ANNUAL REVIEW OF MERCHANT SHIPPING IN THE SINO-SOVIET BLOC, 1959 (RR EM 60-14)

Created: 8/10/1960

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CIA HISTORICAL REVIEW PROGRAM RELEASE AS9

ECONOMIC INTELLIGENCE MEMORANDUM

ANNUAL REVIEW OF MERCHANT SHIPPING IN THE SINO-SOVIET9

CIA/RR00

CENTRAL INTELLIGENCE AGENCY Office of Research and Reports

FOREWORD

Thlo neaiorar-duoneeries of annual publications that arc designed to present in summary form the significant developments In transportation in thc Sino-Soviet Bloc during each precedingyear. In addition to the memorandum on merchant shipping, thc series vlll include two other annual publications, one an developments in Inland transportation In the Bloc and another on civil aviation In the Bloc.

This memorandum has been coordinated vithin this Office but not with other USI3 agencies.

I.

II. USSR

of thc

of the

of

0

III. European Satellites

1. Growth of the

2- Seaborne Foreign Trade .

Growth of the

Adequacy of the

Fleet Earnings and

a. Hew Liner

, 5. Prospects for

Growth of the

Adequacy of the

*

Growth of the

Adequacy of the

Other

1. Growth of the

?. Adequacy of the

Crowth of the

Adequacy of the

C.

H.

IV. Communist Far

1. Growth of the

;;. Adequacy of the

3. Proopecto0

Appendix

Statistical Appendix

Tables

of the Merchant Fleets of the Sino-Soviet

Foreign Trade of the USSR and the European

of the Merchant Fleets of tbe European

k. Estimated Performance of the Merchant Fleets of the

Communist Far

Fleets of thc Sino-Soviet Bloc, by Type,

Number, and

Fleets of the European Satellites, by Type,

Number, and

Foreign Trade of tbe USSR and the European

Satellites, by

IV. Communist Far

Growth of the

Adequacy of the

Prospects for

Appendix

Statistical

Tables

of the Merchant Fleets of the Sino-Sovlet

Foreign Trade of thc USSR and the European

of the Merchant Fleets of the European

k. Estimated Performance of tbe Merchant Fleets of the

Communist Far

Fleets of the Sino-Sovlet Bloc, by Type,

Number, and

Fleets of the European Satellites, by Type,

Number, and

Foreign Trade of the USSR and the European

Satellites, by

ANNUAL REVIEW OF MERCHANT SHIPPING IK THS SI HQ-SOVIET BLOC

J2S2

I. Introduction

The combined merchant fleet of the Sino-Soviet Bloc expanded rapidly. and long-range plans50 are even more ambitious. Expansion of the fleet capacity of the Bloc during the precedingas about proportionate to expansion of the capacity of the world fleet. Bloc capacitybyercent compared vithercent for the world- however, while the world fleet grew byercent, the combined Bloc fleets grew byercent.

The fleet of the USSRrew at only about the same rate as tbe world fleet, but at the same time the fleets of theSatellites and Cotsaunist China made startling advances and are becoming sizable enough to merit serious attention. The fleets of the Satellites increasedercent055 The oceangoing fleet of Communist China increasedercent05ercent5 From comprising onlyercent of the total Bloc fleeteadweight tonsf the total fleet capacityillion DWTthe fleets of the Satellites and China grew so that they made upercent of tho totalDWTotalillion DWT.

Original plans of the European Satellites (and trends for those Satellites not announcing plans) called for an increase In fleet capacity0 of aboutercent above the level As more and more attention was paid to maritime transportation, however.

The estimates and conclusions in this memorandum represent the best judgment of this Office as of

The discussion of ships and fleets in this memorandum refers only to shipsross register tons (GRT) and above and does not include ships in the Caspian Sea, the Great Lakes, or the USfleet. Figures for the Soviet fleet include refrigerator ships in the fishing fleet. (Gross register tonnageeasure of the cubic capacity of the cargo spacehip expressed in tons at the rateross register tonubic feet.)

