On the waterfront: A changed environment

Sea Power, Jan 2002 by Kesteloot, Robert W

The U.S.-Flag Merchant Marine and America's Ports

Last year's maritime essay suggested that there is little hope for an increase in the number of U.S.-flag ships in international trade. The reasoning was that, with only 113 ships then engaged in that trade, the U.S. presence was only marginally adequate to keep the nation's maritime industry, and the various trade interests of the country, involved in the international organizations that control international trade and shipping. That number is not, however, adequate for contingency operations and/or to maintain either the country's seafarer manpower pool or the U.S. commercial shipbuilding and repair industrial base.

The good news this year is that the number has not yet changed from last year. The bad news is that it is still very likely to decline in the near future-primarily because only 47 of the 113 ships receive government assistance in the form of Maritime Security Program (MSP) payments-$2.1 million per ship, per year-that allows them to compete head-to-head with foreign-flag ships that have lower operating costs.

In all likelihood, if the number of ships receiving MSP payments does not increase, foreign-flag ships eventually will replace the 66 non-MSP U.S.-flag ships when the latter are retired.

Optimism Vs. Economics

There has been renewed hope for growth in the domestic ocean trades, thanks to the preservation of the Jones Act-the cabotage legislation that restricts coastwise trade, and trade with noncontiguous states and possessions, to U.S.owned, U.S.-crewed, and U.S.-flagged ships.

In addition, cruise ships were under construction in U.S. shipyards for the first time in more than 40 years. It also has been suggested that greater use of coastal shipping not only could reduce congestion on coastal highways such as I-95, I-10, and I-5, but also could contribute to the growth of the seafaring manpower pool essential to the Department of Defense for crewing inactive government-owned strategic sealift ships for contingency operations. The commercial manpower pool is presently inadequate both in numbers and in billet skills to fully activate these ships.

Unfortunately, the events of 11 September have adversely affected the cruise industry, which relies on air travel by passengers to get to their ports of embarkation. Like the airlines, cruise ships have seen a 20 percent decline in bookings, and sometimes more. The sudden decrease in bookings on the SS Independence in Hawaii caused the American Classic Voyages Company (AMCV) to file for Chapter 11 bankruptcy protection in mid-October.

AMCV is the parent of Project America, which was having two 1,900passenger cruise ships for the Hawaiian trade built in the Ingalls yard of Northrop Grumman in Pascagoula, Miss. Five days after the filing, Northrop Grumman ceased all work on the ships when the Maritime Administration decided not to continue to guarantee the funding necessary for construction of the ships.

Although the combination of fearful flyers and an economic downturn temporarily slowed the cruise industry, the market remains wide open for the entry of coastal shipping of cargo. Congestion, particularly in the Northeast, is hurting productivity-to the point that the Northeast could lose its economic competitiveness. While congestion is common to nearly every large metropolitan center, nowhere is it as pronounced as in the 12-state Northeast corridor where 25 percent of the population lives. With Boston, New York, Philadelphia, Baltimore, and Washington all lined up along I-95, congestion is rampant in this region, even in good weather. Bad weather makes it worse. The Northeast is a natural target area for a return to the use of coastal shipping-- both to mitigate congestion and to reduce the pollution caused by truck exhaust.

Lessons From the Past

From Colonial days until the advent of the automobile, Americans used the waters along the Atlantic Coast to overcome obstructions to travel by land. Travel between Boston and Philadelphia alone was over extremely rough roads and required ferries to cross seven formidable rivers. At the time of the Revolution, packet sloops operating on dependable schedules linked all of the major East Coast ports from Falmouth, Maine, to Savannah, Ga., carrying passengers, cargo, and news.

Reestablishment of such service with modern vessels could go far toward overcoming the Northeast congestion problem. Further, a robust coastwise trade would provide renewed life to the commercial shipyards that build and repair these ships, and the mariners required to operate the ships would increase the size of the manpower pool needed to meet strategic sealift needs.

In Japan and in the European Community, congestion has led governments to establish proactive policies to shift road traffic to other modes of travel, including trains and ships. Last September, the Commission of the European Communities (EC) released a 109-page White Paper, "European Transport Policy for 2010: Time to Decide," that closely examines this extremely complex subject and covers all modes of transport-of both people and goods-by air, highway, rail, sea, and inland rivers.