Research for Merchant Ships

Russian military specialists have argued that Russia will need a strong blue-water naval capability to protect her large merchant fleet, among other reasons. In this paper, we conclude that, in a decade, Russia will likely have a merchant fleet one-third to one-half of the size of the Soviet 1991 merchant fleet. Without a significant increase in capital investment, rapidly aging ships and market-based operational expenses promise to greatly reduce Russia's share of the once large Soviet merchant fleet. This information memorandum is one of a series of analyses produced in response to a request by the Director of Naval Intelligence that would define the probable character of the future Soviet or Russian Navy.

This paper proposes that commercial tankers be used for afloat replenishment of naval ships. It gives a brief history of merchant ships in a support role and technical characteristics for various container ships.

The extent to which the heavy commitment of resources to the Soviet merchant fleet in recent years is worthwile from the standpoint of economic efficiency is assessed in this research contribution. The analysis involves a comparison of the real costs incurred by the Soviet merchant fleet with the real benefits obtained. Because of the nature of Soviet cost-accounting practices and because Soviet prices often bear little relationship to either the scarcity of goods or the demand for them, the money costs of ocean shipping reported by the Soviets are poor indicators of real costs. In spite of these difficulties, money costs are used because they can be adjusted to make them at least informative as measures of real costs. But since Soviet prices are even less meaningful in reflecting utility than in indicating costs, cash flows arising from merchant shipping operations could not be used as the primary measure of real benefits. Consequently, benefits are assessed largely in terms of foreign exchange earned or saved. The evidence indicates that since at least 1964, the Soviet merchant fleet has contributed substantially to the improvement of the country's balance of payments. The hard-currency earnings of the merchant fleet have been of particular importance, since they have been sufficient to offset a significant fraction of the deficits arising from Soviet commodity trade with the West.