Deadweight tonnageeasure of the carrying capacityhip in metric tonsthat is, the difference between the ship's displacement light and its displacement loaded.

revised plans (including revisions made as recently as

were put into effect to provide an increase ofercent at the end0 above the level5 and in turnercent5 above the level Similarly, the fleet of Communist China mode its first large expansion8 and9 bad already exceeded estimates previously made0 on the basis of earlier growth. Thc first announcement of Chinese plans for thc fleet was mude in9 and calledleet capacity of moreillion DMT5 instead ofillion DWT as previously indicated by trends.

The impetus for this sudden expansion of merchant fleet capacity apparentlyasic planning decision to take care of the rapid growth ln the volume of seaborne foreign trade of the Sino-Soviet Bloc and the consequent drain oa Bloc foreign exchange expended for foreign maritime transport services.

The merchant fleets of the countries of the Sino-Sovlet Bloc9 continued to make progress in their programs for expansion of fleet inventories, facilities, aud maritime operations. Expansion of the combined fleet of the Bloc9 was generally at the same rate ashen its deadweight tonnage Increased 13 In both the European Satellites and Communist China, netto fleet tonnage wereate of aboutercent. In the USSR, net additiona of new ships increased fleet tonnage byercent, but deliveries9 approached the highWT added" Thereoticeable trend in acquisitions toward larger and faster shipsarticularly dry cargo shipswhichfavorably in performance characteristics with the latest ships froai Free World shipyards.

In terms of numbers of ships, thc combined fleet of the Sino-Soviet Bloc9 increasedankers andry cargo ships, bringing thc totalhipsillion deadweight tons (see. Most of thc tanker deliveries were made to the USSR, whereas the delivery of new dry carso ships was divided fairly equally among the USSR, the European Satellites, and Communist China. In terms of deadweight tonnage, the USSR received moreof the deliveries made Poland and East Germany received at least two-thirds of thc deliveries made to the European Satellite fleets, ln terms of both tonnage and number of ships.

The origin of additions to the major fleets of the Sino-Sovlet Bloc9 varied greatly. Bloc shipyards accounted forercent of the deliveries to the East German fleet,ercent of those lo

elow.

Brazil, Japan, and Lebanon. Thc USSR9 alto announced plana to call on WeBt African ports in Ghana and Guinea. Soviet tankers0 arc scheduled to begin delivering some petroleum to northern Europe fron Soviet Baltic rather than Black Sea porta.

Although the merchant fleets of the Slno-Soviet Blocc increase their volume of seaborne International trade, they have not been successful ln reducing their requirements for foreign shipping to move substantial parts of this volume. The Chineseremained completely dependent on foreign flag shipping to move their international seaborne trade, which amounted to aboutillion metric tons* ddition, the Chinese relied on foreign shipping to move moreillion tons of coastal Although the other countries of the Blocreater volume of their seaborne foreign trade In their own ships, the grovth in trade vas such that foreign sbipn alsoreater tonnage9 than The USSR and the European Satellites9 had to moveillion tons by sea lo foreign trade, ofons were carried by foreign shipping (see Interms, this amount representedercent of the total seaborne foreign trade of these countries comparedercent

oreign shipping took aboutercent of the seaborne foreign trade cargo of the European Satellites, about the same shore as that carried Aboutillion tons of this cargo were carried by Free World ships rather than Bloc ships. Foreign shipping moved more thanercent of the approximatelyillion tonsln Soviet foreign trade9 compared withpercenthe increased participation by the Free World vaB due largelypercent Increase in Soviet exports of petroleum by sea.

II. USSR

A. Grovth of the Fleet

* Unless otherwise indicated, cargo tonnages are given In metric tons throughout this memorandum. ** ollows on p. 5.

The total deadweight tonnage of new ships added to the Soviet merchant fleet9 was close to the high ofWT added Fifty-six ships,- DWT, were delivered, and

The largest deliveries ta the Soviet fleet In terms ofconsisted of tankers of the Blow, outmoded Kazbek class and of modern,0WT) dry cargo ships of the Andizhan and Ugleural'sk classes, built In East Ccnaany. The most significant delivery vas the lead shipev series, the Lenlnskly Komsomol class of dry cargoWT, l8hlchfavorably in terras of speed, size, and equipment vith the latest large dry cargo ships from Free World shipyards. Deliveries of ships of this type should lead to significant Increases in tbe efficiency of the Soviet maritime fleet and to corresponding improvements in theposition of the USSR in vorld shipping.

