Ensuring a Safe, Secure, and Competitive Future

STATEMENT OF
MARK H. BUZBY
ADMINISTRATOR
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE COMMITTEE ON
COMMERCE, SCIENCE, AND TRANSPORTATION
SUBCOMMITTEE ON SECURITY
UNITED STATES SENATE

HEARING ON FEDERAL MARITIME AGENCIES: 
ENSURING A SAFE, SECURE, AND COMPETITVE FUTURE

April 4, 2019

Good morning, Chairman Sullivan, Ranking Member Markey, and members of the Subcommittee.  Thank you for inviting me to testify today on the Maritime Administration’s (MARAD) contribution to ensuring the safety, security, and competitiveness of our Nation. 

Congress recognized long ago that a U.S. merchant marine composed of the best-equipped, safest, and most suitable types of vessels, constructed in the United States, and crewed by trained and efficient citizen mariners is critical to national defense and robust domestic and foreign commerce.[1]  MARAD’s mission is to foster, promote, and develop our maritime industry to meet the Nation’s economic and security needs. 

The U.S. merchant marine is a fundamental component of our national defense strategy. Our strategic sealift relies on a Government-owned fleet and assured access to commercially operated U.S.-flag vessels, and the intermodal networks that these vessel operators maintain, to transport equipment and supplies to deploy and sustain our military forces anywhere in the world.  Critical to both Government-owned and commercial U.S.-flag vessels is an adequate supply of qualified U.S. mariners to crew them.  Currently, we face readiness challenges because of aging Government-owned vessels, historically low numbers of U.S.-flag vessels operating in international trade, and ensuring we have a sufficient number of qualified U.S. mariners that would be needed in the event of a long-term national emergency. 

Government-Owned Vessels

MARAD maintains vessels under agreement with the Department of Defense in the Ready Reserve Force (RRF) on-call in a state of surge sealift readiness.  In the event of a major contingency, our nation relies on the 46 RRF vessels, along with 15 Military Sealift Command vessels, to provide the initial surge of sealift capacity.  After the initial period, commercial U.S.-flag vessels join the effort to provide sustainment shipping capacity. 

The average age of RRF vessels is more than 44 years, and for the past year we have struggled to maintain readiness levels across the fleet.  Older, increasingly obsolete equipment and systems require more time and money to repair or replace, if replacement parts, equipment and systems are even available.  As a result, the escalating cost of service life extensions is an ongoing concern. In addition, resources are needed to complete necessary repairs to comply with new regulatory requirements, such as upgrading and installing covered lifeboats, addressing exhaust emissions, and treating ballast water.  To address these needs, the President’s FY 2020 Budget for the Department of Defense requests $352 million to maintain the RRF.  Long-term, MARAD supports the Navy’s surge sealift recapitalization strategy, which includes a combination of targeted service life extensions, acquiring and converting used vessels, and building new vessels in U.S. shipyards. 

U.S.-Flag Commercial Fleet

As this committee is aware, the number of U.S.-flag vessels engaged in international trade has declined over the past several decades and remains near its lowest level in history.  Of approximately 50,000 large, oceangoing commercial vessels operating around the world today, only 180 fly the U.S. flag.  Of those, 81 vessels operate exclusively in international trade. The remaining 99 operate almost exclusively in domestic (“Jones Act”) trades.  These types of vessels are critical to the employment base for mariners with the credentials and training required to crew Government ships necessary to deliver supplies and equipment to deployed forces and overseas installations around the world. 

Congress established the Maritime Security Program (MSP), cargo preference laws, and the Jones Act to foster the development and encourage the maintenance of a robust merchant marine; however, these programs now merely support a limited number of oceangoing ships in the U.S.-flag fleet.  The MSP helps maintain an active, privately-owned, U.S.-flag fleet of 60 militarily useful commercial ships operating in international trade and employing U.S. mariners fully qualified for sealift operations.  MARAD provides MSP participants an annual stipend to facilitate the financial viability of operating under the U.S.-flag, and in return, their ships and logistics networks are available through pre-negotiated contingency contracts.  The MSP facilitates employment for 2,400 U.S. merchant mariners qualified to sail on oceangoing vessels who we may call upon to crew the RRF vessels when those ships are activated. The MSP also assures DOD access to the critical multibillion-dollar global networks of intermodal facilities and transport systems maintained by MSP participants.  A continued commitment to this program is reflected in the President’s FY 2020 Budget, which requests $300 million for the Maritime Security Program.

The number one concern for any commercial vessel operator is access to cargo.  Government and commercial demand for U.S.-flag cargo transportation is the lifeblood for these operators and the mariners they employ in the U.S.-flag fleet.  Cargo preference laws require shippers of Government-impelled cargo to use U.S.-flag vessels for the ocean-borne transport of a significant portion of certain cargoes purchased or guaranteed with Federal funds.  Specifically, 100 percent of military cargo, and at least 50 percent of most non-military, Government-owned or impelled cargo transported by ocean, must be carried on U.S.-flag vessels to the extent those vessels are available.   Absent other measures, the cargo preference mandates Congress established support the sustainment and readiness of a U.S.-flagged, privately-owned, international trading commercial fleet, and the continued employment of American private sector merchant mariners.

In addition to cargo preference laws, U.S. coastwise trade laws, commonly referred to as the Jones Act, help sustain the U.S-flag domestic trading fleet.  Jones Act vessels employ U.S. mariners and ensure that vessels navigating daily among and between U.S. coastal ports and inland waterways operate with U.S. documentation and a majority American crew, rather than under a foreign flag with foreign crew.  The American mariners of the Jones Act fleet are our “eyes and ears” in domestic ports and waters and add an important layer of security for our Nation.  In addition, Jones Act requirements support U.S. shipyards and repair facilities, and sustain supply chains that produce and repair American-built ships (including Navy and Coast Guard vessels).  Maintaining a domestic base of shipbuilding and repair facilities is critical to ensuring the readiness of our strategic sealift fleet. 

U.S. Merchant Mariners

As I stated earlier, the number of vessels in the U.S.-flag, oceangoing fleet has reached a low point. I am concerned that the current fleet size could impact our ability to quickly assemble an adequate number of qualified mariners with the proficiency to operate large ships (unlimited horsepower and unlimited tonnage) needed for surge and sustainment sealift operations during a mobilization that lasts more than six months. We may be short of the number of mariners needed to meet crewing requirements beyond those first six months. While, historically, the men and women of the U.S. merchant marine have voluntarily shipped out in times of need, and even extended their time at sea beyond normal tours when called upon to do so, it is important to note that commercial mariners are under no legal obligation to do so.  MARAD is conducting a survey of mariners to ascertain with more certainty their potential availability and willingness to “answer the call.”  The results will help clarify the size of the pool of qualified mariners upon which our Nation could potentially rely in times of need.  Additionally, we are working to better track licensed mariners who may no longer be sailing, but could serve if needed, and project mariner availability to meet the Nation’s commercial and sealift requirements.

Mariner Training

To ensure that qualified mariners remain available to satisfy DOD sealift requirements, the Department of Transportation (DOT) and MARAD are firmly committed to mariner officer development at the U.S. Merchant Marine Academy (USMMA or Academy) and six State Maritime Academies (SMAs).[2]  Each year, the USMMA graduates approximately 225 new highly skilled, entry-level Merchant Marine officers who are qualified to crew large, ocean-going vessels.  Our Midshipmen must have 360 days of sea service in order to qualify for their U.S. Coast Guard credentialing exams.  This shipboard training program exposes Midshipmen to life at sea aboard commercial and military vessels.  USMMA graduates must accept active-duty or reserve officer commissions in an Armed Service or other uniformed service of the United States.  The graduates who do not pursue the active duty option (the majority of graduates) become guaranteed source of mariners who will crew Government owned surge sealift vessels.  The President’s FY 2020 Budget requests $81.9 million for the USMMA to maintain the highest standards of mariner education and training.

The Academy, MARAD, and DOT are committed to ensuring the safety of Midshipmen both on campus and during their sea year.  Since I became Maritime Administrator, we have improved Academy programs and procedures related to sexual harassment and sexual assault, and are making progress to instill a culture of zero-tolerance for such behavior.  I am pleased with the direction and momentum of change at the Academy under the leadership of our new Superintendent, RADM Jack Buono, but am also cognizant that eliminating sexual assault and sexual harassment is an issue that requires consistent attention.  As such, addressing sexual harassment and sexual assault at the Academy remains a top priority for me and DOT leadership.

The SMAs collectively graduate approximately 900 entry-level merchant marine officers annually.  Unlike the USMMA, SMA cadets receive most of their sea time while sailing on board MARAD-provided training ships, rather than on commercial or military vessels.  The SMA training ships are very old and need to be replaced.  We appreciate the support Congress has provided for the School Ship recapitalization program, by appropriating funding for one vessel each in FY 2018 and FY 2019.  Since that first appropriation in March 2018, MARAD has developed and implemented an acquisition strategy, incorporated industry feedback into the ship design, and is well along in evaluating proposals to select a Vessel Construction Manager.   The President’s FY 2020 Budget requests $242.3 million for the SMAs, which includes funding for a third training vessel, and maintaining the existing training ships.

Competitiveness

Moving freight efficiently—both domestically and globally—is critical to U.S. competitiveness.  Freight volumes in the U.S. are projected to increase by 41 percent, and U.S. foreign trade is forecast to more than double from 2015 to 2045.[3]  The ability of our ports to increase capacity and handle cargo more efficiently is vital to the health of many domestic industries and our Nation’s economy.  The newest tool available to DOT in this regard are Port Infrastructure Development grants.  The FY 2019 Consolidated Appropriations Act, P.L. 116-6, provided $292.7 million for the Port Infrastructure Development Program, which is authorized under 46 U.S.C. § 50302.  Through this program, DOT will provide grants to coastal seaports for infrastructure improvement projects that are directly related to port operations, or intermodal connections to ports that improve the safety, efficiency, or reliability of the movement of goods into, out of, or around coastal seaports. 

