This chart illustrates by country of registry, the tanker fleets of the major maritime nations on September 1, 1939, and on January 1, 1953, plus those building or on order as of that date. Based on current construction and that on order, the United States fleet will have declined to the second largest in the world, following the British Empire.

The British Empire and Norway have ordered almost half of the world's tanker tonnage currently scheduled for construction. The British Empire with 21 percent and Norway with 16 percent of the world's existing tanker fleet, have booked orders for 27.7 percent and 20.3 percent, respectively, of all tanker tonnage building in the world shipyards. In contrast, owners of the United States flag privately owned tanker fleet, representing approximately 22 percent of all tonnage of this type in existence, have on order for United States registry only 4.7 percent of the world's tanker construction. There is building for Panama registry 9 percent of all tanker tonnage, while that country represents 10 percent of all tankers in existence. The balance of the major maritime countries own up to approximately 4 percent of existing tanker tonnage, and that construction, with the exception of Denmark, France, Greece, Netherlands and Sweden, is not only limited but somewhat below their ownership share of the world tanker fleet. This rate of new construction for foreign registry poses a serious problem for American flag operators in foreign trades for it means that new, modern, fast and efficient foreign-flag ships will offer still greater competition in a market in which American operators, with few exceptions, have generally been at a disadvantage. Not only has construction of tankers for United States registry slowed to prewar levels, but so has construction of tankers in United States yards. Foreign yards, particularly those of the British Empire, Norway, Sweden, Denmark, Japan, Netherlands and Germany are operating at maximum capacity, constructing vessels both for their own account and for other nations.

Tankers in the post World War II period have continued to increase in actual size along with the increased building activity. As of June 30, 1953, six 45,000 tonners remain the largest ships on order. There are three 38,000 tonners in actual operation with 8 on order and 4 others only a little smaller. In the 24,000 to 33,000 ton range there are 124 ships totaling 3,400,000 deadweight tons in operation and 189 on order.

The bulk of tankers on order will have a trial speed of 141⁄2 to 151⁄2 knots, although some, particularly those building in the United States will have a trial speed as high as 16 to 18 knots.

With full recognition of the fact that the requirements for the United States tanker fleet are subject to review and modification in the light of changing strategic situations, it has recently been determined by the Department of Defense, based on the latest joint emergency plans, that in order to meet the initial requirements of a national emergency, the United States privately owned and MSTS tanker fleets should consist of a minimum of 9,916,500 deadweight tons. There is presently under construction or on order a total of 680,000 deadweight tons. Comparing the minimum required deadweight tonnage of 9,916,500 with the current capability of 7,765,000 deadweight tons comprising the United States tanker fleet indicates a deficiency of 1,471,400 deadweight tons. This deficiency represents 89 T-2 equivalent tankers. This mobilization deficiency is indicated by the blocked area on the chart. In this connection it is important to note that there are no suitable tankers in the national defense or Navy reserve fleets. By means of construction of vessels to join the active fleet the mobilization deficiency can be reduced by retiring older vessels to the reserve fleets, where they will be available for reactivation in times of emergency, while still maintaining an active fleet consistent with peacetime economic and military requirements.

As one means of stimulating such new construction, high-level policy discussions have evolved a plan for inducing private interests to construct new tanker tonnage with private capital for long-term charter to the Military Sea Transportation Service. Such tonnage would serve as replacement for the Government-owned T-2 type tankers now contract-operated for MSTS, permitting such replaced ships to be laid up in an inactive status, thus forming a reserve nucleus.

In July 1952, MSTS contracted with the Orion Shipping & Trading Co. for the 5-year charter of 4 new construction supertankers. Expected deliveries are: 1 at mid-October 1953, 1 at the end of November 1953, and 2 in the spring of 1954. These ships are of approximately 29,250 deadweight tons with a speed of 16 (plus) knots and about 33 feet draft, each one the equivalent of 1.93 T-2 tankers. Thus, the 4 will be available as replacements for 8 of the T-2's at present in the MSTS contract-operated tanker fleet.

Because of existing world tensions, the future requirements of MSTS in the tanker field are difficult to prognosticate with any degree of certainty. As is indicated in the accompanying chart, United States military worldwide petroleum liftings for fiscal years 1948-50 inclusive, averaged 38,757,000 barrels of clean and 31,982,000 barrels of black products for a total of 70,739,000 barrels. Of this total, 37.9 percent was lifted to the Far East. During fiscal year 1953, United States military worldwide petroleum liftings were 89,196,000 barrels of clean and 43,218,000 barrels of black products for a total of 132,414,000 barrels. Of this amount 51.1 percent went to the Far East. Of the total average annual lift for fiscal years 1948-50 the MSTS-USNS fleet of 43 T-2 equivalents carried 38,368,000 barrels or approximately 54.3 percent. In fiscal year 1953, the MSTS-USNS fleet of 60 T-2 equivalents carried 69,990,000 barrels or 52.9 percent.

As a result of the truce of Korea, it is anticipated there will be some reductions in military POL shipping requirements to that area. From a worldwide standpoint, however, because of the expansion of fleet activities and overseas military installations since 1950, combined with technological advances in military aircraft, it is unlikely that the overall POL requirements will be reduced to the point of the 1948-50 averages. However, to establish a position from which to justify contractual long-term commitments with reasonable assurance that the ships so obtained will be fully and economically employed, it is deemed advisable to calculate on the basis of estimated minimum total requirements of 71 million barrels, which was the average of fiscal years 1948-50, anticipating that of this total, ships intended to replace the T-2's, should lift 60 percent, or approximately 42 million barrels per year. This lift, it is estimated, could be accommodated by the four Orion supertankers and approximately 20 new tankers of the specifications given hereinafter.

