MarEx Mailbag:
The mailbag is heavy this week as MarEx readers respond to a variety of articles from our previous online editions.
Last week, our lead editorial referenced various variables and pressures now in play that could help preserve or perhaps hinder the effectiveness of the Jones Act. The editorial, entitled, “Jones Act: In Extremis?,” got its fair share of MarEx traffic and click-throughs. We also got some mail on the subject. You can read that article by clicking HERE. Or, you can read what two of our readers had to say about it below:
Subject: Jones Act: In extremis?
Joe,
You do your readers a disservice by not mentioning how much of those foreign registered assets are, in effect, American owned. And how different are they treated regarding American taxation and regulation?
In the same vein, I remember an article in the Journal of Commerce way back when about a proposal by China that the U.S. and China agree to carry their then nacent, but growing, mutual trade 50-50 in American and Chinese bottoms. That was shot down in Washington because it would be unfair to exclude other nations from the trade. I believe most of the effective lobbying against came from American interests who owned foreign registered tonnage. Gee, some of those even in Congress. I'm just surprised that the Jones Act still exists at all.
Bill MacFaden
MarEx Editor’s Remarks: Actually, the point of the article was not to take sides and I think that I danced quite nicely in not doing so. I don’t think that it is any secret that I am (a.) a passionate advocate of shortsea shipping and (b.) at least a nominal supporter of certain aspects of the Jones Act. There are currently many initiatives – on both sides of the ledger – that are exerting subtle pressure on the way that the Jones Act is interpreted. For example, I find it curious that CBP finds itself in one case supporting a proposal that will strengthen it and in the same month, does something that will arguably weaken U.S. cabotage laws over time. Addressing Mr. MacFaden’s other points, he is right when he says that U.S. interests own and control much of the foreign-registered tonnage that calls on U.S. ports. What is his point? I don’t know. The last time that I checked, this was not illegal. Using that foreign-registered tonnage to carry cargo from Boston to Jacksonville, on the other hand, would violate U.S. laws. Providing preference to U.S. carriers when they are carrying U.S. government or “aid” cargo is good policy.
A number of years ago, I was on a photo safari in Africa, where I traveled to – among other places – Zambia. To get there, we left Victoria Falls (the mother of all tourist traps) via automobile because existing air service was badly limited by local bickering in Zambia and Zimbabwe. I do have a point here, and I am getting to it: The road, under construction – ultimately intended to be a dual carriageway, divided super highway – was being built using U.S. foreign aid money by – you guessed it – Japanese contractors.
After a harrowing, eight hour death ride to Lusaka, we were told that most people there thought the road was a gift from Japan. Here is a case in point where U.S. dollars were exiting the United States to benefit others and despite the fact that any number of U.S.-based general contractors were capable of doing the work, the money was headed elsewhere. Let’s assume that the Japanese were indeed the low bidders. How much of that federal money ever came back to the U.S. coffers in the form of earned, taxed income? Very little, if any. I submit that the final cost to the taxpayer would have been much less had the work been done by Americans. Eventually, the U.S. mission in Zambia actually had to erect a billboard that said and I quote, “This highway is being built through the kindness and generosity of the American people.”
On the very same trip, we were told of another foreign aid project. This one in fact came from the Japanese. Their mission? Drill wells in small villages to increase the access of the local people in this arid country to precious water supplies. The Japanese donated the money, bought the equipment – Japanese produced industrial drills – and brought in people to do the work. Eventually, the local Zambian politicians wanted a cut of the pie and faced with these types of pressures, the Japanese quietly exited (after doing a lot of good) and left the equipment for their hosts. Within two weeks, the Zambians had of course broken the equipment and there were no more wells drilled. The Japanese know how to take care of their tax dollars, and so should we. When we send any aid anywhere, it should be carried on U.S. bottoms. That’s my opinion. It is also my opinion that it is not a good idea to monkey with laws that involve foreign cargoes arriving at our shores, as long as that cargo arrives or departs in a vessel that is compliant with applicable environmental, safety and manning requirements.
Here is another letter addressing both our lead editorial of two weeks ago, entitled, “The World of the American Marine Pilot: Never a Dull Moment,” garnered more MarEx traffic and click-throughs than any other online piece in the past six months. We didn’t get a lot of mail on it, nevertheless we did receive a letter from (Captain) Tim Brown, President of IOMMP. You can read that article by clicking HERE. You also can read what Captain Brown had to say by clicking HERE. Or, you can read what one of our readers had to say about both, below:
Joe,
I read Captain Brown’s letter and your response. There is a lot of interesting history surrounding the history of competition that you might find this tidbit interesting.
Back in the early go-go days of railroad construction, the nation suffered from the harm of what came to be known as “ruinous competition.” It worked like this – two competing railroad companies would build lines serving the same area. Then they would engage in rate wars they were great for their customers until both companies went bankrupt. Then no one had service. For businesses that required rail service, the loss of same proved ruinous. The solution was to establish regulated monopolies with permission to operate and with rates set by the Interstate Commerce Commission. This worked well, until it stopped working due to factors such as the Interstate Highway system, trucking and inland barge. Then the ICC’s bureaucratic processes became yet another obstacle to economically viable rail transportation. Ultimately, the ICC was abolished as it had outlived its usefulness.
A similar kind of ruinous competition plagued maritime pilotage with the competition taking the form of willingness to cut safety corners, rate wars, and due to the lack of cash from the rate wars, an inability to afford safe pilot boats.