The FY 2019 Consolidated Appropriations Act also provided funding for other MARAD programs we will use to help increase the competitiveness of the U.S. maritime industry.   The Act provided $20 million for the Small Shipyard Grant program for shipyard modernization projects, $7 million for America’s Marine Highway projects to develop and expand services to move freight along our waterways and coastlines to relieve land-side congestion, and $3 million for the Maritime Environmental and Technical Assistance program to support research and development to facilitate environmental compliance and enhance sustainability across the maritime industry.

Conclusion

Thank you for the opportunity to highlight MARAD’s programs that support the safety, security, and competitiveness of our Nation.  I appreciate this Subcommittee’s continued support for the U.S. maritime industry and I am happy to respond to any questions you may have.

State of the Mobility Enterprise

STATEMENT OF
MARK H. BUZBY
ADMINISTRATOR
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE
COMMITTEE ON ARMED SERVICES
SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES
AND SUBCOMMITTEE ON READINESS
U.S. HOUSE OF REPRESENTATIVES

HEARING ON

March 7, 2019

Good afternoon, Chairman Courtney, Chairman Garamendi, Ranking Members Wittman and Lamborn, and members of the Subcommittee.  I appreciate the opportunity to join our partner, U.S. Transportation Command (USTRANSCOM), to discuss the “State of the Mobility Enterprise” and the Maritime Administration’s (MARAD) role in supporting the Department of Defense’s (DOD) strategic sealift capabilities.  U.S. strategic sealift consists of Government-owned vessels and assured access to a fleet of privately-owned, commercially operated, U.S.-flag vessels and intermodal systems, and the private sector mariners who operate them.  Together, these vessels, mariners, and networks transport equipment and supplies to deploy and sustain our military forces anywhere in the world.  Our sealift enterprise faces critical challenges to provide the readiness assurances needed to meet the global threats we now face.

Ready Reserve Force

MARAD’s Ready Reserve Force (RRF) is comprised of Government-owned ships within the National Defense Reserve Fleet (NDRF). We maintain the RRF in an advance state of surge sealift readiness.  The fleet stands on-call to transport critical cargo during major contingencies.  In the event of a contingency, the 46 RRF vessels, along with 15 Military Sealift Command vessels, provide the initial surge of sealift capacity.   These vessels would then be joined by commercial U.S.-flag vessels to provide sustainment shipping capacity.   

Vessels in the RRF fleet are very old.  In fact, the average age of RRF vessels is over 44 years, and for the past year the vessels have struggled to maintain an 85 percent readiness level across the fleet.  As a result, MARAD faces ongoing readiness challenges that will continue to impact our capabilities until we are able to complete much needed service life extensions and the fleet is recapitalized with newer ships.  MARAD supports the Navy’s surge sealift recapitalization strategy, which includes a combination of targeted service life extensions, acquiring and converting used vessels, and building new vessels in U.S. shipyards.  All of these efforts require key industrial capabilities: A sustainable ship construction industrial base and available and sufficient marine repair facilities.

The escalating costs of service life extensions of the existing fleet is an ongoing concern.  Older  increasingly obsolete equipment and systems require more time and money to repair or replace, if replacement parts, equipment and systems are even available.  MARAD uses available resources to complete necessary repairs to comply with new regulatory requirements, such as upgrading and installing lifeboats, comprehensively addressing exhaust emissions, and treating ballast water. 

The growing maintenance needs required to sustain this elderly fleet’s readiness relies upon a distributed repair industrial base that has seen significant contraction due to market forces.  Old ships require longer and more costly shipyard periods, but the shrinking base limits drydocks available to U.S vessels—Navy, Coast Guard, NOAA, and the commercial fleet.  The resulting maintenance backlog negatively impacts fleet-wide sealift readiness.  MARAD and the USTRANSCOM are working with the U.S. Navy to plan for resourcing readiness, including extending the service life of nearly the entire RRF fleet, out to 60 years.  With increasingly expensive, age-related repairs, parts unavailability, and the declining availability the qualified steam-ship engineers needed to work on vessels from this era, we anticipate that programming sufficient resources will remain a challenge through the recapitalization period to 2048. 

We are taking steps toward the acquisition and conversion of used ships, including the purchase of two vessels as authorized by the Fiscal Year (FY) 2018 National Defense Authorization Act (NDAA).  In mid-January, Navy and DOD gave MARAD their requirements for used sealift ships to be acquired from the commercial market.  On February 14, 2019, MARAD released a Request for Information to identify suitable ships.  Responses are expected by March 19th. The information gained will help us coordinate with the Navy to ensure resources are available to acquire and convert replacement vessels.  Also in January, we provided Navy with input to develop their business case analysis for sealift recapitalization.  MARAD will continue to collaborate with our DOD partners to address RRF vessel maintenance, repair, and modernization shortfalls to keep the capability viable until commercial acquisitions or new construction can meet projected service life end dates.

National Defense Reserve Fleet

In addition to the RRF, MARAD manages the other vessels in the NDRF, which are used for merchant mariner training, natural disaster response, and supporting our national security, defense, and law enforcement partners.  For example, two NDRF ships were converted for use by the Missile Defense Agency to support ballistic missile defense system testing.

MARAD is also working to replace aging NDRF training vessels that we provide to the six state maritime academies to train entry-level merchant marine officers needed to crew Government and U.S.-flag commercial ships.  We appreciate the support Congress provided for the School Ship recapitalization program, by appropriating funding for one vessel each in FY 2018 and FY 2019.  Since first receiving funding in March 2018, MARAD has been implementing the approved acquisition strategy, incorporated industry feedback into the ship design, and is in the final stages of selecting a Vessel Construction Manager.  The first training ship is expected to be delivered to DOT/MARAD first quarter 2023 and the second by the end of the third quarter of FY 2023.

U.S.-Flag Commercial Fleet

Our Nation’s strategic sealift fleet is augmented by U.S.-flag commercial vessels. Commercial mariners play an essential role, during steady state and contingency operations, by delivering supplies and equipment to deployed forces and overseas installations around the world.  As this committee is aware, the number of U.S.-flag vessels engaged in international trade has declined over the past several decades and has remained near its lowest level in history for several years.  Of approximately 50,000 large, oceangoing commercial vessels in the world today, fewer than 200 sail under the U.S. flag, including 82 vessels operating exclusively in international trade. The remaining 99 operate almost exclusively in Jones Act trades.  These types of vessels are critical to the employment base for mariners with the credentials and training required to crew Government ships when needed.  The decline of the commercial U.S.-flag fleet has been a perennial and intensifying challenge, and any further decline of the actively-trading U.S.-flag fleet reduces our Nation’s ability to unilaterally project and sustain our forces during war.[1] 

Congress established the Maritime Security Program (MSP), cargo preference laws, and the Jones Act to foster the development and encourage the maintenance of a robust merchant marine; however, these programs now merely maintain a limited number of oceangoing ships in the U.S.-flag fleet.  The MSP helps maintain an active, privately-owned, U.S.-flag fleet of 60 militarily useful commercial ships operating in international trade and employing U.S. mariners fully qualified for sealift operations.  MARAD provides MSP participants an annual stipend to facilitate the financial viability of operating under the U.S.-flag, and in return, their ships and logistics networks are available through pre-negotiated contingency contracts and “on-call” to support DOD’s global transportation needs when activated.  The MSP facilitates employment for 2,400 U.S. merchant mariners qualified to sail on oceangoing vessels who we can call upon to crew the RRF vessels when activated. The MSP also assures DOD access to the critical multibillion-dollar global network of intermodal facilities and transport systems maintained by MSP participants. 

In the commercial maritime industry, cargo is king.  Government and commercial demand for U.S.-flag cargo transportation is essential to sustain the vessels and jobs in the U.S.-flag fleet.  Cargo preference laws require shippers of Government-impelled cargo to use U.S.-flag vessels for the ocean-borne transport of a significant portion of certain cargoes purchased or guaranteed with Federal funds.  Specifically, 100 percent of military cargo, and at least 50 percent of most non-military Government-owned or impelled cargo transported by ocean, must be carried on U.S.-flag vessels subject to a MARAD determination of vessel availability. Absent other measures, these cargo preference mandates support the sustainment and readiness of a U.S.-flagged, privately-owned, international trading commercial fleet, and  the continued employment of the associated American private sector merchant mariners.

In addition to cargo preference laws, U.S. coastwise trade laws, commonly referred to as the Jones Act, contribute to sealift capability and capacity and help sustain the U.S-flag domestic trading fleet.  Jones Act requirements support U.S. shipyards and repair facilities, and sustain supply chains that produce and repair American-built ships (including Navy and Coast Guard vessels).  As noted earlier in this testimony, maintaining a domestic base of shipbuilding and repair facilities is critical to ensuring the readiness of our strategic sealift fleet.  In addition, Jones Act vessels employ U.S. mariners and ensure that vessels navigating daily among and between U.S. coastal ports and inland waterways operate with U.S. documentation and a majority American crew, rather than under a foreign flag with foreign crew.  The American mariners of the Jones Act fleet are our “eyes and ears” in domestic ports and waters and add an important layer of security to our Nation.

