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. Dowd. 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.

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 loading 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.

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

The majority of cargo moves historically from the gulf. I customary for other chartering firms to ask for the option to the range or the gulf.

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

No. 1, at the Continental terminal in Norfolk, we are as there, and it costs us 75 cents a ton to load. It is a selfterminal by Continental, and they arbitrarily set the r at 75 cents.

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

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

Mr. Down. There haven't been many tankers c1 ness, I believe.

Mr. GILES. You mean this reference you tankers?

Mr. Down. That is correct, sir.

Mr. GILES. All right. Let me ask you t What is your comment-we have been talkin would be good business or what would be f tinental. Now let's focus on what I woul the ground rules.

What is your comment, now, on the on my part, or the justification, for, i rules here for one case? Would you that?

Mr. Down. I believe the ground r last 3 weeks-I am underestimating: negotiating terms and program in g Maritime Administration was dated

Now, I believe there have been t Another revision I don't think w basis of negotiations.

Mr. GILES. Well, you are coi choice of words about the gro accurate.

Mr. Down. Pardon me. I w Mr. GILES. We have, as ever to make adjustments or decis think that changes, if you we nature of our making the dec' Then I think we also have made these clarifications or across the board for all ship

Δ

the tender. Contrary to commercial terms, take the business if we were willing

3

,000- and 30,000-ton ships. the crew which costs us evator in Norfolk, it costs us

loading at USNH over the gulf .1. But the Maritime Commission the voyage.

of a hardship to accept the voyage I have to move out of the 200,000 tons, March 15-30. I am confident right now will move out of the gulf.

stated, he has the option on this 100,000 tons or gulf, there is no hardship whatsoever to

ght. Now, Mr. Dowd, at this point I just want vation, so that both you and Continental's reprederstand the point that concerns me.

up these points, here, on what I would call the merits, it is clearly apparent, and no disagreement, that the here, involves a departure from the terms. In a technical uld say that you don't even get in the door.

n doing that because I think it is desirable for me to have icture before me. But I do want to make this point to you have given much emphasis to what Continental should position to do.

adopt that principle for Continental, I have to adopt it for the wners. And there are many items in these charters-many -where Continental could, if we opened all of that up, come in say: "Well, we ought to get a little bit better, here, on the merits in the shipowner, because really he can work it out without any iculty." And I am sure that must be true on many specific items, hich would add up and mean money, or less money, to the ship

owner.

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.

39-375-64--14

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 open 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.S.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