Maritime Industry Urges Support for Cargo Preference

From the Seafarers InternationalUnion
22 November 2011

SIU Executive Vice President Augie Tellez and other maritime labor and company officials on Oct. 3 attended an open forum on an important program that greatly affects Seafarers and the industry at large. The multi-component program known as cargo preference stipulates that a certain percentage of U.S.-made or U.S.-funded items must be shipped on American vessels with American crews. The meeting was organized by the Maritime Administration (MarAd), whose stated goal was to open up the issue to public discussion.

Tellez (pictured below) and other speakers pointed out that cargo preference law enforcement is becoming increasingly more important to the maritime industry. With overseas conflicts starting to wind down, non-military cargo is going to become a more vital source of income for shipping companies and subsequently for merchant mariners.

“We in the maritime industry understand the critical need for our cargo preference laws, particularly those that affect food aid, our loan guarantee programs and other nondefense cargoes,” said Tellez. “As Operation Iraqi Freedom and Operation Enduring Freedom wind down after almost a decade, our industry needs to find cargo wherever it can, and we recognize we cannot continue to rely on the Pentagon for everything. Non-defense cargo is more important now than it has ever been.”

Maritime Trades Department, AFL-CIO (MTD) Executive Secretary-Treasurer Daniel Duncan was also on hand at the meeting expressing the department’s support for cargo preference laws.

“The MTD firmly believes that the nation’s series of cargo preference laws is a bedrock of the U.S.-flag maritime industry,” said Duncan. “These laws have played a vital role in ensuring that America has a strong domestic shipbuilding base and merchant marine. Cargo preference laws help create good-paying jobs for American workers, provide tax revenues at the local, state, and federal levels, and make sure America’s merchant marine is ready and available when needed for strategic sealift and other defense interests.”

The Marine Engineers’ Beneficial Association (MEBA) and the International Organization of Masters, Mates, and Pilots (MM&P) also jointly voiced their support for cargo preference laws and talked about the impact that they have on their respective memberships.

“There should be no question that, in order to grow and maintain the U.S. Merchant Marine, U.S.-flagged vessels should be used to the greatest extent possible when shipping government-impelled cargoes,” said William Doyle of MEBA. “Rigorous enforcement and oversight of cargo preference laws enables MarAd to fulfill its mission. Without oversight and enforcement from MarAd, the presence of the U.S.-flag fleet in the foreign trades would cease to exist, leaving a glaring hole in our national defense capabilities and negatively impacting our economy.”

Other speakers pointed out the economic importance the laws have on private shipowners and the costs that are deferred from the government because of them. Cargo preference laws, according to several presenters, provide an economically efficient way to bolster private industry and support jobs.

“Virtually every privately owned U.S.-flag vessel engaged in the foreign trade depends to some degree on cargo preference to remain economically viable,” said Bill Kenwell of Maersk Line, Limited on behalf of USA Maritime, an industry group consisting of shipowners, operators, and labor groups. “Indeed, absent cargo preference, it is no exaggeration at all to say that the U.S.-flag fleet in foreign commerce would disappear and the U.S. government would have to duplicate that sealift capability at enormous expense with government-owned vessels.”

In spite of these facts, however, many in the room were disappointed with MarAd’s efforts to enforce cargo preference laws. Even with revisions made by Congress that would bolster the programs, the agency’s efforts are still seen as lacking.

“If I had to sum up our feelings about MarAd’s performance when it comes to cargo preference matters in one word, that word would be frustration,” said Tellez, pointing to long vacancies in important MarAd positions and the lack of implementation of a three-year-old revision that punishes entities that don’t adhere to cargo preference rules.

Richard Berkowitz of the Transportation Institute, another maritime industry group composed of multiple sectors, agreed.

“Judging from the lengthy time it has taken to fill key management positions at MarAd related to cargo preference administration, it is difficult to believe that the administration’s role to ‘promote … the viability of the U.S. Merchant Marine’ is being taken with the earnestness and purpose needed to direct the government-impelled cargo so key to sustaining U.S. vessels in international trade lanes,” said Berkowitz.

Liberty Maritime Corporation CEO Philip Shapiro sent a letter to MarAd to throw his company’s support behind USA Maritime’s statements but added that the agency could be doing more in regards to cargo preference.

“Liberty Maritime would only like to add that it is imperative that the U.S. Maritime Administration place a high priority on cargo preference implementation and enforcement,” said Shapiro. “Congress has charged MarAd with ensuring that cargo preference achieves its objectives of supporting a strong and vibrant U.S.-flag Merchant Marine.”

In spite of some complaints, the SIU and others at the meeting reinforced their eagerness to work with the administration.

“The cargo preference laws work when they are properly enforced,” said Tellez. “They work when the resources needed to ensure that they’re being enforced are there. I am confident that MarAd can resolve these issues swiftly and I look forward to working with the agency in the future as we all strive to promot and protect our merchant marine.”

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Unions Condemn Maritime Administration Report

From Seafarers International Union Website:
11/7/2011

Statement by American Maritime Officers; International Organization of Masters, Mates and Pilots; Marine Engineers’ Beneficial Association; and Seafarers International Union

On Maritime Administration Report Comparing U.S. and Foreign-Flag Operating Costs

November 7, 2011

Maritime Administration Disregards Shipboard Labor, Releases Flawed Report

The U.S. Maritime Administration recently released a highly contentious study of American-flag shipping without any input whatsoever from maritime labor. This inexplicable decision guaranteed that the report would not contain the information that Congress and the Administration would need to develop and implement meaningful maritime policy that strengthens, not weakens, the U.S.-flag merchant marine, provides jobs for American, not foreign, maritime workers, and bolsters, not diminishes, the economic, military and homeland security of the United States. The administrator who approved the report, David Matsuda, should be held accountable.

The Maritime Administration, more than a year ago, was tasked by Congress with identifying ways to boost American-flag shipping. Instead, the agency accepted a report based on incomplete information whose main conclusion – that in the deep-sea commercial sector, it often costs more to use U.S.-flag ships – isn’t news to anyone. The fact that MarAd chose to exclude a significant segment of the maritime industry from this process, and accepted a report that includes possible cost-cutting suggestions that are completely contrary to the overall best interests of the United States, represents a gigantic failure in Matsuda’s leadership and a missed opportunity on the part of the Maritime Administration.

How could the Maritime Administration sign off on a report that suggests consideration of weakening or eliminating the Jones Act, one of the bedrocks of our national and economic security? How could the agency not refuse the mere notion of turning America into a second register? (It should be noted that the carriers interviewed for the study soundly rejected lowering U.S.-citizen crewing requirements as well as the second-register idea.)

We make no apologies whatsoever for the fact that our members make a living wage and receive health care and pension benefits. American mariners are second-to-none worldwide when it comes to being properly trained for their profession. Yet MarAd’s report points to these factors as some of the reasons why it costs more, on average, to ship American. MarAd should be ashamed of itself for entertaining a study that suggests that beating down American mariners to the level of Third-World labor and lowering their standard of living are good for our industry and good for our country. The findings of this report are an insult to the brave men and women who comprise the U.S. Merchant Marine, including those who sail in harm’s way to deliver vital materiel to our armed forces.

We stand ready to work with Congress and the Administration to make our industry stronger, larger and more competitive. The Maritime Administration had the opportunity to start this process in an all-inclusive, productive way. It is not only unfortunate but a clear dereliction of duty that they chose not to and instead spent time, energy and resources on a report that serves no useful, constructive purpose.