Stovall, Mr. Dowd offered this for the last half of March. What is your situation with respect to the first half of March? Is it fully covered ? Mr. STOVALL. No, sir. The first half of March is
in accordance with the application for waivers for 36,000 tons.
Mr. GILES. Mr. Dowd, can you possibly fit your ship into the first half of March?
Mr. Dowd. No. It is not feasible at this time. We probably will arrive in the gulf actually about March 18, and we couldn't take that risk, because then it would be Continental's option to cancel the vessel, and we would be without employment.
I would like to ask Continental one question.
When they keep mentioning the immensity of the program and their scheduling and moving grain into the elevators, there are two things I would like to ask, just to clarify the statements.
What portion, of 200,000 tons a month, of their Russian sales, is that? It is not their large and only business.
And, No. 2, does Continental mean to say they are not going to sell any more cargoes for the second half of March? I believe they will. They always have in the past.
Mr. STOVALL. Mr. Dowd, first of all, your figures are wrong. It is 400,000 tons a months, not 200,000—200,000 tons of foreign and 200,000 of American.
Mr. Down. I am talking for a 15-day period—200,000 tons.
Mr. STOVALL. We are talking strictly about the fact there will certainly be no further business done in this period for Black Sea or U.S.Š.R.
Mr. Dowd. Is Continental going to do any other business in that period?
I am not worrying about Black Sea for the moment. Let's say with the question of unloading, here.
Mr. STOVALL. I couldn't comment on the question of whether any further business will be done or not. I doubt very seriously if it will for this period.
But you mentioned the fact that there are very few tankers. I would like to mention at this point that 50 percent of the American vessels chartered are tankers, and this is including three liners. Out of the 12 U.S. tramp vessels, of various sizes that were chartered, 8 of them are tankers.
Mr. Dowd. I don't think anyone will object to all-gulf loading. Mr. GILES. It seems to me that is an important point.
You made the point a while ago about this extra charge that the tanker incurred, and therefore you were limiting your offer to the gulf. And it seems to me and I just accepted it at the time—that there were no other tankers in this particular situation.
It seems to me that is an important point. If you got all these other tankers in it, they have accepted these terms. They have come in on the optional basis. And I just wonder what good basis we could have for making an exception for one owner on that point.
Mr. Dowd. All right. I would like to also make one other point on basic issues.
We offered the ship, and from U.S. gulf loading, on these dates. We were originally told cargo was not available. Yesterday we were told we didn't comply with the tender. Contrary to commercial terms, we did not have an option to even take the business if we were willing to go to USNH.
Mr. GILEs. Let me get this straight. You say you had an original offer that was in compliance with the terms of the tender?
Mr. Down. No, the original tender also specified gulf loading: I will say we will be willing to accept USNH loading but I want it clear that, if we do, we have two extra charges and we have two large tankers.
The 30-ton tankers—we have to repatriate the crew, which is an individual ship problem, from USNH to the gulf. Our last voyage was
Mr. GILES. We are talking about the Marine, aren't we? Mr. Dowd. That is correct. Mr. GILES. What is the tonnage of that? Mr. Dowd. It is a 16,000-ton T-2—a small vessel. And the other vessels-quite a few were 24,000- and 30,000-ton ships. Our immediate expense is repatriating the crew which costs us $6,000. In addition, if we load at the elevator in Norfolk, it costs us another $8,000.
We have a $14,000 extra expense by loading at USNH over the gulf which we consider an undue burden. But the Maritime Commission believes we should accept it to carry the voyage.
But we think it is much more of a hardship to accept the voyage from the gulf, because they will have to move out of the 200,000 tons, in the one shipping period, March 15–30. I am confident right now that 100,000 tons minimum will move out of the gulf.
And if, as he previously stated, he has the option on this 100,000 tons to move from USNH or gulf, there is no hardship whatsoever to Continental.
Mr. GILES. All right. Now, Mr. Dowd, at this point I just want to make this observation, so that both you and Continental's representatives will understand the point that concerns me.
I am opening up these points, here, on what I would call the merits, even though it is clearly apparent, and no disagreement, that the specific case, here, involves a departure from the terms. In a technical sense, we could say that you don't even get in the door.
Now, I am doing that because I think it is desirable for me to have the full picture before me. But I do want to make this point to you, and you have given much emphasis to what Continental should be in a position to do.
If I adopt that principle for Continental, I have to adopt it for the shipowners. And there are many items in these charters--many items—where Continental could, if we opened all of that up, come in any say: "Well, we ought to get a little bit better, here, on the merits from the shipowner, because really he can work it out without any difficulty.” And I am sure that must be true on many specific items, which would add up and mean money, or less money, to the shipowner.
Well, I am simply expressing that thought to let you know the difficulty I have, here, on this point, of trying to balance the equities. I can't forget, though I am considering the merits-I can't ignore entirely our technical point.
Captain Goodman, do you have any questions of either of the parties
Mr. GOODMAN. I would just like to ask Mr. Stovall a few questions, just to clarify the record, if he could.
Mr. Stovall, in the overall approximately 1 million tons, excluding the 150,000 from the west coast, have you any idea at this point what your plans contemplate in actual loading out of the gulftotal?