After alloving for deletions from tbe fleet due to sinkings, retirements, and other causes, the net effect of the above additions was un Increase in the size of thc fleethipsillion DWT on8hips totalingillion DWT on" The average age of the ships in thc fleet remained at aboutears, and the average speedatnots.

B. Adequacy of the Fleet

Although the Soviet merchant fleet carried more than one-half of thc total volume of Soviet seaborne foreign tradeoth thc absolute quantity and the percentage share carried by foreign ships increased (see This grovth is largely the resultperceht increase in Soviet exports of petroleum by sea The increased tonnage required for this export vas met by foreign tankers, mostly from the Free World. oviet tankersillion tons, and foreign tankersillion tons. InSoviet tankersillion tons, and foreign tankersillion tons. For timber exports, where asmaller volume of cargo was Involved, the participation of Soviet ships In the movement increased significantly. At Igarka, the most important single port in thc USSR for the export of timber, the volume exported in Soviet ships increased0 tons80 tons

The improvement in the performance of the Soviet merchant fleet8easured inf cargo turnover, was significant, but lt vas less than In former years.t 8

Details are shown in thc Statistical Appendix, Tableelow.

** elow. The term ton-miles refers to metricautical miles throughout this memorandum. t See Table.bove.

9 the productivity of the dry cargo fleet increasedslightly greater thanercent average annual increase for this index The productivity of the tanker fleet, however, increased byercent, considerably less thanercent average rate of Increase for this Indexhe modest increase ln the productivity of the tanker fleet reflects an inability to develop return cargoes for Soviet tankers movingof petroleum fron the Black Sea.

C. Patterns of Employment

The Soviet merchant fleet9 carried cargoes in coastal navigation in the five major sea basins of the USSRhe Black Sea, the Baltic Sea, the Northern (Barents and Whitehe Par Eastern, and the Caspian. Soviet vessels engaging In foreign trade9 appearedll the major world trade routes except those to Oceania, South and East Africa, and tho west coast of South America. Some of the most important routes were the following:

of Origin

Sea

Northern Block Sea

Par Eastern

Sea and Atlantic Europe North Africa South and Southeast Asia Gulf of Mexico and Canada

Baltic Sea, Atlantic Europe, and Mediterranean

Kedlterronean

Continental Europe

South and Southeast Asia

Ear East

West Africa

Gulf of Mexico

Fur East

Canada

Atlantic Europe

Changes in the pattern of employment of the fleet9 Included the reeumptloo of colls at Australian ports; the beginning of deliveries of petroleum cargoes, to Brazil, Jopon, and Lebanon; and increased participation by Soviet ships in theof export timber from the Northern Basin and the Northern Sea Route.

D. Prospects0

Id terms of quantity, deliveries of new ships to the Soviot merchant fleet0 should be comparable to those The quality of the deliveries should be better thanowever,reater number of large, fast, modem tankers and dry cargo ships, particularly of the Pekln and Leninskiy Komsomol classes, win be involved.

Changes In the employment of the fleet contemplated0 include the beginning of petroleum exports froa Soviet Baltic ports to European Satellite portshe Baltic and to Free World ports in thc Baltic, North Sea, and English Channel areas and the beginning of calls by Soviet ships at West African ports in Ghana and Guinea. Tbe initiation of petroleum exports from Soviet Baltic ports will mean thc eventual elimination of shipments of petroleum from Soviet Black Sea ports to Northern Europe andet reduction in Sovietfor tanker tonnage.

III. European Satellites

A. Combined Fleet

1. Grovth of the Fleet

The aggregate deadweight tonnage of the combined merchant fleet of the European Satellites Increased fromWT8 to moreillion DWTate of grovth slightly less than that achieved The tonnage of the combined fleet of the Satellites9 amounted toercent of the combined fleet of the 6Loo-Soviet Bloc. Although thc Polish fleet is thcof the Satellite fleets, the East German and Czechoslovak fleetBigher rate of expansion than the Polish fleetercent andercent, respectively (see.

* elow.

