We subsidized operators have certain special disabilities and problems in connection with this aspect. As I was saying earlier, any agreement that is reached by a subsidized line is subject to the separate approval of the Maritime Administration.

When we try to work out some kind of an agreement, the people we deal with know perfectly well that we can't talk for ourselves, that we are not our own masters. In many instances I have found that they would rather not discuss matters with us, for that reason. They know we can't make a deal right then and there, negotiate, concede, and otherwise do what is necessary to reach an agreement that is mutually satisfactory. We must always put in that little dingleberry that whatever we agree today is really not an agreement. We have to consult our silent partner.

I don't say that this is wrong from the Government's point of view. I can fully understand and appreciate the necessity for some kind of a continuing supervision over the activities of subsidized lines. But I begin to wonder whether the conditions which existed 35 or 40 years ago, when the Act was passed, should be reviewed and should be studied again. They may be entirely different today.

There is one other matter which affects the subsidized lines as well as the foreign-flag lines. The basic objective of the container operation is to move cargo from an interior point to an interior point with nobody opening the container or handling or squeezing the product, or anything else. It moves completely from plant to plant without any handling of the goods. And we must move the cargo the quickest, fastest way at the cheapest cost, and it seems to us that the most commercially desirable type of operation is on a through single factor rate of some sort. Our contact is going to be with the manufacturer at his plant. We are going to deal with him there; we are going to discuss the matter with him there; we are going to make the sale right there. We are going to have a container delivered to him at the time he wants it, and once that container is filled and the doors have been shut, he should be satisfied that the job is done as far as he is concerned.

There are a lot of problems in this area. The assumption of responsibility and liability for the inland U.S. leg, for example, requires ICC certification, which we haven't got, or getting a license from the ICC in order to do it.

I understand that there has already been a great deal of discussion about this problem, and I noted a comment recently about it. I understand that the ICC and FMC and, I believe, the Department of Transportation have been together discussing the possible solutions to the problem. We hope that in the not too distant future we will have a satisfactory solution.

I had a couple of other points here which really don't amount to very much, Ed, and I am running so long that I think I better stop. It sort of reminds me of the story of the guy who was giving a little talk, and after a while he said, "Have I forgot anything?" And somebody said, "Yes, you forgot to shut up at the proper time." So I think that is what I better do.

Mr. SCHMELTZER. Good time for coffee, anyway.

I am sure you all have questions to ask Mr. Wierda. I was surprised and kind of overwhelmed by the fairly optimistic tenor of Mr.

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Wierda's address. It's seldom that you find a steamship operator being optimistic; but maybe they are through container carriers now, so they will be optimistic.

Also, your talk of possible freight rate decreases is something to look forward to, and I think, for our part, we will do everything that the regulations permit to try to allow for the efficiency in your operations that you need to lower freight rates.

Who has the first question?

Dr. Mater, Federal Maritime Commission.

Dr. MATER. I may be premature, but is it my understanding your container service will operate primarily between London, Liverpool, and New York?

Mr. WIERDA. No. Our first service will be to Rotterdam and a German port and London. Not in that order, necessarily, but those three major areas. That's the first set of three ships, and the second set of three will then cover Le Havre and between Liverpool and Glasgow. So we will have two services of three ships each.

Dr. MATER. Do you mean across the Atlantic?

Mr. WIERDA. Oh, yes; all of this is across the Atlantic.

Dr. MATER. New York on this side?

Mr. WIERDA. At least New York on this side and one other port. Mr. SCHMELTZER. Mr. Fetter, of the Interstate Commerce Commission.

Mr. FETTER. I have been asking everybody this. How about your balance of traffic? Has it worked out pretty well?

Mr. WIERDA. Well, no; it has not, really. It's a continuing problem. It's a major problem to us. In the North Atlantic trades at the moment, the balance is fairly good. But, unfortunately, in some respects it's seasonal.

We will never reach a perfect balance, I am afraid. I think in some of the other trades and I don't really know enough about those other trades but my suspicion is that their balance is bad from the standpoint of type of commodity that moves and whether it is susceptible to containerization.

Overall, in the North Atlantic it's good enough to permit an investment in a container operation.

