House Hearing Examines State of Merchant Marine


October 2014


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The conclusion drawn from a Sept. 10 hearing in the House of Representatives on the state of the U.S. Merchant Marine was crystal clear: America must maintain a strong U.S.-flag fleet and a sizable pool of U.S. mariners.


The SIU weighed in at the hearing – conducted by U.S. Rep. Duncan Hunter (R-California), chairman of the Subcommittee on the Coast Guard and Maritime Transportation – through joint testimony presented by Don Marcus, president of the International Organization of Masters, Mates and Pilots. Also signatory to that testimony were the American Maritime Officers, Marine Engineers’ Beneficial Association, Sailors’ Union of the Pacific, and Marine Firemen’s Union.


Three others testified: Mark Tabbutt, chairman, Saltchuk Resources; Niels Johnsen, chairman/CEO, International Shipholding Corporation; and Matthew Paxton, president, Shipbuilders Council of America. U.S. Rep. John Garamendi (D-California), ranking member of the subcommittee, also spoke up in support of American mariners and the U.S.-flag industry.


Hunter described the hearing’s purpose as “to review issues impacting the U.S. Merchant Marine, the important role it plays in our economy and national security, and ways we can work together to strengthen and expand the merchant marine.”


He called the hearing to order with statistics highlighting the need for action.


“Unfortunately, over the last 35 years, the number of U.S.-flagged vessels sailing in the international trade has dropped from 850 to less than 90,” Hunter stated. “Less than two percent of the world’s tonnage now moves on U.S.-flagged vessels. In the same period, we have lost over 300 shipyards and thousands of jobs for American mariners. For the sake of our national and economic security, we need to reverse this trend.”


Garamendi described some of the successes and ongoing challenges in the industry.


“We have successfully fought off ill-advised waivers of the Jones Act, we have rallied and beaten back some of the worst proposals to rewrite our cargo preference laws,” he said. “We’ve also succeeded in reauthorizing and fully funding the Maritime Security Program, to insure that the Pentagon retains the sealift capability it needs to move our military quickly, efficiently and securely.”


He continued, “We need to recapitalize our Ready Reserve Fleet, to modernize our sealift vessels and provide new job opportunities for our shipyards. We need to better utilize existing financial assistance programs, such as Title XI (the shipbuilding loan guarantee program) to again demonstrate that the federal government is a willing partner in the maritime industry. We should note that our competitors around the world are giving significant support for their maritime industry. And, perhaps most important, we must take advantage of the recent emergence of a U.S. LNG export trade, to insure that the export of this strategic national resource does not merely increase the profits of the energy exporters, but also directly benefits our merchant marine and the expansion of our domestic shipbuilding industry.”


Tabbutt, who was testifying on behalf of the American Maritime Partnership (AMP), was the first witness to speak. He described the importance of the Jones Act when it comes to jobs and the economy.


“My testimony today comes on behalf of the American domestic maritime industry – that is, the shipping industry that operates exclusively within the United States,” he said. “I am happy to report that this industry is experiencing an extraordinary renaissance. The largest sector of our domestic marine transportation industry supports our energy infrastructure with the movement of crude, refined petroleum products, and chemicals. This sector has seen dramatic growth as a result of the shale oil revolution. This is driving record levels of new vessel construction orders and deliveries, and the order books at major American shipyards are filling fast.”


“It is a very good time to be part of the American domestic maritime industry,” he added. “Our industry’s contributions to America’s economic, national, and homeland security have never been more important and are expanding every day.”


Johnsen, who testified on behalf of USA Maritime, asked the subcommittee, “Do we want to have a robust United States-flag merchant marine sufficient in size and capability to support our national and economic security for the rest of this century and beyond? USA Maritime strongly believes that the only answer to this question is yes.”


Johnsen then talked about a program that is essential to U.S. mariners: the Maritime Security Program, or MSP.


“A strong, fully funded Maritime Security Program must be a key component of any future maritime policy,” he said. “MSP provides a privately owned, U.S.-flag fleet of 60 militarily useful commercial vessels to support the sustainment of U.S forces throughout the world. Under this program, U.S. carriers commit their vessels and their global logistics networks of ports, rail, trucking and infrastructure to support American troops and to maintain America’s readiness.”


He concluded, “Our industry is in the midst of a perfect storm: dwindling military cargoes, a precipitous drop in food aid cargoes, escalating cost and regulations … and intense, low-cost foreign competition. A national maritime strategy, that addresses these issues in a comprehensive way, must be developed immediately.”


Marcus echoed those sentiments when he said, “We are seeing significant reductions in the amounts of Defense and non-Defense government cargoes available to U.S.- flag vessels. As a result, U.S.-flag vessel operators face significant economic and competitive disadvantages which have resulted in a decline in the share of U.S.-foreign trade carried by privately owned U.S.-flag commercial vessels, a decrease in the number of vessels operating under the U.S.-flag in the foreign trades, and a loss of employment opportunities for American Merchant Mariners.”


Marcus asked Congress to work with the U.S. Maritime Administration to promote and defend American-flag shipping, and he also urged the restoration of previously longstanding percentages of government cargoes reserved for U.S.-flag ships.


Paxton detailed how the shipbuilding industry is an important contributor to the American labor force and economy.


“Shipyards have a big impact on their local communities and the country at large,” he said. “With over 300 facilities located in 27 states, and a supplier base that can be found in all 435 Congressional districts, each direct job leads to another 2.7 jobs nationally.”


Additionally, he explained that defending the Jones Act is just as important to shipbuilding as it is to shipping.


“Commercial vessel construction represents billions of dollars in investments each year, underscoring the importance of maintaining the Jones Act, a law SCA cares deeply about,” he noted. “Each dollar invested in new commercial vessel construction is done so with the understanding that the Jones Act is the law of the land, so it is absolutely critical that any attempts to undermine the law are not entertained, which includes unnecessary waivers.”



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