Almost two years in the making, and the bun is getting ready to come out of the oven.
On April 14, before a meeting of the Navy League, Paul “Chip”Jaenichen, administrator at the U.S. Maritime Administration, said that his agency is putting the final touches on a National Maritime Strategy that will recommend ways to reverse the steady decline of the U.S. merchant fleet and set a more sustainable course for the future of the maritime industry.
Under Jaenichen’s leadership, Marad has spent the past 18 months on the road, listening to all sectors of the industry as they offer ideas and aspirations for how to right the ship.
The final draft is in the works with the help of a private consulting firm, and it must clear a few bureaucratic hurdles before being sent to Congress, probably by this summer. Congress will likely sit on it for a while, chew on the details at public hearings and behind closed doors, and eventually implement changes that are required through legislation. Other ideas might be approved by executive order by the White House.
I don’t know about you, but there are two specific areas that I will be looking for in this much-anticipated rollout.
Of course, as someone who reports on the workboat industry, I’ll want to see how the strategy addresses the inland barge industry, especially how it proposes a more comprehensive integration of the waterways into the national and international transportation network. Many in the industry feel that their work and contributions on the inland system are ignored by Washington policymakers.
There’s also another very crucial aspect that will guide my mouse as I read the details: the strategy’s treatment of the Jones Act. It’s a no-brainer that the document will endorse and support the act, which requires that cargo moved between U.S. ports be transported by U.S.-flagged, -crewed, -owned and -built ships, arguing that it is crucial to national security, maritime jobs and the economy. Marad can’t be a cheerleader of the industry by doing otherwise.
But it will be interesting to see how Marad handles the rather touchy issue of expanding the Jones Act, as has been suggested by a very energetic Democratic congressman from California, Rep. John Garamendi. The congressman has tried unsuccessfully over the past year to pass a law that would require future U.S. LNG (liquified natural gas) exports to be carried on ships that are manned by U.S. crews, built in U.S. yards and are U.S. flagged. There are currently no LNG carriers in the U.S. merchant fleet operating in the international trade, but Garamendi says with all the natural gas activity, the building of such vessels should be encouraged.
Garamendi believes that exporting LNG and eventually crude oil on “Made in America”ships will be a key to revitalizing the U.S. merchant marine. And he suggests that a strong argument in favor of this can be found in national security. U.S.-built LNG vessels, he says, will assure availability of the shipbuilding know-how and the mariners that will be needed during a national emergency.
“This should be put into law,”he said, adding that such a requirement will “revitalize America’s shipbuilding industry in a big way.”
This is music to the ears of most in the maritime industry, and he receives hearty applause when he talks about it before friendly audiences. But to others involved in LNG transport, transportation economics and international trade, this is a very bad idea. Even supporters of the Jones Act, including many in Congress, are nervous about expanding the Jones Act in this way, worried that it would set a precedent for further changes in the law and would run afoul of international trade agreements. These concerns have put the brakes on Garamendi’s proposal so far in Congress.
Others criticize it as blatant politics and overt protectionism that has no place in a global, free market economy. Not to mention the higher costs of moving these fuels by U.S. crewed and built ships compared to foreign flagged vessels. This could put the domestic crude oil and natural gas industries at a competitive disadvantage.
Environmental and labor rules tend to inflate the cost of operating U.S. ships, and critics cite a 2011 Marad study that put the average daily operating costs for foreign-flag operators at $7,454 compared to $20,052 for U.S. ships — a difference of more than $12,500 a day. The biggest difference is in crew costs.
You’ve got to admire the congressman for his tenacity, however. “Made in America,”he has said on many occasions, “is fundamental to any U.S. maritime strategy.”
It will be interesting to see whether his proposal makes it into the final cut of the country’s first maritime strategy since 1936. You’ll have your chance to weigh in, too, when the plan is published in the Federal Register, and a public comment period begins.