“In general, we have seen the charter rates come down, however, competition is restricted on a preference basis,” said Chris Thayer, the MSC’s director of strategic sealift and prepositioning. He said U.S. operators are sophisticated about pricing their services.
“If you’re a U. S.-flag operator, you know who your competition is, and where their vessels are. You know what trades they’re in, and you probably know what cargo they’re carrying,” Thayer said. “If you know you can be in position to bid a contract, and you’re the only U.S.-flag vessel that’s available and capable of meeting the requirement, you will bid a rate accordingly.”
He said there are times when several U.S.-flag carriers are in position to bid, increasing the competition. “But they’re not competing against the rates that may be offered by a foreign-flag vessel owner, because they know they’re going to have the preference,” Thayer said.
A ro-ro ship can transport tanks or trucks, but so can a general cargo ship. That means U.S. ro-ro operators face com-
petition from U.S. breakbulk operators.
“Generally speaking, we like to move rolling stock on roll-on, roll-off ships,” Thayer said. “When we go to the marketplace for procurements, there may not be any U. S.-flag roll-on, roll-off ships in position to take the cargo.”
Ro-ro ships are designed to stow and discharge rolling stock more efficiently than a load-on, load-off ship.
If there’s no ro-ro around, “maybe there are U.S.-flag multipurpose, breakbulk-type vessels that are positioned and capable of taking the cargo,” Thayer said. “If they meet everybody’s technical requirements and it’s U. S. flag, then that ship has a preference and can do the mission.”
MSP carriers’ rates for government-impelled cargo are based on an annual universal service contract. When the quantities are large enough to fill a ship, the sealift command goes to the charter market. Thayer said the Defense Department is reviewing its “liner vs. charter” policies to determine at what price point it is more economical to charter a ship for a vessel-size shipment.
“If you’re a military shipper, and you have huge volumes moving frequently, then you should be chartering ships,” Thayer said. “The department is looking at, do we have the right balance? Do we have the right mix of ships under charter and ships where we are moving cargo under the universal service contract?”
The rate difference between U. S.- and foreign-flag ships does not tell the whole story, Ebeling said. “It’s not necessarily true that the government would be paying less. You’d have to have charter arrangements, and you wouldn’t have the services and rates in place.”
U.S. carriers already have inland supply chains established where a foreign carrier does not. Until recently, only U. S.-flag ships were in service to Iraq, Ebeling said. In Pakistan, the government will not let a “gray hull,” a U. S. government-owned ship, into port.
“The U.S.-flag carriers and the U. S. merchant marine are willing to go places that other commercial services are not willing to go,” Ebeling said. JOC
Contact R.G. Edmonson at bedmonson@joc.com.
P.O. Box 328 • Galveston, TX 77553
Phone: 409-766-6112 • Fax: 409-766-6171
Website: www.portofgalveston.com
Contact: Capt. John G. Peterlin III
Sr. Director of Marketing & Administration
Email: jpeterlin@portofgalveston.com
References:
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