Philip J. Shapiro: President & CEO, Liberty Maritime

You’re a lawyer. How did you get into the shipping business?

After graduating from Columbia University I was really unsure of what I wanted to do. My father was a lawyer and wanted me to go to law school, but I was unsure. So I decided to take a year off and ended up in Israel playing for a professional basketball team. Eventually I took my father’s advice and went to Hofstra Law School. After graduating I went to work for a New York law firm. One of the firm’s clients was Captain Leo Berger, a major U.S. tanker owner. I did some legal work for him and his company over the course of two years. One day he made me an offer to join his company as VP and General Counsel. 

Tell us about Captain Berger. 

Captain Berger was a brilliant shipping man. He could figure out complex transactions on the back of an envelope. He was a difficult taskmaster and had a “sink or swim” management style.  Working for him, you either succeeded or you left the company. Berger had many partners in his shipping deals. The Schnitzer family, which owned a number of enterprises on the West Coast, had invested in some of Berger’s vessels. As a result of their involvement, I got to know the Schnitzer family quite well, especially Dr. Leonard Schnitzer. Little did I realize in those early years that I would eventually become partners with them in Liberty. 

Was Dr. Schnitzer a mentor to you? 

Leonard was a fascinating individual and a mentor to me in many ways. He took great pride in his family’s ownership of a U.S.-flag shipping company as he was a great patriot. I do remember one occasion in 1986 when we were closing the sale of a tanker to the Navy. Leonard’s brother Gilbert turned to me and said, “One day, Philip, you are going to work for our family!” I really didn’t know at the time how close that day actually was. 

I have been partners with the Schnitzer family now for over 25 years, and we have a wonderfully warm and friendly relationship. They have been with us through the ups and downs of the shipping industry and never wavered in their support. I cannot imagine better partners anywhere. 

You have always been heavily involved in U.S. maritime policy. What were the issues in the 1980s?  

One issue was the application of cargo preference to P.L. 480. There were political fights between the agricultural and maritime communities, which culminated in the 1985 farm bill. A compromise was reached where the percentage of food aid reserved to U.S.-flag vessels was increased from 50 to 75 percent in exchange for preference not applying to certain other agricultural export programs. Eventually, the communities have learned to work together for a common goal, which is to preserve P.L. 480 as an in-kind food aid donation program and to resist efforts to send cash rather than American food overseas. 

Cargo preference helps insure that our nation will have the sealift capacity to meet our military and economic security needs. The higher cargo costs are a small fraction of what the government would pay to own and maintain the same capacity as that supported by cargo preference – and that does not even take into account the fact that U.S. owners and U.S. crews pay U.S. taxes. These efficiencies are exemplified by the success of the Maritime Security Program (MSP). Our nation has both military and commercial access to 60 ships and their extensive intermodal networks around the world for about $185 million a year. To replicate that capability and infrastructure would cost many billions of dollars annually.  

Tell us about the company today, including its fleet and services.  

Today Liberty has ten vessels in three different services. The core is our U.S.-flag bulk fleet, which is what we started with in 1988. We are extremely proud of the outstanding record these vessels have had for 25 years delivering millions of tons of humanitarian aid all over the world in a timely and cost-efficient fashion. In 2004 the company diversified and established Liberty Global Logistics, which currently operates a U.S.–Middle East shuttle service. The third market in which we operate involves the foreign-flag international commercial trade, where we have deployed our four new Kamsarmax 82,000 DWT vessels built in 2012 and 2013. 

Liberty is very involved in P.L. 480. If the program becomes a cash voucher system, how would that impact the company? 

A cash voucher system would have a very negative impact on the U.S.-flag fleet operating in the foreign trade. It is one thing to want to improve food aid, but moving to a cash system will ultimately be self-defeating and cause harm to those most in need as it would remove the constituency which fights for funding from the program. There are many things that can be done to improve program efficiency, such as adopting commercial contracting terms and requiring recipient countries to arrange for speedier and priority discharges. That is what we should all concentrate on – not destroying the most successful humanitarian program in history in the name of “reform.”    

