USA Maritime Issues Report on Cargo Preference

Seafarers Log, February 2011

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USA Maritime, a coalition dedicated to promoting and protecting the American maritime industry, has released a report detailing the value of a vital program known as cargo preference. Cargo preference is critical to maintaining a viable U.S. Merchant Marine and therefore has serious implications toward the economic and national security of the United States at large.


Issued in December, the USA Maritime study is titled “A Critical Analysis of Food Aid and Agricultural Cargo Preference.” The document finds that, contrary to the arguments of some critics, the law saves the U.S. millions of dollars in shipping costs. According to the report, for example, U.S. taxpayers saved $332.9 million in 2006 alone with cargo preference for the shipping of food aid.


Additionally, the study notes that all of the vessels trading in the food aid programs under cargo preference meet U.S. Department of Defense (DOD) requirements for militarily useful vessels. Cargo preference also “provides an essential pool of U.S.-citizen mariners necessary to crew organic DOD assets in times of war and national emergency,” the study points out.


Moreover, according to the coalition, the DOD has estimated that it would cost $10 billion to replace civilian-crewed U.S. vessel capacity and an additional $1 billion annually for operation and maintenance.


The Cargo Preference Act of 1954 requires that at least half of all government- generated cargo subject to the law be carried aboard privately owned, U.S.- flag commercial vessels available at fair and reasonable rates. The Food Security Act of 1985 boosted the percentage of the U.S.-flag tonnage requirement to 75 percent of agricultural cargoes under certain foreign assistance programs of the Department of Agriculture and the Agency for International Development.


In short, cargo preference is a guarantee that a certain percentage of U.S.-produced aid, such as food, water, and medical supplies, is shipped on U.S.-flag vessels. This law not only provides family-wage jobs and millions of dollars for the American economy, it also helps create goodwill and understanding amongst nations.


As President Barack Obama put it while running for office in 2008, “People around the world look to the U.S. flag as a symbol of hope and determination. Ships flying Old Glory with American crews are important icons of our resolve.”


The law also helps ensure that the U.S. fleet remains large enough to continue conducting international commerce. Cargo preference creates the incentive for companies to continue operating under the U.S. flag while hiring an American workforce and abiding by proper rules and regulations.


According to the study, “Since at least 1904, cargo preference has been at the center of legislation ensuring the survival of the U.S. merchant fleet. Cargo preference reflects the belief that when the U.S. Government buys ocean transportation, it should hire U.S. citizens paying U.S. income taxes for at least a portion of that work, provided they are available and can do so at a fair and reasonable rate.


“The goal of cargo preference is to ensure that, despite the disruptions of war and national emergency, the U.S. can continue trading with the world, seeking essential resources and getting exports to market. In today’s deeply intertwined global economy and culture of ‘just in time’ deliveries, this is more important than ever. And if, for example, full-scale war erupts again, cargo preference will ensure the availability of reliable U.S.-flag sealift assets controlled by Americans and crewed by American citizens, not just to carry weapons to the front in roll-on/roll-off (ro/ro) vessels, but also to carry bulk food commodities to our allies through enemy blockades, to ensure the movement of vital supplies to our home ports, allies, and troops in bulk tank vessels, and to ensure the movement of manufactured goods in container vessels through intermodal networks, by liner or charter service.


“Cargo preference … ensures we have an American fleet to rely on when it is needed. To quote a 1904 House report recalling the problems caused by a lack of American merchant auxiliaries in the Spanish-American War: ‘It is never safe or wise to depend on foreigners for the defense of our own country. Our dependence must always be on our own men and ships to uphold the honor and dignity of our flag in the time of extremity.’ ”


USA Maritime’s members include the SIU and other maritime unions, U.S.-flag ship operators and other organizations committed to helping ensure a strong American maritime industry.


The report is available online at

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