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The following is the September, 1999 edition of "The Bulletin". Any questions or comments regarding content should be addressed to Alistair Macnab at 713-678-4300.
 The Editorial
June 1973:
Industrial Expansion in Bayport Moves Ahead
as Deep Channel is Dredged.
June 1974:
The Birth of a Splashing New 40-Foot Deep Port.
Sometimes it's worth taking a look back into the archives to see what exciting new projects looked like at their inception and how they eventually turned out. Scanning through back numbers of the Port of Houston Magazine, the captioned headlines caught our eye and we took a closer look at the contents of the two articles with the benefit of 20-20 hindsight.
It is no surprise to note the element of boosterism and pride that recorded the second highest one-year sales total in Bayport's history as reported by Dwayne L. Sparks, vice president of Friendswood Development Company and manager of its Industrial Property Sales. Taken from the June 1973 article, The Bayport Division of the Port of Houston was described at the time as ultimately to consist of 16,000 linear feet of berthing capacity with deep-water frontage for 1,500 acres of land. The existing and potential clients listed in the article certainly represented a virtual Who's Who in the heavy industrial and petrochemical worlds which would leave no one in any doubt that the Bayport development was primarily, one could almost say, exclusively, designed for industrial use.
The photographs and diagrams in the June 1974 edition of the Port of Houston Magazine show the plans for the execution of the expanded Bayport Channel to what it looks like today. The expanded port is described as destined to serve the growing Bayport industrial community and is "just one aspect of the Port of Houston's efforts to continuously plan and build new facilities to serve the ever-changing needs of shipping. " The project is described as a public port facility with land and water frontage available for private terminals as well as public wharves.
"With the many petrochemical industries in the Bayport area, it will naturally serve tankers and liquid carriers, but container facilities also may be constructed in the future." These are the words of Middy Randerson, Publicity Manager of the Port of Houston, which were published in June 1974.
Contrary to a popular misconception, then, it does look as if the Bayport Container Terminal has been around as a plan for more than twenty-five years. This may come as an unpleasant or even unpalatable surprise to some folks but being able to lie out at night and watch the stars and listen to the night critters rustling in the salt grass seemed to be a diminishing option in 1973 just as it is today. Indeed, it's amazing that it has taken this long to get to where we are. Perhaps a good way to look at the past twenty-five years of comparative Bayfront tranquility would be as an unexpected but nevertheless welcome bonus.
In the past twenty-five years, however, enormous strides have been made in ensuring that industrial sites and businesses are as sensitive to their surroundings as possible especially if there are nearby residential and recreational communities involved. It seems to us that the Citizen's Advisory Panel set up for the purpose, should be working with all speed and due deliberation to recommend measures to make the Bayport Terminal a good neighbor. After all, we've had twenty-five years to think about it.
Alistair Macnab
 Bayport Container Terminal Project Unites Opponents in Pasadena.
For most of the crowd that filled the Pasadena Convention Center on the evening of August 17th. it was an opportunity to speak out against the Houston Port Authority's project to construct a container and cruise ship terminal on the south side of the Bayport Channel which has long been earmarked for this purpose.
The occasion was the U.S. Army Corps of Engineers' Scoping Meeting and Workshop convened to address the public issues surrounding the proposed Bayport Terminal and the development and production of an Environmental Impact Statement which will be necessary before the project can proceed.
Speakers against the project were well in the majority on the basis of its alleged adverse effect on the environment and the social amenity of neighboring communities. But there were speakers who spoke out in favor. A large turnout of International Longshoremen's Association members was present to highlight the benefits of job creation and there were a few brave souls who individually drew the assembly's attention to Houston's existing role as the principal Gulf loadcenter for container traffic - a position that would be forfeited without the development of a Bayport terminal.
Speaking on behalf of the Greater Houston Port Bureau, the Marine Exchange of the West Gulf, and the U.S. Gulf International Commerce Club, Alistair Macnab also presented letters of support for the Bayport project received from the Houston Customhouse Brokers and Freight Forwarders Association, and R.W. Smith & Co.,Inc.
Although Macnab was the 34th. speaker after two hours of public comment, only Richard Couch of Sealand Services and as the representative of the Carriers Container Council, Inc., had, up until that time, spoken in favor of Bayport. Couch had drawn attention to the fact that ocean carriers had already looked at alternative sites for a Texas Gulf container terminal and had concluded that Bayport was the preferred location. Macnab, on the other hand, emphasized the impact of Bayport on the human environment - jobs, small businesses, education, and the quality of life through economic stability and progress. A Citizen's Advisory Panel had been convened by the Port of Houston Authority. It was meeting twice monthly and it was an opportunity for citizens to ensure that the Bayport project was constructed in a manner that was sympathetic to their concerns.