Tbe average size of each of the European Satellite fleets increasedith the exception of the fleets of Hungary, Bulgaria, and Rumania. Average speeds increased for all fleets except the Bulgarian and Rumanian, which remained constant. Average ages of ships decreased for the fleets of Poland, Czechoslovakia, and Bulgaria but Increased for those of Bast Germany, Hungary, and Rumania. The Rumanian fleet is exceptionally old, vith an average age of ships* years. All other fleets are below the average age of ships of the world fleet, which in9 wac aboutears.

2. Seaborne Foreign Trade

Although the oerchant fleets of the European Satellites have been growing and have been able to carry more of their ownforeign trade, the volume of trade also has grown rapidly enough to require more foreign shipping. It Is estimated that,otal6 million tons of foreign trade cargo moved9 million tons were left to be moved by foreign ships (see. Of thisillion tons at most ore estimated to have been carried by Soviet and Satellite vessels for the Soviet Bloc. Thus at9 million tone of Satellite cargo were left to be carried in Free World ships.

Poland, East Germany, andinimumillion for the use of foreign ships It is estimated that the other European Satellites spentillionil-lion,otal of0 Billion paid to foreign shipping services from tbe European Satellites. As muchillionillion of this amount went to Free World shipowners.

B. Poland

1 Growth of the Fleet

9 thereet increase in the Polishfleet ofhipsWT, the latter representing an increase ofercent at an estimated valueil lion In all,ceangoing ships wereere sold to Communist Chinao Ciechoslovakla,ere scrapped. Tbe size of the fleet at the close9WT.

Aboutercent of the gross tonnage added was newly built in Polish shipyards,percent was newly built in foreign(mostlyndercent was secondhand tonnage bought outside tho Sino-Soviet Bloc.

* elov.

The Polish and Bulgarian figures were published. The Eastexpenditure ia computed from an oblique reference that was also ln tbe press.

Approximatelyercent of this amount is production la Bloc shipyards, valued at prices prevailing at those Free World shipyards whose costs are believed to be most comparable to those at Blocandercent Is the amount paid by Poland for ships built in Free World countries.

of thc Fleet

The seaborne foreign trade of Poland Mounted to Iktone Polish ships carriedll!Ion tons of this trade, and foreign ships carried almostillion tons (see Table Of thatillion tons, however, Poland was responsible for the transportation of onlyillion tons, for which Poland chartered foreign ships or booked space on foreign shipsost ofillion.

Earnings and ExpenditurcB

In addition toillion expended for foreignPolandillion for other foreign services to its fleet, such as bunkers and port fees. These expenditures were balanced by Polish fleet eamlngB of onlyillion and earnings of other maritime services ofillion. The resulting adverse balance ofillion may be compared'with adverse balancesillion8illion This improvement isto continue, and0 the earnings of foreign exchange by the Polish fleet may exceed expenditures for foreign ships. Earnings of foreign exchange and expenditures for other maritime services may at least break even.

I*. Rev Liner Servicee

Three new routes were opened by tho Polish merchant fleetnd soilings on old routes Increased as the fleet expanded. Polish Ocean Lines (PLO) Inaugurated service between Gdansk, the Black Sea, and Israel. Thla line was opened to supplement tbe service by the Polish Steamship Company (PZM) between the Black Sea and Arab ports oq the Mediterranean. "The regulations In force in Arab ports" were openly stated to be the reasonecond line in this general area. econd new route was provided by PLO between European porta and thc Red Sea and the Persian Gulf. Service was Initiated ln Finally, PZMine to West Africa end by the end9 was main tain Log two sailings per month. It was stated that the USSR "will take considerable advantage of" this new West African line, on will Czechoslovakia and Hungary.

5. Prospects0

Poland plans toinimum ofhips,0 DWT,ringing the total under the Polish flag ln

i P. 2b, below

oWT. Tills additional tonnage is planned toillion.*

illion tons of Polish seaborne trade will be carried by Polish shipsnd this tonnage will amount to about one-fourth of the total seaborne trade of Poland. 8 million tons probably will be left to be carried by foreign ships, the same level as Earnings of foreign exchange by the fleet arc expected toillion comparedillion9 and may equal the amount paid out to foreign ships for cargo under Polish control.

