Remarks Prepared for
Mark H. Buzby
11th Annual New York Maritime Forum
Tuesday, October 15, 2019
Good afternoon. Thank you, Nicholas [Bornozis, President of Capital Link] for that kind introduction.
It’s a pleasure to be with you to discuss the work we’re doing at the Maritime Administration to strengthen the American maritime industry in an increasingly competitive and contentious world.
I also bring the greetings of U.S. Secretary of Transportation Elaine L. Chao. We couldn’t have a better champion of U.S. maritime than Secretary Chao and her leadership comes at a critical time for our industry.
Of course, it’s always a pleasure to get outside the Beltway and to visit New York, particularly because the Port of New York-New Jersey is the epicenter of many exciting developments.
Not only is the Port the busiest on the East Coast—handling more than 3.6 million cargo containers of goods worth nearly $200 billion—it of course remains a center for global maritime finance. It’s also a leader in innovative uses of America’s Marine Highways, which can help reduce road congestion by moving cargoes on to our domestic waterways.
If there’s anything that can help reduce traffic congestion around New York City, it’s a welcome change.
Short sea shipping can also boost the maritime industry and support American mariner jobs. More cargoes mean more ships, more ships mean more mariners, and together that supports America’s national and economic security.
I know that you spent much of your morning on international maritime challenges, and we’re heavily focused on these issues the Maritime Administration, too.
From environmental and safety issues to trade, autonomous vessels, wind energy and LNG, the global nature of our industry requires cooperation across borders and oceans. So, your work and discussions are helping to advance solutions to these shared challenges.
Closer to home, and central to the Maritime Administration’s core mission, our agency is working diligently to address serious, persistent challenges to the U.S. maritime industry that affect both our economic and national security.
America was founded as a maritime nation. But, throughout our history, we’ve seen our naval and commercial maritime power wax and wane.
That’s problematic because, as famed naval strategist Alfred Thayer Mahan observed: “control of the sea, by maritime commerce and naval supremacy together, means predominant influence in the world.”
I believe that Mahan’s words remain true: global influence is tied to the strength of both our Navy and the U.S.-flag commercial fleet; it’s about growing our economy and protecting ourselves, our allies, and our interests around the world.
I was speaking to a group of young Army officers last week at headquarters and posed the question to them: “How do you think you get to war?”
After some blank stares, I told them that while a few might go in the back of a C-17, the preponderance of their combat maneuver forces – the rolling stock – and the sustainment for their forces – would get there in a ship crewed by volunteer civilians.
Virtually everything the military requires in a deployment moves by ships. Some of them are government-owned. But our merchant marine has a unique mission: military sealift. To sustain sealift in an extended deployment, the American military must rely on our commercial vessels.
That’s why many of us are speaking up about the state U.S. flag shipping and its relationship to our national defense.
By any measure, the United States Navy is unmatched – number 1 in the world. But that’s only half of Admiral Mahan’s sea power equation. The other half is that commercial fleet. And it is not where it needs to be.
In fact, of the more than 40,000 large, ocean-going merchant ships of all nations currently sailing internationally, only 81 are U.S.-flag ships. That put us at number 22 in the world.
These vessels employ the highly-skilled, unlimited tonnage mariners we need to crew both the government-owned and commercial sealift ships. Fewer U.S.-flag ships mean fewer mariner jobs, and fewer trained mariners for sealift. Plain and simple, we need more ships, and we need more mariners to sail them.
Programs like the Maritime Security Program are designed to ensure that we maintain an absolute bare minimum of commercial sealift capability – and access to the global logistics networks that come with them - to serve our Nation’s needs in times of emergency. We do that by offering U.S. flag operators a modest $5 million annual stipend per ship to remain under U.S. flag.
As I remind my friends in Washington, it is a challenge to remain under the U.S.-flag when the annual cost differential between operating under a U.S. flag and that of a flag of convenience is nearly $6.5M a year because sailing under a foreign flag provides a more advantageous financial situation. We’ve got to help level that playing field for our ships to be able to compete against unfair, highly subsidized foreign competition. MSP helps to do just that.
Cargo preference statutes which guide 100 percent of DOD cargo and at least 50 percent of non-military U.S. government cargo aboard U.S.-flagged ships if they are available are key elements of the U.S. flag equation, too.
I would add that the U.S. fleet also depends on competing for non-government commercial cargo as well. The more the private sector uses American ocean shipping services, the more cargo our U.S. flag carriers haul. And with more cargo comes more ships. So, if you want to support the American maritime industry, ship with U.S.-flag carriers!
I can’t stand here this afternoon without mentioning the Jones Act and its vital importance to the health of the maritime industry and our National security.
Now, I know there will be some differences of opinion in this room when it comes to the Jones Act. But, my position is clear: the Jones Act is the fundamental cornerstone of our Nation’s maritime policy, and has been for the past 99 years. And its relevance in addressing national security issues is as strong today as it was a century ago – even as the way it directly impacts national security has evolved since 1920.
The Jones Act helps maintains America’s shipbuilding capacity, supporting over 125 shipyards and repair facilities. In addition to 100 large ocean-going vessels in this fleet, it supports roughly 41,000 smaller vessels in our domestic service—all built and repaired by American workers—with a collective 73.8 million tons of cargo capacity.[i] It’s an American jobs machine, resulting in $54.0 Billion in U.S. economic output and supporting the employment of nearly 650,000 Americans.[ii]
Those jobs are very much on our minds—due to our sealift requirements, but also because these are good paying American jobs that can support a family. It is very much in keeping with President Trump’s maxim that “Economic issues are national security issues, and national security issues are economic issues.”
You won’t see a sector of our economy that better or more accurately reflects that maxim than the maritime industry. As a former Navy officer, as a proud graduate of the U.S. Merchant Marine Academy, and now as the head of the Maritime Administration, I’ve had a unique vantage point to observe close-up how the military and commercial sides are intertwined – both sides of Mahan’s equation.
We’re also reminded daily of how maritime affects world events and world events affect maritime. This audience grasps this more than most. You’ve got investments, companies, and jobs on the line with every new headline in the papers and breaking story on cable news. You’re involved in this industry at a turbulent time in international affairs and in the industry itself.
We may well look back at this period as a major inflection point in the history of maritime. This is an industry as old as time; it’s one marked by a spirit of independence; it is slow to change. But speed of change is reshaping the industry.
We’re now under pressure to innovate rapidly, to be cleaner, and more efficient. The global nature of the industry requires increasing cooperation. And the technology being deployed is leaps and bounds ahead of where it was when I walked out of Kings Point, with precision navigation, autonomous technologies, and other advances coming online. We might be witnessing a shift as monumental as that from sail to steam.
So, it is an exciting and tumultuous time in the industry. But Admiral Mahan’s words still ring true. You can trust that I - and everyone else that Maritime Administration is leaning into the challenges to help to grow the U.S. maritime industry and to protect the Nation to the best of our abilities. Thank you.
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