Big Wins for American Maritime Industry


January 2016


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The U.S.-flag maritime industry scored two major victories on Capitol Hill late last year.


President Obama on Dec. 4 signed the Fixing America’s Surface Transportation Act (also known as the highway bill), which included language to re-charter the U.S. Export-Import (Ex-Im) Bank through 2019. The previous week, on Nov. 25, the president signed the National Defense Authorization Act, which included a measure increasing to $3.5 million the annual stipend provided to each of the 60 vessels enrolled in the U.S. Maritime Security Program (MSP).


Bipartisan efforts in both the House and Senate showed the Ex-Im Bank had strong support despite the protests of a small group of elected officials claiming the bank was corporate welfare and a drain on the Treasury.


The SIU and allies from across the U.S. have been meeting with members of Congress since the charter expired at the end of June to point out how important it is to the U.S.-flag maritime industry. Cargo generated by the institution must be transported by U.S.-crewed, U.S.-flagged vessels.


Records show the bank supported 164,000 American private-sector jobs in 2014. Nearly 90 percent of the institution’s transactions went to small businesses. It supported $27.5 billion in U.S. exports at no cost to U.S. taxpayers.


During the debate for its renewal, President Obama pointed out that the Ex-Im Bank actually generated $7 billion for the U.S. Treasury over the last several years.


President Franklin Roosevelt chartered the Ex-Im Bank in 1934 to provide low-interest loans for the export of American-made products. Since its charter expired June 30, the institution was unable to conduct its regular business. Several companies announced during the period when the charter hadn’t been renewed that they were moving operations outside the United States, costing thousands of American jobs. Approximately 60 other countries have similar programs to promote their goods around the world.


After the recent re-chartering, Ex-Im Bank Chairman Fred Hochberg said, “Exporters and their supply chains are critical to the country’s economic health. Export-focused businesses bring a host of benefits to their communities and local economies, including generally paying higher wages to their employees than non-export businesses.”


Meanwhile, to be part of the MSP, U.S.-flag companies agree that militarily useful, U.S.-crewed vessels and the infrastructure supporting them are available to the military in times of war or national emergencies. The MSP was enacted in 1996.


Language in the National Defense Authorization Act noted, “It is the sense of Congress that dedicated and enhanced support is necessary to stabilize and preserve the Maritime Security Fleet program, a program that provides the Department of Defense with on-demand access to world class, economical commercial sealift capacity, assures a United States-flag presence in international commerce, supports a pool of qualified United States Merchant Mariners needed to crew United States-flag vessels during times of war or national emergency, and serves as a critical component of our national security infrastructure.”


The legislation was approved, 370-58, by the House of Representatives on Nov. 5 and 91-3 by the Senate on Nov. 10.


A report on the MSP prepared for the Maritime Administration by Econometrica, Inc. cites a 2006 estimate by Reeve and Associates that “If [the Defense Department] needed to replicate the ... capacity of the MSP fleet, the capital cost alone would be $13 billion.” This same report notes that the United States Transportation Command has estimated “it would cost the U.S. government $52 billion to replicate the intermodal system that has been developed, maintained, and continuously upgraded by MSP participants.”


By contrast, the MSP has cost a relatively tiny fraction of those amounts: $186 million a year, at most.


The provision authorizing the increase the yearly allotment for each vessel during fiscal year 2016 was introduced by U.S. Rep. Duncan Hunter (RCalifornia), vice chairman of the Armed Services Committee’s Seapower and Projection Forces Subcommittee and chairman of the Transportation and Infrastructure Committee’s Subcommittee on Coast Guard and Maritime Transportation. Critical support also came from Chairman of the Armed Services Committee Rep. Mac Thornberry (R-Texas), Ranking Member on the Armed Services Committee Rep. Adam Smith (D-Washington), Chairman of the Seapower and Projection Forces Subcommittee Rep. Randy Forbes (R-Virginia), Ranking Member on the Seapower and Projection Forces Subcommittee Rep. Joe Courtney (D-Connecticut), and Rep. Rick Larsen (D-Washington), who serves on the Armed Services Committee and Seapower and Projection Forces Subcommittee.

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