sealift. As such, the U.S. commercial sealift industry is a vital component to meet the Nation s strategic sealift requirements.

Transcription

1 SUPPORT U.S.-FLAG CARGO PREFERENCE REQUIREMENTS Cargo preference laws, because of the impelled cargoes they generate, help maintain U.S.-flag ship capacity and the qualified mariners necessary to crew the Maritime Administration Ready Reserve Fleet and the Military Sealift Command Surge Fleet. General Darren McDew, Commander, U.S. Transportation Command, 2018 OBJECTIVE To ensure that all Federal shipper agencies and departments fully support and comply with existing U.S.-flag cargo preference shipping requirements. As part of the effort to achieve this objective, Representatives John Garamendi, Duncan Hunter, David Joyce and Cedric Richmond are urging their colleagues to join with them on a Dear Colleague letter calling on the Secretaries of Transportation and Defense to encourage the President to affirm the Administration s support for Ship American. The letter further urges the Administration to direct all Executive Branch departments and agencies to fully comply with the spirit and the letter of existing U.S.-flag cargo preference shipping requirements. We ask that you join in this effort and sign the dear colleague calling on the Administration to fully support and enforce existing U.S.-flag cargo preference shipping requirements. BACKGROUND Existing cargo preference shipping requirements stipulate that a percentage of U.S. taxpayer financed government cargoes must be transported on U.S.-flag commercial vessels to the extent such vessels are available at fair and reasonable rates. The U.S.- flag shipping requirement is 100 percent for defense and military cargoes, and 50 percent for non-defense government exports and imports. These requirements do not apply to commercial (i.e., non-governmental) transactions but only to those transactions that are financed in whole or part, directly or indirectly, by the U.S. taxpayer. They ensure that at least a portion of U.S. taxpayer dollars will pay for U.S.-flag shipping services and will not be used exclusively to the benefit of foreign flag shipping services and foreign mariners. ECONOMIC and NATIONAL SECURITY BENEFITS Nearly 90 percent of all wartime transportation requirements are delivered by strategic organic and commercial sealift. As such, the U.S. commercial sealift industry is a vital component to meet the Nation s strategic sealift requirements.

2 General Darren McDew, Commander, U.S. Transportation Command, 2018 Since 2009, privately-owned U.S.-flag commercial vessels and their civilian U.S. citizen crews have transported more than 90% of the sustainment cargo needed to support US military operations and rebuilding programs in Iraq and Afghanistan. A 2006 report prepared for the National Defense Transportation Association Military Sealift Committee 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 U.S. 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 our US-flag operators. It is our U.S.-flagged merchant fleet and our mariners that ensure that our Soldiers, Sailors, Airmen and Marines are supplied. From Inchon to Iraq, our mariners and our maritime industry delivered... Let us not, as a nation, sign away our remaining sealift capacity to non-u.s.-flagged fleets sailed by non-u.s. mariners. Rear Admiral Thomas Shannon, Commander, U.S. Military Sealift Command, May 21, 2015 In an April 2015 report to Congress, the U.S. Maritime Administration concluded: U.S. Government-impelled preference cargoes are essential for maintenance of the U.S. Merchant Marine. The decline in preference cargo is the primary reason for the decline of our U.S.- flag fleet. Food aid cargoes are the single greatest source of preference cargoes over half of the dry preference cargo tonnage available since Food aid cargoes are more important than ever; DOD cargoes are expected to decline with the end of the wars in the Middle East and Afghanistan, on top of the broad reduction in overseas personnel and bases over the last 25 years. The U.S. merchant marine is a valuable national asset that has always been there for America in times of war and national emergency... Our nation s cargo preference programs, including those with respect to the Food for Peace program, are instrumental to sustaining the U.S. merchant marine and maintaining our national defense sealift capability with the attendant billions saved.

3 Navy League of the United States, 2017 Since MAP-21 slashed cargo preference from 75% to 50% in 2012, our U.S.-flag fleet has plummeted by 26% according to the U.S Maritime Administration more than triple the impact initially forecast by the Administration. GAO reported that when MAP-21 cut cargo preference from 75% to 50%, USAID shipping costs fell less than 9% and USDA shipping costs not at all. The cost of restoring cargo preference back to 75% scored at only $11 million per year. Food aid is unique among government-impelled cargo for its 50% exemption as a result, we are not capturing the full benefit of the cargo that we are already shipping. In 2017, the U.S. Maritime Administration and the U.S. Transportation Command estimated that we are already 2,000 mariners short of the bare minimum needed to meet DOD s national defense sealift requirements. The U.S. Maritime Administration reported that 920 mariners have been lost since 2010 alone, with further shrinking certain to occur unless something is done in the near term. Unless restored, the cuts to cargo preference will further undermine national defense, offshore American jobs, and will require large increases in national defense costs to sustain sealift these cost increases are not offset by the minor savings purportedly achievable in food aid programs. So what we ve described is a catastrophe in the making, as the quality of the mariner pool begins to shrink, as the numbers shrink, the people that are going to be on the pointy end delivering Marine Corps and Army equipment are going to be at risk. Scott DiLisio, Strategic Mobility/Combat Logistics Division, U.S. Navy, March 22, 2016 NEED FOR ACTION All too often in the past, Federal shipper agencies and departments have failed to comply with U.S.-flag shipping requirements, denying American vessels their rightful share of these cargoes, denying American maritime workers important job opportunities

4 aboard these vessels, and instead spending American taxpayer dollars exclusively on foreign flag shipping services. As stated by Representatives Garamendi, Hunter, Joyce and Richmond in their dear colleague letter, the Maritime Administration has indicated that our nation s ability to fully activate, deploy, and sustain our military forces is between medium to high risk. It is, therefore, critically important that the Administration take immediate action in directing its efforts to support policies and programs that serve to enhance the U.S.- flag merchant marine, including existing cargo preference shipping requirements. To ensure that the privately-owned militarily-useful U.S.-flag vessels and their U.S. citizen crews remain available to DOD to advance America s security interests and to support and supply American troops deployed overseas, we ask that you join in this effort and sign the dear colleague calling on the Administration to fully support and enforce existing U.S.-flag cargo preference shipping requirements. Cargo preference is a pillar that ensures America can activate and sustain a sealift fleet adequate to deploy and support the United States Armed Forces anywhere in the world. So the benefits of cargo preference are clear... This program which benefits both the public and private sectors, is less of a burden on the taxpayer than the other options to provide the same capability. Jeff Marootian, Assistant Secretary, U.S. Department of Transportation, 2015

5 For additional information, please contact: C. James Patti James Henry James Caponiti Brenda Otterson President President President Consultant Maritime Institute Transportation Institute American Maritime Congress AMOS March 20, 2018