The U.S. Maritime Administration’s top official said U.S.-flag carriers in international markets are “at a tipping point” and that helping them compete will be an important part of Marad’s effort to develop a national maritime strategy.
“We’re going to put pen to paper here very quickly,” Acting Maritime Administrator Paul “Chip” Jaenichen said at the end of a three-day Marad symposium that focused on U.S.-flag international carriers.
Jaenichen said the forum, which attracted approximately 200 attendees, was a first cut at developing a national maritime strategy. He said except for tweaks in 1970, the current one hasn’t been changed since the 1936 Merchant Marine Act.
Marad plans additional sessions, possibly in conjunction with industry events. Jaenichen said the process will emphasize transparency. The agency has opened a Federal Register docket for comments on development of the strategy. Webcasts of speeches at this week’s event are on Marad’s website.
Past attempts to overhaul U.S. maritime policies have run agound on bickering by industry factions. Jaenichen said the objective is to develop proposals that can be enacted, even if they don’t provide everything everyone wants.
“It might mean giving up something that you want in order to ensure the long-term health of the indusry,” he said.
Following this week’s discussion of U.S.-flag international shipping, Marad plans during the coming months to dive into issues affecting domestic offshore shipping; Gulf, inland and Great Lakes markets; and shipyards.
Any maritime strategy must cover all sectors, Jaenichen told the JOC. “Many of the policies that impact the maritime industry are overarching. If you tinker with one of them, you coiuld have an adverse secondary and tertiary impact on other sectors. We want to make sure we’ve worked all those things out,” he said.
Much of the discussion at this week’s symposium focused on seeking ways to increase commercial shipments by U.S.-flag international carriers. These carriers now are overwhelmingly reliant on government-impelled shipments of military cargo, food aid, and shipments with U.S. Export-Import Bank financing.
Military shipments are falling with the winding down of the Iraq and Afghanistan wars. Meanwhile, U.S.-flag guarantees of carriage of food aid shipments have been weakened by amendments to the last transportation funding bill and the recent budget compromise.
“There is no question that we are at a tipping point for the U.S.-flag fleet operating in international trade, and for some the conditions are already dire,” Jaenichen told the symposium.
“Before we can build the U.S. fleet we must hold what we have, and that means cargo,” he said. “There has to be the cargo, or a buildup of the fleet is going to be artificial and not sustainable.”
U.S.-flag presence in liner shipping is almost entirely limited to vessels in the Maritime Security Program, which provides $3.5 million annual subsidies to 60 ships whose operators agree to make them available for military needs along with commercial cargo.
MSP carriers say the subsidies don’t fully offset the higher costs of U.S.-flag operation. Carriers that continue to operate international services under the U.S. flag do so primarily to retain access to government-impelled shipments under cargo preference programs.
Domestic offshore carriers are shielded from non-U.S. competition by the Jones Act, which requires shipments between U.S. ports to be carried in U.S.-flag, U.S.-built vessels that are owned and crewed by Americans.
Jones Act supporters have beaten back repeated efforts to weaken the law, but are carefully watching efforts to permit exports of U.S. oil and gas. Coastwise petroleum shipments are a key source of cargo for Jones Act tanker operators and unions.
The U.S. energy boom has generated discussion of re-establishing a U.S. presence in construction and operation of LNG tankers. Proposals raised at the symposium included tax and financing incentives to encourage U.S. investment in these vessels.