resulted in the layup of two vessels in the port of San Francisco with a possibility of a third layup within the next 10 days. American President Lines and Weyerhaeuser Line both offered full or parcel lots at $17 and were likewise turned down. We can't even get a share of the movement of bagged flour which has been sold to Russia. Here again, Continental Grain Co. is the seller. The Maritime Administration announced in November that they would publish guideline rates for bagged flour in the Russian program, and published a rate of $24.25 per long ton from the Pacific Northwest to Nakhodka. The most recent American rate to the nearby ports in Korea is approximately $31 per short ton, equivalent to $34 per long ton. This rate is quoted by both foreign and American carriers engaging in the berth trade to the Far East and is deemed a fair and reasonable rate. When we wired the Maritime Administration asking how they arrived at the $24.25 rate, they advised us: "Rate is keyed to ships under 15,500 deadweight for full bulk cargo." We have checked the market situation in recent months and find that there have been no American-flag bulk cargo of flour to that area at such rates. We can only surmise that Marad used a foreign-flag charter rate in determining a rate for U.S.-flag berth ships. We don't mind losing business to foreign-flag lines if we cannot help ourselves, but in this instance, our own Government has used the rate to freeze out berth carriers. We doubt that rail rates, or truck rates, have been whipsawed in similar manner in this program. The Maritime Administration has cautioned the industry against referring to the published rates as "fair and reasonable rates." Rather, they say these are "guideline" rates. We are not impressed with the semantics used by the Maritime Administration in this matter or by the Department of Agriculture. Insofar as we are concerned, the entire program was designed to follow closely the intent of the Cargo Preference Act which requires that each segment shall participate at rates fair and reasonable for the carriage in that segment of trade. In recent press reports, it is reported that if the Russian wheat program which has moved to date from all ports within the United States, only 37,000 tons out of near 300,000 tons have gone U.S. flag, the balance going foreign flag. On the Pacific coast there has been no American-flag participation and the way matters stand, none in prospect. Our plea is that nonavailability waivers be granted by Marad to the Continental Grain Co. and other brokers only when they have been unable to find American-flag vessels at the guideline rate applicable to each segment. If USDA must adjust its deal with Continental Grain Co. to accomplish this, so be it. As matters stand, they are purposely flouting the export control regulations and Presidential directives. We trust that the above information can serve as a guide to the kind of information that your committee members will seek when witnesses from the U.S. Department of Agriculture and from the Maritime Administration appear on January 29. By separate communication, I have asked for time to appear on January 30 at your committee's hearings. Yours very truly, RALPH B. DEWEY, President. ATTACHMENT No. 1 [From the New York Times, Jan. 1, 1964] CAPACITY OF U.S. SHIPS LIMITED FOR CARRYING WHEAT TO SOVIET INDUSTRY ESTIMATES IT COULD TRANSPORT NO MORE THAN 40 PERCENT OF PROPOSED PURCHASE OF 4.5 MILLION TONS (By Werner Bamberger) There simply is not enough American shipping to carry half of the proposed wheat sale to the Soviet Union, trade sources said yesterday. The The original talks on the deal contemplated a total of 4%1⁄2 million tons. Department of Commerce imposed a requirement that half of any such cargoes be carried in ships flying the American flag-if they were available at the specified rates. But the consensus of shipping industry sources yesterday was that, even if all available oil tankers were pressed into service, no more than 1.8 million tons, or 40 percent of the total, could be handled by the U.S. merchant fleet. There is considerable doubt that the Soviet Union will buy all it originally negotiated for. Even so, the trade sources said, there will not be enough American shipping to handle half of a large grain deal on a short-term basis. At present the rates for American-flag ships are about $7 higher than foreignflag rates for 10,000-ton vessels and about $4 higher for vessels in the 15,600to 30,000-ton range. The larger ships are permitted to carry wheat at a 20-percent discount from the rates applicable to the 10,000-ton vessels. For all practical purposes, the smaller ships are said to be disqualified because of the higher rates. Dry-cargo tramp-ship operators noted that the American tramp fleet consisted of about 115 active vessels. About 20 units were said to be larger vessels in the 20,000-ton class and the remainder Liberty and C-2 type ships in the 10,000-ton range. Unless additional American-flag tonnage is made available-presumably tankers that would be diverted from carrying oil-the dry-cargo tramp fleet could carry only 15 to 20 percent of a large-scale wheat export program to the Soviet Union. Whether tankers will be diverted in large numbers to grain carriage appears doubtful, many U.S.