MARITIME SECURITY PROGRAM (MSP) FUNDING
The Maritime Security Program (MSP) and its 60-ship maritime security fleet of privately-owned militarily useful U.S.-flag commercial vessels provide the Department of Defense with access to the U.S.-flag commercial sealift capability, private shipping companies’ global intermodal and logistics systems, and U.S. civilian mariners needed to support American troops and to protect America’s security interests around the world. And all at a fraction of what it would cost the Federal government to provide this capability itself!
A 2006 report prepared for the National Defense Transportation Association concluded that “the likely cost to the government to replicate just the vessel capacity provided by MSP dry cargo vessels would be $13 billion.” In addition, the United States Transportation Command has estimated that it would cost our Government an additional $52 billion to replicate the global intermodal systems made available to DOD by MSP contractors.
Since 2009, U.S-flag commercial vessels and their civilian crews have carried more than 90 percent of the cargo needed to support U.S. military operations and rebuilding programs in Afghanistan and Iraq, and vessels enrolled in the MSP carried 99 percent of those cargoes.
However, significant reductions in the amounts of defense and other government cargoes available to U.S.-flag vessels; the proliferation of tax and other economic incentives available to foreign flag vessels and foreign crews; the regulatory compliance requirements imposed only on U.S.-flag vessels by the U.S. government; and the growing competition for cargoes from foreign flags of convenience vessels are all forcing shipping companies to reduce their U.S.-flag vessel operations, causing a dangerous decline in the number of qualified and available American merchant mariners to meet the needs of the Department of Defense.
At Congressional hearings held in 2017, representatives from the Department of Defense and Maritime Administration warned that there is a shortage of approximately 2,000 mariners available to meet national security requirements. They said this shortfall threatens DOD’s access to the sustained commercial sealift capability needed beyond the first few months of a conflict.
We must reverse this dangerous decline and put American mariners needed to meet Department of Defense requirements back to work aboard U.S.-flag commercial vessels. Otherwise, we will be turning over to foreign flag vessels and their foreign crews the security of our nation and the safety of American troops deployed overseas. It is essential that the Administration and Congress focus on ways to stop the further loss of U.S.-flag vessels and the outsourcing of American maritime jobs.
As one critically important way to help maintain U.S.-flag vessel operations and their U.S. citizen crews, we urge Congress and the Administration to support full FY’2018 and full FY’2019 funding for the Maritime Security Program at its authorized levels of $300 million.
CARGO PREFERENCE SHIPPING REQUIREMENTS
U.S.-flag cargo preference shipping requirements ensure that at least a portion of taxpayer financed United States government cargoes will be carried on U.S.-flag vessels crewed by American mariners. Cargo preference helps to ensure the continued availability of the privately-owned U.S.-flag commercial fleet which, along with its associated American maritime manpower, is a critical national defense asset.
It is important to understand that every U.S.-flag vessel has important military utility by providing the employment base necessary to maintain the cadre of American merchant mariners needed by the Department of Defense. Regardless of type, every U.S.-flag vessel, including all those participating in the carriage of U.S. government generated cargoes under the various cargo preference programs, is militarily useful. The full implementation of the cargo preference requirements helps guarantee that American maritime jobs will not be outsourced to the benefit of foreign maritime workers and that the dangerous decline in the number of available American merchant mariners will not worsen.
All too often, Federal agencies and departments fail to comply with cargo preference, denying American vessels their rightful share of these cargoes and denying American maritime workers important job opportunities aboard these vessels. In addition, this means that American taxpayer dollars will be spent exclusively on foreign flag shipping services, to the benefit of foreign rather than American maritime workers.
Similarly, proposals to transform the existing PL 480 Program into a program that sends taxpayer dollars instead of American produced agricultural commodities overseas to help feed the world’s neediest peoples should be opposed by Congress and the Administration. Rather, the PL 480 Program should continue to ensure that American taxpayer dollars benefit American farmers, American shipping, and American maritime and other domestic transportation workers.
Finally, questions as to the applicability of cargo preference should be decided by the Maritime Administration. We ask the Administration to make clear to all Federal agencies and departments that the Maritime Administration has the final say on questions relating to the applicability of cargo preference, and that the Maritime Administration fully exercises this authority.
As another means to help maintain U.S.-flag vessel operations and their U.S. citizen crews, we urge Congress and the Administration to express their support for the full implementation of U.S.-flag cargo preference shipping requirements and to work to ensure that the statutory requirements for the use of U.S.-flag vessels represent the minimum rather than the maximum utilization of American ships and American crews.
RESTARTING THE EXPORT-IMPORT BANK
Since 1934, the Export-Import Bank has provided direct loans, loan guarantees, working capital guarantees and credit insurance to encourage the foreign purchases of U.S.-made products. It helped to facilitate more than $37 billion in export sales in FY 2013, supporting more than 200,000 American jobs.
Equally important, a percentage of Export-Import Bank financed exports must be shipped on U.S.-flag commercial vessels, providing an important source of cargo for the U.S.-flag fleet. The U.S.-flag vessels and American crews supported by Export-Import Bank cargoes are crucial to protecting America’s security and economic interests.
We urge Congress and the Administration to take the necessary steps to enable the Export-Import Bank to resume its important activities on behalf of American businesses and American workers as a way to generate jobs for American workers in the U.S. manufacturing and service industries, including the U.S. maritime industry.
BILATERAL SHIPPING AGREEMENTS
The negotiation of bilateral cargo sharing agreements between the United States and its trading partners is an important and very effective way for our government to address the tax, economic and subsidy programs available to foreign flag vessels that impede the ability of U.S.-flag commercial vessels to carry a greater share of U.S. exports and imports. In fact, it is estimated that the U.S.-flag fleet carries a mere 2 percent of all the cargo entering and leaving our country, and none of the liquefied natural gas and oil products our country now exports.
We urge the Administration to vigorously utilize its authority to negotiate meaningful bilateral cargo sharing agreements to ensure that U.S.-flag vessels with U.S. citizen crews carry a greater portion of America’s foreign trade.
THE JONES ACT
The Jones Act requires that cargo transported by water between ports in the United States is carried on vessels owned and crewed by American citizens and built in American shipyards. According to a recent study by PricewaterhouseCoopers, the Jones Act generates 500,000 high-quality American jobs, produces an economic output in the U.S. of more than $100 billion annually, and provides critical homeland security, economic, environmental, and safety benefits to our nation. An additional U.S. Maritime Administration study concluded that the American shipbuilding and repair industry supports annual employment in the U.S. for more than 400,000; generates annual labor income of about $24 billion; and creates an annual gross domestic product of $36 billion.
The full enforcement of the Jones Act is essential to ensure that vessels carrying cargo along our coasts, in our non-contiguous trades, on our rivers and on the Great Lakes are not controlled by foreign shipping interests and foreign citizen crews.
We urge Congress to continue to support this critically important national maritime policy.