A Red Star Rises on the High Seas

By Gordon M. Henry.

Bikini-clad women sipping vodka on an ocean liner in the Caribbean. Crates of computers being unloaded in Hong Kong harbor. A cruise ship offering three- month tours with elegant accommodations. These are not the images people conjure up when they think of the Soviet menace. But the Soviet Union's fleet of about 2,500 merchant ships, now the world's sixth largest, has been invading both cargo and cruise markets around the world, underbidding competitors by 40% and more. In the past two decades, the Soviet Union has doubled the number of its ships and tripled the tonnage of its fleet. Meanwhile, the U.S., which is ranked No. 8* worldwide, has sold or scrapped 75% of its ships and reduced its tonnage by nearly a third.

Some nations see the Soviet practice of underbidding liner conferences, which are legally accepted price-fixing cartels, as deliberately predatory. When Britain took the Queen Elizabeth II out of commercial service to send troops to the Falkland Islands in 1982, the Soviets moved in and in two years upped their share of the British cruise market from 10% to 42%. In France, about 80% of imported oil is carried by Soviet tankers, while French ships transport less than 1%. Even the Japanese have been hurt. Since 1981, the Soviets have snatched an estimated 10% of the cargo trade between Japan, Australia and New Zealand.

Soviet ships can afford to underbid other fleets because they are state insured, fueled by cheap domestic oil and manned

by sailors who work for one-fourth the $1,110-a-month wages of U.S. merchant seamen. Even when the ships operate at a loss, they provide the Kremlin with badly needed foreign currency (more than $2 billion in 1984). Their military usefulness is indisputable. Several Soviet liners are equipped with side ports for vehicles, which are of little use on a cruise but of great value for troop carriers.

The Soviet cruise fleet now ranks third worldwide, with 36 vessels of 1,000 tons or more, compared with the U.S. fleet, which has dwindled to six. Sailing from Genoa, Tilbury (England) and Rotterdam, the liners offer rates 15% to 20% below those of most Western ships. Travelers give Soviet cruises high marks. A group from Lisieux, France, who sailed the Norwegian fjords on the Leonid Brezhnev in May, was enchanted by everything from crew members, who danced "Russian," to inexpensive vodka, and frog's legs for dinner.

Soviet ships were barred from U.S. ports as a result of the 1979 Afghanistan invasion. But in Europe, saying bon voyage under a Red star is no longer a novelty. Western companies sending cargo overseas have also jumped aboard cut- rate Soviet ships. Their governments have been slow to respond to the Soviet merchants' tactics. The Japanese, the Australians and several West European nations complain that the Soviets have broken understandings on shipping policies and rates. None, however, has found a means to enforce the pacts. For now, maritime nations seem likely to find that ships flying the Hammer and Sickle are an increasingly dominant presence in their ports.

FOOTNOTE: *The top ten shipping nations in terms of tonnage: Liberia, Panama, Greece, Japan, Norway, U.S.S.R., United Kingdom, U.S., France, Italy. Several are so-called flags of convenience, used by shippers to hire low-paid foreign sailors.

With reporting by Frederick Ungeheuer/New York and Harriet Welty/Paris