U.S. Merchant Mariners

The use of Reduced Operating Status (ROS) crews onboard RRF ships keeps a core crew ready to activate Government-owned vessels in a very short period of time. This core of nine or ten crewmembers maintains the ships and systems ready to get underway within five days of notification, but they must be quickly augmented with a full crew complement to set sail. Access to a pool of qualified mariners from a robust, commercial maritime fleet is an essential multiplier to maintaining enough sealift readiness capacity for contingencies.

As I stated previously, the number of ships in the U.S.-flag, oceangoing fleet has declined for many decades and has now reached a historic low.  As a result, I am concerned about our ability to quickly assemble an adequate number of qualified mariners to operate large ships (unlimited horsepower and unlimited tonnage) needed for surge and sustainment sealift operations during a mobilization lasting more than six months. We may be short of what is needed to meet crewing requirements after the first six months of a full military mobilization. While, historically, the men and women of the merchant marine typically shipped out in times of need and would likely voluntarily extend their time at sea beyond normal tours if called upon to do so, it is important to note that commercial mariners are under no legal obligation to report when called.  MARAD is conducting surveys to ascertain with more certainty the potential availability and potential willingness of mariners to “answer the call.”  The results will help clarify the size of the pool of qualified mariners upon which our Nation could potentially rely in times of need.  Additionally, we are working to better track licensed mariners who may no longer be sailing, but could serve if needed, and to develop tools to understand and analyze changes in the numbers of fully qualified mariners trained to meet the Nation’s commercial and sealift requirements when needed.

MARAD also continues to support mariner training through the U.S. Merchant Marine Academy (USMMA) and the six state maritime academies, which produce highly skilled and licensed officers for the U.S. Merchant Marine.  These institutions graduate most of the U.S. Coast Guard credentialed officers who are qualified to crew U.S.-flag ocean-going ships including RRF vessels.  In addition, all USMMA Midshipmen and certain state maritime academy students who receive Federal financial assistance to attend an academy incur obligations to sail for a specific time  or to otherwise serve in the U.S. maritime-related industry, as well as to serve in an active or reserve component of the U.S. Armed Forces.  For example, USMMA graduates incur an obligation to maintain their license as an officer of the merchant marine for six years following graduation and to serve five years as a merchant marine officer aboard U.S. documented vessels if such employment is available or on active duty with the U.S. Armed Forces or uniformed services.  If not on active duty, they must serve as a reserve commissioned officer for eight years. The USMMA is the single largest annual contributor to the U.S. Navy’s Strategic Sealift Officer community, sponsored by the Commander of the Military Sealift Command.  These officers form a critical part of the sealift manning equation because of their service obligation to maintain their license and crew the RRF in emergencies.

Conclusion

I believe that MARAD can support DOD sealift requirements today, but we are facing readiness challenges that require careful planning and action now.  MARAD remains committed to working with our Navy and USTRANSCOM partners to meet these challenges and to continue providing the sealift capabilities needed to meet our national security requirements.

Thank you for the opportunity to testify today.  I appreciate your support for the Merchant Marine and I look forward to your questions.

U.S. Maritime and Shipbuilding Industries: Strategies to Improve Regulation, Economic Opportunities and Competitiveness

STATEMENT OF
MARK H. BUZBY
ADMINISTRATOR
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES

HEARING ON
U.S. MARITIME AND SHIPBUILDING INDUSTRIES:
STRATEGIES TO IMPROVE
REGULATION, ECONOMIC OPPORTUNITIES AND COMPETITIVENESS

MARCH 6, 2019

Good morning, Chairman Maloney, Ranking Member Gibbs, and members of the Subcommittee.  I appreciate the opportunity to discuss strategies to improve economic opportunities and the competitiveness in the U.S. maritime and shipbuilding industries.

The U.S. Merchant Marine, U.S. shipbuilding and repair facilities, the Nation’s port system, and supporting industries (collectively referred to as the U.S. maritime industry) integrates our economy with a vast global system that moves more than 90 percent of the world’s trade by tonnage, including energy, consumer goods, agricultural products, and raw materials.  Of the goods that the U.S. imports and exports, approximately 69 percent by weight and 40 percent by value move by water and through our national port system.  These industries, vessels, infrastructure, and personnel also play critical roles in national security, supporting our Nation’s ability to provide sealift for the Department of Defense (DOD) during times of war and national emergency. 

The mission Congress gave the Maritime Administration (MARAD) is to foster, promote, and develop the maritime industry of the United States to meet the Nation’s economic and security needs. Unfortunately, over the last few decades, the U.S. maritime industry has suffered losses as companies, ships, and jobs moved overseas. To reverse this multi-decade trend, MARAD is continuing to work with its industry stakeholders to identify ways our U.S.-flag commercial fleet can better compete for international cargoes and our U.S. shipbuilding and repair industry can grow and continue to meet commercial and military shipbuilding needs.  In addition, MARAD continues to leverage its existing congressionally authorized programs to support mariner training, improve port infrastructure, and assist industry to address environmental challenges.

U.S.-flag Fleet

U.S. strategic sealift consists of 61 Government-owned vessels maintained in reduced operating status, augmented by the U.S.-flag commercial fleet.  Commercial vessels crewed with civilian mariners transport equipment and supplies around the world and provide the pool of mariners with the unlimited tonnage/horsepower qualifications needed to provide the additional crew for Government ships when they are activated.  Our Nation relies on the fleet of large oceangoing self-propelled commercial vessels operating in the domestic (Jones Act) and international trades to provide employment for these highly qualified mariners and auxiliary sealift capacity when needed.

U.S.-flag Vessels in U.S. Domestic Trades

U.S.-flag vessels operating in domestic trades sail on U.S. inland and intracoastal waterways, lakes, oceans along the coasts of the United States, and between non‑contiguous States and U.S. territories.  The domestic water transportation market is served by a diverse array of approximately 41,000 vessels owned, operated, and largely built by U.S. citizens.   The majority of vessels in the domestic trades consist of tugs and barges, with a smaller number of work and supply vessels used in the offshore oil industry, and specialty vessels such as dredges.  As of February 4, 2019, 99 of the vessels operating in the domestic market were large cargo-carrying, merchant-type vessels capable of self-propelled operation in the deep oceans.  These are the types of vessels needed to provide an employment base for mariners with the unlimited credentials and training required to also crew Government ships when needed to meet DOD sealift requirements.

U.S.-flag Ships in International Trades

Cargo preference laws require shippers of Government-impelled cargo to use U.S.-flag vessels for the ocean-borne transport of a significant portion of certain cargoes purchased or guaranteed with Federal funds.  Specifically, 100 percent of military cargo, and at least 50 percent of most non-military Government-owned or impelled cargo transported by ocean, must be carried on U.S.-flag vessels subject to a MARAD determination of vessel availability. U.S.-flag carriers engaged in international trading believe that shipping required by cargo preference laws provides critical revenue that significantly contributes to the economic viability of this portion of the  U.S.-flag fleet.

As of February 4, 2019, there were 82 large, U.S.-flag merchant-type vessels operating in international trades.  Estimates using 2016 U.S. Census foreign trade data indicate that just 1.5 percent of U.S. waterborne imports and exports by tonnage move on oceangoing commercial vessels registered in the U.S.  The last year in which the U.S.-flag fleet carried at least ten percent of our trade by tonnage was 1960 when the U.S.-flag commercial fleet consisted of well over 1,000 ships; the share remained close to four percent from 1977 until 1993, and fell to two percent as of 2003. 

U.S.-flag ships must compete against foreign-flag carriers that benefit from major subsidies or state ownership.  For example, one large Chinese-flag carrier that is wholly state-owned has received at least $1.95 billion in state assistance over the last several years, and will soon carry the single largest share of containerized imports to the United States.  Other foreign-flag carriers also receive state support through various means.[1]  Absent other measures, cargo preference helps support the sustainment of a minimal U.S.-flagged, privately-owned internationally-trading commercial fleet and the continued employment of the associated American merchant mariners.

Supply of Qualified Mariners

To ensure that qualified mariners remain available to satisfy DoD sealift requirements, the Department of Transportation (DOT) and MARAD are firmly committed to mariner officer development at the U.S. Merchant Marine Academy (USMMA) and six State Maritime Academies.[2]  Together, these academies graduate more than 1,000 entry-level new officers each year.

Hiring veterans makes good business sense, and in the case of the maritime industry, skills and experience from the sea services translate directly into qualifications needed in the U.S. Merchant Marine and maritime sector.  In 2014, at MARAD’s request, the U.S. Committee on the Marine Transportation System (CMTS) formed the Military to Mariner Task Force to help coordinate Federal efforts to facilitate the transition from military service to civilian employment in the U.S. Merchant Marine and other positions within the U.S. Marine Transportation System.  The Maritime Administrator and the Executive Director of the Military Sealift Command lead this Task Force, with participation from all the sea services.  As a direct result of this partnership, Federal agencies have committed time and resources to:

• crosswalk military ship-board training and qualifications to civilian mariner credential requirements,
• assign permanent staff to the Navy and USCG Credentialing Opportunity Online (COOL) projects,
• enable USCG Academy graduates to receive a 100 Ton Master-Near Coastal Credential upon graduation,
• increase the number of service training courses approved for Merchant Mariner Credentials, and
• identify ways to recruit, train, and retain Merchant Mariners to support both national Defense and Federal mission accomplishment.

I am extremely proud of the Executive Order the President signed this week to address long-standing challenges to the transition of active-duty uniformed service mariners into civilian merchant mariners crewing U.S.-flag commercial vessels. The Military to Mariner Executive Order also directs the CMTS to pursue innovative ways to support merchant mariner credentialing through the existing Military to Mariner (M2M) Task Force and to provide a yearly status report on its efforts.

