House Subcommittee Hearing Examines Status of U.S. Merchant Marine

M/T Florida, a 33,000 dwt Jones Act tanker built by Aker Philadelphia for Crowley Maritime Corp. Photo courtesy Crowley

The House Subcommittee on Coast Guard and Maritime Transportation held a hearing today to review the status of the U.S. Merchant Marine, issues impacting the domestic maritime industry and the role maritime plays in the U.S. economy and in national security.

On hand as witnesses were maritime industry and labor representatives, who provided testimony before  Subcommittee Chairman Duncan Hunter (R-Calif.) and Ranking Member Rep. John Garamendi (D-Calif.).

Testifying on behalf of the American Maritime Partnership was Mark Tabbutt, Chairman of the Board of Saltchuk, one of the country’s most recognized transportation and distribution companies. Tabbutt told the Subcommittee that the American maritime industry, supported by the Jones Act, is strong, vibrant, and growing.

“Our industry is experiencing an extraordinary renaissance and its contributions to America’s economic, national and homeland security have never been more important,” said Tabbutt. “The largest sector of our domestic marine transportation industry supports our energy infrastructure with the movement of crude, refined petroleum products, and chemicals and has seen dramatic growth as a result of the shale oil revolution. This is driving record levels of new vessel construction orders and deliveries in American shipyards.”

Tabbutt updated the subcommittee on the growth in domestic vessel construction and noted that the American shipyard sector is seeing a significant resurgence in construction for all types of vessels including containerships, roll-on/roll-off vessels, dredges, offshore supply vessels, large articulated tug-barges, and tankers. Tabbutt also noted that the state-of-the-art vessels being built are more productive, energy efficient, and environmentally friendly. America’s maritime industry is also reaching out to hire more veterans, Tabbutt said, through its Military2Maritime program with recent job fairs in Jacksonville, FL and Houston, TX.

“The American domestic maritime industry is doing its part to help address the transportation changes. There are 22 new large tankers and articulated tug-barges under contract, not including options for future construction.” Tabbutt said. “We have inland shipyards in this country that are building and launching, on average, almost a new barge every single day of the year. New tugs and towing vessels are also being built to handle that increased demand.”

Matthew Paxton, president of the Shipbuilders Council of America (SCA), testified that the state of America’s commercial shipbuilding industry is strong, more vibrant than ever, and that U.S. shipyards are experiencing dramatic growth as a result of the shale oil revolution and record levels of new vessel construction orders and deliveries.

“The state of the U.S. commercial shipyard industry is the strongest it has been in decades,” said Paxton. “Our industry, which includes thousands of businesses supporting vessel construction, is a vibrant manufacturing sector employing hundreds of thousands of Americans in all 50 states. Commercial markets are witnessing a boom not seen in decades, representing billions of dollars in new investments to our economy. This is all while American shipyards continue to deliver the largest and most sophisticated Navy and Coast Guard in the world.”

In a statement about the hearings, the SCA notes that in 2012, U.S. shipbuilders delivered 1,260 vessels worth more than $20 billion in revenue, according to a recent study conducted by the Maritime Administration. Nationwide, the U.S. shipbuilding and repair industry supports more than 400,000 jobs, which pumps $36 billion into America’s economy. Over the past year, U.S. shipyards have entered into hundreds of contracts for new vessels, including the construction of state-of-the-art oil tankers and the world’s first LNG-powered containership that the White House recently recognized as critical to the future of maritime transportation, according to a statement from the Shipbuilder’s Council of America. Paxton noted that vessels under construction will add almost 6.4 million barrels of new capacity to the domestic fleet in addition to the more than 8.2 million barrels of capacity that were added last year.

“This is a very exciting time for our industry because U.S. shipyards are quickly becoming world leaders in innovation as they construct new technologically advanced vessels like the first LNG powered containership in the world,” Paxton said. “Shipyards also have a big impact on their local communities and the country at large. With more than 300 facilities located in 27 states, and a supplier base that can be found in all 435 Congressional Districts, each direct job leads to almost three indirect jobs nationally.”

Niels M. Johnsen, Chairman and CEO for International Shipholding Corporation, provided testimony about the current “precarious” state of the U.S. Merchant Marine and what this could mean for national security, urging for the immediate development and implementation of a meaningful National Maritime Strategy, one that includes a strong and fully funded Maritime Security Program.

“Our industry is in the midst of a ‘perfect storm’ – dwindling United States Military cargoes, a precipitous drop in food aid cargoes, escalating costs and regulations from the USCG and other Federal agencies, and intense low-cost foreign competition,” said Johnsen. “Any such National Maritime Strategy must preserve and enhance the Maritime Security Program; reinforce and expand existing United States flag cargo preference requirements, while ensuring strict compliance with those requirements by all Federal agencies and Departments; and include immediate efforts to expand trading opportunities for United States flag vessels with the key trading partners of the United States. USA Maritime is fully prepared to work with this Subcommittee on these initiatives so we can rebuild the United States flag fleet and reestablish a strong American presence on the oceans of the world.”

Don Marcus, President of the International Organization of Masters, Mates & Pilots (MM&P), provided testimony emphasizing that the economic and military security of the United States is heavily reliant on a strong, U.S.-flag shipping industry.

“Our country cannot afford to lose any additional U.S.-flag commercial vessels, or see the further decline in our nation’s ability to carry its commerce on U.S.-flag ships,” testified Marcus. “The next generation of American mariners will not be available to serve the needs of our nation unless something is done. It is time for immediate, aggressive and innovative action to develop a stronger, more competitive U.S.-flag fleet, to increase the share of our trade carried by American ships, and to stop the outsourcing of American maritime jobs.”

The U.S. maritime industry currently employs more than 260,000 Americans, providing nearly $29 billion in annual wages.  There are more than 40,000 commercial vessels currently flying the American flag.  The vast majority of these vessels are engaged in domestic commerce, moving over 100 million passengers and $400 billion worth of goods between ports in the U.S. on an annual basis.  Each year, the U.S. maritime industry accounts for over $100 billion in economic output.

Full Testimonies:

• Mr. Mark Tabbutt, Chairman, Saltchuk Resources | Written Testimony
• Mr. Niels Johnsen, Chairman/CEO, International Shipholding Corporation | Written Testimony
• Mr. Don Marcus, President, Masters, Mates and Pilots | Written Testimony
• Mr. Matthew Paxton, President, Shipbuilders Council of America | Written Testimony

See Also: Hunter Statement from Hearing on Merchant Marine 

Additional Sources:

• AMP: Domestic American Maritime Industry Booming
• Shipbuilders Council: State of American Shipbuilding is Strong