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MarAd Sets Strict Conditions For APL Foreign-Flag Activities

The Maritime Administration (MarAd) announced conditions under which American President Lines, Ltd. (APL), a subsidized U.S.-flag ship operator, would be permitted to operate six new foreign-built ships under a foreign registry. Subsidized shipping companies are not permitted to operate foreign ships that compete with U.S.-flag vessels without a section 804(a) waiver.

MarAd said the new ships must be registered in one of five nations which permit U.S.-owned ships to be under the effective control of the U.S. They also must be enrolled in MarAd's Voluntary Sealift Agreement that will ensure their availability to the U.S. military if needed.

APL also must agree not to scrap or re-flag any U.S.-flag ship covered by its operating subsidy contract prior to Oct. 1, 1995. In addition, APL must agree to transfer the new ships to U.S. registry should a program like that proposed in the Administration's Maritime Security and Trade Act be enacted into law. Congress did not complete action on the bill this year, but President Clinton has said he would work with the new Congress next year to pass a maritime reform program. "If the administration's maritime reform efforts are successful, these new ships some day will operate under the American flag," Maritime AdministratorAlbert J. Herberger said. "In the meantime, we have ensured that they will remain under American control.

"In addition, our action preserves American seafaring jobs on existing U.S.-flag ships until the outcome of our efforts is known." APL has said it expects to operate the six new vessels in service under foreign registry in its Pacific South Express loop. The Pacific South Express loop itinerary deployment is San Pedro- Long Beach- Oakland-Dutch Harbor-Yokohama- Kobe-Pusan-Kaohsiung-Hong Kong-San Pedro. APL will redeploy other ships to its Seattle-Japan service. Three of the ships are being built in Germany and three in Korea. They are expected to be delivered between May and November 1995. MarAd's action came in the form of a conditional waiver of section 804(a) of the Merchant Marine Act of 1936, as amended. Section 804 prohibits a subsidized operator from operating a foreignflag vessel which competes with any essential American-flag service unless a waiver is granted under special circumstances and for good cause.

 
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