Shipping executives say Congress should provide American maritime companies more financial support to improve the state of the U.S.-flag fleet.
Rep. Elijah E. Cummings, chairman of the House Transportation and Infrastructure subcommittee on Coast Guard and Maritime Transportation, noted at a hearing this week the fleet has been in steady decline for years, to the point where only 94 ships still fly the U.S. flag in international commerce.
Operating under the U.S. flag requires that ships be owned by American companies and crewed by U.S. citizens. Operators incur higher costs that put them at a competitive disadvantage with foreign flag operators
Speaking at Tuesday's hearing, a panel of executives called for a reauthorization of the Maritime Security Program in 2015 and extension of cargo preference to require ships carrying liquefied natural gas and oil for the Strategic Petroleum Reserve. They also called for changes in tax law to give expatriate status for U.S. mariners serving aboard vessels overseas.
Cummings noted the U.S. fleet today depends on government subsidies. The sixty vessels in the Maritime Security Program draw $2.9 million per year to offset the difference in operating costs between a U.S.-flag and foreign flag ship.
But MSP subsidies were not enough to make up the cost difference. Philip Shapiro, president of Liberty Maritime, said that MSP gave his company access to U.S. preference cargo. Overall 80 percent of the company’s business was U.S. preference cargo such as food aid or exports financed by the Export-Import Bank of the United States.
Shapiro said that without government support, the alternative would be to re-flag their vessels, and board foreign crews to compete internationally. “We believe it’s our duty to support a U.S. merchant fleet that can sustain our military and national security,” Shapiro said.
In 2004 lawmakers approved legislation that allowed operators to pay an annual tax based on their fleets’ tonnage rather than corporate income tax. Michael R. Dumas, vice president of Intermarine, said by keeping the tax savings in-house the company has been able to expand its U.S.-flag fleet of heavy-lift ships from one to four vessels in the past 10 years.
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