MAERSK LINE LTD. SEEKS DIRECT MANAGEMENT OF ALL ITS VESSELS IN MSP

MAERSK LINE LTD. SEEKS DIRECT MANAGEMENT OF ALL ITS VESSELS IN MSP    Maersk Line Ltd., the U.S.-flag vessel operator of A.P. Moller/Maersk, has asked the U.S. Maritime Administration to confirm its eligibility as a Maritime Security Program provider to bring all its U.S.-flag vessels enrolled in the program under its direct management.
   Maersk Line Ltd. manages four U.S.-flag vessels in MSP and another 15 ships indirectly under U.S. Ship Management, a section 2 citizen corporation established when A.P. Moller/Maersk took over the vessels from former the Sea-Land Service.
   Under its operating contracts with Maersk Line Ltd., however, U.S. Ship Management agreed to transfer direct operation of the vessels to Maersk should Maersk Line Ltd. elect to become the MSP contractor. MarAd approved those contracts in 1999, the company said.
   John P. Clancey, chairman of Maersk Inc., told a House Armed Services MSP reauthorization hearing this summer that direct management of the 15 U.S. Ship Management ships would save the company millions of dollars in operations costs a year.
   With the MSP ships, Maersk Line Ltd. operates upwards of 50 U.S.-flag ships in commercial and government service, including vessels used for top secret security duties.
   “Transferring the MSP operating agreements under existing law makes complete sense,” said John F. Reinhart, chief executive officer of Maersk Line Ltd. “It lets us bolster our fleet and do a better job for the U.S. government.”
   Also under Maersk Line Ltd.’s direct control, the 19 MSP vessels will continue to be owned by the same section 2 citizen companies that own them today, ensuring the Defense Department’s control and access to the vessels.
   In addition, Maersk Line Ltd. said the vessels will also “remain U.S.-flagged supporting U.S. global trade and national security, and will be crewed by the same American seafarers that man those vessels today.”
   MSP was created under the 1996 Maritime Security Act and is managed by MarAd. The program provides the federal government with immediate access to 47 military-useful commercial container and roll-on/roll-off vessels during times of war or national emergency. To help offset the higher vessel operations costs, the federal government pays the MSP vessel operators $2.1 million per ship annually.
   The U.S.-flag vessel industry has already started lobbying Capitol Hill for reauthorization of MSP. Carriers and union leaders asked Congress to increase the number of ships enrolled in MSP to 60 and raise the level of government payment per ship in the program to $3.5 million annually.
   Kenneth C. Gaulden, senior vice president of Maersk Line Ltd., said the “administrative approach” to directly manage its 19 MSP ships should be acceptable under current legislation and regulation. “MarAd’s authority to proceed would remove this issue from the legislative debate for reauthorization of MSP,” he said.