The Navy League of the United States is proposing a major new investment in building dual use ships to transport commercial and military sealift cargoes. In peace time, the ships would be deployed as Jones Act & Marine Highways ships sailing along the I-5 (Pacific coast), I-95 (Atlantic coast) and I-10 (Gulf coast) maritime corridors.
Such an undertaking could create new business for smaller U.S. ports.
Ports closest to Asia that have additional capacity to support a military and Marine Highway surge would include the ports of Oakland, Portland, Seattle, and Tacoma. Honolulu might also benefit due to its strategic location in the Pacific Ocean.
The proposal is contained In the Navy League’s ‘Legislative Path to a New Maritime Transportation Strategy.’
In October of 2022, the Commander of the Military Sealift Command (MSC) Rear Admiral Michael Wettlaufer, warned that MSC continues to face a shortage of both ships and sailors, and it will take a “collective effort” from government and industry to turn the tide.”
At an event hosted by the Navy League of the United States, Wettlaufer noted: “Specifically, the top challenges currently facing MSC in this area are an atrophied maritime industry, a reduced U.S. flag commercial fleet and a shortage of ocean-going mariners.”
Wettlaufer said MSC will seek to incentivize commercial participation: “We’ve got to incentivize U.S. flagged shipping,” he said, noting that the number of U.S. flagged ships at their disposal had declined from 282 at the start of this century to 178 today: “On the production side, it’s great; we’re building ships. But we certainly need more.”
U.S. House and Senate leaders are discussing a proposed ‘SHIPS Act’ to dramatically upgrade U.S. naval and commercial shipbuilding along the lines of the $52 billion CHIPS Act that is supporting U.S. semiconductor manufacturing, according to Luke Lorenz, Director of Legislative Affairs, Navy League of the United States.
In May, Lorenz told the Propeller Club of Northern California that shipbuilding is now a top national security priority as China ramps up its naval and commercial shipbuilding: “... we do need a certain number of ships in our fleet to be able to counter a larger maritime force coming from the Chinese if such a conflict were to occur. And so, this type of shipbuilding program … is absolutely imperative.”
Title XI Loan Guarantee Program for New Ships Lacks Funding
One means of financing new U.S commercial ships is through the Title XI Loan Guarantee program operated by the U.S Maritime Administration (MARAD). Unfortunately, the program lacks sufficient funding to support a major surge in U.S. shipbuilding.
The Title XI Loan Guarantee program is only able to provide a small number of loan guarantees for new shipbuildings at U.S. shipyards. In June, the program could only support “approximately $475 million in loan guarantees,” according to a Maritime Administration report.
In an exclusive interview with AJOT, Ann Phillips, U.S. Maritime Administrator, explained the underfunding problem: “The challenge with Title XI is we now have a lot more interest in loans in the program than we have funding support to buy down that risk. So, Congress knows this, the Department of Transportation (DOT) knows this. And what we are doing is we are processing loan applications and we're going to keep going until we run out of money. And then, we're going back and ask for more."
Furthermore, “There is bipartisan interest from both sides. I get asked about this a lot in testimony by everybody: ‘Is there enough money in this program for the loan applications that we have? No, there is not. And so, they all go: ‘mm-hmm’ and they walk away. So, there's a lot of interest here. And we absolutely want to be able to take advantage of this opportunity and help industry … to increase their capacity.”
Insufficient Tankers Phillips said that the United States needs more ocean-going tankers to support U.S theater requirements in the Pacific: “And that is where Air Force General Jacqueline Van Ovost, head of the U.S. Transportation Command (USTRANSCOM), is very, very focused on. Can she maneuver enough fuel around the ... Pacific to meet the theater campaign requirements? No, she cannot. That need generated the Tanker Security Program (TSP).”
On July 25th, MARAD announced that nine U.S. ships have been enrolled in the Tanker Security Program.
In March, Phillips warned Congress that the United States is relying on an aging cargo-carrying Ready Reserve Fleet (RRF): “Today, the RRF is a fleet of 45 vessels, with an average age of more than 45 years, maintained in a reduced operating status to be ready to sail within five days of activation.”
The Ready Reserve Force is a subset of vessels within MARAD's National Defense Reserve Fleet (NDRF) ready to support the rapid worldwide deployment of U.S. military forces. As a key element of Department of Defense (DOD) strategic sealift, the RRF primarily supports transport of Army and Marine Corps unit equipment, combat support equipment and initial resupply during critical surge periods -- the period of time before commercial ships can be secured for similar support.
