140224-N-PW661-016_CRP-16-9
Issue Background

Merchant Marine

Policy Needs: We must protect the legal framework that was created to support the national sealift requirement.

  • Maritime Security Program:     The 60 vessel Maritime Security Program (MSP) provides the foundation to support the U.S. commercial fleet operating in international trade and an economically viable U.S.-flag Merchant Marine for national defense and economic security. Rear Admiral Thomas Shannon, Commander, Military Sealift Command, stated that “without a strong U.S.-flagged merchant marine, we cannot answer the call and carry our nation to war.”  He went on to express strong support for the MSP, stating that “the Maritime Security Program is a bargain.”
  • The Jones Act:  The Jones Act mandates that cargo moving between U.S. ports must be carried on vessels that are U.S.- flagged & built, and crewed & owned by U.S. Citizens.  This generates approximately $100 billion in total annual economic output and supports 500,000 American jobs, and is vital to border and homeland security.
  • Cargo Preference Laws: To ensure sealift capacity and guarantee a skilled cadre of U.S. seafarers operating ships in foreign trade, Congress enacted laws to require certain percentages of government to be carried on U.S.-flagged, owned, and crewed vessels. Cargo preference covers government-impelled cargo movement on international waters. It is commonplace among the world’s seafaring nations. However, government-impelled cargoes have declined 35% since 2014, and the number of U.S. vessels in international trade has declined by almost 25%, shrinking the pool of mariners available for sealift. Congress must oppose further percentage cuts, especially to the Food for Peace program.
  • Title XI Shipbuilding Program: The Federal Ship Financing Program (commonly referred to as “Title XI”) promotes U.S. Merchant Marine fleet and U.S. shipyard growth and modernization. Through long term debt repayment guarantees, it encourages U.S. ship owners to obtain new vessels from U. S. shipyards cost effectively. It also assists U.S. shipyards with modernizing their facilities for building and repairing vessels.  Many other countries have similar financial programs that support their domestic shipbuilding industry.
  • National Security Multi-Mission Vessel: The six State Maritime Academy Training Vessels are reaching the end of service-life.  These ships have also been used during times of national emergency.

 

Funding Needs:

  • Maritime Security Program:  To compensate for reductions in military and other preference cargoes and to ensure continued economic viability, the amount of payment should cover the almost full extra cost of U.S. flag operation. At least $5M/year/ship ($300M total) is needed now to keep these ships under U.S.-flag.
  • Title XI Shipbuilding Program:  The FY17 budget requests $0 Title XI funds in FY17 and asks to rescind $5M added by Congress in FY16.  This should be opposed and should be funded at $25-35M/year. Each appropriated Title XI dollar can leverage up to $12 of private investment. 
  • National Security Multi-Mission Vessel:  $80M is needed in FY17 funding to start detailed design/fund long lead material to ensure first in class delivers before 2020

 

The Navy League Recommends: Protect a strong and healthy U.S.-flag Merchant Marine fleet.  Protecting the Jones Act and Title XI reduce overhead shipbuilding costs for the Navy and Marine Corps.  The Jones Act provides Homeland Security protections needed by the Coast Guard. Cargo preference, the National Security Multi-Mission Vessel, and the Maritime Security Program ensure we have the needed sealift capacity in terms of both ships and trained mariners. Protect our national security by investing in the Merchant Marine.   

The National Security Directive on Sealift states that “Sealift is essential both to executing this country’s defense strategy and to maintaining a wartime economy….The United States national sealift objective is to ensure that sufficient military and civil maritime resources will be available to meet defense deployments, and essential economic requirements in support of our national security strategy….The U.S.-owned commercial ocean carrier industry, to the extent it is capable, will be relied upon to provide sealift in peace, crisis, and war.  This capability will be augmented during crisis and war by reserve fleets comprised of ships with national defense features that are not available in sufficient numbers or types in the active US-owned commercial industry.”   This sealift capacity is dependent on having a sufficiently large ocean-going U.S.-flag fleet operating in foreign and domestic trades with an adequate pool of skilled U.S merchant mariners to crew each commercial and government owned reserve sealift vessel.    