Ensuring the availability of sufficient qualified contract and obligated mariners for a prolonged activation of U.S. reserve sealift capacity is a continuing concern.  In 2017, Congress directed MARAD to convene a Maritime Workforce Working Group (MWWG) to assess the size of the pool of U.S. citizen-mariners necessary to crew the sealift fleet in times of national emergency. At that time, U.S. Coast Guard data indicated that 33,125 U.S. mariners held unlimited credentials, however the MWWG estimated a value of 11,768. The MWWG determined that the disparity between these values will remain unresolved until more research is completed.   

U.S. Shipbuilding

Among the foremost challenges to the U.S. Merchant Marine and shipbuilding industry are low-cost foreign competitors (including heavily subsidized, state-owned fleet operators), diminishing government cargoes, and reduced commercial ship orders.  Over the last several decades, large U.S. shipyards and their skilled labor forces have atrophied due to the uneven playing field of low-cost, highly-subsidized international shipbuilding competition among other factors, resulting in shipyard closures and reductions in the U.S. vendor base. 

The few remaining large U.S. commercial shipyards rely on the small U.S. domestic market. The successful, multi-decade industrial policies of the principal shipbuilding nations have virtually eliminated the ability for U.S. shipyards to compete in the global market.  Over 90% of global shipbuilding occurs in three countries; China, Korea, and Japan. While the United States remains a global leader in naval shipbuilding, which represents the majority of the Nation’s shipbuilding revenue, our large commercial shipyards are struggling to remain afloat. U.S. commercial shipbuilding of large merchant-type ships has been locked into a downward spiral of decreasing demand and an increased divergence between domestic and foreign shipbuilding productivity and pricing. 

In the case of large self-propelled oceangoing vessels, U.S. shipyards still lack the scale, technology, and the large volume “series building” order books needed to compete effectively with shipyards in other countries.[3]  The five largest U.S. commercial shipyards construct limited numbers of large cargo vessels for domestic use, averaging five such vessels per year over the last five years, with a peak of ten such vessels in 2016.  This production is small, however, relative to the worldwide production of 1,408 such ships in 2016. 

U.S. shipyards have opportunities for growth.  The expanding energy sector, and the Liquefied Natural Gas (LNG) market in particular, presents a unique opportunity to grow the U.S. shipping and shipbuilding industry, provided domestic LNG import demand can be grown to the needed levels. The global LNG market, however, is anticipated to expand over the next 20 years and it is estimated that the number of LNG ships necessary to service the market will nearly double by 2040.   The U.S. could capitalize on this growing industry.  Ship owners are more likely to be able to secure financing and invest in the construction of LNG vessels in the U.S. if there are long-term contracts for coastwise transportation for LNG that would provide a reliable flow of cargo for new vessels to carry at the necessary price levels once completed.  Therefore, encouraging demand for U.S.-flag coastwise vessels in the domestic LNG market could foster an improved prospect for domestic construction of LNG tankers, and more LNG bunkering vessels.   

The Jones Act requirement that vessels serving domestic markets must generally be built in the U.S, the Capital Construction Fund (CCF), and Construction Reserve Fund (CRF) programs are all tools Congress established to sustain U.S. shipyards.  In addition, the Small Shipyard Grant Program is an important program for shipyard modernization.  Since 2008, this program has provided grants totaling $203.79 million to 216 shipyards. 

Port Infrastructure/Freight Movement

Another challenge the U.S. maritime industry faces is the state of our Nation’s gateway port infrastructure.  The ability of our ports to increase capacity and handle cargo more efficiently is vital to the health of many domestic industries.  Freight volumes are projected to increase by 31 percent, and U.S. foreign trade will more than double between 2015 and 2045. 

There is great potential to improve this system by increasing the efficiency of our ports.  The newest tool available for DOT to improve efficiency is Port Infrastructure Development grants.  The FY 2019 Consolidated Appropriations Act, Pub. L. 115–141, appropriated a total of $292.7 million for the Port Infrastructure Development Program, which is authorized under 46 U.S.C. § 50302.  Through this program, MARAD will provide grants for coastal seaports for infrastructure improvement projects that are directly related to port operations, or intermodal connections to a port that improve the safety, efficiency, or reliability of the movement of goods into, out of, or around coastal seaports.  Funds for the FY 2019 grants will be awarded on a competitive basis. 

MARAD is also working through its America’s Marine Highway Program to develop and expand services to move freight along our waterways and coastlines and to relieve land-side congestion.  Given the immense economic and environmental benefits of increased waterborne transportation, this program represents an opportunity to enhance American supply-chain competitiveness.  Working with local sponsors, this program is gaining support and making a difference for regional economies and transportation infrastructure.  For example, a new Baton Rouge-to-New Orleans, LA, barge service was recently established to transport heavy weight export containers.  In the past 90 days, more than 11,000 truckloads have moved via the Marine Highway, reducing highway congestion by one million vehicle miles traveled.  The FY 2019 Consolidated Appropriations Act included $7 million in grant funding for the program. 

Environmental Issues

Finally, there is opportunity to foster the competitiveness of the U.S. maritime industry through MARAD’s Maritime Environmental and Technical Assistance (META) program.  Since maritime transportation is, by its nature, a global industry in most cases, U.S. vessel compliance with international environmental standards is required to compete in this realm. This program supports applied research and development to facilitate environmental compliance and enhance sustainability across the marine industry.  Leveraging resources with the private sector and other government agencies, META’s goal is to identify economically sustainable solutions to emerging maritime environmental challenges.  The FY 2019 Consolidated Appropriations Act includes $3 million for the META program. Following on the META model, MARAD is also exploring other areas in which partnerships with the private sector and other government agencies can be leveraged to further research, development, and technology transfer to make our fleets and ports safer, more efficient, and more competitive.

Thank you for the opportunity to highlight MARAD’s programs that support the strength and competitiveness our U.S. maritime industry.  I appreciate this Subcommittee’s continued support for the U.S. Merchant Marine and look forward to working with you to address the challenges facing the U.S. maritime industry and take advantage of opportunities to enhance and improve the U.S. maritime transportation system. I am happy to respond to any questions you may have.

Review of Recent Gao Reports on Icebreaker Acquisition and the Need for a National Maritime Strategy

Maritime Transportation: Challenges and Opportunities

STATEMENT OF

REAR ADMIRAL JAMES HELIS, U.S. MARITIME SERVICE

SUPERINTENDENT

UNITED STATES MERCHANT MARINE ACADEMY

BEFORE THE

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORATION

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND

MERCHANT MARINE INFRASTRUCTURE, SAFETY AND SECURITY

UNITED STATES SENATE

HEARING ON

MARITIME TRANSPORTATION:  CHALLENGES AND OPPORTUNITIES

APRIL 24, 2018

Good afternoon, Chairwoman Fischer, Ranking Member Peters and members of the Subcommittee. Thank you for the opportunity to update you on the U.S. Merchant Marine Academy (USMMA or Academy) and highlight accomplishments made since I appeared before you last year. 

First, I am pleased to say that the Middle States Commission on Higher Education (MSCHE) fully reaccredited the Academy in November 2017.  I am proud of the commitment and effort shown by our faculty, staff, and Midshipmen in achieving this goal in a short period of time.  It speaks to the dedication of the Academy community that so many worked so hard to address MSCHE’s concerns. 

We are building on this progress as we develop the Academy’s 2018-2023 Strategic Plan.  This March, we invited 161 representatives of the maritime industry, the Department of Defense, alumni, parents, Midshipmen, faculty, and staff to provide input on the plan. In addition, Academy staff solicited input from more than 700 stakeholders over the past few months.  Our planning discussions are ongoing and we plan to have a final plan by graduation in June.

In June 2016, the Department paused Sea Yea training on commercial vessels.  Over the past year, the Academy restored Sea Year training on commercial vessels, and reestablished the mix of Midshipmen who completed Sea Year on commercial and Government vessels to pre-stand down levels.  As of April 5, 2018, the Maritime Administration (MARAD) certified 17 commercial operators as eligible to host Midshipmen for Sea Year training. 

We have been working hard to implement requirements established in the Fiscal Year 2018 National Defense Authorization Act (FY 2018 NDAA), P.L. 115-91, including testing global satellite communication devices for Midshipmen at sea.  Those tests were successful and we are beginning to procure sufficient devices to equip all Midshipmen.  MARAD and the Academy also worked with the Ship Operations Cooperative Program (SOCP), an organization with members from across the maritime industry, to develop industry-standard sexual assault and sexual harassment prevention and response training.  This training is required for all Midshipmen prior to starting Sea Year and is available to all commercial operators.  As required by the FY 2018 NDAA, Academy staff has begun visiting commercial vessels hosting Midshipmen during Sea Year to ensure compliance MARAD Sea Year eligibility requirements. We have also surveyed Midshipmen returning from Sea Year in November 2017 and March 2018 and are analyzing these results to determine where further improvements can be made.     

I am committed to the elimination of sexual assault and harassment on our campus and improving the environment at the Academy so that victims are comfortable reporting all incidents and they are confident that Academy personnel will respond appropriately to reported incidents.  Over the past year, we have seen an increase in reports of sexual assault, with a total of 12 reports made.  While this increase could reflect an increase in the number of sexual assaults taking place, it is more likely that it indicates greater confidence by victims that reports will be responded to appropriately and therefore more willingness by victims to make reports.  The Office of People Analytics (formerly the Defense Manpower Data Center) began the bi-annual survey of Midshipmen in April 2018, which will be the basis for the next annual report to Congress.

