Copyright 2002 Commonwealth Business Media  
Journal of Commerce Online
November 7, 2002, Thursday
SECTION: OCEAN TRANSPORTATION and PORTS/INTERMODAL; Pg. WP

LENGTH: 347 words

HEADLINE: Maersk Lines asks for MSP approval

BYLINE: BY R.G. EDMONSON - THE JOURNAL OF COMMERCE ONLINE

BODY:
WASHINGTON - Maersk Line Ltd. has asked the Maritime Administration to rule on its eligibility to operate 19 Maritime Security Program vessels currently operated by U.S. Ship Management Inc. (USSM). Kenneth C. Gaulden, Maersk Line senior vice president for marketing said Thursday that U.S. Ship Management agreed to transfer operation of the ships under a 1999 contract. That contract transferred management of former Sealand ships in the MSP program to USSM to satisfy the "Sec. 2" citizenship requirements of the law.

"There is a provision in the contract with USSM and Maersk Lines that enables us to operate the ships directly, if we're permitted to do so under current law and regulation," Gaulden said.

Maersk Lines reportedly tried to lobby Congress in 2001 to change the citizenship requirements. Gaulden denied that the carrier had tried to get the law changed.

At the beginning of the year, other MSP operators agreed to allow Maersk to operate the former Sealand ships. The agreement was part of the group's effort to have a united position as Congress begins to consider renewing MSP.

U.S. Ship Management did not agree to the compromise, and hostility was evident between Maersk and U.S. Ship Management during a hearing in July before the Merchant Marine Panel of the House Armed Services Committee.

Gaulden said that by asking Marad to confirm its status as an MSP contractor, Maersk takes the dispute with U.S. Ship Management out of the legislative arena, so that MSP renewal can go forward. "In effect, we'll work on this between us," he said.

Jay Keegan, president of U.S. Ship Management, called Maersk's request to Marad "contractual sleight of hand that would allow them to take this unprecedented action."

"We've never agreed to anything like that. There is no basis in the contract," Keegan said. He said that since Maersk unsuccessfully tried to get Congress to change the citizenship law, it was now turning to Marad instead.

"Our contract is to fully operate MSP ships through Sept. 2005, and we intend to do that," Keegan said.

LOAD-DATE: November 8, 2002