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Guam governor fears defence scheme's end will bring shipping monopoly

GUAM Governor Eddie Calvo fears that ending the federal Maritime Security Programme that offers a retainers of US$5 million a year for militarily useful ships, will result in a Matson Line having monopoly that serves the US Pacific island territory.

Without the annual subsidy it is feared that French shipping giant CMA CGM's Singapore-based APL will withdraw from the market, reports Guam's Pacific Daily News.

"Such a change would limit competition and increase transportation costs to Guam," said Governor Calvo, a Republican.

In a March 23 letter to US Department of Transportation Secretary Elaine Chao, the governor asked for continued support of the Maritime Security Programme, and opposed any legislative efforts to change it.

The programme is intended to provide emergency shipping services for the US military and for national security, is administered by the Department of Transportation, which pays millions of dollars for each ship.

Only ships involved exclusively in "foreign commerce" are eligible for the programme, which means they must operate between foreign countries or between a foreign country, "the United States, its territories or possessions, or the District of Columbia."

APL has two ships in the current fleet under the programme - the 1,078-TEU APL Guam and the 1,600-TEU APL Saipan. According to the Federal Register, shipping companies under the programme this fiscal year receive $4.99 million per ship. Payments next fiscal year increase to $5 million per ship.

According to Governor Calvo, the programme's support for the APL ships "forms the economic basis that allows the service to Guam to be offered."

APL officials on Guam said they cannot comment until they get additional information. Officials with Matson, which is the primary shipping company that serves Guam, did not return calls for comment.

The Maritime Security Programme was first passed in 1996, and originally had a fleet of 47 US flag militarily useful vessels, information on the US Department of Transportation website states.

The MSP was reauthorised in 2003 and expanded to a fleet of 60 militarily useful vessels. In 2011, the MSP was extended to 2025, the site states.

Matson has publicly acknowledged its support for a two-carrier market. "I do think that the natural state is a two carrier market from the US and I think that provides many of the customers a good choice," said Matson CEO Matt Cox.