The Academy has continued to build on its Sexual Assault Prevention and Response (SAPR) Program, established in 2012, by implementing provisions of the FY 2018 NDAA, including expanding and improving training requirements for Midshipmen, faculty, and staff; updating procedures for handling reports of sexual harassment, dating violence, domestic violence, sexual assault, or stalking; and refining a plan to combat retaliation against Midshipmen who make reports.  We have also increased staffing of the SAPR Office, which now includes a SAPR program manager/Sexual Assault Response Coordinator (SARC); a Sea Year coordinator, who is an activated U.S. Navy Reserve Strategic Sealift Officer and an Academy alumnus with commercial sailing experience; and one Victim Advocate/Prevention Educator, with a second in the process of being hired.  The Academy also expects to hire an attorney shortly who will be available to provide sexual assault and harassment legal advice to victims.  In addition, the Academy has five volunteer Victim Advocates from the faculty trained and certified to receive restricted and unrestricted reports of sexual assault. The Academy has also completed a contract with the Rape Assault Incest National Network (RAINN) to establish and operate a 24/7 worldwide hotline with access to worldwide resources, similar to the Department of Defense Safe Helpline.  We expect Midshipmen to have phone, text, and internet-based access to RAINN in May 2018.

While the Academy has made progress in developing its SAPR Program, we know there is more work to be done. The recent Department of Transportation Office of Inspector General (DOT IG) report on the Academy’s SAPR Program highlights gaps in prevention sexual assault and sexual harassment, as well as processes for evaluating the effectiveness of the program.  The Academy has concurred with the ten recommendations made by the DOT IG to improve the program and is acting to address the recommendations.  For example, the Academy is implementing a procedure for validating the Academy’s data on reported sexual assault and sexual harassment incidents, which we expect to have finalized very soon.  In addition, the Academy is working to improve communication of policies and procedures to all Academy stakeholders. 

The Academy has also been focused on addressing the culture at the Academy regarding sexual assault and harassment.  The LMI study completed in 2016 identified challenges in Academy culture in terms of inclusiveness, respect for differences, and empathy for victims of sexual assault and all forms of harassment.  Sexual assault is a symptom of a culture that tolerates it and does not want to acknowledge or accept it as a problem.  Tolerance can arise from peer pressure not to “get someone in trouble” and an absence of inclusiveness that signals a tolerance of these behaviors.  This is a core issue that we must address.  The entire USMMA community must have zero tolerance for sexual assault and sexual harassment, retaliation, bullying, hazing, coercion, victim blaming, and alcohol misuse/abuse. To begin, we have launched the “Be KP” campaign, which is a campus-wide effort led by Midshipmen, with support from faculty and staff, to focus on Academy values, enhance pride, and build a campus climate in which each individual is valued and has the opportunity to reach their fullest potential.  Our approach is to re-emphasize the Academy’s core values—Respect, Honor, Service—with the goal of eliminating signals of intolerance that are enablers for those who commit sexual assault and barriers to reporting for victims. 

As we look to the future, there are positive trends at the Academy that we intend to build upon.  Over the past few years, the quality and diversity of incoming classes has improved and we expect to see continued progress in this area.  We are also making great strides in improving campus facilities.  We have completed construction and outfitting of Zero Deck of the Midshipmen barracks to include additional fitness rooms, baggage storage for Midshipmen during Sea Year, a recreation center, and club storage and meeting places.  The Academy’s wi-fi network has been expanded to the barracks and new furniture has been installed in two of them.  Additional surveillance cameras have been installed primarily in the barracks, the security command center has been upgraded, and improvements have been made across campus on drainage and paving.  Thanks to a generous gift from the Academy Alumni Foundation, the gym floor has been refurbished.  We have also replaced equipment in one of the gym’s weight rooms.  Looking ahead, funding provided in the recently passed FY 2018 Consolidated Appropriations Act, P.L. 115-141 will allow facilities improvements to continue, with $45 million in funding for capital improvements and $7 million for facilities maintenance, repair, and equipment.   These increases will enable us among other things to accelerate the timeline to renovate and upgrade our Midshipmen health service and athletic facilities, enhance campus lighting and vehicle access control, and continue work to repair the sea wall, roads, and parking areas on campus.

Thank you for inviting me to testify today.  I appreciate your interest and continued support for the Academy and will be happy to answer any questions you may have.

Maritime Transportation: Opportunities and Challenges

STATEMENT OF

MARK H. BUZBY

ADMINISTRATOR

MARITIME ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORATION

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND

MERCHANT MARINE INFRASTRUCTURE, SAFETY AND SECURITY

UNITED STATES SENATE

HEARING ON

MARITIME TRANSPORTATION:  OPPORTUNITIES AND CHALLENGES

April 24, 2018

Good afternoon Chairwoman Fischer, Ranking Member Peters, and members of the Subcommittee.  Thank you for this opportunity to testify about the challenges facing the U.S. maritime sector and opportunities to ensure the long-term viability of this important industry. 

The Maritime Administration’s (MARAD) mission is to foster, promote and develop the U.S. maritime industry to meet the Nation’s economic and security needs.  A key challenge MARAD faces in carrying out this mission, is meeting Department of Defense (DOD) sealift requirements.  The United States relies on strategic sealift capabilities, which include ships and the necessary mariners to crew those ships to efficiently and effectively deploy military forces around the world.  Strategic sealift consists of Government-owned vessels, privately-owned vessels engaged in commerce under the U.S.-flag and the mariners who operate them, and intermodal systems upon which the Government relies.  These vessels, mariners, and supporting infrastructure transport 90 percent of equipment and supplies that move and sustain our military forces around the globe. 

Government Fleet Readiness

Vessels in MARAD’s 46-ship Ready Reserve Force (RRF), along with 15 Military Sealift Command (MSC) vessels, form the 61-ship surge sealift fleet to rapidly deliver equipment and supplies during major contingencies.  Readiness of the RRF is a constant challenge given that the average age of the vessels is 43 years.  Repairs to older equipment and aging systems require shipyard periods lasting longer and costing more each year.  In addition, MARAD and DOD must make investments to meet new regulatory requirements, such as installing modern enclosed lifeboats on RRF vessels.  MARAD and the U.S. Transportation Command (USTRANSCOM) are working with the U.S. Navy to address the challenges of recapitalizing the sealift fleet to ensure mission readiness.

U.S.-Flag Commercial Fleet Viability

Our Nation relies on privately-owned commercial vessels operating under the U.S. flag to augment the capabilities of the Government’s fleet.  The U.S.-flag commercial fleet delivers supplies and equipment to deployed forces and to service members and their families stationed overseas during steady-state operations and essential sustainment during long military deployments.  Unfortunately, the U.S. commercial presence in the international maritime domain has declined and is currently at the lowest level in its history.  Of some 41,000 deep-draft self-propelled oceangoing commercial vessels in the world today, just 181 sail under the U.S. flag, including 81 vessels operating exclusively in international trade, while the total capacity of U.S.-flag containership and roll-on/roll-off vessels is roughly the same as 25 years ago. The other 100 consist of the oceangoing ships in our Jones Act fleet.   Further decline of the actively-trading U.S.-flag fleet reduces our Nation’s ability to unilaterally project and sustain our forces during war..[1] 

The Maritime Security Program (MSP), cargo preference laws, and the Jones Act are used to maintain a baseline U.S.-flag fleet.  The MSP helps maintain an active, privately-owned, U.S.-flag and U.S.-crewed fleet of 60 militarily useful commercial ships operating in international trade.  MARAD provides MSP participants an annual stipend, and their ships and logistics networks are available “on-call” to support DOD’s global transportation needs.  The MSP facilitates employment for 2,400 U.S. merchant mariners qualified to sail on oceangoing vessels who we can rely upon to crew RRF vessels when activated, and assures DOD access to the critical multibillion-dollar global network of intermodal facilities and transport systems maintained by MSP participants. 

Cargo is essential to sustain the vessels and jobs in the U.S.-flag fleet.  Cargo preference laws require shippers to use U.S.-flag vessels for the ocean-borne transport of a significant portion of certain cargoes purchased or guaranteed with Federal funds.  Specifically, 100 percent of military cargo, and at least 50 percent of most non-military Government owned or impelled cargo transported by ocean, must be carried on U.S.-flag vessels subject to vessel availability. Absent other measures, a strong cargo preference mandate supports the sustainment of a U.S.-flagged, privately-owned commercial fleet and to the continued availability of the associated American merchant mariners.

In addition to cargo preference laws, U.S. coastwise trade laws, commonly referred to as the Jones Act, contribute to a baseline of sealift capability and capacity help sustain the U.S-flag fleet and supports the U.S. shipping industry.[2]  Jones Act requirements support U.S. shipyards and repair facilities.  They also keep current the supply chains moving that produce and repair American-built ships (including Navy and Coast Guard vessels).  Finally, the Jones Act ensures that vessels navigating daily among and between U.S. coastal ports and inland waterways operate with U.S. documentation and a majority American crew, rather than under a foreign flag with foreign crew, as is the case for 98.5% of our nation’s waterborne international trade.  The American mariners of the Jones Act fleet are our “eyes and ears” in domestic ports and waters and add an important layer of security to our Nation.