 Liberty has enrolled its ships in the Voluntary Intermodal Sealift Agreement program, and it has a vessel in MSP. Tell us about these programs from the Liberty perspective.  

All of our ships are pledged to the VISA program because we believe it is our patriotic duty to make them available to the U.S. government. As far as MSP is concerned, one of our three U.S.-flag ships is enrolled, and the other two vessels are eligible for MSP participation if MSP agreements become available. We strongly support the MSP program and believe that its retention and full funding from Congress are absolutely essential to the maintenance of a U.S.-flag fleet operating internationally as well as our national security.  

Tell us about the extension of MSP to 2025. 

While Liberty was a strong supporter of extending MSP from 2015 to 2025, we were also outspoken in our criticism of “grandfathering” all 60 existing vessels for an additional 10 years.  We believed that the program would have benefited substantially from a competition to determine the best 60 vessels available and to prefer U.S.-citizens in the competitive process. Regrettably, Congress went forward with “grandfathering” and removed the existing preference for U.S. citizens upon the transfer of MSP agreements. Nevertheless, while disappointed, we continue to stand by the program and are a strong supporter of full funding as MSP remains a key component of U.S. government support for the U.S. Merchant Marine. 

As you know, the “Captain Phillips” movie is bringing positive attention to the U.S. Merchant Marine. How does that movie relate to your business?  

Interestingly, one of our ships – the Liberty Sun – was also attacked by pirates soon after the attack on the Maersk Alabama. In fact, it was announced from Somalia that the attack was in retaliation for what happened with the Maersk Alabama. Like the Maersk Alabama, the Liberty Sun was carrying P.L. 480 food aid to African countries. It was a harrowing time for the crew, but they were well trained and repelled the attack even though the ship was damaged by rocket-propelled grenades and small arms fire. In fact, the very same U.S. Navy vessel that provided the platform for the SEAL team for the Maersk Alabama intervention came to aid the Sun. We were very thankful that no one on the crew was hurt, and all returned safely home. Since that time, our ships all carry armed security teams when near pirate-infested waters. 

What was the most difficult part of starting a company and growing it over the last 25 years? 

The people make all the difference! I receive a lot of the accolades, but I get far too much credit for the work done by my management team, crews and shore-side employees. I am surrounded by an extraordinary management group. My Executive VP and CFO, Dale Moses, has been with me every single step of the way and is invaluable. He has put together a great financial team managed by John Sheen, our VP of Finance, who has many years of experience in transportation, logistics and finance. Our Marine Operations Department is headed by Executive VP Tom Keenan, an outstanding operations man who supervises the department from Operations to Engineering to Compliance. He also oversees all aspects of Liberty’s newbuilding program as well as our construction supervision teams.  

Ted Makrinos, our VP of Engineering, started as a Chief Engineer with us, came ashore as a Port Engineer, and now heads up a young and talented engineering group. Bob Wellner, our Executive VP in LGL, and Scott Cornell, our VP of Commercial Operations at LGL, are extremely knowledgeable about the PCTC trade and the multimodal logistics business. As we have grown, we have handpicked our executive management group and made succession planning a priority. Liberty would never have been such a success without these very talented people. 

Has the next generation of the family gotten involved in the business? 

Yes, I am very proud to have my son Josh as a VP at Liberty. He has been with us five years. He has learned our business quickly, especially since he works so closely with Charlie Nolfo, our VP of Commercial Chartering and Operations, who is a seasoned executive. Josh has already proven to be a very valuable addition to the team and has taken the lead on a number of strategic initiatives. It’s really gratifying for me and a wonderful experience for us to be able to work so closely together in this business.  

What is your vision for the future of Liberty Maritime? 

First, Liberty will survive and prosper. We have a number of young people in the organization who have a clear understanding of the mission and strategy. We also recognize the potential of the marketplace, and we can adapt quickly and efficiently. Liberty has been in business for over 25 years, and we know the markets and are strategically positioned for the future.