C 3?.<£o2-' ^ <*?/& THE PKITOSTIVANIA STAT1 UMVBR31TY LilfcARF DOCUMENTS SECTKW urface fleet H IP A New Era in Commercial Ocean Transportation A Paper by James A. Higgins Office of Research and Development presented at the national meeting of the Society of Automotive Engineers Washington, D. C. April 14, 1965 U.S. DEPARTMENT OF COMMERCE MARITIME ADMINISTRATION f ^N t ABSTRACT This paper briefly reviews the economic history of the merchant marine, and discusses the effect that a declining merchant marine may have on the nation in general. The text discusses six requirements that a ship concept should have in order to meet the requirements for successful opera- tion under American flag operations and compares our presently subsidized ship operation with that of our unsubsidized foreign aircraft operations. Five of the most promising surface effect ship concepts are discussed and a comparative analysis is made of the five machines in operation. One of the more promising ships was studied in a hypothetical transoceanic route situation in sizes from 100 to 10,000 gross tons. Finally, the surface effect ships are compared against the six criteria originally laid down as requirements for successful economic merchant marine ship operation. The paper concludes that surface effect ships are economically and theoretically sound, technically feasible, and that such ships would be insensitive to the labor rate differential be- tween American labor and our foreign competition. Further, the SES has vehicle characteristics capable of restoring the American merchant marine to its original vigorous state as a world leader in marine transportation, without requiring Government subsidy to survive. Figure 1 SURFACE EFFECT SHIPS - A NEW ERA IN COMMERCIAL OCEAN TRANSPORTATION Introduction Happy coincidence made this nation one of the most outstanding maritime powers of the world from the early colonial days until about 1860. These were the days of fine wooden ships and in- cluded the beautiful Clipper. Our early immigrants included skilled English shipwrights, and high standards of workmanship were fostered by a progressive apprenticeship system. These people settled in the coastal areas of this new nation that were so richly endowed with great forests of white oak and pine. These virgin forests furnished the shipbuilder with the basic materials to create our fleet of wooden ships. The large coastal fishing fleets operating in those times pro- vided the natural source for the manpower needed to operate our growing shipping industry, for foreign trade represented a large portion of our national income in those days, thus keep- ing the importance of shipping uppermost in the nation's mind. The ship operators were rated among the wealthiest and most able men in the growing American economy. The speedy and hard driven Clippers continued to demand the best cargoes and rates until about 1860, but the seeds of their economic end were sown years before by an American named Robert Fulton. Although Fulton is credited with inventing the steamboat, it was the British who gained the advantage. The British iron industry, substantially more advanced than our own, could build the faster, safer iron hulled steamships at substantially less cost than they could be built in this country. In the period 1855-59 American ships carried 74% of the goods imported and exported from this country; in 1866 this had dropped to 32%. It only took twenty years for the steamship to move from an experimental ship to a fully competitive state. American ship owners were contemptuous of the new development and the lag- ging transition of the fleet from wood to iron dissipated many of the advantages achieved by the industry in the previous 100 years. Except for wartime periods these trends that began in the 1860 ' s have continued downward in spite of new technology and Government subsidy, until today less than 10% of our export tonnage moves by American ships. Today we find an industry that may be down, but it is far from being counted out. Labor, management and Government interests are closing ranks in an all-out attack on the major problem of revitalizing our industry. 