A July Brookings Institute report entitled ‘America can’t afford to ignore the logistics triad’ warned that with a growing focus on the Western Pacific, the U.S. military has neglected logistics: “America’s strategic center of gravity has shifted to the Western Pacific; three problematic trends have weakened American logistics capabilities. First, ships and planes (and trucks) bought in the 1980s have aged and atrophied, without being adequately maintained or replaced. Second, China (and Russia) has developed precision missiles that can threaten fixed bases anywhere, especially in regions near its shores. Three, cyber systems have proliferated.”
In 2022, U.S. Senators Maria Cantwell (D-Wash.), Chair of the Committee on Commerce, Science, and Transportation and Ranking Member Roger Wicker (R-Miss.) introduced the bipartisan U.S. Maritime Administration (MARAD) Reauthorization Act. The legislation included a provision to develop a new National Maritime Strategy to help grow the maritime economy through shipbuilding, maritime trade, training and infrastructure.
Senator Wicker who inspired support for the SHIPS Act in Congress based on his proposed “Securing the Homeland by Increasing our Power on the Seas (SHIPS) Implementation Act…” which proposed the United States reach a 355-ship Navy through the authorization for 39 new ships.
In an interview, Sara Fuentes, Vice President of Government Affairs, Transportation Institute and Jonathan Kaskin, National Vice President for Legislative Affairs, Navy League of the United States said that a National Maritime Strategy would provide the basis for the United States to assess maritime shortfalls and address them through greater investment and/or policy changes. Kaskin notes that U.S. flagged ships account for less than 2% of the global shipping fleet.
Kaskin said that among options that the Navy League is proposing, is a major new investment in building Dual Use Vessels to operate in Marine Highway commercial trades in peace time and as military sealift ships in the event of a war-time emergency.
In the Navy League’s ‘Legislative Path to a New Maritime Transportation Strategy’ it is proposed to: “Expand the domestic “Jones Act” fleet with coastwise services of Dual Use Vessels (privately-owned commercial ships with military utility-installed national defense features). These Dual Use Vessels (DUVs) would alleviate congestion, road wear and pollution along the I-5/I-95/I-10 corridors in peacetime by carrying domestic 53- foot tractor trailers/boxes along these American Marine Highways (AMHs).”
Furthermore, “A business case analysis done in 2013 estimated the externality benefits associated with DUVs amounting to $16-25 million/ship annually compared to truck or rail equivalents. If these externality benefits could be monetized and if the Title XI Federal Ship Financing Program and the Capital Construction Fund are used to reduce the effective capital costs, the DUVs would likely be competitive without further government support. Additionally, these DUVs would be quickly available (less than five days) to support a major deployment of military equipment through participation in the Voluntary Intermodal Sealift Agreement (VISA) program. This program, in which all MSP vessels and at least 50% of the Jones Act fleet participate, fulfills the intent of the national sealift policy that commercial ships have priority in meeting wartime sealift requirements.”
According to MARAD, the Maritime Security Program (MSP) maintains a fleet of commercially viable, militarily useful merchant ships active in international trade. The MSP fleet is available to support U.S. Department of Defense (DoD) sustainment sealift requirements.
The Navy League DUV proposal would possibly require upgrades at U.S. ports to handle container, roll on/roll off ships and tankers. This creates the possibility of growing cargo business at smaller U.S. coastal ports along the Pacific, Gulf and Atlantic coasts.
In June, container cargo declines were reported at the Ports of Oakland, Seattle and Tacoma related to declines in trans-Pacific shipping and the continued strengths of the Ports of Los Angeles and Long Beach to handle mega-container ships, according to the Pacific Merchant Shipping Association’s (PMSA) West Coast Trade Report. In the report, PMSA analyst Jock O’Connell argues that smaller ports, such as Oakland, need to develop a new strategy to attract new business, a strategy which would also seem to apply to other West Coast ports including Seattle, Tacoma, and Portland.
For West Coast ports, deploying Dual Use Vessels transporting containers and Ro/Ro cargoes to and from the Ports of Los Angeles and Long Beach might provide the answer for creating new port business while helping the United States build-up its military sealift fleet.
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