C. East Germany

of the Fleet

The East German fleet grewWTl*-percent increase above the level Host of the ships added to the fleet9 were newly built in East German Tbe additions to the fleet are valued atillion.** Free World shipowners3 million for secondhand ships, which made up aboutercent of the additions

of the Fleet

growth in performance of thc East German fleet has

approximately paralleled its growth in cite, risingons carried8 to an estimated maximumillion tons9 (see. It is estimated, however, that the fleet may be able0 to moveillionillion tons,on the delivery dates of vessels

It Is probable that9 East German ships carried onlyercent of the seaborne foreign trade of Eastlight Improvement in comparison East Germany isto have paid outillion for foreign shipping9 compared with theillion paid out

The planned amountillion zlotys, converted atlotysbe official maritime exchange rate for domestic zlotys. This conversion factor used9 figure quoted by the same sourceeasonable dollar value.

** Approximatelyercent of this amount is production in Bloc shipyards, valued at prices prevailing at those Free World shipyards whose costs arc believed to be rost comparable to those at Bloc.

*** ollows on

Aboutercent of this amount nay have been for Free World ships.illionillion tons may be moving in foreignhowever, comparedillion tons

Table 3

Performance of the Merchant Fleets of the European Satellites a/

9 w

'^lou^and Metric Tons

Poland

Germany

Ton-Miles SJ

and

Germany

88*

performance of vessels of lessRT.

autical miles.

D. Chechoslovakia

of the Fleet

The addition of two large freighters and one large tanker9 nearly doubled the capacity of the Czechoslovak fleet. The tanker was newly built by Yugoslav shipyards, one of the freighters was newly built by Japanese shipyards, and thc second freighter was purchased secondhand from Poland. Tbe latter ship was believed to be under the control of the Chinese-Polish Shipbrokers Corporation (Chipolbrok). These additional ships are valued at betweenillionillion. Thereumber of Indications that at least three of the four dry cargo freighters added7 and also the tanker are under some kind of control by Communist China, possibly an arrangement such as Chipolbrok. ew company, the Czechoslovak Maritime Navigation Company (Ceskoslovenska Namornlas formed9 to operate the seagoing fleet. It was reported to be an "international stockut theof stockholders is not known and thereossibility that the government of Chinatockholder.

Thc absence of any known long-range plans for amerchant marine lends credenceeported East Germanthat Czechoslovakia should give up ownership of its merchant marine as soon as the East German and Polish fleets reach thelevel of development. In view of the difficulties that East Germany is having in carrying its own foreign trade, it is unlikely that the East German fleet soon will be able to substitute for the Czechoslovak fleet. The Polish fleet, however, has been carrying increasing quantities of Czechoslovak cargo. 0 tons were carriedons were to be carried9 according to9 plan.

of the Fleet

Czechoslovakia is almost wholly dependent on foreign ships to carry its seaborne foreign trade. More than9 million tons) of this trade9 moved on foreign ships, of whichillion tons, orercent, moved on Free World ships. It le estimated that the use of foreign ships9 cost Czechoslovakiaillionillion.

Developments

Czechoslovakia9 made agreements with the USSR, Ru:nenia, and Bulgaria to increase transit shipments through ports on thc Black Sea and the lower Danube. Incomplete returns indicate

corresponding decreases Id transit through Hamburgons) and Rljekaons).

E. Dul^arla

of the fleet

Tbe oceangoing fleet of Bulgaria9 increased bymall ships1 dry cargoankerbringing the fleetotal ofhips0 DWT at the end of the year. The freighter was producedulgarian shipyard, and the tanker was purchased secondhand from Sweden. The estimated value of these two ships Is3 million."

of the Elect

The Bulgarian fleet9 carried about one-third of the seaborne foreign trade of Bulgaria, leavingillion tons to be carried od foreign ships. It is probableighof the total ofillion tons was carried by Soviot ships, mostly In the Black Sea, but no definite Information Is Bulgaria7 paid5 million for foreign shipping (includingnd lt is estimated that almostillion vas paid out

F. Rumania

mj

1. Grovth of the Fleet

* The Bulgarian freighter la valued at prices prevailing at those Free World shipyards whose costs are believed to be most comparable to those at Bloc shipyards.

