The Failure of U.S. Maritime Policy

In a recent editorial on the blog Information Dissemination titled “Is America Still a Maritime Power?,” Stephen Carmel, Senior Vice President for Maritime Services at Maersk Line, declared, “The U.S. has no overarching maritime strategy which addresses the U.S. flag merchant marine’s role in our nation’s maritime power.” What Carmel told his naval audience is that the U.S. Merchant Marine (USMM) has absolutely no impact on U.S. military endeavors globally. “What is in question is the role of the U.S. flag merchant marine in our foreign commerce, economic security, and status as a maritime power,” Carmel said.

Carmel states that the movement of 1.5 billion tons of goods through U.S. ports annually is a key component of the U.S. supply chain and creates 30 million jobs, or about 18 percent of total U.S. employment. Carmel himself is employed at the U.S. subsidiary of AP Moller-Maersk, a Danish company, which is considered the world’s largest vessel operator. But for some reason he feels the urge to malign and disparage U.S. mariners who work at ‘hybrid organizations’ like the Military Sealift Command (MSC) and the Ready Reserve Fleet (RRF) as not really being qualified deepwater mariners because often they “don’t actually go anywhere and are not exercising and honing their skills, and probably just the opposite.’

In his hubris, Carmel describes the USMM as being “insignificant to the nation’s economic security” and that the “last fill program” of crude oil into the Strategic Petroleum Reserve, completed in December 2009, was shipped 100 percent by foreign tankers. He also depicts ‘food-aid’ shipments by the U.S. fleet as gratuitous government handouts, asserting that all U.S. agricultural exports, which are a significant part of the nation’s total exports, are transported solely by foreign-flagged vessels. He marginalizes the U.S. deepwater fleet again by saying that if it were not for cargo preference laws, which force the Ex-Im Bank and other government agencies to support these ships, the USMM could not survive.

The U.S. fleet is about one-half of one percent of the total global tonnage of ships over ten-thousand tons. The median age of the U.S deepwater fleet is 14 years and of Jones Act vessels 27.5 years, Carmel proclaims. “The median age of ships in the international container fleet is about 5 to 6 years,” he states. “The age of ships in the international fleet is likely to decline as the international community invests in state-of-the-art, fuel efficient or alternative fuel (e.g., LNG-fueled) ships to survive the twin threat of high fuel costs and strict emissions standards, investments the U.S. fleet, Jones Act or foreign-going, are not making.” All of this, says Carmel, is “casting doubt on claims that the U.S.-flag fleet is either modern or efficient.”

“Third World” America

While the U.S. maritime sector gets ZERO subsidies or support from the federal government, Capitol Hill provides $170 billion in annual aid to American corporations to export and another $1.3 billion in tax breaks on earned foreign revenues. Additionally, the agricultural industry receives about $30 billion per year in subsidies, including $790 million for foreign sales, and another $300 million to assist foreign purchasers to buy American agricultural products. Meanwhile, the Ex-Im Bank’s lending cap will be increased to $120 billion in 2012, $130 billion in 2013 and $140 billion in 2014, and its sole purpose is to help private firms finance their exports.

Carmel appears to revel in describing the USMM and Jones Act fleet and its mariners as “third world.” The motives behind this deprecating commentary are obvious and contrived because cargo preference laws are construed to be a form of subsidy, which is totally ridiculous. The U.S. government spends over $300 billion each year to ensure U.S. corporations are competitive globally. Meanwhile, the 2012 U.S. maritime  budget was an insignificant $344 million, and people like Carmel would love to keep it that way.

The American Century is fading away quickly and even the National Intelligence Council has admitted America’s global power is in decline. The Council also said that, while it hoped the U.S. military could maintain its ability to immediately respond globally, its ability to do so will be impacted by huge budget cuts. In a recent opinion poll by the journal Foreign Affairs, almost 65 percent of Americans believe the country is now “in a state of decline.” In 2011, for the first time since the Great Depression, almost four million Americans have been unemployed for over a year, and it is estimated that, since 2008, over 15 million Americans are either under-employed or have fallen into the ranks of the unemployed . 

Neptune Orient Lines (NOL), which is owned by the Singaporean government, bought American President Lines for $825 million in 1997.  AP Moller Maersk bought SeaLand in 1999 for $800 million. The Danes and the Singaporeans both have incredible social benefits, including health care. The U.S. is Denmark’s largest non-European trading partner, the major share of which is transported by AP Moller Maersk. In 1997, only four of 47 vessels in the Maritime Security Program (MSP) were foreign-controlled. Today, just 11 of 60 vessels are pure American ships.

On January 3, 2012, Maersk Line was fined $31 million by the U.S. Department of Justice to resolve allegations that it inflated shipping costs for transporting containers to U.S. troops in Afghanistan and Iraq. The DOJ claimed the company knowingly overcharged the Department of Defense and put profits over the welfare of U.S. troops. Furthermore, what makes Capitol Hill believe that foreign companies operating the commercial fleets that support U.S. military endeavors around the world will adhere to our foreign policies? AP Moller trades directly with countries like Iran and Syria, and it is documented that U.S. officers have left U.S.-flagged ships operated by Maersk when directed to sail to Iranian ports by Copenhagen executives.

A Time to Sow

The Obama Administration needs firm policies that will rebuild the U.S. maritime sector not only in the deepwater, but domestically as well. The U.S. has the world’s largest economy and for its flag lines to be considered “third world” is unconscionable. The recent editorial by Mr. Carmel is reflective of anti-U.S. maritime sentiments within Congress and by exporters like the agricultural industry, which receives billions of dollars in subsidies but will not support a deepwater fleet – a fleet that has protected national security since the time of America’s Founding Fathers.  This was once the greatest maritime nation on the planet, and there is no reason the current course to futility cannot be corrected.

Economist and Nobel Prize winner Paul Krugman called the U.S. economy a new car’s dead battery. In figurative terms the unemployed are being told to walk or take the bus, when it would cost merely $100 to get it (and the car) back on the road.  Increased government spending to assist state and local governments would put teachers, police and firemen back to work and boost the economy. Similarly, rebuilding the U.S. Merchant Marine and its flagged fleet would revitalize a nation sorely in need of jobs and in need of new strategies for global leadership and influence.