RECENT DEVELOPMENTS IN SOVIET MERCHANT SHIPPING

Created: 8/1/1973

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DIRECTORATE OF INTELLIGENCE

Intelligence Report

Recent Developments in Soviet Merchant Shipping

cia historical review program release as sanitized

3

Recenl Developments in Soviei Merchant Shipping

By the end2 the Soviet merchant fleet consistedhips7 million deadweight tonsver the las! two years, annual deliveries to the fleetWT, about one-half the yearly additionsive-year plan. One immediate consequence of this low level of deliveries was the failure of ton-mileage lo grow2 for (ne first rimeonnage carried by Ihe fleet, however, increased and was in line with plan targets.

Although of recenl construction, the Soviet fleet is backward in modern marine technology. Ships are small by wortd standards, and the fleet lacks innovations found in Western fleets such as roll-on, roll-orf vessels and LASH (lighter-aboard-ship) barge carriers- Similarly, progress in conta menial ion Lags: Soviet container ships are smaller and slower and remain noncompeutivt with Western counterparts.

Important changes occurred in Ihe pattern of fleet operations2 and the first halfesult of the signing of Ihe Maritime Agreement with Ihe United Stales inarge-scale Soviei shipping lo US ports was possible for the firsl timehc Soviets extended three existing cargo lines andew passenger line to US ports earlyith Ihe increase in calls at US ports, the USSR designated six US and Canadian companies as steamship agents.

As for non-US liner operations, the Soviet fleelajor gap in its worldwide network of liner services by adding Caribbean and Central American ports lo an existing line between Europe and South America. The most significant development in Soviei (ramp operations was the use of the tanker fleet in major new inlerpori movements. For ihe first time other thanack haul, the Soviet tanker flee! moved inlerpori (cross trade) cargoajor industrial power when itetric ions of crude oil lo Japan from Indonesia. This developmcnl suggests Ihe capacity of lankerj in the Soviei fleet evidently exceeds Soviet requirement for the carriage of its own oil cargoes.

The US-SovicI Maritime Agrccmcn!ecessary condilion for implementing ihe record sale8 million ions of US grain to the USSR negotiated inoviet ships movedillion Ions of grain out of US ports in the periodf the7 million tons shipped in rataloviet carriage was less than one-half the amouni authorized under Ihe terms of Ihe Agreement. The small reserve capacity of the fleet and ihe existence of prior commitments apparenlly precluded Ihe allocation of additional Soviet tonnage lo this lask.

Note: Comments and queries rcgardin* this report are welcome.

discussion

Growth of Heel2

Th* merchant fleet of thc USSR increasedhips

4 million deadweight torn (DWT) at year's1

totalingillion DWT at year's2 (seeespite

the goals ofive-year plan calling for annual deliveries of one million DWT, additions to the fleet during the first two years of thc plan have averagedWT. Thisess than two-thirds of average yearly deliveries. Although the Soviet fleet ranks as the seventh largest in theosition i( has heldt accounts for only slightly more thanf world tonnage, as shown in Ihe following tabulation;

Million

Deadweightof

as of2 World Total

Total

Liberia

Japan

Uniietl Kingdom

Norway

Greece States

(active)

USSR l

Olher

ith two-thirds of its inventory less thanours old. the Soviet fleet is young by world standards. Yet in technology and size of ships, the fleet lags well behind the fleets of major non-Communist maritime states. Whereas other countries operate tankers as largeWT and bulk dry cargo ships a% largeWT. thc biggest tanker in Ihe Soviet fleet0 DWT and Us largest bulk0 DWT Moreover, the largest full container ship in the Soviet fleet at the end2WT vesselpeed ofnotsapacityontainershardly competitive with Western container ships with speeds ofonots and space for as manyontainers. Two other recent innovations introduced in Western fleets, the "Ro-Ro" (roll-on, roll-off) horizontal-loading vehicle carriers andSH (lighlcr-aboard-ship) barge curriers, have no counterparts in thc Soviet fleet.