Availability of Mariners

Another challenge to meeting DOD sealift requirements is ensuring enough qualified U.S. merchant mariners are available to operate the surge fleet of 61 Government-owned cargo ships in times of need.  The mariners required to operate these vessels are civilians regularly employed on board U.S.-flag, oceangoing commercial ships.  I am concerned about the availability of a sufficient number of qualified mariners with the necessary endorsements to operate large ships (unlimited horsepower and unlimited tonnage) and to sustain a prolonged sealift mobilization beyond the first four to six months.  While the entire RRF has not been fully activated at one time, there have been more than 600 activations since 1990, over half of which were for reasons other than readiness testing. We seek to ensure there are enough qualified U.S. mariners to safely crew our Government vessels when the need arise.

The FY 2017 National Defense Authorization Act (FY 2017 NDAA) directed MARAD to convene a working group consisting of agency and maritime industry representatives to assess the size of the pool of qualified U.S.-citizen mariners necessary to crew the U.S.-flag fleet in times of national emergency, and recommend actions to enhance the availability and quality of mariner data.  MARAD provided the working group’s conclusions to Congress in January 2018.  In it, the working group estimated a shortfall of 1,800 qualified mariners in the event of a full, prolonged mobilization, but this estimate assumed a “best case” that all qualified mariners would voluntarily report when called upon, and that there will be no ship losses or personnel casualties.  Given this assessment, I am working closely with USTRANSCOM, MSC, the USCG, and the commercial maritime industry to develop actions to identify and maintain an adequate number of trained mariners, and ensure they receive training unique to operating in contested waters.  Additionally, we are working to better track credentialed mariners who are not sailing, but could serve if needed, and to develop tools to count and understand the characteristics of fully qualified mariners available to meet the Nation’s commercial and sealift requirements at any given time.

One opportunity to ensure qualified U.S. mariners are available is continued support for the United States Merchant Marine Academy (USMMA), and the state maritime academies (SMAs).  MARAD provides funding and oversight to Kings Point and the SMAs to produce highly skilled and licensed officers for the U.S. Merchant Marine.  These institutions graduate most of the USCG-credentialed officers who hold an unlimited tonnage or horsepower endorsement qualified to crew these U.S.-flag ocean-going ships. 

I will leave it to Rear Admiral Helis to discuss the Academy’s accomplishments and challenges, but I must say that I am proud of what they have done.  I have been particularly encouraged during my visits to the Academy by the Midshipmen-driven, on-campus culture change program, “Be KP (Kings Point).” The Midshipmen have taken ownership of efforts to change the climate at the Academy and are now leading this effort.  Progress is being made, but more work needs to be done as noted in the recent DOT Office of Inspector General report on the USMMA’s Sexual Assault Prevention and Response Program.  We appreciate the insight from this report and are addressing the recommendations to continue improving the Academy as a whole.

In addition to providing oversight of the USMMA, MARAD provides funding to six SMAs[3], which collectively graduate more than three-fourths of the entry-level merchant marine officers annually.  As part of this support, MARAD loans training ships to SMAs and covers a portion of those ships’ maintenance and repair costs.  In addition to being used to train mariners, these vessels, which are part of the National Defense Reserve Fleet (NDRF), are used to respond to national disasters when requested by other Federal agencies.  Most recently, MARAD activated RRF and NDRF ships to support Federal relief activities following Hurricanes Harvey, Irma, and Maria.  During these deployments MARAD vessels supplied citizens and first responders with housing, meals, logistical support, and relief supplies, including delivering critical Federal Aviation Administration replacement air navigation equipment to the Virgin Islands.  These vessels are aging and nearing the end of their life cycles, with two of the vessels more than 50 years old.  Ensuring the continued availability of these ships is a high priority for MARAD.  Congress recognized this need and provided $300 million in the FY 2018 Appropriations Act to fund the design and construction of a new common school ship—the National Security Multi-Mission Vessel.

Port Infrastructure

Another challenge we face is the state of Our Nation’s port infrastructure.  The ability of our ports to increase capacity and handle cargo more efficiently is vital to the health of many domestic industries.  Freight volumes are projected to increase by 31 percent and U.S. foreign trade will more than double between 2015 and 2045.[1]  Without major improvements to multimodal transportation infrastructure and technologies, congestion resulting from greater volumes of freight could lead to growing delays and failures in the supply chain that would reduce our quality of life.  There is great potential to improve the efficiency of this system by increasing the efficiency of our ports, which are the interfaces between water and land-based

MARAD is engaged with port communities to leverage existing DOT financing programs such as TIFIA and RRIF, and grant programs such as BUILD and INFRA, to increase Federal and  non-Federal investment in port infrastructure and first/last mile intermodal connectivity.  MARAD is also exploring ways to use our existing authorities to attract more non-federal investment in port infrastructure.  We are also leading the way in identifying the critical challenges in port operations that could be met by increased use of intelligent transportation system technologies to interface more seamlessly between global and domestic transportation systems.  We do this work in partnerships with the Federal Highways Administration’s Intelligent Transportation System Joint Program Office and the American Association of Port Authorities.  Finally, we are working to attract new investment in technologies to more efficiently and safely integrate maritime cargo movement into the overall transportation system. 

Other MARAD Programs

In addition to meeting DOD sealift requirements, MARAD programs support the environmentally sound disposal of obsolete Government-owned vessels, innovation to address maritime energy and environmental issues, activities to address infrastructure challenges at our ports and on our inland rivers and waterways, and ship repair.  Funding in the FY 2018 Appropriations Act allows MARAD to capitalize on opportunities in each of these areas as highlighted below. 

MARAD is the ship disposal agent for Federal government-owned merchant-type vessels of 1,500 gross tons or greater.  Currently, MARAD has 11 obsolete vessels not yet under contract for disposal, which is a historic low.  The FY 2018 Appropriations Act provides $6 million for the disposal of these vessels.  MARAD is also responsible for continuing the required protective storage activities for the Nuclear Ship (NS) SAVANNAH until decommissioning and license termination are complete.  The FY 2018 Appropriations Act provides $110 million for the storage, maintenance, and final decommissioning of the NS SAVANNAH.

The FY 2018 Appropriations Act provides $3 million for MARAD’s Maritime Environmental and Technical Assistance (META) program.  This program supports applied research and development to facilitate environmental compliance and enhance sustainability in the marine industry.  Leveraging resources with the private sector and other government agencies, META’s goal is to identify economically sustainable solutions to emerging maritime environmental challenges. 

MARAD received $5 million in funding in FY 2017 for the America’s Marine Highway Program.  The goal of this program is to develop and expand services to move freight along our waterways and coastlines and to relieve land-side congestion.  Given the immense economic and environmental benefits of increased waterborne transportation, serious implementation of this program represents an opportunity to significantly enhance American supply-chain competitiveness.  MARAD is currently reviewing project applications and expects to announce the FY 2017 grant awards later this Spring.  In addition, the FY 2018 Appropriations Act included $7 million in grant funding for the program.  We expect to issue a Notice of Funding Opportunity for those grant funds soon.

The Small Shipyard Grant program provides funds to support capital improvements and training at small U.S. shipyards.  Small shipyards play a significant role in our shipbuilding and repair activity. The grants support modernization that allow U.S. shipyards to compete more effectively in the global market place.  The FY 2018 Appropriations Act provides $20 million in funding for the grant program.  MARAD published a Notice of Funding Opportunity on April 14, 2018, and DOT will award grants by July 23, 2018.

Lastly, the Maritime Administration is an active member of the U.S. Committee on the Marine Transportation System (CMTS).  In August 2017, I was appointed by the Secretary to Chair the subcabinet Coordinating Board for one year.  The CMTS is an interagency forum through which 25-plus federal agencies and offices collectively address challenges of the marine transportation system.  In October 2017, Secretary Chao approved the National Strategy on the Marine Transportation System:  Channeling the Maritime Advantage.  The interagency members, which also includes the Saint Lawrence Seaway Development Corporation, U.S. Coast Guard, U.S. Army Corps of Engineers, the National Oceanic and Atmospheric Administration, and Federal Maritime Commission, to name a few, is addressing five areas of focus in the Strategy for system performance, navigation safety, maritime security, energy innovation, and infrastructure investment.

In addition to managing the programs discussed above, MARAD is reviewing recommendations made in a November 2017 National Academy of Public Administration (NAPA) report on the agency.  MARAD requested this assessment from NAPA to provide a review of the agency’s programs and offer recommendations for improving the alignment of activities to enhance performance and meet MARAD’s mission to foster, promote, and develop the maritime industry of the United States.  In response to recommendations, MARAD is conducting an internal business process review to ensure MARAD’s mission is clear and supports the Administration’s policy goals.

I appreciate this Subcommittee’s continued support for the U.S. Merchant Marine and look forward to working with you to address the challenges facing the U.S. maritime industry and take advantage of opportunities to enhance and improve the U.S. maritime transportation system. I am happy to respond to any questions you may have.

The Maritime Administration’s Fiscal Year 2019 Budget Request

STATEMENT OF

MARK BUZBY

ADMINISTRATOR

MARITIME ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

U.S. HOUSE OF REPRESENTATIVES

HEARING ON “THE MARITIME ADMINISTRATION’S

FISCAL YEAR 2019 BUDGET REQUEST”

March 14, 2018

Good morning, Chairman Hunter, Ranking Member Garamendi and members of the Subcommittee.  I appreciate the opportunity to discuss the President’s Fiscal Year (FY) 2019 budget priorities for the Maritime Administration (MARAD).  MARAD’s statutory mission to foster, promote, and develop the merchant maritime industry of the United States.  This budget request furthers that mission by investing in U.S. mariner training, supporting programs that help U.S.-flag commercial vessels compete globally, and maintaining sealift readiness to meet national security requirements. 