2 In a recent interview, Robert V. Roosa, former Under Secre- tary of Treasury, pointed out the seriousness of the high cost of delivering American exports overseas with the resulting over-all high cost of U. S. goods to the foreign consumer. This over-all cost was pointed out as a "great barrier to U.S. sales abroad and a major headache for the balance of payments". (It should be noted that shipping costs are the same whether or not the cargo moves by American or foreign flag vessel. Nevertheless, these shipping charges make a substantial con- tribution to the over-all cost of American products bought overseas.) The same problems were discussed by Nicholas John- son, Maritime Administrator, in a recent paper discussing the problems and values of the American merchant marine. These discussions by Mr. Roosa and Mr. Johnson summarize a widely held belief that the maritime industry's problems are problems that affect the welfare of our nation. Perhaps a more competi- tive merchant marine could help to lower these costs. Is Technology the Answer ? The problem of revitalizing the maritime industry is complex and has many facets. These are all being explored in concert and many solutions to individual problems will be found, and will contribute to a new merchant service. It may prove pain- ful. A recent paper 4 by an outstanding transportation economist, D. A. Lane, has provided some of the material for this intro- duction. Two paragraphs on the influence of technology are revealing and worth quoting. "In our modern world, the rate of international migration of technology is ever-increasing. The advantages that techno- logical leadership bestows, then, are ever more brief. Never- theless, if a technological advance is sufficiently revolution- ary, it could still overpower (and substitute for) high labor and/or capital costs for some time. Perhaps the Savannah , the hydrofoil, or the ground effect machine approaches have this potential. " "Outside of the field of ship design, modern computerized management systems, integrated transportation systems, and con- tainerization offer the United States a potential for such large scale innovation. The evaluation of a fully integrated transportation system together with containerization would have the effect of "Shoving Ohio into Europe". Such a result would obviously increase both exports and imports and thus provide an expanding market in which American ship operators should be able to get at least a proportionate share. Moreover, should these innovations take place, they would provide additional in- ducement for ship operators to employ more automated ships - an improvement about which more will be said later in this paper. Finally, it would be a long time before other nations could profitably follow our lead in such an internal transpor- tation revolution. Even in Europe, a great deal of improvement in physical transportation facilities is currently required to achieve what America now has." Between these statements by Mr. Roosa, Mr. Johnson and Mr. Lane we have an identification of the seriousness of the decline of the American merchant service to the nation, and we also have an indication of a course of action which could reverse this downward trend of the merchant marine and increase its economic well-being, as well as improving the marine industry's contri- bution to the well-being of our nation. To do this, we must provide a better service to the shipper at the lowest possible rates. Many ways and means can be found to do this, as sug- gested in Mr. Lane's statement. In this paper we will only consider the ship link and its effect on the ocean transport system. What Is a Desirable Vehicle for Ocean Transportation ? Before discussing any particular ship, it is well to review its desirable characteristics and operational limitations. The ship should: 1. Be able to operate and survive in its ocean environ- ment . 2. Be able to utilize existing facilities, e.g., canals, channels, pier facilities and harbors to the greatest extent possible. 3. Be of such size, shape and arrangement to substantially reduce the required turnaround time and minimize the handling of cargo in port. 3 4. Offer a substantially increased, more flexible service to the shipper at a cost at least equivalent to pre- sent costs, and at a lower cost if possible. 5. Be as insensitive to construction and operating labor cost as possible. 6. Be capable of being operated and maneuvered with the experienced merchant seamen existing in our fleets today with a proper retraining course. The preceding list of requirements would seem to indicate that some "magic carpet", costing nothing to build or operate, would be required to accomplish such a task, and, clever as our nation's engineers are, such a carpet is still some time in the future. However, in a land that can build the polaris weapon, the jet airplane, a network of super highways, produce enormous food surpluses, and put men into outer space, a nation planning commercial supersonic aircraft, men on the moon, and a whole raft of equally important technical achievements, I ask you to seriously question with me whether or not this ex- panding technology can be employed to provide a better shipping system that meets the requirements which I have previously laid down. I am positive that it can be done if the proper national emphasis is provided. Let us take a closer look at the requirements that the ship link in our ocean transport system should