DCI BRIEFING ON SOVIET MERCHANT SHIPPING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70T00666R000200110013-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 15, 2016
• Document Release Date: August 23, 2002
• Sequence Number: 13
• Publication Date: June 10, 1966
• Content Type: MFR

ApproveddFor Release 2002/09/05 CIA-RDP70T666R00020011001
SUBJECT: DCI Briefing on Soviet Merchant Shipping
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1. The briefing was given at 0900 on Wednesday, 1 June. Copies
text and the graphics used are attached.
1966
2. Questions asked during and after the briefing were not confin
the material in my prepared text. The two topics from the text that
the most interest were the relative ages and efficiencies of ships in
Soviet and US merchant fleets and the nature of Soviet competition on
high seas. In addition there was considerable interest on the part of the
Director in the outlook, from a businessman's point of view, for the US
merchant fleet and one question from a staff member on the extent of US
ownership of ships under flags of convenience.
3. While it did become necessary for me to deviate significantly from
my planned outline, I feel that the briefing went quite smoothly. I had
prepared for questions on the US shipping situation and this preparation
payed off. As I departed, the participants in the meeting were still dis-
cussing the dilemma subsidized US steamship lines currently find themselves
in, trying to remain competitive in their commercial operations while at the
same time fulfilling their commitments for the movement of cargoes to South
Vietnam.
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Approved For Release 2002/09/05 : CIA-RDP70T00666R000200110013-8
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SOVIET MERCHANT SHIPPING
The Soviet merchant fleet is currently seventh largest in the world.
As the result of expansion during the recent Seven Year Plan, its tonnage
increased to two and one half times its 1958 level in 1965, from 3.4 to 8.4
million deadweight tons. This spectacular growth has caused considerable
concern among Free World shipowners. Some merely fear an increase in
competition from Soviet ships, but others talk of Soviet domination of the
sealanes between now and 1980. I hope during the remainder of my talk to
put some of these ideas into better perspective.
I first want to take a closer look at the standing of the Soviet fleet
among the fleets of the world. I have already pointed out that the Soviet
fleet is seventh largest in the world. In spite of its relatively high
standing it must be remembered that the Soviet fleet still only makes up
four percent of the shipping tonnage in the world. It is, nevertheless,
one of the most modern fleets in the world. When the fleets are ranked on
the basis of the tonnage of ships ten years old and under, the Soviet fleet
ranks fifth. Because of the large bloc of war-built tonnage it includes,,
the US fleet drops from first to twelfth place when this criterion is applied.
The Soviet fleet should move up to fifth place in terms of overall tonnage
sometime during the early 1970's. By this time both the Greek and the US
fleets should have fallen behind because of the retirements of large numbers
of war-built ships. There is little chance of the Soviets overtaking the
fleets of Liberia, Great Britain, Norway, and Japan within the next fifteen
years. These fleets are too big and they are growing too fast.
Approved For Release 200 O `)AXRDP7.OT60666R000200110013-8
 Approved For Release 2002
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Since before World War II the Soviet fleet has been adequate for the
domestic shipping needs of the USSR -- in coastal navigation. However, in
the movement of its seaborne foreign trade the USSR has had to supplement
its ships with chartered foreign ships. Even though the main emphasis in
operations of the Soviet fleet since 1956 has been on the movement of
foreign trade cargoes, the fleet has been unable to keep up with the ex-
pansion of Soviet seaborne foreign trade. During each of the years 1959-
1961 this trade increased at annual rates approaching 30 percent. As a re-
sult the share carried by Soviet ships dropped from 50 percent in 1958 to 37
percent in 1961. As the result of stepped up deliveries to the fleet in
1964 and 1965 the USSR succeeded in restoring the share carried by its ships
to 50 percent in 1965. Because many of the Soviet foreign trade cargoes
carried by foreign ships move on ships chartered by the USSR,the growth in
the volume of Soviet seaborne foreign trade carried by foreign ships has re-
sulted in increased expenditures of hard currency by the USSR and has thereby
contributed significantly to the hard currency deficits experienced by the
USSR in recent years. This dependence on foreign shipping has, of course,
provided a strong motive for expansion of the Soviet fleet.
There is increasing evidence that the continuing participation of foreign
ships in the movement of Soviet seaborne foreign trade will not deter the
USSR from making the services of its ships available to foreign shippers on
an increasingly larger scale. Free World shipowners can definitely expect
increased competition from both Soviet cargo liners and tramps. Until two
years ago the USSR operated cargo lines only on routes where there were
yep q