Mr. STOVALL. No, sir; I don't know at this particular point.
Mr. GOODMAN. Would you say it would be 10 percent; 20 percent?
Let me ask you this: How many elevators do you have, Mr. Stovall, on the Atlantic and the gulf?
Mr. STOVALL. We have two elevators on the Atlantic and three elevators on the gulf that we operate. There are other elevators that possibly may necessarily be used for this business.
Mr. GOODMAN. I don't want to pin you down. I would just like to have an expression.
If you have three elevators on the gulf and two on the Atlantic, it is reasonable to assume that a substantial amount of cargo you expect to move through the gulf!
Mr. STOVALL. Possibly 50 percent:I don't know.
Mr. GOODMAN. At least 25 percent of that must go on American ships?
Mr. STOVALL. It will probably be necessary, before the program is finished, to divide it up as evenly as possible in order not to overload any one particular area or one particular period, to avoid heavy steamship demurrage charge or railroad charges.
Mr. GOODMAN. I have a point, if you don't mind, I would like to make on that: Now, you have presently 311,900 tons actually booked ; is that correct?
Mr. STOVALL. Yes, sir.
Mr. GOODMAN. We will exclude February, if you want to take out a certain amount of that tonnage. On any tonnage remaining, which is a substantial amount, that is all under option right now; isn't it? You haven't declared it, either North Atlantic or gulf. You can go either way; isn't that correct?
Mr. STOVALL. The present tonnage that we have is all optional.
Mr. STOVALL. Except for the vessels which are in the February position, and for which loading orders have already been given.
Mr. GOODMAN. You said before, as I recall, when Mr. Oberschall was on the stand, that at this time you couldn't possibly tell them before February 15 where the cargo would be going. You don't know?
Mr. STOVALL. For March positions, that is true. But we are now speaking of February positions.
Mr. GOODMAN. What I am getting at is: With this terrific amount of optional tonnage that you have, that is still a long way off, you have a tremendous amount of flexibility, haven't you, between the gulf and the North Atlantic? Is that true, or isn't it? Mr. STOVALL. Yes. But we have no cargo for this,
Mr. GOODMAN. My specific question is: You have a great amount of flexibility on a fairly large and substantial amount of tonnage, whether
you put it in the gulf or whether you put it in the Atlantic. And you have three elevators in the gulf and two in the Atlantic, so a substantial amount is going to go in the gulf. Is that correct? So you have a great deal of flexibility; haven't you?
Mr. STOVALL. Yes.
Mr. GOODMAN. But don't you have enough flexibility to move one T-2 tanker in and, perhaps with all of this optional tonnage, you can move another ship into the North Atlantic? Is that unreasonable?
Mr. STOVALL. But again I repeat, Captain Goodman, we have no cargo for this vessel, either USÑH or gulf.
I would like to put in the record that Mr. Dowd originally offered this vessel, the T-2 tanker, on January 9. Since January 13, our tender has called for 110,000 tons of American-flag tonnage, required U.S. gulf or U.S. Atlantic, for the March 15–30 position.
Not until January 27, I believe it was, did we receive a firm offer from the Marine, wherein he advised that he could supply vac-u-lators for the vessel and was interested in this business.
At this time, we were fully booked. Our last American-flag vessel for this position was the Venore, which I believe was booked on January 25 or 26. So there was no cargo available for this vessel, either UŠNH or gulf, or for any other vessel in this position.
Mr. GILES. The only departure was no vac-u-lators!
Mr. ŞTOVALL. Yes, and it was previous oil, and there was a question of contamination, so consequently the vessel was unworkable. On January 13, when we put out a tender for the entire quantity going right through February and March, some 75 to 80 days ahead of schedule, we posted the entire tender conditions right through, and we had an opening for 105,000 tons of American-flag, for this position.
Other tonnage was offered, and other tonnage was booked. And the last vessel taken I believe was the Venore on January 26.
There was no reoffer with vac-u-lators suitable for this business made until January 27, and consequently, he was advised on that date that we had no cargo and his dates were unworkable.
We again yesterday stated that, “As previously advised, your dates are not acceptable.'
Mr. Dowd. That is true. We offered the vessel originally without vacs, because we were negotiating with Maritime to have them accept vessels-the receiver paying the cost of vacs.
We amended our offer by allowing us to furnish the vac-u-lators, which cost us $100,000. This was a major consideration, which we did not concede, with the other tank owners, for 2 weeks.
We cooperated with Maritime, and were having meetings. It is not just a time lapse, when we were not interested in the business, but we were having numerous meetings and trying to conciliate the differences.
On January 27, when we offered the vessel, we complied with the terms, because at that time Maritime ruled that the owners would supply the vac-u-lators. We were not just idly sitting by, as the record might indicate so far.
Mr. GILES. Now, Mr. Dowd, it is true that by that time we had ruled in effect on that, but we had ruled on that, as I recall, on January 17.
Mr. STOVALL. January 8, Mr. Giles, it was agreed that discharge equipment was required, and it was shown in our first tender of January 8.