USSR: Growth cf thc Meretunl h'ktl

D*hnd fromIjij.

he lull in deliveries io ihe Soviet fleet is attributable in pari to (a) thc recognitionimited need for additional vessels of the sizes and types already in the fleet, and (bl the inability of larger tankers and bulk carriers to enter Soviet ports until programs for deepening the ports are completed. Work on deepening certain Black Sea 3nd Far East ports is under way and should be completed in thc next two years oresult of this dilemma, deliveries of tankers, which averaged moreear, dropped to0 DWTith no ship larger0 DWT. Deliveries of dry cargo ships dropped less precipitously.WT added lo thc fleet2 was two-thirds ofverage. New classes introduced2 included the first dry cargo vessel in Ihe fleet of more0 DWT

T. The fun uiuU or the iwo cbsw* of thipt thai ml) require *ete deepwaici laaUUei. IheWT Krym-cUtt linkersWT combination ml and dry bulk carom buUr In Poland, will probably not be delisted4 it uie ejjllc*i.

ut

s ofec

Tonnage Over Previous Year

During Yew

Dead-

Dead-

Dead-

Ton*

Tons Percent1

Tons

(Ihe MikhaDWT bulkhe first class of full container ships of moreWTnd three classes of conventional dry cargo ships with design features permitting their use as purl container ships0 DWT;0 DWT; and LeninskayaWT).

n the first halfoscow continued its cautious approach lo containcrization and maintained its preference for ships capable of carrying either conventional or containerized liner cargo. Of the seven new dasses of dry cargo ships introduced throughnly one. the Aleksandr' Fadeyev. is lutedull container ship, and its container capacity is lowessel of its DWT. Thc characteristics of all seven classes are given in the tabulation below:

Fadeyev

Panfilovijy

cargo

Zhokov

cargo

Moskvy

timber

cargo

Novikov

timber

Grabar'

limber

slowdown in deliveries ef ships affectedhen Ion-mileage failed to increase for thc first time sinceturnover2 amountedillion ton-miles, aboutulfillment of the plan goalillion ton-miles bynow in jeopardy. Growth of total tonnage carried by the fleet wastarget, an increase ofillion tonshegrowth rate needed lo meetillion ions targeted forof the pun period is 5%

Maritime Relations with the United States

grain purchases by the USSR2 and thea US-SmTct Maritime Agreement effectiveovember1 have great

? AlUMMipt IM Ape*menlonclobri. il dtd noi become eiieem* untilovember,ormab wu worked oul lot ehaiitr met lo beto US shlw bv Ihe USSR (ori

bearing on present and future operations of thc fleet. The grain sales would not have been possible without assurance from the International Longshoremen's Association (ILA) that its members would cooperate in loading grain for the USSR on ships of all flags in Great Lakes, East Coast, and Gulfhe ILA commitment stemmed in turn from the stipulation in the Maritime Agreement that the US and Soviet ships would each have the opportunity to carry at least one-third of US-Sovict seaborne trade.

Other benefits accrued to the USSR from the Maritime Agreement. With the threat of an ILA boycott lifted, Soviet tramps and liners were able to enter US Great Lakes, East Coast, and Gulf ports for thc first time0 to participate in the movements of cargoes in US trade with both the USSR and third countries. This use of Soviet ships avoids expenditure of hard currency for the movement of Soviet cargo and earns hard currency through the movement of cargoes for foreign shippers. Atf the most important US ports, Soviet ships now enter routinely after giving four days' advance notice. Under previous US port security regulations, visits were allowed only with permissionwo-week advance request to enter. Calls at most other US ports still take place under this two-week advance request procedure.

Movement of grain, which involves bulk cargoes and ships operatingramp basis, has dominated Soviet shipping activity in thc US trade since the Maritime Agreement came into effect. Nonetheless, officials of the Soviet Maritime Fleet also have been expanding their liner services to US ports and soliciting non-grain cargoes for carriage by Soviet tramp vessels to and from the United States.

Soviet-US Liner Services

from the introduction of container carriage onconventional lines, the major thrust in Soviet liner operationshas been thc extension of service to US ports opened as athe Maritime Agreement. When the Agreement came into effect,service to the United Stales consisted ofingle linethe Far East Steamship Company (FESCO) of Vladivostokand West Coast ports in the United Stales and Canada. Thisonly between Japan and Canadahen calls atwere added on an experimental basis. Currently, the line offers moreto USncluding Seattle, Portland, Oakland, and- than to Canadian ports. Inontainer serviceon the route through use of conventional Pula-class cargo liners

I This problem has never exnied on the WMl Coast where anoUieiunion has pit fraction.

modified lo carry containers on deck. Inhc Aleksandr' Fadeyev. the largest full container ship in the fleet, was assigned to the line (see the photograph).