- lh -

No change in the oceangoing fleet of Rumania has occurredby the end9 the average age of the ships In tbe fleetk years. Various ships have spent protracted periods under repair during the years since World War II, and fleethas suffered accordingly. Rumanian thinking on the subject of ship obsolescence Is highlighted by the statement that seagoingaxe being amortized at an average annual rate ofpercent. Inasmuch as approximatelyercent of this amortization Is actually earmarked for capital repairs, tbe effective amortization rateercent. The Rumanians therefore calculate the "useful life" of their ships to3 years. The rest of the maritime worldhip to be obsolete or overage.ompetitive sense, atoears.

Nevertheless, Rumania does have on order In Yugoslav yards two freighters0 DWT. The first keel was to be laid in Plans, announced inall for doubling the fleet capacitya. It is worth noting, however, that5 planalled for increasing the fleetimes above the levelncluding five or six "big" ships and at least eight medium and small ships. Not one of those planned ships vas added.

2- Adequacy of the Fleet

Rumaniainimum seaborne tradeillion tonsfillionillion tons were petroleum and petroleum products, but Rumanian ships carried none of the petroleum and onlyercent of the total. This record win not beto any appreciable extent in the near future.

Soviet ships probably carriedillionillion tons of Rumanian cargo. illion tons of this amount Is estimated to be petroleum moving to the USSR and0 tons to be petroleum moving to countries outside the Black -Sea area. Other European Satellite ships, mainly Polish owned and Polish chartered, moved perhapsons of petroleum. Thus less than one-half of the seaborne foreign trade of Rumania moved on Free World ships.

is estimated that9 Rumania paid out between

illionillion in foreign exchange for the use ofships, about one-half of vhlch probably was paid to the USSR.

0. Hungary

" This figure represents the value at prices prevailing at those Free World shipyards whose costs are believed to be most comparable to those at Bloc shipyards.

Hungary isaritime nation and has confined its fleet to small ships plying the Danube to Budapest. ne Hungarian-built ship, with an estimated valueas added to thisnd one ship sank, maintaining thc fleet at six shipsWT. These ships carried onlyercent of Hungarian seaborne tradehd most of thoillion tons, was apparently carried in Free World ships. The cost to Hungary for the use of foreign shipping9 is estimated to have been betweenillion andillion. The costUillion.

Ho ofricial or formal plans for thc Hungarian fleet have been announced beyond the hope thatWT ships per year would be addednot fulfillednd that possiblyDWT freighters would be purchased abroad. By these means, Hungary hopes to triple its share In the carriage of Hungariantrade.

II. Albania

Although Albaniamall country with comparatively little foreign trade, it has nevertheless begun toleet. Tbe first three oceangoing shipa were acquired9 andWT. Plans have been announced0 DWT The three ships are valued at5 million0 million."

esult of tbe enlarged fleet, Albanian participation in the carriage of Albanian seaborne trade is estimated to haveto one-fourth of the total. .Most of the rest probably was carried by other Soviet Bloc ships. Use of foreign ships probably cost Albania aboutillion.

IV. Communist Far East

A. General

Merchant shipping in tbe Communist Far East Is dominated by the shipping requirements of Communist China. Neither Horth Korea nor North Vietnamhip as largeRT. These twohave placed their main emphasis In merchant shippingiand improvement of existing ports. The performance of the North Korean and North Vietnamese fleets combined is only slightlyercent of tho performance of the Chinese Communist fleet (see

B. COsniunist China

1. Growth of the Fleet

At the end9 the merchant fleet of Communist ChinahipsWT, an increase ofercent above the level All of the growth was accounted for by general cargo ships, and no tankers or bulk carriers were added to the fleet In the year under review.

this figure represents the value at prices prevailing at those Free World shipyards whose costs are believed to be most comparable to those at Bloc shipyards. Tabicfollows on

Table 4

Estimated Performance of tbe Merchant Fleets of the Communist Far East

ritrv

7

Ton-Miles V

China cf North Korea North Vietnam

5

5 9 2

9

c/

Million Metric

Tons

China North Korea

0.8

2.0

2.8

lt

figures include performance of chartered Free Worldfor North Korea and North Vietnam include Inland vater Data are not available for North Vietnam on metric tone of cargo

carried.

autical miles.

are rounded to theillion metricautical

mile.

