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Reflagging America

Sep 12, 2017

In 1960 America held 16.9 percent of the world’s tonnage with 2,926 cargo vessels and tankers, against a total capacity of 17,317 vessels worldwide. At the turn of the century that number had dropped to 282 vessels registered under the U.S. Flag. It represented only 1.0 percent of the world fleet. By 2016 according to the D.O.T. that number had dropped again to 169 ships representing only 0.4 percent of world tonnage. Container carriers and general cargo vessels were down to a total of 108 bottoms and the roll on roll off sector was down to 28 ships. Under current conditions America’s merchant marine capability would be sorely tested in times of need. Fortunately, many U.S. companies are stepping up to the plate to build or re-flag ships under the Stars and Stripes.

American flag vessels under the Jones Act

The Merchant Marine Act of 1920 introduced by Wesley Jones set forth regulations for U.S. maritime commerce. Cargo ships built in America and plying routes within the confines of U.S. coastal waters, its territories and possessions fall under the act. They can’t take on foreign cargo nor can they discharge at ports outside U.S. jurisdiction. Graduates from the U.S. Merchant Marine and State Maritime Academies and crews from one of several unions man these ships without foreign intervention. Jones Act ships however are not the only ones flying our flag. Ocean carriers registered here in the States can re-flag foreign built ships to operate as U.S vessels in international trades. Manning and crew requirements are the same as for Jones Act vessels.

Vessels outside the Jones Act

There are several reasons to re-flag ships; the more common ones are for economic and commercial benefit.

Vessels can be reflagged in order to participate in the movement of U.S. Aid and or Department of Defense and other flag impelled cargos. Ships registered with the Maritime Security Program do not operate under the Jones Act. They are not restricted to “Inter U.S.” carriage of goods and must actively trade in international commerce. They have to be commercially viable and military useful and available so to speak.

Reflagging capacity within the Ro/Ro Sector

One company re-building an American fleet is Liberty Global Logistics. Last week their newest ship the MV Liberty Peace was granted U.S. Flag status by MARAD under their Foreign Transfer Program. This 58,107 gross ton Roll on Roll off vessel is the latest addition to Liberty’s PCTC service (Pure Car Truck Carrier). Completed in March at HHI, Hyundai Heavy Industries in Ulsan South Korea, the Peace joins the “Liberty” Passion, Pride and Promise to form the backbone of their Round the World Service. She was reflagged for commercial and operational reasons but the “Peace” accepts rolling stock, containers, high and heavy and other project type cargos in international trade between the U.S. the Med, Middle East and Far East. She joins Liberty Global’s “Commercial Service” schedule.

Liberty Global’s MSP Fleet

The Liberty Passion like her sister ship the “Peace” was delivered from HHI in January and reflagged in February,2017. The “Pride” and “Promise” were built by Daewoo Shipbuilding & Marine Engineering Co., Ltd. and reflagged in September of 2009 and March of 2010 respectively. These three vessels form the nucleus of Liberty’s (MSP) Maritime Security Program commitment. It places these ships at the disposal of the U.S. Military and the Department of Transportation as the need arises.

The Maritime Security Program

In 1996 President Clinton signed the Maritime Security Act which established the Maritime Security Program. In 2003 it was incorporated under the National Defense Authorization Act. The NDAA requires the Departments of Defense and Transportation “...to establish a fleet of active, commercially viable, militarily useful, privately-owned vessels to meet national defense and other security requirements.” MSP operators upon request are required to make their ships available to the Secretary of Defense in times of war or national emergency.

Liberty Global’s MSP fleet is manned by the MEBA Marine Engineers Beneficial Association. Other U.S. flag vessels within their organization including the Liberty Peace are crewed by the AMO, American Marine Officers. All vessels also employ the unlicensed crew members provided by the Seafarers International Union (SIU). Management at Liberty Global Logistics is committed to expanding their international business within its American reflagged fleet. They continue to hire U.S. maritime employees and promote U.S. Mariners.

Rebuilding America’s Merchant Marine

Liberty Global is not the only U.S. firm to reflag vessels. In a June naming ceremony at the Port of Charleston, American Roll on Roll off Carriers (ARC) christened the “Liberty’ a PCTC built 2007 by DSME in Geoje South Korea. She is the 8th Fidelio-ARC ship to enter MSP service. Maersk has 20 reflagged container ships under MSP service varying in size between 1,090 and 6,200 TEUs.

Jones Act carriers continue to build everything from tankers to ocean going tugs, while international carriers reflag ships at an aggressive rate. If we hope to strengthen our maritime capacity to pre-millennial levels the pace will need to be maintained. Can America once again become a commercial maritime power?

Author Photo
Matt Guasco
INF Marketing and Logistics, Inc.
President

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