The Port of Houston Authority has submitted an application to the United States Army Corps of Engineers, Galveston District, for permits under Section 10 of the Rivers and Harbors Act and Section 404 of the Clean Water Act to construct and operate a marine terminal complex on approximately 1,050 acres along the south side of the Bayport Ship Channel. The proposed project site is mostly within the Extraterritorial Jurisdiction of the City of Pasadena but a portion is also located in the City of Seabrook.
The Army Corps of Engineers has the responsibility to consider need, alternative site, public interest, effect on Wetlands, and a host of historic, cultural, scenic, and recreational issues as well as other Federal, State of Local Requirements. A Notice of Intent to prepare an Environmental Impact Statement was published in the Federal Register on June 2nd. 1999. The comments expressed in Pasadena will be used to develop the scope of the Corps of Engineers' work and a Draft Environmental Impact Statement will be released by the Corps in mid-2000.
 PHA Commissioners Hear Proposal for a Marine Training Center for Houston.
Appearing in public session before the Port of Houston Authority's Board of Commissioners on August 23rd., James Cooney representing the Houston International Seafarers' Center, Pat Smith of Coastal Towing, and Alistair Macnab of the Greater Houston Port Bureau, outlined a proposal which would bring a pilothouse simulation center to Houston.
The project is being developed by the Center for Maritime Education, a division of the Seamen's Church Institute of New York and New Jersey. Having successfully expanded into Paducah KY with a training facility, the Center was now looking for a Gulf location.
This was a project of particular interest to the towboat and barge sectors, declared Smith. The industry had already committed $2.5 million to future training and appropriate facilities to be located in Houston were desirable.
Ned S. Holmes, Chairman of the Commissioners, thanked the visitors for drawing the matter to the Commission's attention. Port personnel would be assigned to look into the project and the Board would examine what it might be able to do to bring the Center to Houston.
 Port Bureau Schedules Annual Dinner for Wednesday, October 27th. 1999.
Following last year's very successful Celebration and Dinner, the Port Bureau and the Marine Exchange are returning to the Houstonian for their Annual Dinner and Entertainment which will be held on Wednesday, October 27th. 1999.
Tickets for this fundraiser are $60.00 per person and you are encouraged to make up tables of eight or ten. While arrangements are still in the early stages, we can promise you that this year's "floor show" will again be "something different" and since Election Day will closely follow, we feel sure that the whole gathering will also be something of a Booster for the Port of Houston's Port Improvement Bonds.
By calling Cynthia at the Bureau on 713.678.4300 you can make your reservations now. This is the Bureau's and the Exchange's principal fundraiser of the year and your support is earnestly solicited. You'll be wined, dined, and entertained and there will be raffles and table prizes. Mark your calendar now and plan to attend!
 Advertising Opportunities:
We are currently accepting advertising for our Millennium Membership Directory and Services Guide which is to be published towards the end of this year. This useful Port of Houston reference tool might very well prove to be a worthwhile sales aid for your company and we will print individual copies with your own company name and logo on the cover for a special price depending on the number of copies ordered. We envisage a print run of around one thousand copies at this time.
For other advertising opportunities, quarter page entries will cost $250.00, half-pages: $375.00, and full inside pages, $600.00.
Advertising is also coming to "The Bulletin". While we do not want to spoil this highly successful publication with unwelcome content, we have been asked by several Members if we would consider accepting their corporate messages as an expression of their ongoing financial support for our monthly newsletter.
We have agreed to do this and to increase our page count to twelve. This will also permit us to expand our editorial content and to improve the layout. Our monthly run for "The Bulletin" will remain at 450 monochrome and 50 in color for the time being.
Advertising rates for "The Bulletin" start at $100.00 per issue for a one-inch strip with a monochrome (or color) background. At twenty cents per copy this is surely a good advertising "buy". For series discounts and larger formats please call Alistair Macnab on 713.678.4300
 Commerce Club Resumes Lunch Meetings on Thursday, September 9th.
Jack H. Ewing to Speak.
The U.S. Gulf International Commerce Club enters its fourteenth year with the resumption of luncheon meetings which are always held in the Plaza Suite of the Fountain View Restaurant on the second Thursday of every month. The next meeting will be on Thursday, September 9th. when a good turnout of members and their guests is expected, to hear from Jack Ewing, who will be the guest speaker.
