At a House Transportation and Infrastructure Committee hearing last week, Representative Tom Rice, Jr. (R-SC) asked witnesses why the U.S.-flag fleet wasn't competitive with the foreign-flag fleet. He was told that the reason was complex, and many others in the room shook their heads in agreement.
But the answer isn't complex. It's directly related to the fact that this Administration doesn't support the U.S.-flag fleet. It doesn't have a coherent maritime strategy. And the political appointees who are supposed to be advocating on behalf of the industry don't know anything about it. These failures will continue until the Administration nominates a Maritime Administrator who comes from the industry and understands the perilous precipice upon which it currently stands.
Role of the Administrator
The Maritime Administration's mission is to promote the U.S.-flag fleet. The Administrator of this agency during the first Obama Administration, David Matsuda, was a former Senate staffer who did not have a maritime background. He also lacked management experience. The Administration tried to compensate for these gaps by using taxpayer dollars to pay for leadership training. You can't learn about leadership and the maritime industry from a Washington, DC office suite. Such knowledge comes from real-world experience and contacts with private sector decision-makers.
The Administrator's lack of both leadership skills and knowledge of the industry negatively impacted the U.S.-flag fleet during his four years in office. For example, in 2011 the Obama Administration released 30 million barrels of oil from the Strategic Petroleum Reserve, and the majority of it was transported on foreign-flag vessels. The President was advised to release this oil based on guidance, according to a June 2011 Reuters article, from Treasury Secretary Timothy Geithner, White House Deputy National Security Advisor Michael Froman, and Deputy Energy Secretary Daniel Poneman. These men aren't statutorily charged with protecting the U.S.-flag fleet – that is the responsibility of the Maritime Administrator.
Administrator Matsuda determined that U.S.-flag capacity was not available to transport the petroleum. Based on this determination and information from the Defense and Energy Departments, the Secretary of Homeland Security granted numerous Jones Act waivers to foreign-flag carriers. The determination of non-availability was challenged by the American Waterway Operators and by U.S.-owned and operated companies, who stated that U.S.-flag vessels were indeed available. Despite these challenges, waivers were granted, and U.S. companies and U.S. workers lost income when the petroleum moved on foreign bottoms.
The 2011 incident is relevant today because Administrator Matsuda resigned this month and the Administration must nominate a new Administrator. This new individual will be joining an Administration that continues to chip away at the U.S.-flag fleet. Proposed changes to the food aid program, which Deputy Secretary of Transportation Porcari and General William Fraser, Commander of the U.S. Transportation Command, attempted but failed to successfully defend at last week's hearing, are merely the tip of the iceberg when it comes to the changes that the Administration could propose absent a strong Maritime Administrator.
The future of the U.S. maritime industry is dependent upon the next Maritime Administrator. If the new nominee is another candidate who lacks management skills and knowledge of the industry, this individual will not be able to fight against those currently in the Administration who want to see the demise of the U.S.-flag fleet. The next Administrator must be someone who has gone to sea, who has the leadership and management skills to manage an agency, and who can go to toe-to-toe with those who openly advocate an end to the Jones Act and cargo preference laws. Now, more than ever, the industry needs a leader who can help it navigate through dangerous waters. – MarEx
K. Denise Rucker Krepp is a homeland security, transportation, and energy expert who began her career as an active duty Coast Guard officer in 1998. After September 11th, Ms. Krepp was part of the team that created the Transportation Security Administration and the U.S. Department of Homeland Security.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.