Study of the Comparative Economies of Using Berth Service and Time Charters for the Ocean Movement of Military Cargo

Published by the Government Accountability Office on 1971-01-22.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                   COMPTROLLER            GENERAL     OF     THE   UNITED    STATES
                                                        WASHINbTON.    DC.     20548

Ii-145455                                                                                    January        22, 1971

                                                     - -1: _
  Cā€™      Dear   Mr.   Chairman:              Ls ā€™

                  We have completed the study requested in your letter of August 24,
          1970, concerning the comparative               economies of using ,+
                                          sa,~--*psrmpn~~~~~u~.s~~~M                 berth   service "WI'
                  charters for the ocean  ... *.fmovement
                                                 ___ri.-. r.-A ..of.^,..mn~L&tary cargo. As agreed to
          by your office,      o~%~'%%%w was directed primarily                    to determining
          whether the Military      Sealift       Command(formerly -Military Sea Transpor-                                    - ?,
          tation Service) was complying with the provisions                        of the Wilson-Weeks
          Agreement in its decisions to charter ships.                        We also made a limited
          inquiry into the impact of the Command's chartering practices on the
          U.S. merchant marine.


                 When we received your request to evaluate the Command's charter
          practices,   we were-- in connection with an ongoing assignment--developing
          data on the cost of selected time charter voyages. In subsequent meet-
          ings with your office we agreed to compare the cost of these voyages
          with   our   est3mate      of the          costs     that   would        have     been      incurred   if    -the
          cargo had moved in commercial berth                         service.

                 We analyzed all voyages made by eight dry cargo C-4 type ships
         ' under charter to the Command during the period October 1966 through
           December 1969. We found that the 79 voyages made by these ships during
           this period cost the Government approximately   $38 million, including
           per diem, escalation,   fuel, and port charges. We estimated that if the
            cargo carried on these voyages had moved in berth service at the lowest
            appl&able shipping agreement rates, including necessary demurrage
            charges, the cost would have been about $33 million.
  -, 5
                The $38 million   and $33 millioti   costs are gross figures for all
          voyages. However, cost differences       for individual   voyages vary depend-
          ing on the tonnage carried and the route used. Of the 79 voyages,          we
          found 22 voyages in which charter costs were lower than costs based on
          lowest berth rates and 57 voyages on which the costs would have been
          lower based on berth rates.     We did not examine into the reasons for
          tonnage variations    on the chartered vessels or the economy and efficiency
          of the Command's routing of its chartered vessels.
               Further, our review indicated that there was generally insufficient
          berth service available to meet the Command's cargo requirements during
          the period covered by our study.   We have no evidence indicating  that
          the carriers offeri.ng the                          es had equipment