With a lack of preference cargo, carriers that move international cargo are exiting the U.S. flag; fleet has shrunk from 106 to 78 in past four years.
One of the major incentives the U.S. government can use to encourage companies to operate ships under the U.S. flag is the Maritime Security Program.
It provides a stipend of $3.1 million per ship for up to 60 ships to help offset the higher cost of U.S. crews and other expenses of registering a ship in the United States.
At a joint hearing held Tuesday by the House Subcommittee on Coast Guard and Maritime Transportation and the Subcommittee on Livestock and Foreign Agriculture of the Agriculture Committee, Maritime Administrator Paul N. “Chip” Jaenichen said for the first time not all those stipends are being claimed.
He said only 57 ships are participating in the program, which is one of the pillars of support for the U.S. merchant marine, along with the Jones Act and government preference cargo.
About 80 percent of government preference cargo is military-related, 5 percent is cargo given preference for carriage by U.S.-flag ships under programs such as the Export-Import Bank loans and 15 percent is food aid, the focus of Tuesday’s hearing.
The purpose of the programs is to make sure the United States has a maritime presence in global trade and its military has sufficient vessels and personnel to operate them, including 63 government reserve sealift vessels.
Jaenichen said 78 U.S.-flag ships trade internationally, which is down from 106 at the end 2011.
Fifty-seven of those ships participate in the MSP program, even though funding for 60 militarily useful ships is authorized. He said those 60 ships can create jobs for up to 2,400 mariners.
“This is the first time I know of that a maritime administrator has testified before Congress where we had vacancies in this critical program,” Jaenichen said.
He said the “continuing winding down of military operations and the decreasing number of U.S. bases in foreign countries and military personnel and families assigned overseas has reduced the volume of Department of Defense-impelled cargoes.”
In addition, he noted the Moving Ahead for Progress in the 21st Century (MAP-21) law, which took effect on July 6, 2012, returned the food-aid preference threshold for U.S.-flag vessels from 75 percent to its previous level of 50 percent.
In 2014, more than 800,000 metric tons of food aid was shipped on U.S.-flag vessels, with 600,000 tons provided under the Food for Peace program established under P.L. 480 Title II. Half of the Title II food-aid cargo—54 percent—is carried on dry-bulk vessels, which unlike most of the liner vessels are not part of MSP and receive no government support beyond cargo preference, Jaenichen said.
Rep. Duncan Hunter, R-Calif., chairman of the House Coast Guard subcommittee, expressed concern about the decline in the U.S. merchant marine.
“There is no peace dividend in terms of not having to move stuff around anymore… There is not going to be a time we don’t have to move military goods overseas,” he said.
Referencing the terrorist attacks in Paris last week, Hunter said “things have not gone away, the world is not a safer place, you are going to need these ships to move more gear to our troops on the ground overseas.”
57 ships enrolled in MSP, even though 60 can receive stipend