It should be borne in mind that the tankers to be built under this program are to be constructed by private firms with private funds. The proposal contemplates charter contracts for periods of 10 years, or for approximately one-half of the useful lives of the ships. Unless the charters are extended, the ships revert to the owners' use in routine commercial operations. This has an influence upon the type of tankers to be constructed in that the ships must possess features adaptable to commercial use so that prospective bidders may attract the capital necessary for construction.

In the matter of deadweight and speed, it is interesting to note the following with respect to 51 tankers now under construction or which have been built in American yards in 1953:

35_

3.

13.

25,000 deadweight tons or above. 20,000 to 25,000 deadweight tons. 15,000 to 20,000 deadweight tons.

As to speed, only 4 of these 51 tankers are designed for 18 knots. The balance have speeds ranging from 15 to 17.5 knots, of which 31 have speeds of 16 to 16.5 knots. Although industry has generally been satisfied with a top speed of about 16 knots up to the present, the current trend is toward increase and it is believed that the speed requirement of not less than 18 knots determined to be necessary will be favorably regarded by prospective bidders.

Additional factors which determine the size and type of tankers and which are common to industry and MSTS are

(a) Ullage available at discharge ports.

(b) Availability of cargo at loading ports.

(c) Draft, beam, and length.

(d) Flexibility.

(e) Daily operating costs.

Concerning ullage and availability of cargo, the ASPPA gives assurance that necessary ullages and cargoes for tankers of 25,000 to 30,000 deadweight tons would generally be available at major loading and discharging ports insofar as they can now predict. Between January 1, 1951, and present date, MSTS has loaded a total of 60 tankers, ranging in size from 20,000 to 28,000 deadweight tons, on voyage charter. Of these 60 ships, 55 loaded in the Persian Gulf for discharge in Japan; 4 loaded at Aruba, 3 for Italy and 1 for Japan; 1 loaded in the United States Gulf for Japan. There were some minor delays but in general the loading and discharging times compared favorably with T-2's. It is to be noted that a total of only 3 loading areas and 2 discharging areas were involved in the use of these 60 tankers.

With regard to draft, beam, and length, it is considered that not more than 32 feet maximum draft, 84 feet maximum beam, and 650 feet length overall

would permit the proposed new ships to berth at the majority of loading and discharging ports required for military operations.

In the matter of flexibility, the principal consideration is the availability of tankers of appropriate size and speed, under direct MSTS control, to accommodate economically and efficiently the minimum estimated diversified military POL worldwide shipping requirements.

The factor of daily operating costs is among the most important considerations because it determines the cost per long-ton mile of the cargo hauled. Studies

have shown that the maximum deadweight tonnage which is consistent with other characteristics dictated by military considerations will result in greatest economy.

Based upon detailed studies and the information contained in the foregoing summary the following is recommended:

(a) MSTS be authorized to invite bids for the construction of tankers for longterm charter of the following general characteristics:

Deadweight tonnage: 25,000 (plus or minus 500 tons).

Length: Approximately 600 feet between perpendiculars but not to exceed 650 feet overall.

Beam: Not in excess of 84 feet.

Draft fully loaded: Not more than 32 feet.

Speed: Not less than 18 knots sustained sea speed fully loaded.

Capability to handle 4 products simultaneously with a pumping capacity of not less than 2,000 tons per hour.

(A tanker of the foregoing characteristics is roughly the equivalent of 1.87 T-2 type tankers.)

(b) That the total program for this new construction, long-term charter replacement include 20 tankers of these characteristics. This will represent replacement for approximately 37 of the existing T-2's.

(c) That the proposed charter and deliveries of these 20 new tankers be phased over a period of 4 years, the first and immediate phase to cover 5 tankers. This will allow a sufficient interval of time for the full development of the program to provide for periodic review and adjustment as later circumstances may dictate. (d) That the period of charter be set at 10 years. This is considered to be of sufficient duration to be attractive to industry and represents one-half of the useful life of the ships to be constructed.

(e) That MSTS proceed with the deactivation of two T-2 tankers at approximately the time each of the supertankers under contract with Orion become available. This will result in the deactivation of a total of eight T-2 tankers by the spring of 1954.

(f) That the remaining T-2 tankers (approximately 10) in the present MSTS tanker fleet not accounted for by replacements in preceding recommendations be inactivated when and if world conditions and military POL shipping requirements indicate this to be desirable.

Admiral DENEBRINK. At the present time the United States leads all other countries in the amount of tanker deadweight tonnage under its flag. This position was attained solely as a result of the World War II construction program. Of all the major powers, only the United States increased the tanker tonnage under its flag during the war. In 1945 over 50 percent of the worldwide tanker tonnage was under the American flag. At the present time, however, the United States-flag tanker fleet amounts to only about 25 percent of the total world tanker tonnage. Let us examine the significance of this trend a little more closely. I have with me a series of charts to which I will refer for illustration of the points in my testimony.

Let us bring this up a little closer. I think these gentlemen would like to see it. Bring the whole easel up, because I think this is the whole situation here.

Chart I is a graphic presentation of the summary of the trend in world tanker tonnage since 1945. For further comparison, the chart includes corresponding figures for the prewar year of 1939.

(See chart I.)