Many of you will know Jack from his days at the Greater Houston Partnership but nowadays; he's the Executive Director of the Japan-America Society of Houston, Inc. At the turn of the last century there were only thirteen Japanese in Texas with only one recorded as actually living in Houston. Today, our city's large and vibrant Japanese community is contributing substantially to making Houston a truly international center with influential positions in energy, chemical, biotechnology, computer, space, construction, engineering, environmental, and agribusiness industries as well as in our educational and cultural institutions.
Jack will also be talking about Houston's sea and air links with Japan and about the many business opportunities that a closer understanding of Houston's Japanese connection has to offer. Houston has a significant stake in the 40% of World GNP accounted for by Japan and the United States.
Reservations can be made by calling Cynthia or Jeannie at the Bureau on 713.678.4300. There is a charge of $20.00, which includes lunch and a refreshment ticket. The Fountain View Restaurant is located at 2777 Allen Parkway (The Riviana Building), just to the west of Downtown. The Plaza Suite is on the Second or Plaza Level.
 The Port of Houston and Y2K; What Every Ship's Agent Needs to Know.
There is some concern in U.S. Coast Guard and Port of Houston Authority circles that there may be some ship's agents who are unaware of the conditions that a visiting ship, or tow and barge will have to meet in order to gain access to the Port of Houston during Y2K-significant dates.
The goal of all parties is for the uninterrupted flow of commerce during September 8th/9th; December 31st./January 1st. 2000; and February 28th/March 1st. 2000 but this ideal situation will only prevail when all vessels and terminals have been pre-screened and have achieved "green" status.
The Coast Guard have prepared a Risk Matrix that has to be completed by all potential traffic, either by the vessel itself or its agent. A "red" designation will mean that a vessel will be denied access to the port until the critical time period has elapsed. A "yellow" classification, on the other hand, will mean that a tug escort will have to be employed for entering and leaving the port and that movement might be restricted to daylight hours.
Pre-screening of vessels is strongly encouraged if delays are to be avoided as unidentified vessel arrivals, be they deep sea ships or tug-and-tow, will be required to submit to the Risk Matrix program which will take time to complete. This will be an even more significant problem if Y2K results in shutdown telephone, fax, or computer communications.
Should an agent or vessel owner/operator require any further information on this matter, Cmndr. Bob Acker, Chief of the Response Department of MSO, Houston-Galveston, can be contacted on 713.671.5104 or by fax on 713.671.5185
The Coast Guard further advise that pre-submission of Risk Matrix material to the Coast Guard's central database in Washington DC or to another port, might not find its way to Houston-Galveston in an acceptable or timely fashion. For this reason, all interested parties are urged to check in advance with Cmndr. Acker's office to ensure that their vessel has been designated "green" for the ports of Houston, Texas City, Galveston, or Freeport.
 Why Bayport? Tom Kornegay Explains PHA's Choice.
Cost and location factors fully support the placing of Houston's new containerport on the Bayport Channel said Tom Kornegay at the Citizen's Advisory Panel meeting on August 24th.
A number of alternative sites had been closely studied, continued Kornegay, such as Spillman Island, The San Jacinto Ordnance Depot and Galveston. On the reclaimed dredge spoil at Spillman, the raw development costs were shown to be $600,000 per acre more than at Bayport whilst the privately-owned Ordnance site, although having some attractive features, was essentially too small and would require new dredging to form a turning basin and to obtain at 45-foot working depth.
As for Galveston, it was well known that the additional landside costs for getting containers to the Houston market created an uncompetitive situation. The Carriers Container Council had examined doing business in Galveston on several occasions and without some form of subsidy for trucking, Galveston was not a commercial option for the ocean carriers which would be bringing the container ships and international commerce to our region.
The existing Barbours Cut facility was now developed as far as it could be taken and unless a new container terminal was created, Houston's present regional load-center status was ours to loose. We already owned the land on which the Bayport terminal would be built, concluded Kornegay. As the Executive Director of the Port of Houston Authority, it was his responsibility to plan for the Port's future growth. Bayport had not been an arbitrary decision, but one based on a careful and systematic study of the alternatives.
 The Houston Center for Marine Education; Inaugural Program Launched on September 1st.
Although the instructors and visiting specialists outnumbered the students on Wednesday, September 1st. when the Greater Houston Port Bureau launched its new learning program, the one-day generalist seminar entitled: "Charter Parties, Booking Notes, and Bills of Lading", was well received.