possess. (1) Ability to Operate in the Ocean Surface Environment The sea is a fearsome thing to behold in a violent winter storm. This is especially true when it is seen from the deck of a violently pitching ship (Figure 2) with a cold howling wind driving spray through the air like hail. Man has feared the ocean from the beginning of time because of its tempera- mental and changing mood, but it is time that our oceans be looked upon objectively, and with due respect, for we can measure, see, feel and understand the environment in which we must make our vehicle capable of operating. Surely, this is nothing like the technical problems involved in determining environmental factors in space travel or our high speed air- craft. A substantial number of high grade, well-equipped air- craft are lost to the natural elements each year, but it is a rare case when a modern well-equipped ship is lost due to natural causes. Most modern ship losses are attributable to errors in human judgement. Figure 2 Today, we have extensive knowledge of weather patterns which permit vessels with sufficient speed to skirt the edges of the worst storms. We have acquired a tremendous knowledge of sta- bility and control of vehicles through research programs in- volving missiles and aircraft. This knowledge has been demon- strated in the marine industry by vehicles like the U. S. Navy's large hydrofoil ship "Highpoint", the British Hover- craft, and the Maritime Administration's hydrofoil ship 'Denison". One must conclude that machines can be made to transit the surface of the ocean at speeds of 100 knots or greater. In reaching such a conclusion, the assumption is not made that the vehicle will run at these speeds in 60 feet waves anymore than we would expect a jet airplane to plow headlong into a massive thunderhead. (2) Ability of Vessel to Utilize Existing Facilities Our "magic carpet" has restrictions other than rough water WATER SURFACE B-Beam D-Draft D-Draft 200 40 5 Maximum (At rest in water) (Underway) Fig. 3 Maximum Ship Dimensions and poor visibility. Billions of dollars worth of marine ser- vice facilities exist today and the industry will move slowly to change these, therefore, our ship must be capable of being built in existing manufacturing facilities, loaded and unloaded at existing pier facilities, and navigated on existing water- ways. Simpler, less costly facilities may eventually make existing facilities obsolete. Figure 3 indicates possible maximums by which we may guide our ship design. A machine within these dimensions could probably navigate most of the major harbors of the world. There is little question that many variations and shapes would evolve for special ser- vices and operations. (3) Arranged for Minimum Cargo Handling and Quick Turnaround Time Figure 4 shows what the idealized cargo handling operation might look like. All cargo would be converted to unitized packages (containers or pallets) . Cargo would be loaded and unloaded by roll-on roll-off methods or an overhead crane such as Sea- Land or Matson uses in their container services. As you can see, our "magic carpet" is beginning to take shape. It is a rectangle and probably two decks high or deep for car- go storage. Total capacity would be 500-5000 tons of con- tainerized cargo. Fig. 4 Idealized Cargo Handling Configuration (4) Offer Increased, More Flexible Service to the Shipper At No Increase in Cost Unlike domestic land transportation, the manufacturer who wants to move his merchandise overseas is severely limited by available equipment. Figure 5 gives a rough idea of the ser- vice available. For example, a manufacturer in New York has a consignment of automobile parts for San Juan, Puerto Rico. He is restricted to two choices. First, he can fly the parts and have them delivered the next morning - less than 24 hours service; how- ever, he will be required to pay over 20 cents per ton mile for this service. Or second, he may elect to package his parts in a container and take advantage of the ship service at a substantially lower cost, approximately 5 cents per ton mile, but this will not be delivered until the fifth day. The shipper's automobile parts actually have an inventory value that would permit a shipping cost of perhaps 10 cents per ton mile, but no such service exists. There is a substan- tial vacuum in the ocean transportation spectrum. From this discussion, we can now identify two other require- ments for our "magic carpet". First, its speed needs to be between 30 and 200 knots. Second, it must be able to deliver cargo for a cost between 2 and 20 cents per ton mile in order to fill the transport vacuum illustrated in Figure 5. 1 1000 2000 3000 RANGE, NAUTICAL MILES 4000 Fig. 24 Compares 5 Ships - Payload vs. Range Figure 24 compares the five machines in their 100 ton size by plotting range vs. payload. This curve brings out the effect that large fuel requirements have on the cargo carry- ing capability of the various ships. 