FY 2019 BUDGET REQUEST

The United States is a maritime Nation, with our country’s economy highly dependent on viable coastal and ocean resources, and inland waterways.  In 2014, U.S. maritime freight activity helped to support $4.6 trillion of economic activity among the many non-maritime industries that depend on it for access to world markets and within the maritime industry itself, equivalent to 26 percent of our GDP.  MARAD’s programs seek to support both the maritime industry’s commercial health and national security objectives.

The U.S.-flag fleet operating in international trade currently carries less than 2 percent of our annual foreign trade by tonnage. The U.S. commercial presence in the international maritime domain has been at historic lows over the past several years with only 81 ships remaining in those trades.  As our national economy relies on foreign trade, we need to increase our capability to participate as a nation in maritime commerce to ensure we remain economically competitive.  Without this capability, the U.S. economy would become reliant on foreign-flag shipping services.  During Operation Desert Shield in 1991, DOD found it necessary to employ 177 foreign vessels to meet sealift needs in addition to approximately 170 U.S.-flagged vessels.  However, 13 of the foreign vessels carrying essential supplies hesitated or refused to enter the area of operations, resulting in a loss of 34 transit days for ships carrying cargo for U.S. troops. Additionally, Commander, United States Transportation Command, recently testified regarding the critical importance of the availability of U.S.-flag vessels using this example stating, “foreign-flagged vessels declined to enter the area of operations, while U.S.-flagged vessels provided steadfast support, delivering the bulk of the Joint Force to the Middle East.”.As the fleet dwindles, so does the base of U.S. Merchant Mariners and the shipbuilding and repair industry, which are all essential components of national security.

To ensure a strong domestic maritime industry and U.S. Merchant Marine into the future, the President’s FY 2019 Budget Request for MARAD of $696.4 million is focused on increasing the competitiveness of the U.S.-flag fleet, and investing in the education and training of the next generation of merchant mariners.  MARAD remains committed to marine transportation policies that improve security, address our Nation’s critical maritime infrastructure gaps, and leverage technology to meet the needs and challenges of the marine transportation industry.  This request supports a variety of MARAD initiatives involving ships and shipping, vessel operations, national security and strategic mobility, ship disposal, and maritime education.  A summary of the FY 2019 request is provided below.

NATIONAL SECURITY

By law, and pursuant to Presidential National Security Directive 28, DOD must rely on U.S.-flag ships crewed by volunteer, civilian U.S. mariners, to provide the sealift capacity to support military deployments and respond to national emergencies.  MARAD is charged with ensuring that U.S.-flag ships and merchant mariners are available to meet DOD sealift requirements.  The U.S.-flag fleet of privately owned, commercially operated vessels, along with government-owned vessels, provide a critical public-private sealift surge and sustainment capacity to move equipment and materials for the Armed Forces and Federal agencies as needed, during times of conflict, humanitarian crises, and natural disasters such as those we witnessed last summer in the wake of Hurricanes Harvey, Irma, and Maria.

Maritime Security Program (MSP)

For FY 2019, $214 million is requested for the MSP, providing for $3.6 million for each of the 60 ships enrolled in the program.  The Maritime Security Act of 1996 established the MSP, which ensures access to U.S.-flag ships in ocean-borne foreign commerce and the necessary intermodal logistics networks to move military equipment and supplies during armed conflict or national emergency.  This program also provides critical employment for up to 2,400 highly qualified U.S. merchant mariners and approximately 5,000 shore side maritime professionals each year.  The MSP provides direct annual stipends for 60 active, commercially viable, militarily useful, privately owned U.S.-flag vessels and crews operating in the international trade.  Participating operators commit their ships, crews, and global network of intermodal facilities and commercial transportation resources upon request by the Secretary of Defense during times of war or national emergency. 

During FY 2018, MARAD restored the MSP fleet to the full, authorized level of 60 ships.  Being at full capacity bolsters the ability of the U.S. merchant marine to meet DOD deployment and sustainment requirements.  MARAD brought two new roll-on roll-off (RO/RO) vessels into the MSP fleet, which added more than 320,000 square feet in militarily useful cargo capacity, significantly improving DOD’s ability to move and sustain the heaviest U.S. armored units.  Entry of the new ships raised the overall fleet's militarily useful capacity to the highest level in the program's history.  The MSP has supported every U.S. conflict since its inception in 1996, including Operations Enduring Freedom and Iraqi Freedom.  These vessels stand ready to play a vital role in support of U.S. military operations worldwide.

National Defense Reserve Fleet (NDRF) and Ready Reserve Force (RRF)

MARAD maintains a fleet of government-owned merchant ships in the NDRF.  This includes 46 RRF vessels that are maintained and ready for operation within five or ten days for transport of military cargo to critical areas of operation.  Our Nation has called upon RRF and NDRF vessels, which include training ships on loan to the six state maritime academies (SMAs) and the U.S. Merchant Marine Academy (USMMA), to respond to several disasters.  RRF and NDRF ships were activated to provide support to other government agencies for recent relief efforts following Hurricanes Harvey, Irma, and Maria.  During these deployments, these vessels supplied first responders with housing, meals, logistical support, and relief supplies, including critical replacement of Federal Aviation Administration air navigation equipment that was delivered by one of the activated vessels to the Virgin Islands.  Additionally, these vessels were previously activated for disaster relief following Hurricanes Katrina, Rita, and Sandy and the 2010 earthquake relief effort in Haiti.

In addition to hurricane response, this past year MARAD supported DOD with the largest round of ammunition cargo sealifts in decades, as well as a 57-day mission for an Army unit movement to Kuwait where five vessels were utilized to accomplish six distinct sealift missions.  Along with cargo sealift activities, two MARAD vessels were utilized by the DOD’s Missile Defense Agency for tracking multiple missile test launches. 

Funding provided from DOD will allow MARAD to continue to provide ready surge sealift support in FY 2019 and special mission vessels from the RRF fleet, while maintaining MARAD’s NDRF fleet mooring sites.  This request includes an additional increase in funding that will support readiness related maintenance and repair initiatives for service life extension work supporting the special mission vessels.  MARAD is working with the U.S. Transportation Command (USTRANSCOM) and the U.S. Navy to address the urgent need for recapitalization of the RRF to ensure the readiness of these 46 ships, the average age of which is 43 years.

MARITIME TRAINING

MARAD provides funding and oversight for mariner training programs to produce highly skilled U.S. Coast Guard (USCG) credentialed officers for the U.S. Merchant Marine.  It takes many years of training to develop the necessary mariner competencies for deck and engineering officer positions on large vessels in international trade.  Therefore, maintaining an adequate pool of U.S. merchant mariners is vital to both the peacetime commercial success of the U.S.-flag fleet and to maintain the capacity needed to man Government-owned surge sealift forces to deploy and sustain US forces overseas in times of national emergency.  The USMMA and SMAs graduate most of the USCG-credentialed officers who hold an unlimited tonnage or horsepower endorsement available to crew these U.S.-flag ocean-going ships.  These graduates support our Nation with a cadre of well-educated and trained merchant mariners capable of serving in support of military operations, national emergencies, and humanitarian missions.

United States Merchant Marine Academy

The President’s FY 2019 Budget Request includes $74.6 million for USMMA.  Of this, $70.6 million will support Academy operations, and $4 million will fund priority capital repairs and improvements to the Academy’s buildings and infrastructure.  This request will enable the Academy to effectively achieve its core responsibility to educate and train the next generation of outstanding leaders as shipboard officers at sea and commissioned officers in our active and reserve armed forces.  The USMMA is an accredited institution of higher education operating under the DOT and managed by MARAD.  The USMMA offers a four-year maritime-focused program, centered on rigorous academic and practical technical training that leads to a Bachelor of Science degree, a USCG merchant mariner credential (MCC) with an unlimited tonnage or horsepower officer endorsement, and a commission as an officer in the reserve or active Armed Forces.  Distinctly, USMMA graduates incur an obligation to serve five years as a merchant marine officer aboard U.S. documented vessels or on active duty with the U.S. Armed Forces or uniformed services.  If serving in the reserves, they must remain as a commissioned officer for eight years.  In June 2019, 196 midshipmen are expected to graduate from the Academy. 

DOT, MARAD, and the USMMA take sexual assault and sexual harassment at the Academy and at sea very seriously, and have worked collaboratively with industry stakeholders to facilitate a cultural change by disseminating a strong message against sexual assault and sexual harassment in the maritime sector.  The Academy is implementing provisions included in both the Fiscal Year 2017 and Fiscal Year 2018 National Defense Authorization Act aimed at improving the Academy’s sexual assault and sexual harassment prevention and response efforts.  Actions include enhancing prevention training, increasing campus security, initiating a Midshipman-driven on-campus culture change program, and expanding the Sexual Assault Prevention and Response Office.  The FY 2019 funding will also provide for satellite communication devices that will be issued to midshipmen during Sea Year training and upgrading the 24/7 sexual assault hotline.

State Maritime Academies

In addition to providing oversight of the USMMA, MARAD provides funding assistance to six SMAs, which collectively graduate more than three-fourths of the entry-level merchant marine officers annually. The President’s FY 2019 Budget Request includes $24.4 million for the SMA program.  This request includes $22 million to fund maintenance and repair costs for Federally owned school ships on loan from MARAD to the SMAs.  Ensuring the continued availability of SMA training vessels is a critical need and high MARAD priority.  Training ship maintenance work is increasingly critical and costly as the ships age, and approach or exceed their designed service life.  MARAD will use the funds to address priority maintenance needs across all the training vessels.