Students were taken through several course topics which encompassed importing, exporting, liner and tramp shipping, contracts of afreightment, and understanding the charter market. Ethics, negotiating strategies, and win-win outcomes were emphasized with a look at several actual fixtures taken from the initiation stage to a satisfactory conclusion.
This refresher course is repeated again on October 13th. and on November 17th and is recommended for individuals who have some knowledge of maritime business but are anxious to broaden their skills.
Advanced seminars which concentrate on "The Charter Party and the Bill of Lading" (September 22nd.); "Claims, Recoveries and General Average" (November 3rd.); and "Logistics Management" (December 15th.) will be available for the student looking to obtain a deeper understanding of the topic. Each module can be taken separately.
The entire program has been launched in response to a perceived demand among Houston's maritime sector for local access to professional training opportunities. The Port Bureau is proud to be the sponsor of this exciting development and welcomes enquiries from employers interested in developing training programs tailored to suit specific requirements.
It has long been recognized that ongoing training and education are vital to attract and retain good personnel. The Houston Center for Marine Education has embarked on an ambitious series of learning initiatives that will encompass new-entrant pre-professional outreach programs at high school level and offer continuing educational resources to enhance baccalaureate and masters courses in the relevant disciplines of business administration and logistics management.
For more information, you can speak with Alistair Macnab on 713.678.4300. Enquiries for class attendance should be made with Cynthia on the same number. There is a fee of $95.00 per module, and payment in advance will confirm availability of space in the class of your choice. Classes are small. They are held at the Bureau's offices in the Port of Houston Authority's building and a light lunch is provided.
 Marine Exchange Working to Enhance Ship Traffic Information Program.
Do you have a need to know where visiting ships arrive from or what their next port of call will be? Berth activity? Agency rankings? And not just for the public and private port of Houston but also for Texas City, Galveston and Freeport? Are you wanting to trace a particular ship in the Puget Sound or perhaps in the Delaware River ports? How about a comprehensive ETA listing?
The Marine Exchange is currently working on a new and exciting computerized program that will greatly enhance its ability to respond swiftly and accurately to your traffic questions. With the kind of information available from the Exchange, you will be able to more easily support your reports to Principals and Head Office. Already hardware has been purchased and data inputs are being sought from the U.S. Coast Guard, the Houston Pilots, from our own Morgan's Point Reporting Station, the Port of Houston Authority, and from other proprietary sources.
Whilst the Houston Pilots will continue to develop and deliver their pilot booking and real time reporting service for individual vessel arrivals and departures, the Exchange will concentrate on port, regional, and nationwide shipping intelligence that encompasses your own and your competitors' activities.
A wide array of reporting options, tailored to your individual requirements, will be available with a flexible pricing structure to match. The new program is expected to be up and working on a trial basis during the fourth quarter of this year and to go into full operational mode on January 1st. 2000.
Interested entities are invited to discuss their anticipated vessel reporting requirements with Alton Landry, Manager of the Marine Exchange, by telephone on 713.678.7711 or by fax on 713.678.4839. This is a good time to let us know what you would like to see included in our database when we are in the process of writing the new programs.
Access to the Exchange's data will, of course, be for Members only. As a not-for-profit organization, the Exchange will continue to rely, as it has in the past, on Membership Contributions to keep the door open and the light on. It is interesting to note that in a recent thesis submitted in support of a Masters Degree, Mr. Gregory D. Case described the marine exchange as an "unheralded, private-sector, American Port Institution" that provides essential communication services for the Nation's busiest ports.
The Marine Exchange of the West Gulf has been doing this for over fifty years and in its present form, since 1983 as a wholly owned subsidiary of the Greater Houston Port Bureau, Inc.
 Houston's Seafarers Centers Maritime Gala '99.
Mark your social calendar for September 25th. to celebrate "Noche de Gala Con Sabor!" at this year's Maritime Gala which is being held at the DoubleTree Hotel, Post Oak and promises to be an exciting evening of "Latin Sizzle!"
Every year, the Houston International Seafarers Center and the Lou Lawler Seafarer Center, honor distinguished individuals at their fund-raising events. This year's honorees are the Reverend Taft Lyon and Captain James Baker.
With a goal of $200,000.00, which will be used to support the Centers and to train chaplains, special benefactor contributions of from $1,250.00 to $5,000.00 will obtain a ten-person table at the Gala. Additionally, sponsorship advertising in the Commemorative Program starts at $25.00 for a Business Card and extends to a full-page monochrome advertisement at $250.00.
