The DOT’s U.S. Maritime Administration (MARAD) is now authorized to produce a National Maritime Strategy that would provide the basis for the United States to assess maritime shortfalls and address them through greater investment and/or policy changes, according to Sara Fuentes, Vice President of Government Affairs, Transportation Institute and Jonathan Kaskin, National Vice President for Legislative Affairs, Navy League of the United States.
Both Fuentes and Kaskin are worried that the decline in U.S. shipping and shipbuilding has gone on for so long that the issue lacks a national urgency: “What we need is for the White House to make a National Maritime Strategy a top priority that will mobilize national resources to get the job done,” Kaskin said.
Fuentes and Kaskin worry that the Jones Act is under attack in Congress, backed by influential conservative think-tanks such as the Cato Institute and the Heritage Foundation. These organizations ignore the economic and national security benefits of the Jones Act and advocate outsourcing maritime work to foreign flag operators, they say. The result is that Cato and Heritage represent an anti-federalist movement that is undermining the maritime security of the United States.
Background To MARAD Reauthorization Act
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. They argued that the $1.6 billion bill would invest in the maritime workforce, strengthen maritime infrastructure, and expand research and development into new technologies to advance fleet sustainability and innovation.
The Bill also requires a new National Maritime Strategy to help grow the maritime economy through shipbuilding, maritime trade, training, and infrastructure.
“This bill makes critical investments in America’s maritime workforce, shipyards and port infrastructure that are key to keeping our supply chains moving,” said Sen. Cantwell. “It will create a new innovation center to explore cleaner fuels and new technologies to boost resilience of our maritime fleet and ensure the U.S. maritime industry remains competitive well into the future.”
“A strong Maritime Administration is essential for our national and economic security. I am glad to support this bill, which would improve our marine highway system, help protect against sexual assault and harassment within our merchant fleet and … support maritime education, and reauthorize the port infrastructure development program,” Sen. Wicker said.
Military Sealift Commander Warns of Shortage of Ships & Mariners
In October of 2022, the Commander of the Military Sealift Command (MSC) Rear Adm. 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. Wettlaufer was speaking at an event hosted by the Navy League of the United States.
Wettlaufer noted that after the number of U.S. mariners reached their peak during World War II at 262,000, their population has plummeted to a fraction of that today — about 33,000 between 2018-2021. With recruitment and retention, a problem across all of the services, MSC faces no easy solutions.
“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,” he said.
To address the issue of a lack of vessels, 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.”
GAO Cites “Poor Condition” at U.S. Naval Shipyards
On May 2, 2023, a Government Accounting Office (GAO) report found that the United States Navy is experiencing a growing backlog of ship and submarine maintenance delays related to the “poor condition” at the Navy’s four public shipyards. The four shipyards are: Norfolk Naval Shipyard in Virginia, Pearl Harbor Naval Shipyard in Hawaii, Portsmouth Naval Shipyard in Maine, and Puget Sound Naval Shipyard in Washington.
The GAO report concluded that: “Addressing ship and submarine maintenance delays, backlogs, and other sustainment challenges will be difficult given the poor condition of infrastructure at the Navy’s four public shipyards. The Navy’s public shipyards are critical to maintaining the readiness of its fleet of nuclear aircraft carriers and submarines, and supporting ongoing operations around the world … These shipyards provide the Navy with the capability to perform depot level maintenance on ships, emergency repairs, ship modernization, and ship deactivations.
We found in May 2022 that the Navy has taken several actions to improve its public shipyards in recent years. In 2018, the Navy began a 20-year effort to modernize and optimize its shipyards, known as the Shipyard Infrastructure Optimization Plan, that the Navy initially estimated would cost $21 billion.”
Offshore Wind & Shipbuilding
Another aspect of the National Maritime Strategy will need to be directed toward offshore wind.
Jeff Andreini, Vice President, Crowley Wind Services will be directing offshore wind efforts for wind farms built off of Humboldt Bay in Northern California where he expects 3,600 new jobs to be created: “I do not think that many people … realize the momentum that is building for offshore wind that is going to become evident in the second half of this decade …”
If permits for the Humboldt Bay project are approved in 2024, then he expects “shovels in the ground thereafter and start-up middle of 2026: “In 2026, you will be seeing a marshaling area where you will be seeing components. Vessels as well … You will also be potentially seeing a manufacturing site … There will be tugs and barges transporting pre-assembled components. In addition, heavy lift ships will be used for the construction of the terminals. There will be heavy lift cranes that will … be doing the actual construction of the turbine … The floaters will actually be built in Humboldt Bay and not in a foreign country. There might be materials that might come from Asia, but the pre-construction will potentially (take place) in either San Francisco or Los Angeles and would be shipped to Humboldt Bay where the actual buildout will take place.”
Here again, there are concerns about lack of competitive shipbuilding. Higher shipbuilding costs are contributing to greater overall project costs in the U.S. offshore wind industry, according to maritime and offshore consultancy Intelatus Global Partners as cited in a Marinelink report: “The United States will rely on a large fleet of foreign and domestic vessels as it builds up toward the Biden Administration's target of 30 gigawatts (GW) of offshore wind capacity by 2030 and 110 GW by 2050. This fleet will consist of both existing and newbuild tonnage, including wind turbine installation vessels (WTIV), subsea rock installation vessels, service operation vessels (SOV), crew transfer vessels (CTV) and tug and barge spreads, among others.
But the price to build these vessels in the U.S.—where labor costs are only expected to increase—is considerably higher than it is for those being built in Asia and Europe. According to Intelatus, the price for a newly built Jones Act-compliant SOV comes with a 40% to 140% premium compared to SOVs being built for Europe.”
Navy League Recommendations
The Navy League’s Kaskin says that among the options to be considered in the forthcoming National Maritime Strategy are the following:
Expand the “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). A business case analysis done in 2013 estimated the externality benefits associated with DUVs amounting to $16-25M/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.
Expand the Maritime Security Program to meet less time sensitive sealift needs and fund an expanded “Tanker Security Program” to address the massive tanker shortfall required to support Naval and Air Force operations.
Create and implement new cargo preference programs such as the Energizing American Shipbuilding Act which would generate additional U.S.-flag and U.S.-built ships, help maintain the shipbuilding industrial base and provide crews for reserve fleet ships. This particular law would require a percentage of liquefied natural gas and crude oil exports be transported on U.S.-built, U.S.-flag ships. This would help stem the decline of U.S. shipping in foreign trade, boost mariner employment and provide additional work for U.S. shipyards.