Mr. SCHMELTZER. Bud Kirse, Federal Maritime Commission.

Mr. KIRSE. Incidentally, I share your view about sometimes not understanding the container rules.

Mr. WIERDA. Thank you.

Mr. KIRSE. We have the same problem. The Carriage of Goods by Sea Act addresses itself to liability of $500 per package. We have some freight tariffs that actually address themselves to the container being a package, and we have others that address themselves to the container as not the customary unit of freight.

Do you have any views with respect to liability, and should the shipper expect that his liability will be limited under a containerized operation to $500?

Mr. WIERDA. You don't think that is a controversial question, Bud. do you?

Mr. KIRSE. Hardly.

Mr. WIERDA. Well, I do. We, of course, have been maintaining that the container is one package. Although I understand that there has

been some discussion and there are discussions underway for a revision of that, I believe that there have been meetings on it and it won't be too long before the matter is solved.

Mr. SCHMELTZER. John Norris, Western Maryland Railroad.

Mr. NORRIS. I want to put a plug in for the other part of the East Coast-Baltimore, of course.

Seriously, Mr. Wierda, I want to ask you two questions.

First of all, you have got a considerable investment apparently in containers and present vessels that enables you to move into the container era without waiting for the full container fleet.

Mr. WIERDA. That's correct.

Mr. NORRIS. What service will those vessels go into when you have your full container vessels in operation?

Mr. WIERDA. We are planning to continue operating those in the North Atlantic.

Mr. NORRIS. Lesser ports type of operation?

Mr. WIERDA. Yes. It won't be in exactly the same ports nor with the same frequency, of course, in those ports. Those vessels also have breakbulk capacity available, so that they will be supplemental. They will continue to carry containers, but they will also give the supplemental break-bulk service.

Mr. NORRIS. They can well fill an economic flexibility facet, if you like.

Mr. WIERDA. Yes.

Mr. NORRIS. The other thing: You mentioned a while ago that your new container vessels, starting with the one you have in March, have 20-foot containers. I would presume you speak of 20 and 40. Mr. WIERDA. Oh, yes.

Mr. NORRIS. Are there other sizes, also?

Mr. WIERDA. No, not at this stage of the game, anyway. Most of the containers would actually be 40 feet.

Mr. NORRIS. Yes.

Mr. WIERDA. But when you talk about containers, it must be put in some kind of a common unit, and we always put it in terms of 20 footers. Actually, I think about 70 or 75 percent of the vessel will be 40 feet and the rest will be 20 feet.

As we get up in the nose and back in the tail, we can't put the 40footers back there or up there, so we use 20-footers in that area. And it's weight cargo basically which needs 20-foot equipment.

Mr. SCHMELTZER. I would like to supplement Mr. Norris' question. Doesn't it murder you to hold the fast-loading container part of your combination ships until the break-bulk holds are loaded?

Mr. WIERDA. Yes.

Mr. SCHMELTZER. And what are you going to do in the future when you continue to use these combination ships?

Mr. WIERDA. Well, as I was saying, we don't realize all the benefits of containerization on this half-and-half vessel, because we still have to wait until the break-bulk hatches are completed. But there still is a considerable need and demand for both kinds, and we are planning to continue to operate them. We don't have any real long-range solution that doesn't cost a lot of money.

Mr. SCHMELTZER. No palletization or anything like that?

Mr. WIERDA. We are doing that to a very large extent today. We have pallets galore and all those types of units-flats, and so on. But to realize the benefits, it has got to be all one thing or another because it really gets to be like a bulk operation.

Mr. SCHMELTZER. Don Norris, Federal Maritime Commission.

Mr. NORRIS. Has anyone thought of the idea of organizing a container operations firm which does nothing but perhaps approach lines such as yourself and undertake to operate containers for them? Mr. WIERDA. Yes.

Mr. NORRIS. And how does it work?

Mr. WIERDA. It's been suggested by several different interests. It's been suggested just as a container control unit. It's been suggested by investment people who are willing to provide the containers and run them and operate them.

But we have not found one that was sufficiently interesting to encourage us to give up the control of our own equipment. We haven't felt at this stage of the game that anybody who has approached us with these ideas really was offering something that we needed, and we have decided to do it ourselves.