The Houston International Seafarers Centers was chartered in 1972 and provides religious, recreational, shopping, and sports facilities for visiting seafarers calling at the Port of Houston and Barbours Cut. Over one million seafarers from all countries, all religious denominations, and all social backgrounds have discovered a "home away from home" at the Houston International Seafarers Centers.
As a 501C non-profit organization, the Centers' Maritime Gala is THE social event of Houston's maritime community and is the principal fundraiser on the Centers' calendar. For table or individual tickets ($125.00 per person), please call 713.672.0511 or fax 713.672.2444.
 Controlling Nonindigenous Invasive Species; What Approaches are Best in the Gulf of Mexico?
Advance registration is required for submission by September 30th. for the Ballast Water Conference to be held in New Orleans on October 6th. 1999. Sponsored and conducted by the Louisiana Sea Grant College Program of Louisiana State University - Baton Rouge, the program will examine the history of invasive species said to have been introduced into local waters from ship's ballast water and look at existing U.S. Coast Guard regulations and guidelines.
Further topics will include ballast water management and treatment technologies; open ocean ballast exchange alternatives, and a look at the range of strategies and best approaches available for our regional waters and seaports.
For added information, contact Marylyn Barrett-O'Leary, on 225.388.6349 or at
  The Chemical Industry in Houston.
The chemical industry is an expanding business. Recent numbers released by the European Federation of Chemical Companies places chemical industry annual average growth in the USA at 3.2% in volume terms. The compares with general industry in the USA where the annual average growth is 2.9%
The USA numbers for the chemical industry rank immediately behind those of Belgium (4.9%) and Japan (4.2%). Houston, although recognized as the location of the largest chemical complex in the world, has the Belgian city of Antwerp in Flanders as a close runner-up in the Number Two spot.
Growth in the past has been based on large chemical plants producing huge quantities of basic chemicals but there is now an increasing focus on producing advanced chemicals in smaller plants. Houston's ready supply of basic products, its central location and excellent infrastructure are expected to attract this new class of business to our region. A higher emphasis on chemical specialization can be anticipated in line with developments already under way in Europe where specialization is further advanced in Belgium, The Netherlands, Spain, and France.
  Inbound Deep-sea Vessel Arrivals: August 1999
The August numbers for Houston indicate 561 arrivals during the month. This compares with 617 arrivals during August 1998 for a reduction of 9% which also reflects the full year's downturn to date. All seaports in our region are experiencing similar shortfalls in vessel calls except for Galveston which has actually recorded a healthy 16% increase, year-on-year, and Texas City where traffic numbers are running at close to last year's.
For detailed vessel arrival information and to access other traffic intelligence data you are invited to call Alton Landry at the Marine Exchange of the West Gulf Inc. on 713.678.7711. The Exchange's specialist, telephone answering service presently has a few open lines available for members looking for an off-hours and weekends live-voice response to incoming calls which can be patched through to duty personnel as required.
  ITC Attempts to Fine Tune U.S Tariff System
The United States International Trade Commission (ITC) is working on a simplified version of the Harmonized Tariff System, which - with over 2000 pages listing 20,000 categories of goods -has become complicated and unwieldy.
In 1997, the House Ways and Means Committee decided the tariff system needed a major overhaul and assigned the task to the International Trade Commission, which recently released the first version of its simplified tariff, now down to 945 pages, to the industry and other government agencies for comment. The Commission must issue a final draft for the Committee's review by July 14, 2000, with a final version due by 2004.
In order to simplify the new tariff, the commission studied ways to eliminate or combine domestic product codes, as well as reviewed specific and compound duty rates and suggested equivalent ad-valorem rates to replace them. It also sought ways to simplify statistical reporting categories, such as textile and apparel, steel, footwear, autos and electronics. However certain categories of products such as chemicals were too difficult to make major revisions as they have complex descriptions in the tariff, which cannot be easily simplified.
Customs brokers are urging their import clients to carefully review and comment on the ITC's simplified tariff model, in order to make sure of areas where it may discriminate or open doors to their business.
The United States Trade Representative's Office is also being asked to study the ITC's efforts to reduce or eliminate certain U.S. tariffs. The Trade Representative's office will study the effects resulting from:
  • Changes in the levels of dutiable imports from all U.S. trading partners if all tariffs were reduced by at least 50%, with tariffs of 5% ad-valorem or less eliminated.