-flag vessels are profitably employed carrying refined products over coastal routes at favorable freight rates. However, some tanker tonnage, particularly in the supertanker class, was said to be available. This could be supplemented, to some extent, by carrying grain shipments in vessels owned by subsidized steamship lines. These ships are normally employed on fixed routes. Earlier this month one grain cargo to Hungary was moved by a subsidized vessel. However, even if large tankers and some subsidized tonnage were brought into play, only 30 to 40 percent of the wheat exports could travel in American ships. The shipping industry views were expressed in response to inquiries concerning the granting of two export licenses by the Department of Commerce to Continental Grain Co. The two licenses authorized the sale of about 700,000 tons, or $40.6 million worth of wheat, to the Soviet Union. It would be a cash transaction. A spokesman for Continental said here yesterday that no negotiations were being conducted now. He said that the company was not looking for tonnage to cover that shipment, but added that a few unsolicited offers of American-flag ships had been received. He said the sale of the 700,000 tons was "just a big question mark" now. Shipping industry sources referred to the Continental licenses as "hunting licenses" and explained that the issuance of a license was no guarantee that any "game would be bagged." It was recalled that when shipment of 100,000 tons of wheat to Hungary wasmade earlier this month only 9,000 tons of it could be booked on American-flag vessels. A waiver was granted by the Maritime Administration to permit 41,000 tons of that shipment to travel in foreign-flag ships. Other potential obstacles to large-scale sales of wheat to the Soviet Union were said to be: Soviet unwillingness to pay the higher freight rates for American ships. The ability of American tramp ships to keep busy with cargoes through Government-sponsored exports of agricultural surplus commodity exports under Public Law 480. Doubt as to the ability of Russian ports to handle large tanker-borne grain shipments, which may require special pneumatic unloading equipment. The possibility that American maritime labor might boycott foreign-flag ships carrying wheat to the Soviet Union. The Seafarers International Union earlier this month made an unsuccessful attempt to delay through picketing a West German vessel carrying Hungarian wheat. Industry sources said they did not anticipate any relief in the situation from the authority granted the Administration on Monday to allow Export-Import Bank credit guarantees for commercial wheat export transactions. ATTACHMENT No. 2 U.S. DEPARTMENT OF COMMERCE, MARITIME ADMINISTRATION From one port of loading to one port of discharge. Loading and trimming expenses for account of vessel-discharging expenses for account of charterer. Posted spot bunker fuel prices in effect May 15, 1957. No provision for war risk insurance or war zone bonus. The above represent fair and reasonable voyage charter rates for the transportation of U.S. Government-sponsored commodities on U.S.-flag vessels moving in full cargo lots and do not apply to shipments for private account. Effective: May 15, 1957. ATTACHMENT No. 4 Berth line bookings of grain to Hungary via Hamburg and/or Gdynia, December 1963 to January 1964 NOTICE TO EXPORTERS AND AMERICAN SHIPOWNERS ON SHIPMENT OF WHEAT AND WHEAT FLOUR TO SOVIET BLOC COUNTRIES Current Export Bulletin No. 883 issued by the Office of Export Control, Department of Commerce, on November 13, 1963, requires that at least 50 percent of the wheat and wheat flour to subgroup A countries will be exported on U.S.-flag carriers and that if such carriers are not available at reasonable rates, the exporters must obtain prior authorization from the Maritime Administration to ship less than 50 percent on U.S.-flag carriers. Any application by an exporter to the Maritime Administration for waiver of the foregoing requirement must be accompanied by a certification that solicitation of all owners and/or operators in all segments of the American steamship trade for necessary shipping space has been made, including posting at the New York Maritime Exchange, 80 Broad Street, New York, N.Y., for the required U.S.-flag shipping. Application may be made at any time subsequent to the date of prompt solicitation after a sales contract has been signed and after allowing 5 days for response thereto. The results of such solicitation must be clearly and fully itemized, including the dates of all tenders, shipping dates, rates, terms and conditions, loading and discharge ports, cargo tonnage offered, and full response to such tenders. Exporters are advised that waivers will not be considered unless U.S.