1948. 1949. 1950. 1951. 1952 TABLE VII.-Average speed of recently built foreign-flag vessels 1953 (6 months). In the United States during the same period, only three ocean-going dry cargo ships were built other than four 16-knot full reefers and the Mariner vessels. These three were delivered in 1951 and had an average design speed of 16.83 knots. No others, except Mariners, are now under construction in the United States. FOREIGN SHIPS UNDER CONSTRUCTION A rumor, reported in 1953 in a British shipping publication, suggested that cargo vessels with a speed of 20 knots were under construction in Japan, but the report was denied from authoritative sources in Japan. On the other hand, we have a definite report that as of June 30, 1953, there were five dry cargo vessels under construction in Swedish and British yards having a design speed of 18 knots or better. Four of these will have an 18-knot speed and one a 19-knot speed. These figures, however, do not give consideration to the number of dry cargo vessels also under construction in foreign yards with a design speed of less than 18 knots. 10 It thus appears that, except for Mariners and the Schuyler Otis Bland, there are no dry-cargo freighters in operation under the United States flag or being built in this country with speeds exceeding 18 knots. The average speed of recently built foreign-flag vessels is not over 15 knots. Of the nine foreign-flag ships operating in the United States commerce with speeds over 18 knots, most operate on routes where there is no United States flag competition, and are especially designed with large refrigerated capacity for special trade requirements, and may thus be considered exceptional in the foreignflag liner fleets which number over 1,000 vessels trading to United. States ports. From a commercial point of view, high speed has value if it attracts more business or if it results in decreased operating costs. It does not appear that even a saving of two or three days on a long voyage which an additional 2-knot speed might make possible would 10 The Schuyler Otis Bland, a prototype cargo carrier capable of 18% knots sustained speed, was built by the Government, and since her delivery in July 1951 has been operating under bareboat charter or general agency agreement. necessarily be of consequence to shippers who, under ordinary circumstances, are paid for goods sold at port of shipment against shipping documents, and without waiting for actual delivery abroad. There is testimony in the record that the primary interest of American C. I. F. shippers is to get the price of the product, which in most cases can be done by depositing on-board bills of lading in bank. As to operating costs, it appears that the port time of a Mariner is substantially the same as that of a C-3 type vessel. The sea operating cost of a C-3 type vessel at 161⁄2 knots is substantially lower than that of a Mariner at either 18 or 20 knots. The per-ton mile cost of a fully loaded Mariner operated at 20 knots is substantially the same as at 18 knots if the voyage is long enough to effect savings of one or more full days, provided fuel is purchased at the lower west coast rate of $1.70 per barrel. If fuel is purchased at the higher east coast rate of $2.40 per barrel, the operating cost of a Mariner at 20 knots is somewhat greater than at 18 knots. On short runs, the saving of part of a day is of little commercial value, for arrival time in port may necessitate delay until the beginning of the succeeding working day for the shore gangs needed to work the ship. Without in any way detracting from the commercial value of good, efficient, regular, and reasonably fast service, it appears that the element of speed by itself as a competitive element in obtaining cargo is today perhaps of less importance than in prewar days. Factors which today are becoming more important in the competition for United States export cargoes stem from the power of foreign importers and governments which control the foreign purchases to direct the routing of cargo by vessels of their choice. It appears that there are probably relatively few cases, except in respect of limited amounts of high value cargo moving mainly in the North Atlantic trades, where speed is a controlling factor in getting the business. We are aware of certain estimates made by some members of our staff as to desirable speed that are to some extent in variance with the conclusions above set forth. We believe, however, that our conclusions are supported by the seasoned judgment of experts in the field of commercial operations, well qualified to appraise the commercial utility of the element of speed here under consideration. COMPUTATION OF ESTIMATED BRITISH BASIC COST OF 20-KNOT MARINER AND 18-KNOT COMMERCIAL EQUIVALENT We start with the United States contract prices on the 20-knot Mariners, including all defense features, set forth in Note 1, and proceed as more particularly set forth below. First Step: Computation of Estimated British Cost of Mariner (20 Knots), Including National-Defense Features The staff sent to Britain the plans, specifications, and material requisitions for the major components going into the Mariner as supplied by Bethlehem-Quincy (which company had prepared the plans and had issued all purchase orders for materials going into the vessels), and an effort was made to price each item in the British market. Of the various hull