MARAD Predicts More U.S. Flag Fleet Losses

The APL Pearl will be flagged out in Italy on April 20, APL said this week. They will replace the tonnage with the APL Belgium in the Maritime Security Program (MSP). MARAD Administrator Chip Jaenichen told the House Subcommittee on Coast Guard and Maritime Committee that the agency expects more ships to exit the program as a consequence in the decline in Defense Department cargoes. Cargo preference for U.S. flagged ships has dropped by more than 80% recently with the drawdown of U.S. troops from Iraq and Afghanistan.

Jaenichen told members of the subcommittee that since 2009, MSP carriers have moved over 90% of the ocean-borne cargo needed to support U.S. military operations and rebuilding programs in the Middle East. He added MSP provides critical employment for 2,400 U.S. merchant mariners, which allows the government to maintain a pool of professional mariners capable of supporting its sealift ships. MSP currently operates 60 U.S.-flag vessels in program with each ship receiveing a $2.7 million annual subsidy to maintain their U.S. registry.

Jaenichen also touched on Administration-proposed changes to the PL 480 Title II food aid program, which plans to pay merchant ship operators $25 million in 2016 to counter a reduction in the amount of food aid cargoes transported on U.S.-flag vessels. Jaenichen said an additional $25 million in the Administration's budget "would mitigate the impact that such reforms could have on mariner jobs," and that the vast majority of food aid would continue to be sourced and shipped from the United States.

Statistics compiled by the U.S. Maritime Administration put the number of US flagged vessels currently operating internationally at 93, down significantly from the 1072 that operated in 1955. The downward trend of U.S. flagged vessels has caused ripples through the maritime community as an estimated 2,200 US mariner jobs have been lost since 2012. APL, the world’s seventh largest container transportation and shipping company, currently operates 10 U.S.-flag ships, nine of which are under the MSP.

Congressmen Duncan Hunter (R-CA) has been a strong opponent to the food aid program changes stating that there would be a “one-time payoff” for U.S. mariner jobs. Hunter and John Garamendi (D-CA) have been maintaining efforts to ensure that 50% of U.S. food aid move via cargo preference laws, which require the shipments be made on U.S. vessels.