ABSTRACT
In the summer of 1968, American Mail Line (AML), a Seattle-based U.S.-subsidized steamship operator, had five ships under construction at a cost-after construction differential subsidy (CDS)—of about $39 million. The management at AML was trying to determine the optimum scheduling and route structure for the line’s fleet after these new ships went into service in late 1968 and 1969. The company currently ran (at a profit) a fleet of nine ships on the Far East Trade Route #29 and Trade Route #17, serving Indonesia, Malaysia, and India. The five new C-5 class ships were designed for Trade Route #29; on their delivery, four war-built C-3 class ships would be retired. (The “C” classification refers to the length of the cargo ship.)
AML ran two services called the “Short Run” and “Long Run.” The Short Run consisted of routes to points in the Far East on Trade Route #29. The Long Run consisted of routes to the Bay of Bengal, Calcutta, and to other countries on Trade Route #17. The ships serving Trade Route #17 also called at ports on Trade Route #29. (Data on the ships, trade routes, and financial background of AML are contained in Exhibits 2.1 through 2.4.)
The new ships would not have cellular holds for containers; however, they were designed to carry 411 twenty-foot containers, 254 of which would be below decks. The containers, as well as the break-bulk cargo, could all be unloaded by the ship’s conventional cargo-handling gear. Calculations comparing the C-4, or Mariner, against the new C-5 on various Short Run routes were made in which both ships carried only non-containerizable cargo (because of economical or physical characteristics). Exhibit 2.5 shows the summary of two such calculations for a Short Run routing known as Route A. Also shown are the summarized data from one simulated voyage of a C-5 carrying only containers on a shuttle run between Seattle and Japan.
