U.S maritime advocates have warned of the crippling of the Merchant Marine before, only for the institution dating back to revolutionary days to soldier on. This time, however, their fears appear warranted.
The Obama administration’s fiscal 2014 budget seeks to overhaul foreign food aid programs the U.S.-flag fleet depends on. The budget shifts funding from the Food for Peace program, the nation’s largest food aid facility, to the International Disaster Assistance account for emergency food needs. IDA funding would be used for emergency needs, with the majority of purchases in the U.S. Purchases also would be made for food from markets near crises.
Critics say the government spends too much money for U.S.- and foreign-flag carriers to ship the roughly $1.5 billion worth of food aid to recipient countries. A 2011 report from the Government Accountability Office, the watchdog arm of Congress, found ocean transportation made up two-thirds of the cost to deliver food aid. Further, transportation costs are rising because a dwindling number of U.S.-flag carriers is dampening competition, the report stated.
Proponents counter that the aid programs support more than 33,000 American transportation jobs and U.S. agriculture. Sourcing the aid domestically also cuts down on corruption, they add.
The concern over the proposed reshaping of the food aid program goes beyond just those U.S.-flag carriers that haul the grain. The greater threat is that the Merchant Marine will shrink in terms of vessels and mariners to the point that it can’t support military operations during times of crisis, said James Caponiti, executive director of the American Maritime Congress. The ocean fleet, comprised of commercially owned and operated vessels, numbers about 200 ships and provides job to more than 11,000 mariners.
“It has us all very frightened. This is the most people have been worried in a long time,” he said.
The U.S.-flag fleet already gets less of a piece of the food aid contracts, after the federal sequestration cut the Food for Peace program, the main aid program, by $74 million, or 5 percent. The federal fiscal tightening also means carriers enrolled in the Department of Defense’s Sealift Readiness Program will receive less money to help them stomach the higher costs of operating a U.S.-flag vessel rather than a foreign vessel.
More dramatically, the roughly 60 U.S.-flag vessels able to haul the food cargo — nine dry bulk ships, 51 container ships and four general cargo ships — also have seen their guaranteed share of the business shrink from 75 percent to 50 percent, because of the recent surface transportation bill, known as MAP-21. The sequestration cuts and the decision to cut the guaranteed cargo preference — completed in back rooms as Congress hashed out MAP-21 — speaks more to fiscal tightening than the industry’s inability to get its message heard on the Hill, said Charlie Papavizas, a maritime partner at Winston & Strawn in Washington.
The larger reason the industry faces more threats is that it doesn’t have a strong enough ally in Obama, said Denise Krepp, a consultant and former chief counsel at the U.S. Maritime Administration. The administration hasn’t done enough to enforce cargo preference requirements that federal departments use the U.S.-flag fleet for transport, she said.
The Department of Energy ignored cargo preference rules for its alternative energy program during Obama’s first term until the Department of Transportation stepped in. And Marad’s granting of waivers to foreign-flag tankers to ship oil during the summer of 2011 from the Strategic Petroleum Reserve on the Gulf Coast still stings. Krepp fears the Merchant Marine will be gone within a decade if a coalition of mariners, farmers and governors don’t rally in support of the program.
Some shippers also “game” cargo preference rules by breaking up shipments of more than $20 million that are financed via the Export-Import Bank, Pavavizas said.
In addition to the DOT, U.S. maritime advocate Clay Maitland said Marad hasn’t given the fleet enough support. “We’re not happy with Marad and Marad Administrator (David Matsuda). We feel there is obviously going to be a change of personnel there very soon. We would like a qualified person to fill the Marad administrator post,” he told Maritime TV last month.
Matsuda, who had no maritime experience before taking the post in 2010, has been criticized for not being more aggressive in wielding the agency’s limited power. The tiny agency within the DOT had a budget of $349 million in fiscal 2012, and has received less financial support in recent years. Marad also would get $25 million for “additional targeted operating subsidies for militarily useful vessels and incentives to facilitate the retention of mariners.”
“I think Marad does what it can do,” said Caponiti, a former employee of the agency. “We would like to see a different attitude from the (Obama) administration.”
(Editor's Note: This is an update of a story originally posted on April 5.)