There is a right way to have competition and a wrong way to have competition. Similarly, there are right and wrong ways to protect the public from the decision to either have competition or to do away competition. I think it clear that the ICC ultimately became a source of harm rather than a protector of the public’s larger interests. To further illustrate my point, many have arguably benefited from the introduction of competition into formerly regulated monopolies such as electricity. But when there is no one watching the newly freed commercial enterprises, you end up with such things as ENRON deliberately interrupting electricity supplies in California in order to drive rates up artificially. As President Reagan famously put it, “Trust. But verify.”
Either approach can succeed. Either can fail. A big part of being successful, no matter which approach you take, is to have effective oversight (Would we better off today if the financial services sector had had some adult oversight? Do I even need to ask the question?) and, unlike the ICC, to have enough flexibility to adapt to changing circumstances in a timely manner.
Best,
Bob
Robert G. Ross
Chief, Risk Sciences Branch
Special Programs Division
Science & Technology Directorate
Department of Homeland Security
MarEx Editor’s Remarks: Mr. Ross is a regular reader and he weighs in from time to time, as well – especially when he feels I’ve gone astray. We appreciate his well-thought-out letters. In this instance Mr. Ross writes of a lot of things that I have no knowledge of. His comments on “competition” may have some merit. In the case of marine pilots everywhere, the burden of making the right decision based solely on safety and not on the demands of commercial enterprise is a heavy one. One way of obviating that pressure is to create the state pilotage system that we commonly see today in the United States. Absent that, the pressure in a purely competitive market would probably bring down the rates but also have a palpable, negative effect on marine safety. Maybe I am wrong – but I don’t think so. Captain Brown alludes to that metric and I think that he is spot on. And, in 2006 and referring to the “competition days” in Long Island Sound, Charles Beck, the Maritime Transportation Manager, Bureau of Aviation and Ports for the State of Connecticut (and a retired U.S. Coast Guard Captain) said that, “The practice was good for keeping the rates low for shippers, but not necessarily conducive to marine safety.” Amen. Mr. Ross advocates a “Trust but Verify” system. I honestly don’t know how you get there within the bounds of a purely competitive situation in our marine harbors. Maybe our readers have some good ideas. I’m all ears.
Here is another letter which indirectly references the CBP policies in the U.S. Gulf that were mentioned in last week’s lead editorial. The reader talks about another aspect of CBP policy that he feels is less than wise. Read on to see what he has to say:
Joe,
The unintended result of the CBP program in the Gulf is that ships not involved in lightering now are forced to rotate crews before the 29 day limit if they are laid up in a port. We have a ship in Camden that has been laid up since July and the crew has not had shore leave. Now the owner needs to remove crew members who have exceeded the 29 day rule. This is putting undue financial pressure on owners who need to lay up their ships for a period of time. Now ships must also leave the US to go to foreign ports, thus depriving local terminals of needed revenue, in order to avoid the 29 day rule. Short sighted policy.
We ask detained seafarers to be our allies in port security yet we (CBP) treat them as potential terrorists and couldn't care less about their human needs. This is how America presents itself to the world of foreign seafarers! No wonder the world is angry at us. And as ships lay up in the US, they will face the consequences of the CBP enforcement. Short sighted policy.
Jim
The Rev. James D. Von Dreele
Chaplain to the Port & CEO/Executive Director
Seamen's Church Institute of Philadelphia & South Jersey
MarEx Editor’s Remarks: I honestly was not aware of this CBP policy. We hear more about seamen’s right to shore leave and how that is being denied or restricted under the broad umbrella of maritime security. Both issues are troubling and both perhaps could use a little “fine-tuning.” The Rev. Von Dreele is a regular reader and he is active in many maritime-related efforts on the waterfront. Ultimately, his efforts go towards the safety and welfare of all mariners. We thank him for his letter.
Our last letter, shown below, gave me a chuckle this past weekend.
Dear Capt. Keefe,
I thoroughly enjoy reading the MarEx eNewsletter and many of the linked articles in spite of the USA centric perspective.
While I am not a paragon of grammar use I try. Please, please, please Sir, author, editor, publisher, please use the word _affect_ in most places _impact_ is being over and incorrectly used.
If there is some need to use it please consider the necessary use of an adjective. i.e. ". . . a negative impact on . . ", "A positive impact was had on . . ."
Thank you.
Fair winds,
Name Withheld
MarEx Editor’s Remarks: The reader is a loyal fan and therefore I redacted his name. Okay, clearly I am going to have to tighten up on my grammar. Either that, or have a harsh word with my copy editor. I guess that I had too many course in Admiralty Law and Celestial Navigation at Mass. Maritime Academy and not enough English Grammar Mechanics seminars. Had I known then that I’d end up at MarEx, I would have probably adjusted my course load. Nevertheless, our Canadian friend also points out that he perceives our e-newsletter as being too “USA Centric.” I’m guessing that he probably doesn’t know that we produce a print magazine as well and that the last few covers (three in a row to be exact) featured International (Asia / Europe) executives. I do try to cull information from global sources and I think that we do a decent job at reporting the maritime news from that perspective. We are, after all, Americans at MarEx for the most part, and perhaps that frame of reference colors our editorial content. If so, I won’t apologize for that. Finally, I had to physically restrain myself several times this morning from using the word “impact” in my prose. It was a Herculean effort, I assure you. Thanks for the letter and thanks for reading. – MarEx.