  • Change in the levels of dutiable imports from all U.S. trading partners if tariffs were eliminated.
  • Elimination of dutiable imports from countries in the Free Trade Area of the Americas.
International groups such as the Word Trade Organization and the World Customs Organization in Brussels are also studying the Commissions work. These groups want to standardize and reduce the complexity of customs tariffs worldwide.
  FMC Reopens Japanese Ports Probe
The Federal Maritime Commission in reaction to the failure of Japan to make significant progress in opening its port system to U.S. and other non-Japanese ocean carriers has decided to reopen an investigation which several years ago threatened to impose monetary sanctions against Japanese flag vessels entering U.S. ports.
The FMC had requested U.S.-flag carriers Sea-Land Service and APL to submit reports on Japanese trade conditions beginning August 26, 1999 and every six months thereafter. The FMC will use the new information to re-evaluate conditions facing U.S. carriers and implied that new sanctions against Japanese carriers may be imposed if the Commission is not satisfied that progress is being made.
The major problem is that non-Japanese carriers are required to submit to "prior consultation " by the Japanese Harbor Transportation Association, a private group of Japanese stevedores and terminal operators, if they wanted to make any type of operational change including new sailings or operation of private terminals.
Although the Japanese government agreed to end these practices after facing potential fines of up to several million dollars, in the nearly three years since, little if any progress has been made. The FMC wants the Japanese government to take action, which will force faster action to eliminate or liberalize regulations, which hinder foreign carriers entry into the Japanese harbor services industry.
In addition to the investigation into Japanese harbor practices, the FMC is also looking at China's restrictions against U.S. ocean carriers and Ocean carrier intermediaries. U.S. carriers must go though a burdensome pre-clearance process in order to call at many Chinese ports, and they have not yet received clearance from the Chinese government to open their own branch offices in China.
Carriers' ocean transportation subsidiaries also face restrictions on operating their own businesses such as trucking subsidiaries to move cargo to or from interior points.
  CIT Rejects Lawsuit on Import Portion of HMT
The Court of International Trade (CIT) has dismissed a lawsuit from Thomson Consumer Electronics which claimed the import portion of the Harbor Maintenance Tax was unconstitutional, on a technicality. However another suit making the same claim by Amoco Oil Co. is continuing.
Although the U.S. Supreme Court ruled that the "Commerce Clause" of the U.S. constitution prohibits export taxes, there is no similar ban on import taxes and importers continue to pay the tax.
The CIT dismissed the suit claiming that Thomson failed to first file a protest against the tax with U.S. Customs. Thomson had argued that it did not file a protest with Customs because it believed that Customs did not have the authority to declare the tax unconstitutional and to refund the money. The Amoco suit is expected to go forward since Amoco did file a protest with Customs and the Court will probably consider the constitutional argument in the case that claims the import section of the tax must also be struck down, since applying it to imports only would violate Congress's intent in creating the tax.
  Senate Considering Legislation to Change Maritime Subsidy Program
Senate Majority Leader Trent Lott, R-Miss. and Senator John Breaux, D-LA, both major supporters of the maritime industry, are considering new legislation changing the existing Maritime Subsidy Program which pays U.S.-flag steamship companies subsidies to operate American built and manned vessels in their fleets.
Due to recent sales and mergers such as the recent sale of the largest American flag carrier, Sea-Land Services to Denmark's A.P. Moller Group owner of Danish-flag carrier Maersk Lines and the sale of Lykes Lines to Canadian owner CP Ships along with the sale of American President Lines to Singapore based NOL Lines, 31 of 47 vessels in the subsidy program will be owned and operated by U.S. entities for the benefit of foreign lines.
Senators Lott and Breaux are proposing to end the subsidy based program and replace it with a plan under which income earned by ships registered in the MSP program would not be subject to U.S. income taxes. The registry would be reserved for newly built vessels or existing newer vessels of useful military value. The registry would also be open to non-U.S. built vessels, but the ships would have to be crewed by U.S. citizens and the controlled vessels would have to be made available to the Defense Department during national emergencies and be subject to U.S. Coast Guard regulations.
The wages of the U.S. crew of up to $80,000 would be tax-free and registry vessels would also be exempt from the existing 50% ad valorem tax levied on ship repairs made in foreign shipyards.
Ships enrolled in the registry would also be exempt from the three-year waiting period to carry government preference cargoes. However existing U.S. flag ships in the MSP program would receive first priority for government-impelled cargoes.
The bill is not expected to come up for hearings until sometime next year.
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