U.S. merchant marine gives way to foreign ships, crews

March 22, 1992|By John H. Gormley Jr.

For almost a century the flagship of the New Orleans-based Lykes Bros. Steamship Co. Inc. has been called the Doctor Lykes, after the father of the five brothers who founded the shipping line in 1900. The sixth Doctor Lykes recently joined the fleet, but unlike its predecessors, the American flag does not fly from its stern.

Chartered by Lykes and renamed the Doctor Lykes in ceremonies here this month, the ship was built in the Netherlands. Its captain is German, its crew Filipino. It sails under the Panamanian flag.

Just as the Doctor Lykes' predecessors set the standard for the rest of the Lykes fleet, this Doctor Lykes represents the future for Lykes Lines. As other vessels in its 27-ship fleet are taken out of service, their replacements also will be foreign-flag ships with foreign crews. By the time the shift is complete over the next three to five years, the jobs of 2,000 American seamen will be held by foreigners.

The Doctor Lykes may be establishing the pattern not just for Lykes Lines, but for the entire U.S. merchant marine, a trend that threatens to leave this country with only a negligible commercial fleet by the turn of the century.

The U.S. ocean-going commercial fleet consisted of just 141 ships in 1990 and will shrink to 49 by 2000, according to the U.S. Maritime Administration. During the same period, the number of U.S. seamen on such ships will decline from 27,400 to 10,800, according to MARAD projections.

Eugene F. McCormick, president of Lykes Lines, said that given the federal government's maritime policies, Lykes has no economic alternative but to replace American flag ships with foreign-flag vessels.

"Just because the United States government doesn't want to pay for an American flag fleet, Lykes doesn't want to see its fleet diminish," said Mr. McCormick, who was in Baltimore for the renaming ceremonies. "We can no longer afford to build a ship in America for international trade."

According to Mr. McCormick, U.S.-built ships cost three to four times as much as a comparable ship built in a foreign yard. And American crews also cost several times as much as a foreign crew. Given those high costs and no compensating benefits for operating a U.S. flag vessel, Lykes has little choice, he said.

"The American government has decided they don't want to pay for an American merchant marine. No one else is going to pay for it," he said. "Every American company finds itself in this position."

Lykes Lines is the third largest American steamship line. American President Lines and Sea-Land Service Inc., the two biggest American ocean carriers, have warned that they, too, will be forced to reflag their ships unless the government drastically changes its maritime policy.

At a joint news conference in February, the heads of the parent companies of APL and Sea-Land said that without help soon the American merchant marine would "virtually cease to exist."

"At present there is no economic justification to invest in the U.S. flag vessels," John Lillie, president of American President Companies said. "The U.S.-flag shipping industry is in a state of orderly liquidation as current vessels reach the end of their useful life."

"We're sending out an SOS," said John Snow, chairman of CSX Corp., the parent of Sea-Land. "Events are forcing us to ask the government whether or not it wants a U.S.-flag merchant marine."

While the two did not claim to have a comprehensive solution to the problems facing the U.S. flag fleet, they did offer the outlines of a program:

* Safety standards: Allow U.S.-flag vessels to meet the same safety standards as foreign vessels calling at U.S. ports.

* Crew size: Permit smaller crews, comparable to the ones on foreign ships.

* Tax policy: Allow more liberal depreciation schedules and end the 50 percent duty U.S. operators now pay of repairs performed in foreign shipyards.

* Cargo preference: Overhaul military procurement policies.

Without change, predict CSX and APL, only 30 general cargo ships would be left in the American flag fleet, and none of them would be operating on international trade routes. The only U.S. merchant ships would be those on domestic routes -- the Hawaiian, Alaskan and Puerto Rican trades -- which are reserved by law to U.S.-flag ships with U.S. crews.

While the major maritime unions may differ with the shipping lines on specific solutions, they, too, agree that action is needed if the the U.S.-flag fleet is to survive.

"There's a clear and present danger to the maritime industry," said Michael Derby, assistant to the president of the National Marine Engineers Beneficial Association, which represents the officers and seamen who work for Lykes. "There's no comprehensive maritime program in this country any more."

While he said he could understand objections to subsidies for the industry, he said there is no way American merchant mariners can compete with the "Third World wages" paid to foreign crews.

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