Mr. NORRIS. What would they have to do to make it attractive for you?

Mr. WIERDA. Well, I don't know. Each proposal we have examined is more expensive than we could do it ourselves, for example. We don't like the idea, at this time at least, of turning over to a third party who doesn't really have an interest in the company-turning over to that kind of a party the wherewithal to either keep us in business or put us out of business. We are not ready for that yet.

Mr. SCHMELTZER. Frank Bartak, Federal Maritime Commission. Mr. BARTAK. In terms of the 20-foot unit, about how many containers do you estimate you will need per ship for maximum utilization?

Mr. WIERDA. Every one of them.

Mr. BARTAK. In terms of a number?

Mr. WIERDA. Each vessel will carry 1,208, which is a lot. It is a very large number. Two ships each week sailing from each side of the ocean. So we have a big job cut out for us.

A maximum, of course, would be all 1,200. But if I can get up to the 900 to 1,000 category on each of those vessels per week, you will see some smiles from my side, anyway.

Mr. BARTAK. Do you have some type of a computer system available so that you can keep tabs on every container? Is a computer system to tell the location of every container vital?

Mr. WIERDA. Yes, we are now devising a very complicated, complex, and sophisticated control system because of our conviction that it's in the control of equipment where the real profit is going to be. If you can get high utilization, that is one thing; and you have got to get quick, efficient turnaround. You have got to have high-density loads. The improvement of a day in turnaround time, or another 3,000 or 5,000 pounds, or another 300 feet in a box, is going to make all of the difference.

So we are going to have a computer system in New York which will tell us instantaneously the location of any box at any time worldwideEurope or Far East or the United States-wherever it may be.

And, also, when we need a box in a location where there isn't one, we will have supplemental computer run-offs in other areas so that the computer can tell us which is the box that's the closest, or the box which is going to be the cheapest to get to the point in question.

Mr. SCHMELTZER. Do your tariffs have provisions that require the containers to come back to the carrier in a certain number of days? Mr. WIERDA. Oh, yes; we have demurrage rates in the tariffs. I have forgotten now what the exact number of hours are that we give them. I think it is 72 hours or something; I am not sure at the moment. Then a demurrage charge is imposed on the trucking company which took it away.

We don't deal with the shipper on this score. We deal with his trucker, and we have trucking interchange agreements; so that he takes over the liability for the equipment and the responsibility for getting it back to us.

Mr. SCHMELTZER. I take it, then, there is no need for the Federal Maritime Commission to consider putting out container detention. rules or getting into that kind of regulation, is there?

Mr. WIERDA. I haven't found it yet; no, Ed.

Mr. SCHMELTZER. Mr. Robert Walsh.

Mr. WALSH. In regard to filling these containers, you must be reasonably sure that you are going to get them filled, at least to begin with. What is the problem-is it keeping that customer or getting it filled initially, or what do you care to say? You mentioned you anticipate problems keeping full schedules.

Mr. WIERDA. Surely. I anticipate problems because of the tremendous volume and the number of containers that we are going to move; plus, of course, we have to perfect the techniques of moving them around in the most efficient manner.

I don't say that these are insuperable. I think they are going to be solved by us, but it is going to take a year or so before we really get it down into the real system it ought to be. That is really all I meant.

Mr. WALSH. I appreciate this. But in the meantime, you have got other people whittling away, saying that they are unhappy with you or the shipper at the other end; and you may lose them. This is where your problem is.

Mr. WIERDA. Then we just have to fight doubly hard when the time comes to get them back, because I think we are going to do a better job for them, quite frankly. There is no question in my mind that in the North Atlantic the United States Lines, once we get this operation really going, is going to be able to give the shipper, no matter where he is located, a lot better service than any of our competitors. I don't think there is any question about it. And we are building for that purpose. So we will get him back.

Mr. SCHMELTZER. In the domestic trades where we have had containerization for years, there has been a great problem of shippers misdescribing, misclassifying, and so forth, cargoes in the containers. It was so bad that even shippers asked the Maritime Commission to act on it.

Do you see that kind of problem in containerization in the foreign trade?

This is for the benefit of the shipping attachés.