Evening star., 1942-07-05
War Control Places
Merchant Marine
On Strong Footing
Improved Competitive
Stotus Is Foreseen
After Conflict
Special Dispatch to The Star.

%TCST SONIII(t
Special Dispatch to The Star.
NEW YORK, July 4.-The neces-
sary Government control OF our
ships during the critical
war period through which we are
now passing rather than resulting
in serious dislocation of our ship
ping interests, embodies many fa-
vorable features which should ulti-
mately accord American merchant
marine a strong competitive status
in future world trade, Fitch Inves-
tors Service reported today.
Most vessels have been with
drawn from regular services and
are currently under charter to the
United States Government under
some form Of compensation and
while the investment return is
small, it provides the basis Of an
even income. with good portion
accruing directly to earnings.
Moreover, it is understood that
negotiations are proceeding with
reference to basis Of compensa-
tion for the various other services
being rendered to the Government
by the steamship companies and
upon satisfactory determination OF
the rates to be paid for such oper-
ating services, the various units
should be able to satisfactorily abb
sorb the essential operating ex-
penses. Hence. the outlook for a
satisfactory earnings return Is
highly possible.
Title, Supervision Retained.
"Under the control plan now in
operation, operators are permitted
to retain a good measure Of their
normal functions because title to
such fleets, in a good many cases,
remains undisturbed and supervision
of such vessels is permitted by the
actual operators who act as direct
agents of the Government.
During the war interim, in ad-
dition to holding title and acting
in a supervisory capacity, owners
will, as mentioned above, derive a
stable form Of income from the
Government in the form of charter
rates or management fees, for the
operation Of all vessels which come
under the direction of the War
Shipping Administration.
THE management fee relates to
the new vessels being constructed
under guidance of the Maritime
Commission and as new vessels are
allotted, so this form of income will
rise.
Charter Rates Revised.
Existing charter rates were raised
in May of this year and time charter
contracts on this new basis should
provide fairly satisfactory form Of
income during the emergency period.
While such revenue stands to run
sharply lower than the average re-
suits attained during 1941, which
witnessed intense activity for Amer
lean shipping, it does not necessarily
follow that profits will suffer to the
same extent
THE greater part Of charter and
management fees should be trans
ferred directly to earnings, with a
special form of compensation alb
sorbing the usual overhead in con-
nection with the many other miscel-
laneous services rendered.
During 1941 the demand for
shipping space was unusually heavy
and operating costs mounted SUBJ
stantially with the result that
charter rates showed steady in
creases until the passage of the
Ship Warrants Act in the middle OF
that year.
This act provided the Maritime
Commission with the means of set
ting maximum charges and both
cargo vessel and tanker charter
rates we're adjusted. Such rates
experienced a further material adj
justment on January 20, 1912, mov-
ing down to the scale of $3.25 per
deadweight ton from rate of $3.50,
with variations for different weights
and speeds.
Freight Rates Changed.
Moreover, so that freight rates
might conform with the charter
revisions, ocean freight schedules
were adjusted to the level existing
as of September l, 1910, with pro-
vision for the addition of surcharges
where required to cover increased
operating expenses.
The new charter rates, which
became effective in May of the
current year, are the result of
negotiations by the operators for
some needed forward adjustment,
and as previously mentioned, nego-
tiations are now in progress for a
satisfactory rate to cover the many
other services being rendered by
the steamship companies"