Shipping is the canary in the coal mine for the ability of the United States to project power abroad, and that canary is increasingly faint.
Paul Jaenihcen, administrator of the US Maritime Administration (MarAd), delivered that message to attendees at the TradeWinds Shipowners Forum USA. He said the diminishing share of world seaborne cargo trade carried on US-flagged ships poses a broader problem for America’s image aboard.
Jaenichen says only 78 of the 50,000 ships that trade internationally and make call on US ports are US-flagged. The amount of commerce represented by those US-flagged ships is the lowest in history, he added.
“We are no longer a maritime nation as it regards a US-flagged and crewed fleet,” Jaenichen said.
While acknowledging the issues of higher costs of US-flagged and crewed ships, Jaenichen says US-flagged ships trading in international markets serves the larger purpose of demonstrating the US is not withdrawing from the world stage and that it will protect its interests in other parts of the world.
The disappearance of US-flagged ships from international markets can be taken as a signal that the US will not act beyond its borders.
The withdrawal of the US-flagged fleet “has the potential to diminish our global interest,” Jaenichen said. “It emboldens our adversaries and increases the risk of not being able to sail anywhere.”
Jaenichen says about 98% of the seaborne goods moving through US ports are foreign-owned or backed by other countries. That itself poses a national security threat to the US.
Additionally, it weakens US readiness to respond to overseas crises, in terms of both less ship capacity and a smaller merchant marine workforce. Jaenichen says the US merchant marine workforce has fallen 20%. That leaves the US vulnerable to relying on non-US-crewed ships to carry military forces.
“I cannot overstate this potentially disastrous state of affairs,” Jaenichen said. “We are going to be beholden to someone else for our security.”
The decline of the US-flagged fleet was seen as starting in 2012 when the requirement for the amount of food aid carried on such ships was dropped to 50% from 75%, said Charlie Papavizas, a lawyer at Winston & Strawn. Fewer overseas military basis also reduced the business for US-flagged ships.
Other than boosting that ratio back up to 75% of aid carried on US-flagged ships, “Nothing can be done easily to reverse that trend,” Papavizas said. “A lot of attention has to be paid to all the cargo so that it doesn’t leak.
Robert Curt, the retired president of MLR Petroleum, laid out the high costs of US-flagged ships, which can have three times the operating expenses of non-US-flag ships. Along with crewing costs, Curt says protection and indemnity coverage is also higher on US-flagged ships due to more US sailors suing for damages.
Curt says costs of US-flagged ships could be managed through limiting liability for ships and offering tax breaks of US mariners working in international waters. The larger issue is the US-build requirement for ships in the US Jones Act trade, Curt says. That requirement unnecessarily burdens US shipping companies with extra costs and serve little in the way of national security interests.
“The Military Sealift Command runs a fleet of US-flagged ships, none of which are built in the US,” Curt said.
