With Congress about to act on bills to give sweeping antitrust immunity and regulatory relief to the U.S. maritime industry, the General Accounting Office has concluded that the economic condition of much of the merchant fleet is far better than generally believed and "does not justify a major revision" of existing shipping law.
The GAO's finding that the U.S.- flag liner fleet is not in the state of decline ascribed to it runs counter to a long series of SOS signals about the fleet issued by the industry, congressional committees and independent researchers in recent years, and is likely to be disputed vigorously by industry lobbyists.
The GAO report is apparently an abbreviated version of a study initiated four years ago and circulated for comment to interested groups in January but never made public. Congressional sources said the new study is to be released soon.
It says that the U.S.-flag liner fleet--the vessels carrying manufactured goods and general cargo on scheduled international routes--is generally profitable, well-equipped and capable of competing with foreign shipping lines.
The sharp decline in the number of American-flag vessels in this service in the past decade is the result not of "general chronic distress" but of modernization and the acquisition of big container ships that carry more cargo in less time at lower cost, the report says. Although "valid reasons exist" for changing shipping law to favor the carriers, "The GAO does not believe the current condition of the general-cargo-liner segment of the U.S. merchant marine is among them," the report says.
It also says that the decline in the number of ship operating companies from 19 to nine was caused not by overall erosion of the industry or by flaws in maritime law but by competitive forces and the demands of capital investment in containerized equipment, which are invigorating to the industry.
These conclusions appear to support the claims of consumer groups who argue that the proposed grant of blanket antitrust immunity and authorization for the carriers to enter cartels would require consumers and exporters to subsidize the liner fleet unnecessarily. But it is not clear whether they will have any impact on legislation that has been making its way through Congress since last summer, with the backing of the administration.
One congressional source said yesterday that the main conclusions of the GAO's analysis have been known on Capitol Hill for some time and are unlikely now to undercut legislation that has bipartisan support. But another said it would "cast doubt on some of the arguments for the legislation . . . "
A Senate version of the bill awaiting floor action would confer antitrust immunity on the carriers, authorize them to join international groups of shipping companies to control rates and schedules and lift some regulation of rates and schedules. A similar bill cleared the House Merchant Marine and Fisheries Committee and is undergoing review in the Judiciary Committee.