KEEGAN: MAINTAIN CURRENT MSP CITIZENSHIP POLICY
Jay Keegan, president and chief executive officer of U.S. Ship Management, chastised U.S.-flag vessel operators that seek to “undermine” the corporate citizenship policy for participation in the nation’s Maritime Security Program.
U.S. Ship Management is the largest U.S.-flag container vessel operator with 19 ships, 15 of which are enrolled in MSP.
“The MSP citizenship policy is critical to our national security and should not be changed,” said Keegan to members of the U.S. Merchant Marine Academy Alumni Association in Washington, March 6.
MSP was created under the 1996 Maritime Security Act and is managed by the Maritime Administration. The program provides the federal government with immediate access to 47 military-useful commercial container and roll-on/roll-off vessels during times of war or national emergency. To help offset the higher vessel operations costs, the federal government annually pays MSP vessel operators $2.1 million per ship.
During his speech to the alumni, Keegan specifically referred to a recent request by Maersk Line Ltd., the U.S.-flag vessel operator of A.P. Moller/Maersk, to Congress and MarAd “to change long-standing policy by seeking to equate a foreign-controlled ‘documentation citizen’ with a U.S. citizen-owned and controlled company (a section 2 citizen).”
Maersk set up U.S. Ship Management to maintain control of the MSP vessel assets of the former Sea-Land Service, which the Danish carrier acquired.
The scuffle between Maersk and U.S. Ship Management came to a head during a House Armed Services hearing last July regarding renewal of MSP, set to expire on Sept. 30, 2005. Keegan and John Clancey, chairman of Maersk Inc. both testified before the committee.
Clancey told lawmakers that Maersk Line Ltd.’s direct management of the 15 U.S. Ship Management vessels would save the company millions of dollars in operations costs a year.
Keegan countered by explaining how Maersk ships made calls at ports of so-called “state sponsors of international terrorism,” such as Iran, Iraq, Libya and Sudan.
“I made it clear that I was not suggesting that Maersk was violating U.S. law because, after all, Maersk is not a U.S. citizen,” Keegan said at the alumni meeting. “But Maersk was appearing before the committee and claiming that it should be considered as the equivalent of a section 2 citizen. Well, it is not enough to be a like citizen.”
In November, Maersk Line Ltd. asked MarAd to confirm its eligibility as a MSP provider to bring all its U.S.-flag vessels enrolled in the program under its direct management, specifically the 15 vessels managed by U.S. Ship Management. Maersk Line Ltd. currently operates four U.S.-flag vessels in MSP.
Maersk Line Ltd. said that under its 1999 MarAd-approved operating contracts, U.S. Ship Management agreed to transfer direct operation of the vessels to Maersk should Maersk Line Ltd. elect to become the MSP contractor. MarAd is expected to release its decision soon.
Keegan warned: “If we permit a ‘documentation citizen’ the same rights and privileges as a section 2 citizen we will hasten the demise of the citizen-operated U.S. merchant marine in the foreign trades and, as importantly, it will eventually result in both the domestic and non-contiguous trades falling to foreign ownership and control.”