Although promulgated in 1989, this Policy is still relevant today.  However, there are now serious challenges to meeting its objectives.  The commercial U.S.-flag vessel operating fleet engaged in international trade and the Navy’s and Maritime Administration’s (MARAD) reserve sealift fleets are under economic and fiscal pressures that could impact their long-term ability to surge and support our naval forces in a crisis.  

While the domestic component (Jones Act) of the U.S. flag fleet is stabilizing because of recent recapitalization of ships in the Hawaii and Puerto Rican trades and the new tankers being added to transport shale oil, the number of non-Jones Act U.S. vessels in international trade have significantly declined by nearly 25 percent, from 106 to 80, over the last three years.  This is primarily the result of a 35% decline in government impelled cargoes since 2014 due to (1) reduced military operations in Iraq and Afghanistan, (2) legislation that reduced cargo preference requirements for food aid, and (3) inability to enforce cargo preference regulations.   Additionally, the deactivation of Maritime Prepositioning Squadron One and the reduction of Army prepositioning ships reduced the number of seagoing billets.  These losses of “blue water” U.S.-flagged vessels since January 2010 have resulted in a loss of over 2,800 mariner jobs.  MARAD assesses we are at the point, below 90 ships in international trade,  where our ability to crew all U.S.-flagged commercial and government reserve sealift vessels for a sustained period of more than six to eight months is no longer certain.

Additionally, sequestration and continuing resolutions negatively impact the funding provided to support U.S.-flag vessels operating in international trade and the readiness of the Federal government reserve sealift fleets.  In 2013, sequestration resulted in no funding for the 60 vessels in the Maritime Security Program (MSP) for more than five weeks.  Worse situations for fiscal years 2014/2015 were narrowly averted when funding for up to 20/7 MSP vessels was restored by last minute budget compromises.  Future years funding is uncertain as the Budget Control Act funding caps return in 2016.  Although funding for MARAD’s Ready Reserve Force (RRF) of 46 vessels and Military Sealift Command’s (MSC) 14 Reduced Operating Status (ROS) vessels is adequate for 2014 and 2015, we must continue to invest in this priority.   Cuts to the program could reduce reserve sealift readiness and capacity below levels that would fully meet Combatant Commander’s Operations Plans for major deployment of ground forces.  These plans call for 95 percent of unit equipment and sustaining supplies to be moved by strategic sealift.  Reduced funding could also reduce the number of mariners employed on these vessels, exacerbating the problem of not having sufficient crews to mobilize Federal reserve sealift fleets.  Without adequate sealift and sealift manning, mission capability will be compromised.

Another issue with the RRF is the advanced age of most of its vessels, now averaging over 39 years.  The Navy does not have sufficient construction funds to recapitalize these ships during the next decade when they reach their expected service life.  As an alternative, the Navy recently explored the option of supporting the development of coastwise services of dual use vessels (commercial ships with military utility).  These commercial ships would alleviate congestion, road wear and pollution along the I-5/I-95/I-10 corridors in peacetime by carrying domestic 53’ tractor trailers/boxes along these American Marine Highways, while also being quickly available to support a major deployment of military equipment through participation in the Voluntary Intermodal Sealift Agreement (VISA) program.  This program, in which all MSP vessels and at least of 50% of the Jones Act fleet participate, fulfills the intent of the National Sealift policy that commercial ships have priority in meeting sealift requirements.

Beyond the availability of sealift shipping, the training of U.S. mariners is a critical issue.Even though the number of ships has been declining, the demographics of the merchant mariners crewing them and the demands of the offshore oil industry have resulted in a robust demand for graduates of the Federal and State maritime academies and union training schools.  Fewer training billets afloat and aging State Maritime Academy training ships are making it increasingly difficult to provide these new entrants the required sea time to meet the increased licensing and certification requirements when the International Maritime Organization Standards for Training, Certification and Watchkeeping (STCW) went into effect on 1 January 2017.  The academies need training vessels that will prepare them for their role in the maritime community

“The United States Military would be unable to deploy and sustain its forces worldwide without using privately owned, U.S. flagged commercial vessels.” –National Defense Transportation Association