The Soviet Full Containersftip Aleksandr' Fadeyav at the Port of Lang Beach

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y the end ofhe USSR had added US ports to three oilier existing lines. One of these lines provides casfbound sailings only, from the Gulf ports of Houston and New Orleans to West European ports in thc Antwerp/Hamburg range and Leningrad. This service, which began operatingonthly basis ins part of the Bailie Steamship Company's Baltic/Western EuropeWest Coast of South America/Caribbean service. The other two lines that added US ports of call were the Murmansk Arctic Steamship Company's Ballic/Weslcrnastern Canada/Great Lakes line and thc Black Sea Steamship Company's Blackastern Canada/Great Lakes line. Both added US Great Lakes pons (Chicago and Milwaukee) to the itineraries of ships that formerly called only at Canadian Great Lakes ports. Calls at USegan in April immedialely after the opening of thc shipping

*:

season on the St. Lawrence Seaway. The Baltic service uses only conventional cargo liners, thc Black Sea/Mediterranean service used only conventional vessels until the current Seaway season, when one Scstrorelsk-class container ship was assigned to the line.

The USSR's Baltic Steamship Company apparently plans toew line on the Baltic/Westernast Coast of the United States route during the second halfn June the Journal of Commerce carried advertisements alerting shippers lo the forthcoming announcementwice-monthly service between US ports north of Cape Ha it eras and West European pons in Ihe Antwerp/Hamburg range and Leningrad. Ships assigned lo the route will be conventional cargo liners adapted to carry containers on deck. US ports of call will be New York. Philadelphia, and Baltimore.

In3 the Baltic Steamship Company inaugurated the USSR's only passenger line to Ihe Untiedroject Soviet shipping Officials have been pushinghc line offers sailing* between Leningrad and New York via London. Bremerhavcn. and Le Havre,

In new of burgeoning maritime relations wilh the United States, the USSR hasumber of US rams as its agenls. These firms include Texas Transport and Terminalnc. of Houston, which serves as agent and stevedore representative for all Sovict-ownrd and chartered shipping in Gulf and East Coaal ports; Nordship. Inc. of Chicago, which handles Soviet shipping in Great Lakes pons; and two firm* on the West Coast. Interoccan Steamship Corporation of San Francisco, which takes care of Soviet ships in Oakland and Long Beach, and International Freight liners.hich covers Seattle and Portland. Internationalubsidiaryanadian firm of ihe vimc name located ineportedly is com roiled by So* in Hot. live organization in ihe Soviet Minislry of the Manlime Fleet responsible for overseas representation.

Growth in Other Liner Services

USSR added only two completely newts network from the end1 ton thatwas operatingcheduled lines. Of these.re on routes whereare in Soviet trade andre in ihe cross trades where mostbetween non-Soviet ports (see TableOnly four of thein the conference system.

ne of ihe newontainer feeder line for the Trans-Siberian Landbndgc (similar lo thai opened1 between Nakhodka and Japan) on Iheong Kong route

6

tank*

ussr: intenstv^cmrrdj (unW mt 1 1

that started inhc otheraltic Steamship Company service linking Soviet and Swedish ports on the Baltic with Italian and Egyptian ports on the Mediterranean initiated at thc beginning

In addition to thc new services, the Baltpacific service, which was opened by the Baltic Steamship Company in1 on the Soviet Baltic/Westernest Coast of South America route, was expanded. At thc end2 this service added calls in Jamaica, the Dominican Republic, Haiti, Guatemala, and Honduras, thus closing one of the few remaining gaps in thc USSR's worldwide network of cargo lines. During thc first quarteraltpacific extended its operations to include US and Mexican ports on thc Gulf of Mexico. The final important change in thc network of Soviet cargo lines occurred when the Estonian Steamship Company's unilateral Baltic/Westernest Africa serviceimilar joint East German/Polish service (the Uniafrica Line) were combined early

Soviei progress in the seaborne container era has focused entirely on cargo liner operations. By5 Soviet lines were in container carriage, compared wilh II at the endhe newong Kong line openedontainer service, and container-carrying ships were assigned to three existing routes: Soviet Farest Coast of Canada and the United States. Soviet Baltic/Western EuropeAustralia. and Blackastern Canada/Great Lakes. In spite of thc growth in the number of containerized services, the USSR remains in the backwater of containerized seaborne transport. As indicated earlier, container-carrying vessels being added to the Soviet fleet are much smaller and slower than their Western counterparts. No change will occur untilDWT East German-built Mcrcur-class full container ships enter the fleet. TheWT) Soviet-built gas turbine Atlantika-class full container ship is reported lo have been on the drawing boardshe current status of this project is not known.

