[This article was first published in Army Sustainment Professional Bulletin, which was then called Army Logistician, volume 3, number 3 (May–June 1971), pages 10–11. The text, including any biographical note, is reproduced as faithfully as possible to enable searchability. To view any images and charts in the article, refer to the issue itself, available on DVIDS and the bulletin’s archives at asu.army.mil/alog/.]
THE DEFENSE DEPARTMENT’s decision to make the Army the single manager for surface transportation of service cargo worldwide is perhaps the most significant change in military logistics operations in recent years.
It was evident that a top-level shakeup was in the offing that would give the Army a much bigger role in military transportation of cargo when Deputy Secretary of Defense David Packard directed the Secretaries of the Army and Navy in late February to come up with a joint plan to consolidate the activities of the Military Sealift Command (MSC) and the Military Traffic Management and Terminal Service (MTMTS) into a single new jointly staffed agency.
The new agency, which has not yet been named, will report to the Secretary of Defense through the Secretary of the Army, and except for intratheater land transportation in oversea areas, it will be the single manager for Department of Defense (DOD) surface transportation, worldwide.
In open testimony before The Committee on Merchant Marine and Fisheries, House of Representatives on 4 March 1971, Barry J. Shillito, Assistant Secretary of Defense (Installations and Logistics), shed more light on the whys and wherefores of this major reorganization.
Mr. Shillito said that up until now the Secretary of the Army, through MTMTS, has been responsible for land traffic management in the continental United States and the operation of common-user military ocean terminals and that the Secretary of the Navy, through MSC, has been the single manager for DOD ocean transportation.
Under the consolidation, MTMTS will be responsible for all traffic management and procurement of surface transportation worldwide, except for land transportation within each of the oversea theaters, which will continue as a function of the Unified Commander. MTMTS also will operate common-user ocean terminals in the United States and some oversea terminals.
The Navy will continue to be responsible for the operation and maintenance of Government-owned and bare-boat chartered ships used for such activities as research, oceanography, cable laying, range instrumentation, and repair facilities. The Navy also will retain responsibility for design and specifications for oceangoing vessels.
The consolidation of traffic management functions has been studied for some time, Mr. Shillito said. The division of responsibilities between the two agencies resulted in duplication of effort.
Until the mid-1960’s, surface transportation for oversea cargo could be easily segmented and managed separately on a geographic or environmental basis.
For each segment of the movement there were separate carriers, responsibilities, problems, and rate systems. In this environment, the separate single manager system worked well, since each leg of the pipeline could be effectively managed, although not without its duplications and deficiencies.
Mr. Shillito pointed out that starting in the mid-1960’s intermodal containerized transportation service gained momentum and has been expanding ever since. Advances in transportation technology now enable a shipper to load cargo into a van-type container at an inland point, seal the container, and arrange for delivery at its destination at an inland point overseas.
A single land or ocean carrier assumes responsibility for the entire movement, quotes a single rate to the shipper, and arranges to reimburse other carriers who have participated in the transportation arrangements with him as joint ventures.
The DOD recognized and is capitalizing on the advantages of containerization. In 1966, hardly any cargo was containerized. Presently, with the exception of ammunition, Mr. Shillito said some 52 percent of the outbound cargo is containerized.
The major increase in container service has not been without problems. Most significantly, container transportation must now be viewed on a systemswide basis, not just in individual segments. The present single manager structure is geared to a division along the lines of land versus ocean transportation.
Under these circumstances, the necessary overview is not possible. The expanded use of containerization has emphasized the essentiality of a systems approach so that the total surface transportation system would be managed by one manager.
Many Deficiencies
The increasing frequency and complexity of these management problems caused DOD to examine the organizational alinement between MSC and MTMTS objectively and to seek a solution. DOD’s study revealed these shortcomings —
• There is considerable duplication in overhead functions, such as billing, data systems, and operations. In fact, and this was also true before containerization, MTMTS, which loads the cargo, and MSC, which controls the vessel, each billed its customers using the identical transportation document; yet, each has a separate computer system to do it.
• When MTMTS, as the traffic manager, is notified of an export shipment by a customer, it first evaluates the cost of alternative methods of shipment and then refers the shipment to MSC. Then MSC advises MTMTS of the ocean carrier with whom arrangements have been made. It is only after that notification that the shipper can be advised to release the cargo. This means that each agency has stalls of people who spend time passing data back and forth to one another and who must attend frequent meetings in order that the separate organizations can perform their assigned missions.
• It is almost impossible to hold MSC responsible for ship utilization since MTMTS loads the vessels. Similarly, effectiveness of the MTMTS terminal operations are dependent on whether MSC provides the right vessels at the right time.
• Both MSC and MTMTS can arrange container transportation, MTMTS by means of a through Government bill of lading and MSC by means of ocean carrier agreement. Thus, each has its own system and in a sense each competes with the other and with the various segments of industry in arranging for container transportation from the single pool of military cargo.
• Both agencies operate industrial funds, have computer systems, and maintain headquarters staffs, much of which represents a duplication of effort.
It became apparent, Mr. Shillito told the committee, that the only long-term solution to the interface problems of the different surface transportation modes was a consolidation of the traffic management and procurement functions of the two agencies.
Many advantages will be gained by establishment of a single organization to manage the total surface transportation system. Some of these are —
• A single agency would have the total responsibility for developing a system approach for surface transportation and for establishing a proper balance in the use of organic versus commercial facilities and equipment.
• All surface transportation carriers and military shippers would have only one point of contact within the DOD, regardless of the different modes involved in any particular shipment.
• There will be only one computer system for surface movements and a single industrial fund. This will eliminate duplication of data as well as multiple billing to the military services.
• The overhead operating functions will be merged; thus, overhead expenses will be reduced.
• The existing, somewhat fragmented decision-making process would be eliminated and the initial traffic management decision made at the point of origin of the cargo will include consideration of the total distribution costs.
• Total surface pipeline times from origin to destination will be better controlled and therefore more effective under a single traffic manager.
• Mobility planning and execution of contingency plans with respect to surface transportation will be simplified under a total systems manager.
• A single traffic manager will be more responsive to military requirements because the delays normally associated with the coordination process between two separate agencies will be eliminated.
• The evaluation of tariffs, tenders of service, and contract agreements would be made by one agency, thus assuring the best service available for any particular shipment.
Army Decision
Mr. Shillito emphasized that the decision to consolidate functions and to establish a new agency under the Secretary of the Army was based primarily on the fact that the traffic management decision for the total movement must be made at the time a shipment is available for transportation at the inland origin point. Unlike the movement of break-bulk cargo, decisions for container movements cannot be made on a piecemeal basis at each interchange point.
While both MSC and MTMTS have expertise in the traffic management area, the Army has most of the inland responsibilities and some 60 percent of the total worldwide traffic moved is for the Army. Therefore, these functions were given to the Army.
Mr. Shillito said he is confident that a single surface transportation agency will prove to be the best approach to complete systems management and that it will best serve the national interests.
| Date Taken: | 09.18.2025 |
| Date Posted: | 09.18.2025 08:38 |
| Story ID: | 548506 |
| Location: | US |
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