[Federal Register Volume 61, Number 148 (Wednesday, July 31, 1996)]
[Notices]
[Page 40067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19363]


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DEPARTMENT OF TRANSPORTATION
Maritime Administration
[Docket S-939]


Lykes Bros. Steamship Co., Inc.; Notice of Application for a 
Waiver of Section 804(a) of the Merchant Marine Act, 1936, as Amended, 
to Participate in a Space Charter and Sailing Agreement With Foreign-
Flag Operators

    Lykes Bros. Steamship Co., Inc. (Lykes) by application dated July 
11, 1996, requests a waiver of the provisions of Section 804 of the 
Merchant Marine Act, 1936, as amended (Act), through December 31, 1997, 
the expiration of its operating-differential subsidy (O.D.S.) contract 
MA/MSB-451, to permit it to participate in a space charter and sailing 
agreement with Transportacion Maritima Mexicana, S.A. de C.V. (TMM), 
and Contship Containerlines Ltd. (Contship) to serve primarily the 
foreign commerce of the United States.
    The purpose of the Agreement is to improve the productivity and 
operating efficiency of the parties' vessels and equipment and to 
provide efficient, reliable and stable liner shipping services through 
space chartering and coordination of sailings. The Agreement does not 
authorize the parties to fix rates.
    The Agreement covers the trade between ports on the Atlantic Coast 
of Florida and U.S. Gulf Coast, and ports in Spain, Italy, and France 
and between ports on the Atlantic Coast of Florida and the U.S. Gulf 
Coast and ports on the Gulf Coast of Mexico.
    Assuming approval of the Agreement by the Maritime Administration 
and the Federal Maritime Commission, Lykes three subsidized Pacesetter 
Class vessels--HOWELL LYKES, THOMPSON LYKES, and JEAN LYKES--will serve 
the Mediterranean trade from U.S. Atlantic ports North of Florida. 
Lykes will initially charter space on TMM and Contship vessels 
providing service between Mexican, U.S. Gulf and Florida ports and 
Mediterranean ports in Spain, Italy and France. The vessels are 
scheduled to call at ports including but not limited to: Houston, 
Altamira, Veracruz, New Orleans, Mobile, Miami, Valencia, Barcelona, La 
Spezia, and Gioia Tauro.
    According to Lykes, the Contship and TMM vessels that serve the 
above trades and any Lykes vessels that might ultimately serve those 
trades will not compete ``with any American-flag service determined by 
the secretary to be essential as provided in Section 211 of this Act'' 
as that term is used in Section 604(a) of the Act.
    Lykes points out that Sea-Land does not provide an all U.S.-flag 
direct service to the Mediterranean from Mexican, U.S. Gulf or Florida 
ports. Farrell Lines, Inc.'s (Farrell) Mediterranean service does not 
include U.S. Gulf, Mexican or Florida ports. Waterman Steamship Co. 
(Waterman) only serves Mediterranean ports in Egypt from the U.S. Gulf. 
Because the parties to the proposed Space Charter and Sailing Agreement 
will provide direct service to the Western Mediterranean ports in 
Spain, Italy, and France, Lykes believes that the parties to this 
Agreement will not compete with any American-flag service determined to 
be essential by the Secretary.
    In Lykes' view, there are ample good cause and special 
circumstances to support the granting of this application. The 
opportunity this proposed agreement offers to rationalize schedules 
will permit operational savings to be realized and lend considerable 
flexibility to Lykes' schedules through the use of space on Contship 
and TMM vessels. The agreement will enable Lykes to offer shippers 
broader, more responsive service without any additional capital 
outlays. Lykes contends that its presence on the proposed routes is 
essential to the preservation of its customer base which relies on 
Lykes to provide a sufficiently broad array of services to satisfy 
their multitrade transportation needs. It will also assist Lykes in 
maintaining its experienced management. The additional revenue that the 
agreement will permit Lykes to earn will also spread overhead costs 
currently being borne by a limited number of Lykes U.S.-flag vessels, 
over an additional number of vessels.
    Lykes notes that the scrapping of its older U.S.-flag vessels has 
accelerated and there is no program in place for the construction of 
replacement tonnage in the United States. Moreover, satisfactory 
existing U.S.-flag vessels are also not available to serve the 
contemplated services. Consequently, Lykes maintains that the proposed 
Agreement will not affect U.S. seafaring jobs. Since Lykes' O.S. 
contract expires in approximately seventeen (17) months, Lykes 
concludes that approval of this Agreement is critical if it is to 
gradually position itself as a viable mixed U.S.-flag, foreign-flag 
operation capable of operating independent of subsidy.
    This application may be inspected in the Office of the Secretary, 
Maritime Administration. Any person, firm, or corporation having any 
interest in such request within the meaning of section 804 of the Act 
and desiring to submit comments concerning the application must file 
written comments in triplicate with the Secretary, Maritime 
Administration, Room 7210, Nassif Building, 400 Seventh Street SW., 
Washington, DC 20590. Comments must be received no later than 5:00 p.m. 
on August 2, 1996. This notice is published as a matter of discretion 
and publication should in no way be considered a favorable or 
unfavorable decision on the application, as filed or as may be amended. 
The Maritime Administrator will consider any comments submitted and 
take such action with respect thereto as may be deemed appropriate

(Catalog of Federal Domestic Assistance Program No. 20.804 
(Operating-Differential Subsidies)).

    By Order of the Maritime Administrator.

    Dated: July 24, 1996.
Edmund T. Sommer, Jr.,
Acting Secretary.
[FR Doc. 96-19363 Filed 7-30-96; 8:45 am]
BILLING CODE 4910-81-P