Growth in Tramp Operations

thc endramp operations of thc Sovietinfluenced only slightly by the Maritime Agreement and theWith few exceptions, all the tramp activity in US-Soviet tradeof grain. Soviet vessels apparently did not handle any(cross trade) cargo between US and third country ports,large-scale Soviet participation in such voyages may becarriage, however, will occur infrequently as long as the Uniteda major supplier of grain to the USSR and priority is givenmovement of thisew cross trade voyages occurred in the

first halfnd the USSR apparently has been negotiating to bring Swedish iron ore pellets to the US East Coast using vessels on the back haul after delivering grain to thc Baltic.

the notable developments in Soviet trampof US-Soviet trade2 was the appearance of major newmovements by the Soviet tanker fleet. The largest of theseof crude oil from nationalized fields in Iraq to BulgariaEast0ri0ndSimilarly, Soviet tankers carriedons offrom Indonesia to Japan. This arrangement with Japanese shippersbecause it did not involve shipments on Soviet accountto most of the Iraqi crudeoreover, for theSoviet tankers were observed moving interport cargo for ancountry other thanack haul. This developmentthe supply of tankers of the sizes already in the Soviet fleet hasthe USSR's need for such vessels in the carriage of its own

The Movement of US Grain to the USSR in Fiscal3

Asons of US corn, barley, and oats remained to be shipped to the USSR under US commitments for fiscal yearhichillion tons. All such cargoes moving prior2 and all grain shipped under these and subsequent commitments were handled by third-flag ships throughS ships were not in the trade, because their high operating costs made them noncompetitive in the world charter market. Soviet shins were out of thc trade because of the threat ofA boycott at ports cast of the Rockies and because of the high cost of loading feed grains on the West Coast for delivery to Black Sea and Baltic ports.

Record grain sales of8 million tons in3 raised the quantity of grain to be moved by3 lo more2 millionreakdown of the commodity composition of Ihis tonnage is as follows:

Thomand Ton*

Spillover from

2 Commit men Is in

3 Total in be

moved3

470

ven after conclusion of the major sales contracts for wheat and corn in July and earlyhe pace of shipments lagged. Soviet ships entered the trade in September when cargoes of wheatrain acceptable at Soviet ports on the Pacific) first became available at West Coast ports in the Portland, Oregon, area. For the next two months, Soviet loading activity was confined to these ports. Additional commitments for third-flag ships were likewise inhibited because of thc likelihood that provisions in the forthcoming Maritime Agreement alloling cargo in US-Soviet trade among US. Soviet, and third-flag ships would be retroactiven this maze of uncertainty, Ihe volume of shipments dropped off steadilyillion tons in August to lessons in November (see

Tabic 3

Shipments of US Grim ro ihe USSR, by Carrier1

Thousand Metric Tom

CVrwr

Total

3

II

Becaiw of (ivundir.

add lo ihe ictij) shown.

onditions changed rapidly once the Agreement went into effect onovember. Soviet ships entered US Gulf and East Coasl ports for thc first time, and US-flag ships made their initial appearance in thc trade. Shipments in December rose loillion tons, double the November total, with Soviet shipsons.

10

GONMlJliN

Soviet participation in the grain tradeeakons inustained movement at this rate would haveWT of shipping, orf Soviet fleet capacity available at the endhe USSR was either unwilling or unable to divert this amount of tonnage despite the fact that the use of non-Soviet ships on the booming world charter market would incur even higher expenditures of hard currency. Soviet carriage of grain dropped each month after March and by June was down to0 tons. Seasonal factors such as the resumption of timber exports from ports in the Soviet North, the mobilization of shipping for the annual movement of supplies to points along the Northern Sea Route, and thc resumption of shipments of Canadian grain from St. Lawrence and Hudson's Bay ports may explain part of this falloff. The drop also mirrored thc limited reserve capacity in the Soviet fleet.

Byllillion tons of the more2 million tons in US grain export commitments to the USSR were shipped, as shown in the tabulation below.illion tons of this shortfall was unexpected. Soviet representatives in2 agreed to deferred shipmentillion tons of com untilhen it had become clear that this tonnage could not be moved earlier because of rail and port congestion.

Million Tons

Rye Soybeans

Total to be moved

in actually

moved in3 into

4 Becau* of founding, components miy not add to the total* ftown.

4 USirily >ouldbeen peaterumber of (tup* earmarked for Ihe pain moreo the USSR had nol accepted more lucrative cha/ier offers In oihct tildes duilnf the period of uncertainly before the Aeccmcm came mio effect.

f7 million tons moved inillion torts were on Sovietillion tons were on US ships,9 million tons were on third-flag ships (seeor the entire period, the Soviet and US fleets carriedespectively. Their shares increased tof the effective date of the Maritime Agreement is used as the benchmark. In any case, carriage by both fleets fell far short of the percentage shares provided for in the Agreement.

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