23 EFFECT OF VEHICLE GROSS WEIGHT ON TRANSPORTATION COSTS FOR DIFFERENT ROUTES DOLLARS PER TON NAUTICAL MILE .12 | LOS ANGELES- HONOLULU IOOO 3 4 5000 6 7 8 VEHICLE GROSS WEIGHT - LONG TONS 9 10,000 Fig. 25 Sidewall Ship, Cost/ Ton-mile vs. Gross Weight Figure 25 is the results of a special study of the CAB showing the effect of size vs. cost per ton mile. These costs were developed for hypothetical routes from New York to Europe and for the Los Angeles-Honolulu- Tokyo route. 24 Discussion of Study Results Early in this paper we explored six requirements for a suc- cessful vehicle that could recoup our position as a vigorous maritime power. Next, five possible concepts were reviewed and briefly compared. For purposes of this discussion let's compare the captured air bubble concept with the six require- ments. (1) Ability to Operate in the Ocean Surface Environment The large vehicle contemplated would have the capability of sustained high sea speed, 40-50 knots in waves as high as 30 feet, 70 knots in eight feet waves, and 100 knots in smooth water. In addition, the ship's captain would have sufficient speed capability to avoid or outrun major storm centers much the same as aircraft do today. In the event that the craft was caught in a major storm area, then the ship would proceed at a slow, cautious manner like any other ship. Our studies indicate an ability to average over 70 knots 95% of the time. These values were used in determining the cost per ton mile vs. range curves, but may not represent the most economical speed. (2) Ability of Vessel to Utilize Existing Facilities Again, viewing the captured air bubble concept, it can be seen that the machine will be able to operate in most of the world's waterways. Its principal disadvantage is the rather broad beam compared to the rest of the ship's dimensions. The size craft that we are discussing here would probably not be able to use the present Panama Canal or some of the more restricted ship canals in the world. There is little question that many variations and shapes would evolve for special services and operations. Also, research presently being conducted may be able to reduce the broad beam that is presently required for stability. (3) Arranged for Minimum Cargo Handling and Quick Turnaround Time These craft will be weight limited, a situation which will make them ideally suited for roll-on roll-off or containerized cargo service. Excess volume inside the cargo space should permit wide runways for forklifts and other cargo handling 25 equipment. In addition, the ship will have a basic rectangu- lar shape and probably be two decks high which should make an ideal cargo stowage arrangement. Being comparatively small and dealing only with unitized cargo, these craft may well introduce an entirely new approach to handling cargo from that used today. First, the cargo would be packaged in containers or on pallets that would permit it to be moved on and off the ship quickly. Second, it would probably be delivered in lots of 1,000 to 1,500 tons, several times a week, instead of 10,000 tons once a month. This should permit a smoother flow of cargo through the port. Third, and last, the smaller, possibly amphibious ship would probably elect to operate out of many smaller inland ports that are now bypassed by the larger displacement ships. This new port operation procedure could cut port costs substantially. (4) Offer Increased, More Flexible Service to the Shipper at No Increase in Cost It would appear that the machine concept under discussion could carry cargo at speeds in the order of 5 times that pre- sently attained for the same, or perhaps slightly less, cost than that now being paid. This increased speed would permit more frequent sailing and certainly a much greater service. Our trading distances would shrink until Ohio would indeed be shoved into Europe. Future improvements may lower costs of operating these craft, and improved operations at the termi- nals may allow substantial reductions. (5) Be as Insensitive to Construction and Operating Costs as Possible Figure 7 compared the cost of operating an American ship and an American aircraft. Now look at Figure 26. It can be seen that, like the aircraft, the surface effect ship takes on characteristics which are not readily affected by lower labor costs available to our competitors. It can be seen that fuel and maintenance predominate. There is little question that our competitors will take ad- vantage of these new ships, but once an operating balance has been reached, the advantage will be to the most competitive and aggressive manager. 