The Chinese Communist fleet has tended toward larger and faster ships in the past several years. Thc size of the average Ship at the end7RT and had increasedRT by the end The speed of the Chinese ships rangesnots tonots, with thc average probably lyingndnots. Although China haa constructed ships with reported speeds ofnots, no ship of this speed is yet in service. Thc average Chinese ship is aboveears In age.

Tbe Chinese Communists9 acquired fiveships9RT) from Free World countries. On the basis of prices reported in Lloyd's and the current market, it

is estimated tlist thc Chinese paid an averageer deadweight ten for these ships. It has been reported that thc Chinese haveoalillion DWT About one-half of the ships Bust be purchased from the Free World If this goal Is to be achieved. Thus, if present market conditions prevail, the Chinese probably will invest aboutillion annually for theears in tbe purchase of ships from the Free World.

Of the moreWT added to thc Chinesefleetearly -i0 percent came from Free Worldaboutercent from shipyards of the Soviet Bloc In Europe;ercent. Including salvage, come from Chinese shipyards. At an estimated cost of aboutillionRT, the Chinesein domestic shipbuilding alone will be on the order0 million annually, based on present plans. Investment in port improvement and construction also willonsiderable amount of capital.

2- Adequacy of the Fleet

The Chinese Communist merchant fleet is at the present time employed almost entirely in the coastal trade. Some cargo is moved between Chinese ports and both North Vietnam and Bong Kong, but lt is believed that the Chinese count this movement to be coastal. The Interdiction of the Formosa Strait by the Chinese Nationalists forces the Communists toonsiderable number or chartered ships to link, their north ond south coasts. It is estimated that chartered ships moved atillion tons of cargo in the coastal trade In addition, all of the internationaltrade or Communist China, which totaled at leastillion tonsoved in foreign flag ships. Thus China depended on foreign flag ships9 to move more1 million tons. If the Communists could eliminate the Nationalist blockade of the coast, the present fleet of Communist China probably would be adequate for domestic requirements. In the field of international trade, however, the Chinese Communists will continue to be dependent on foreign flag ships, although this dependence will decrease as they approach their goalillion GRT under the Chinese flag.

3. Prospects0

Prospects for the Chinese Coemninlst merchant fleet in ccntly, leBj Ud OPaTmtloDBi

Tbe Chinese fleet probably willRT by tbe endhips0 GRT and larger are under construction In Chinese yards, and comparable ships are being built for China In other shipyards of the Sino-Soviet bloc. Chinese purchases from the Free World may be

expected to continue and perhaps even to increase if the shipping market drops further.

The next major development that may be expected In Chinese Communist shipping operations is the initiation of internationalservice with Chinese flag ships. It is estimated that the Chinese already have the capability of initiatingervice, and they may be expected to do so whenever they Judge it expedient for eitheror political reasons.

The Chinese Communist fleet probably will prove to be adequate in terms of coastal shipping requirements, although chartered ships will continue to be used for movements between the north and south coasts. It is estimated that charter utilisation in the coastal trade will continue at about the level- Virtually all of the seaborne international trade of China will move In chartered ships for the next few years.

a

a a

n

a a

t

i

Table 6

Merchant Fleets of the European Satellites, by Type, Number, end Tonnage a/

ttaJf

'f 'llj

-

-

wd.o

pi

}

1

s

)

>

n.e

(

i

"

talio

1

i

fcj

teul

- 1

i

n

bj 1

1

i

an uhlid nuirtvt for pw ud rwm iii, m*a) oruh tlipohlwx"bb.

s-#>

Tabic 7

Seaborne Foreign Trade of the USSR ond the European Satellites by

Thousand Metric Tons

Country

total

ships Foreign ships

Germany total

German ships Foreign ships

total

ships Foreign ships

total.

ships Foreign ships

4o4

490

699

409

total

ships Foreign ships

total

ships Foreign ships

975

805

935

795

total

ships Foreign ships

435

470

500

655

630

-

Table 7

Seaborne Foreign Trade of thc USSR and thc European Satellites

by Country

ContinuedJ

Thousand Metric Tons

duplication among Satellites

Balance

Domestic ships Foreign ships

Domestic ships Foreign ships

Grand'total

Total for the USSR

Less duplication among the USSR and the Satellites

Balance

ships Foreign ships

Original document.

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