By Peter A. Buxbaum, AJOT United States cargo preference policies have come under some scrutiny of late. On October 3, the U.S. Maritime Administration convened a public meeting to develop a formal rule making process. “The way that [cargo preference is] implemented can be subject to improvement,” said David Matsuda, the MARAD administrator, at the meeting. Congress authorized MARAD in 2008 to promulgate rules which would harmonize cargo preference practices across federal agencies. “There is, unfortunately, resistance to compliance to cargo preference by some federal agencies,” said Captain John Murray, who represented Hapag-Lloyd USA at the meeting. “Unfortunately, and somewhat inexplicably, MARAD has failed to promulgate the interim or final regulations required by” the legislation. A series of cargo preference laws dating back to 1904 require shippers to use U.S.-flag vessels to transport “government-impelled” ocean cargoes. One-hundred percent of military and Export Import Bank-supported cargo, 75 percent of food aid cargo, and 50 percent of civilian agency cargo must be transported on U.S.-flag vessels. The primary rationale for the preferences is to encourage a private U.S.-flag merchant fleet to provide sealift capabilities during wartime and national emergencies. While U.S. maritime industry and labor interests strongly support cargo preference regulations, others have questioned the costs associated with the policy, especially when it comes to food aid. A 2011 report from the Government Accountability Office concluded “that food aid shipments on foreign-flag carriers cost the U.S. government, on average, $25 per ton less than U.S.-flag carriers.” Among the reasons the GAO cited for this phenomenon is that “the number of vessels participating in U.S. food aid programs has declined, thereby limiting competition in transportation contracting and leading to higher freight rates.” A paper released by Cornell University in 2010 also slammed food aid program preferences. Agricultural cargo preferences “cost US taxpayers $140 million in 2006,” according to the paper, “46 percent above competitive freight costs.” The paper blamed an “iron triangle” of interests formed by agribusiness, non-governmental organizations, and ocean carriers for the perpetuation of the the status quo in U.S. food aid policy. But USA Maritime, a Washington-based industry group, rebutted to the Cornell report in a paper of its own, claiming that “cargo preference is a great deal for the American taxpayer” because “it would cost $10 billion to replace U.S. vessel capacity and an additional $1 billion annually for operation and maintenance….U.S. taxpayers actually saved $222.9 million in 2006 through the application of cargo preference to food aid.” The organization also denied claims in the Cornell report that the U.S.-flag vessels carrying food aid were not military worthy. ” All of the vessels trading in the food aid programs under cargo preference meet DoD’s requirements for militarily useful vessels,” the paper said. USA Maritime also argues that cargo preference provides benefits to the U.S. economy: $1.9 billion in annual U.S. economic output and support of 33,000 jobs. “There is no logic,” the paper concluded, “in outsourcing American jobs, and ultimately costing the American government more money in a time of ballooning government deficits.”