-flag ships have been given a reasonable period to meet the shipping schedules, and in any event the shipping schedules (laydays) for U.S.flag ships shall extend over the same period applicable for other shipping but should be not less than 30 calendar days after the date of solicitation unless compelling circumstances require a shorter period. Upon receipt of an application for a waiver of the U.S.-flag shipping requirement, the Maritime Administration will promptly issue a public notice including posting of a notice at the New York Maritime Exchange, 80 Broad Street, New York, N.Y., giving full details of the waiver application, stating that a request for waiver has been received and unless evidence within 5 days from date of such notice is received showing that U.S.-flag shipping is offered, capable of meeting the reasonable shipping schedules of the exporters at applicable guideline rates, the waiver will be granted. Exporters and American shipowners are advised that on these commercial transactions the supplemental guideline rates for wheat in bulk published by the Maritime Administration, Department of Commerce, in the Federal Register issue of November 16, 1963, and any other supplemental guideline rates published for other port areas applicable to ships of 15,600 to 30,000 TDWT will govern. If wheat flour in bags is to be shipped under Current Export Bulletin No. 883, supplemental guidline rates will be published. JANUARY 7, 1964. ATTACHMENT No. 6 [From the Baltimore Sun, Nov. 9, 1963] SOVIET DEALS LIKELY AFTER HUNGARY OK NEGOTIATORS AGREE ON DIRECT RUSSIAN-TRADER TALKS (By Philip Potter, Washington Bureau of the Sun) WASHINGTON, November 8.-The Commerce Department announced tonight the granting of an export license for the sale of 100,000 tons of wheat to Hungary and indicated wheat transactions with Russia soon would follow. Negotiators for the United States and the Soviet Union apparently paved the way for such sales to the Soviet bloc when they reached an agreement today under which the Communist states will deal directly with American grain traders operating under "guidelines" established by the Commerce Department as to how much of the grain must go in American-flag vessels. 50 PERCENT SHIPPING FORMULA The Department announced a formula providing that 50 percent of the wheat must go in American ships if they are "available." The U.S. shipping industry, it was announced, has agreed to lower by 20 percent rates hitherto charged for carrying surplus wheat sold or given away by the U.S. Government under Public Law 480. This, Franklin D. Roosevelt, Jr., Under Secretary of Commerce, said, will bring American rates in close proximity to those charged by other maritime nations, whose rates are rising. In consequence, it is believed, the Russians may close deals for wheat within a day or two. Their negotiators first had sought a government-to-government deal, but this was rejected, as was their next suggestion that a private organization be set up here to deal with them as an entity. U.S. negotiators said the antitrust laws forbade this. The Soviet-bloc nations are said to want 4 million tons, of which 2,500,000 would go to the Soviet Union. The approximate value would be $250 million. The Hungarian deal now consummated is said to involve $7,600,000. BLACK SEA COAST DELIVERY All sales are to be made on "C and F" basis, officials said, with American dealers quoting prices based on the price of the wheat plus customs and freight costs to delivery points on Russia's Black Sea coast. Dean Rusk, Secretary of State, only this morning had told a news conference that he agreed with Soviet Premier Khrushchev, who announced yesterday in Moscow that "some progress" was being made in the wheat negotiations. A few hours later, Llewellyn E. Thompson, State Department adviser on Soviet affairs, disclosed an "understanding" between American negotiators headed by George W. Ball, Under Secretary of State, and a Soviet team headed by Sergei Borisov. PRESIDENTIAL POSITION State Department officials represented the Russians as accepting the idea of a "mix" of American and prevailing world shipping rates, but said that whether deals were consummated still depended on the price. Russia was said to want the wheat, but as grain reserves and would draw on them rather than pay much more than the current world price for wheat plus freight at world rates. The President had declared a policy of giving preference to American shipping when "available," leaving it to the Commerce Department to define "availability" after consultation with the Maritime Commission and a survey of the world shipping scene. 25 PERCENT OF DEAL LIMIT The American grain dealers, no one of whom will be allowed to transact more than a fourth of the trade with the Soviet Union, must ge export licenses from the Commerce Department. Thus, they will be bound by its "guidelines" as to shipping. |