items, British prices were developed on more than 90 percent in value, and on machinery items on approximately 80 percent in value. As to the unpriced hull items, these were included in the British estimate at the ratio of the priced hull items, and similar treatment was given to the unpriced machinery items, based on the ratio of the priced machinery items. To the British estimated cost of all hull and machinery material so derived was added the British cost of labor necessary to construct the ship. The total man hours in an American yard was also taken from the Bethlehem-Quincy bid, and adjusted for differences in subcontracting practices in British yards. Based on information as to the relative productivity of representative British yards which have not all the labor-saving devices available in American yards, it was determined that on the average 18 percent more direct hours would be required in Britain than in the United States to do the same work. The average cost of labor in Britain was found to be $0.461 per hour, so that by multiplying these factors, a British labor cost of the ship was obtained, and the following computation was then possible: Indirect labor, including general administration charges and social charges-30 percent of direct labor-. 1 1 13, 560 567, 260 170, 180 3, 903, 360 Establishment charges, including use of plant and equipment, prop- 975, 840 4,879, 200 This is rounded off at--‒‒‒ 4,879, 000 1Itemized separately in this British estimate of cost, since the United States cost of plans and engineering was derived from a separate plans contract and was not in Bethlehem-Quincy ship contract, and, consequently, no allowance for labor or material necessary for producing British plans and engineering was included under those headings in the foregoing British labor and material estimates, which were for ship construction only. It is to be noted that indirect labor and social charges were estimated at 30 percent, based on information from financial reports of various British shipbuilding companies and also from information derived from cost computations for the construction of a number of tankers then being constructed in Britain. In some the indirect labor and social charges ran as low as 25 percent of direct labor, and in some as high as 35 percent of direct labor, and, accordingly, an intermediate percentage of 30 percent was considered a fair medium. Similarly the basis for establishment charges and firm's profit of 25 percent is based on reports from United States foreign service representatives in Britain, taken from records of British shipyards and also from several large oil companies recently constructing tankers in British shipyards. The staff estimate for February 7, 1951, based on British figures as of that date, is deemed therefore to be as fully documented as is reasonably possible. All estimated British prices herein set forth are subject to escalation for changes in cost of material and labor in Britain during the building period. By applying the British index for materials 11 and the British index for labor 12 to the February 7, 1951, figures, the following three estimates were made of British basic costs of constructing a Mariner ship when built as one of five, and including the national-defense features incorporated in the Mariners (except item (c), special treatment steel for splinter protection), computed at the post-devaluation official rates of exchange prevailing on the dates when the contracts were signed in the United States: 12 TABLE IX.-Estimated British cost of 20-knot Mariner, including defense features Contract date: Feb. 7, 1951_. June 25, 1951- Cost $4,879, 000 5,047, 000 5, 239, 000 Second Step: British Cost of 20-Knot Mariner, Excluding National-Defense Features We next adjusted these costs to exclude costs of national-defense features except speed. The British estimate of the 20-knot Mariner, set forth above, did not include splinter protection. The 12 items of national defense features having an estimated United States cost of $255,920, as set forth above (page 419) were separately priced in 11 Mechanical Engineering Materials Price Index from British Board of Trade Journal. 12 Index of Weekly Wage Rates of All Workers (British) from monthly Gazette of British Ministry of Labour. Britain as of February 7, 1951, and exclusive of splinter protection, had an aggregate British cost on that date of $155,500.13 This estimated British cost of national-defense features computed as of February 7, 1951, was adjusted by the same British indices to reflect changes to June 25, 1951, and August 1, 1951, to provide the following British estimated cost of the 20-knot Mariners without the 12 national-defense features referred to. These, then, are the fair and reasonable estimates of basic costs, as determined by us, of construction of the 20-knot Mariners if they had been constructed under similar plans and specifications (excluding national-defense features) in the United Kingdom, and provide the minimum basic prices for the Mariners if sold for use as combination passenger-freight carriers in foreign commerce. Third Step: Computation of Estimated United States Basic Cost of Commercial Equivalent (18 knots) The staff next computed an estimate of the basic United States cost of the 18-knot commercial equivalent as of February 7, 1951, based on the Newport News material and labor costs, plus 1/35th of the |