26 DISPLACEMENT SHIP SURFACE EFFECT SHIP CARGO AIRCRAFT 12$ 3% rag* Crew Wages 28% h% 13% 9% Amortization 1% 1% k% Fuel Maintenance Other Fig. 26 Comparative Operating Cost of Ships, Surface Effect Ships, and Aircraft The British may well be the first country to put these craft into service, for they now have a large pool of technology and an industry base established that can build these machines This work has been courageously supported and encouraged by the British Government in a manner reminiscent of the early iron hulled, steam ships. (6) Be Capable of Being Operated by Existing Maritime Personnel Introduction of the surface effect ship among the world ' s 18,000 or so displacement ships will not cause any great immediate change in the maritime work force. If the surface 27 effect ship is to be commercially attractive, it will have to stimulate new traffic as well as divert existing traffic. In a world of growing trade, the net result will be a reservoir of new and highly skilled jobs for merchant seamen who are experienced ship handlers and who know the sea from intimate association. No serious study has been given to the problem of crewing the surface effect ship to date, but there are obvious require- ments - these machines would be highly automated, navigation and control at speed of 100 knots would become a substantially more difficult task, and routine maintenance aboard ship would not be possible. It is doubtful whether ship's crews would live aboard these craft. More than likely, a crew rotation would occur at the end of each voyage in the same manner air- craft crewmen are rotated today. The individual crews required to operate the craft would probably be substantially smaller than required for present day automated ship operations, but the multiple crew aspect would likely require more skilled men than our present ships. These ships would create a new work force at the shore termi- nals in addition to the longshore workmen required to load and unload the vessels. Maintenance activities now performed aboard ship while underway would need to be accomplished in the very short period while the ship was in the harbor. Most important to the labor element of our industry, in my opinion, would be the removal of the unfair stigma that now blames high labor costs for the economic woes of the industry. Technology will have finally provided the vehicles and systems necessary for the maritime labor force to increase its pro- ductivity to the point where labor costs are not the overriding element of cost in cargo movement. This can be done and has been demonstrated in the air cargo services. Conclusions It would be a serious disservice for me to paint a rosy pic- ture of a future merchant ship concept without pointing out that many major technical and social pitfalls will need to be crossed before the "magic carpet" ship can be put into ser- vice. But in perspective, when one compares the problems of building surface effect ships, of the characteristics described in this paper, to those of landing a man on the moon, or building a Mach 3 passenger plane, or even a network of 40,000 28 miles of superhighways over our country, the problems of the surface effect ship diminish rapidly. In summary, I have concluded that: 1. Large surface effect ships suitable for open ocean opera- tions are technically feasible and theoretically sound. 2. Economically, the SES should be able to compete with pre- sent forms of transportation while providing a much greater transportation speed and more flexibility to the shipper. 3. The SES concept would provide a major advantage to the American merchant marine, regardless of which country develops it, because it is less sensitive to the labor rate differential between American labor and that of our foreign competition. 4. The SES has vehicle characteristics needed to restore the American merchant marine to its original vigorous state as a world leader in marine transportation, not requiring Government subsidy to survive. This in turn should have its beneficial affect on American world trade by helping to increase exports and further augment our favorable trade balance, which will influence the gold outflow prob- lem. 5. Project "magic carpet" should be pursued vigorously. 29 REFERENCES 1. Kirkland, E. C, "A History of American Economic Life", third edition, Appleton-Century-Crof t, Inc., New York, 1951, p. 217. 2. Mr. Robert V. Roosa, Under Secretary of Treasury (Resigned), "U. S. News and World Report", February 8, 1965, p. 53. 3. "The American Partnership: The U. S. Merchant Marine", by Nicholas Johnson, Maritime Administrator, U. S. Department of Commerce. 4. "The Future of the World Shipping Industry", by D. A. Lane, Arthur D. Little, Inc., October 12, 1963. 5. "A Review of Surface Effect Ships Suitable for Commercial Marine Service and Their Economic Potential", Booz-Allen Applied Research, Inc., 1965. ■wgg