President's Column


October 2017


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SIU President Michael Sacco takes a closer look at the many ways America benefits from cargo preference


Within the maritime industry, we regularly refer to the figurative “three-legged stool” that keeps the American-flag fleet in operation. The components are well-known to many, in title if not necessarily in detail. They are the Jones Act, the Maritime Security Program, and cargo preference laws.


Note that when we talk about cargo preference, we are indeed referring to multiple laws. There is a tendency at times to think of cargo preference exclusively as the Food for Peace program, but there’s more to it.


First, though, I have to say that when military leaders, government officials and people from every component of the U.S. maritime industry all agree that a federal program works and benefits the country’s economy and defense, you would think its future is solid. But, for cargo preference, the outlook could depend on the day of the week, or on what particular concern is being debated on Capitol Hill. Despite boasting more than a century of proven results, efforts remain to undermine cargo preference.


For those who aren’t closely familiar with the specifics, cargo preference laws require shippers to use American-crewed, U.S.-flag vessels to move certain government-impelled, ocean-borne cargoes. The three major cargo preference statues are the Military Cargo Preference Act of 1904, which stipulates that 100 percent of military cargoes be shipped on U.S.-flag vessels; Public Resolution 17 (enacted in 1934), which requires all cargo generated by the U.S. Export-Import Bank be moved via U.S.-flag vessels (unless granted a waiver); and Public Law (PL) 480, the 1954 Food for Peace measure. PL-480 calls for a certain percentage of domestically grown agricultural goods and government aid to be transported on American-flag ships.


Earlier this year, the person who oversees the movement of all military goods and personnel told a Congressional hearing how important cargo preference is to the armed forces. Gen. Darren McDew, commander of the U.S. Transportation Command, told two subcommittees of the House Armed Services Committee, “There are several pieces of U.S. law that are part of the industrial base and it’s not just one. The Jones Act is probably the anchor for it, but without the Jones Act, without the Maritime Security Program, without cargo preference, our maritime industry is in jeopardy and our ability [to] project the force is in jeopardy.”


A month later, the head of the Navy League of the United States responded to a Washington Post editorial against PL-480. In a letter published April 29, Navy League National President Skip Witunski wrote, “Our nation’s cargo preference programs, including the Food for Peace Program, are instrumental to sustaining the U.S. Merchant Marine and maintaining our national defense sealift capability with the attendant billions saved.”


PL-480 has faced many attacks in recent years. Despite the fact that Food for Peace has been one of America’s most successful foreign aid programs, and even though it has received strong bipartisan support from president after president and members of Congress, there remain those who want to take the program’s funds and distribute the actual dollars directly to those in need.


The previous administration tried this via a pilot program that reduced the percentage of cargo carried by U.S.-flag vessels from 75 percent to 50 percent, while providing foreign governments and non-governmental organizations with money to hand out for aid in affected regions. Predictably, those dollars were distributed with little to no accountability. And, the damage caused to the U.S.-flag fleet has been considerable: the loss of almost 20 ships.


PL-480 isn’t the only program affected by funding cuts. Cargo generated by the Ex-Im Bank is way down because the bank has not been able to its job, but that’s a topic that’ll have to wait for another column.


Cargo preference laws normally aren’t something you’ll hear discussed on cable news shows or read about in newspapers. But, they are an important component of America’s commercial shipping capability – and they help maintain our manpower pool of reliable, U.S.-citizen mariners. That’s why the SIU will continue fighting to uphold and strengthen these critical laws.



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