Additionally, the request provides $2.4 million to fund the Student Incentive Program (SIP), which provides financial assistance to 75 new cadets each year (across all SMAs) that participate in the program for a period of four years.  The SIP program provides cadets with funds for uniforms, tuition, books, and subsistence.  Upon graduation, SIP students must maintain an unlimited USCG credential for six years, fulfill a three-year service obligation in the maritime industry, and serve in a reserve unit of an Armed Forces or uniformed service for eight years.  The SMAs regard the SIP program and support for their training ships as among the most important recruiting tools to encourage potential cadets to pursue careers as merchant marine officers.  Approximately 991 Cadets are expected to graduate from the SMAs in May 2019. 

School Ship Replacement

The President’s FY 2019 Budget Request includes $300 million to support the procurement and conversion of two used ships to replace aging and outdated training ships on loan from MARAD to the SMAs.  Specifically, this funding will be prioritized for replacing the Training Ship (TS) EMPIRE STATE, currently assigned to the State University of New York (SUNY) Maritime College, and TS KENNEDY, currently assigned to the Massachusetts Maritime Academy.  These two vessels are each more than 50 years old, and are now serving beyond their designed service lives.  Both ships combined provide nearly 68 percent of the state maritime training capacity. 

Investment in school ship replacement is essential to foster the growth of the Nation’s maritime transportation workforce needs, while addressing emerging workforce challenges facing a critical shortage of U.S. merchant mariners needed to crew the commercial and government-owned sealift ships to meet national security needs.  The Department is working to update its 2019 Budget materials to reflect the $300 million school ship request and will submit that revised information to Congress soon.

OTHER MARITIME TRANSPORATION PROGRAMS

Ship Disposal Program

The President’s FY 2019 Budget requests $30 million for the ship disposal program, of which $25 million is to continue, under Phase II, the radiological decontamination, dismantlement, and disposal of the defueled nuclear power plant on board the Nuclear Ship SAVANNAH (NSS).  Funding also includes $3 million to maintain the NSS in protective storage, which supports and manages the Nuclear Regulatory Commission (NRC) required licensed activities on board the ship, including radiological protection, vessel maintenance, lay berthing, and custodial care.  The ship disposal funding request also includes $2 million for salaries and administrative program costs. 

As a Federal licensee, MARAD is responsible for continuing the required protective storage activities for the NSS until decommissioning and license termination are complete.  The program received funding for decommissioning in FY 2017 to initiate and complete Phase I of a three-phased decommissioning project.  Phase I is comprised of administrative and industrial activities that complete the prerequisites for commencement of the heavy engineering and industrial activities in Phase II.  This FY 2019 request allows for a seamless decommissioning project transition, without shutdown interruption, into Phase II, which will be largely confined to activities involved with removing the reactor and major components.  The NRC allows a maximum of 60 years from permanent nuclear power plant shutdown to license termination.  All decommissioning and license termination activities must be completed by December 2031. 

MARAD is also the ship disposal agent for Federal government-owned merchant-type vessels of 1,500 gross tons or greater and has custody of a fleet of non-retention ships.  When ships are determined to be no longer of sufficient value to merit the cost of further preservation, MARAD arranges for their responsible disposal, with priority emphasis on the disposal of non-retention vessels in the worst condition.  Currently, MARAD has 13 obsolete NDRF vessels not yet under contract for disposal, which is a historic low.  In July 2017, MARAD completed the final removal of the remaining two non-retention vessels from the Suisun Bay Reserve Fleet, in compliance with an April 2010 U.S. District Court consent decree requiring the removal of all 57 vessels from the fleet site by September 2017. 

CONCLUSION

These programs represent MARAD priorities supported by the President’s FY 2019 Budget request. We will continue to keep this Subcommittee apprised of the progress of our program activities and initiatives in these areas in the coming year.

Mr. Chairman, thank you for the opportunity to present and discuss the President’s FY 2019 Budget Request for MARAD.  I appreciate the Subcommittee’s continuing support for maritime programs and I look forward to working with you on advancing maritime transportation in the United States.  I will be happy to respond to any questions you and the members of the Subcommittee may have.

Mobility and Transportation Command Posture

STATEMENT OF

MARK H. BUZBY

ADMINISTRATOR

MARITIME ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

COMMITTEE ON ARMED FORCES

SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES

AND SUBCOMMITTEE ON READINESS

U.S. HOUSE OF REPRESENTATIVES

HEARING ON MOBILITY AND TRANSPORTATION COMMAND POSTURE

March 8, 2018

Good morning Chairman Wittman, Chairman Wilson, Ranking Members Courtney and Bordallo, and members of the Subcommittee. I appreciate the opportunity to discuss mobility and transportation command posture and specifically, the state of strategic sealift, including the long-term readiness of our Nation’s surge sealift fleet and the ability of the U.S. commercial fleet and U.S. mariners to meet Department of Defense (DOD) sealift requirements.

The United States relies on sealift capabilities, which include ships, mariners, and strategic ports, to efficiently and effectively deploy military forces, respond to national emergencies, and provide humanitarian assistance on short notice at home and around the world. U.S. strategic sealift consists of both Government-owned vessels and a fleet of privately-owned, commercially operated, U.S.-flag vessels and intermodal systems, and the mariners who operate them. Together, these vessels and mariners transport 90 percent of equipment and supplies that deploy and sustain our military forces enabling responses to any location on the globe.

GOVERNMENT FLEET

The U.S. Government-owned fleet of 61 strategic sealift vessels includes 15 vessels operated by the Military Sealift Command (MSC) and 46 vessels in the Maritime Administration’s (MARAD) Ready Reserve Force (RRF). Together, these vessels form the surge sealift fleet that rapidly deliver military equipment and supplies during major contingencies. These surge ships must be ready for quick activation and be reliable to enable multiple voyages over several months. These ships provide the initial surge of military capability, followed by sustainment shipping capacity which comes from the commercial industry.

The DOD determines the size and readiness of the RRF that is required to meet its sealift requirements. Generally, RRF ships must be ready to load military cargo for transport to areas of operation within five days of receiving a DOD activation order. Operated under contract by commercial U.S. ship managers, these vessels form three-quarters of the Government’s surge sealift capacity and are crewed by volunteer, contract, U.S. mariners.

Readiness of the RRF is a constant challenge given that the average age of the fleet is 43 years. I have concern that despite hard work by the collective sealift team, and a modest increase in program funding, some age-related issues may still present readiness challenges. Repairs of older equipment and aging systems is complex and shipyard periods are taking longer and becoming more expensive as the ships age. In addition, investments are needed to meet new regulatory requirements, such as upgrading and installing lifeboats on RRF vessels. As you are aware, the Navy’s 30-year shipbuilding plan includes a three-prong surge sealift recapitalization strategy that consists of service life extensions, acquiring used commercial vessels, and building new vessels at U.S. shipyards. MARAD and the U.S. Transportation Command (USTRANSCOM) are working with the U.S. Navy to address the challenges of adequately resourcing current readiness as well as the service life extension of nearly the entire RRF fleet out to 60 years. We are working on a strategy for the acquisition and conversion of used ships, including the purchase of two vessels as authorized by the Fiscal Year (FY) 2018 National Defense Authorization Act (NDAA). MARAD will continue to collaborate with our DOD partners to address maintenance, repair, and modernization of the existing RRF vessels to keep the capability viable until open market acquisition or new construction can enhance the overall fleet.

The RRF is a component of the National Defense Reserve Fleet (NDRF), authorized by statute to provide a reserve of ships for national defense and national emergencies. In addition to providing the RRF ships, MARAD manages NDRF vessels used to train merchant mariners and respond to national disasters. Most recently, RRF and NDRF ships were activated to support relief activities of other Government agencies following Hurricanes Harvey, Irma, and Maria, as was done for Hurricanes Katrina, Rita, and Sandy, and the earthquake relief efforts in Haiti. During these deployments MARAD vessels supplied citizens and first responders with housing, meals, logistical support, and relief supplies, including critical Federal Aviation Administration replacement air navigation equipment that was delivered by one of the activated vessel to the Virgin Islands.

Like RRF vessels, training ships in the NDRF are also aging and nearing the end of their life cycles. The six state maritime academies use MARAD training ships to graduate more than three-fourths of entry-level merchant marine officers annually. As a result, ensuring the continued availability of training ships is a critical need and a high priority for MARAD. As a result of the recently agreed upon two-year budget cap deal, the Administration is amending the President’s FY 2019 Budget request to include an addition al $300 million to fund the replacement of two of the oldest training ships that MARAD provides to maritime academies in New York and Massachusetts. Both training ships are well over 50 years old and are serving beyond their designed service lives. The Administration proposes to purchase two used ships that will be converted in U.S. shipyards into modern training ships for our future mariners.

COMMERCIAL FLEET

The Department of Defense does not rely on the Government-owned surge sealift fleet to deliver supplies and equipment to service members and their families stationed overseas during steady-state operations. The U.S.-flag commercial fleet is critical to accomplishing this mission and providing longer term sustainment during military deployments. Access to the commercial US-flag fleet is formalized through the Voluntary Intermodal Sealift Agreement (VISA) program, and the Maritime Security Program (MSP), with the MSP being key to U.S. sustainment capability and supporting the pool of highly trained Mariners necessary to man our government owned RRF fleet when activated. Created in 1996, the program helps maintain an active, privately-owned, U.S.-flag and U.S.-crewed fleet of 60 militarily useful commercial ships operating in international trade. MARAD provides MSP participants an annual stipend and their ships are available “on-call” to support DOD’s global transportation needs. The MSP supports employment for 2,400 U.S. merchant mariners, and provides DOD with assured access to the critical multibillion-dollar global network of intermodal facilities and transport systems maintained by MSP participants.

Ships of the MSP have carried more than 90 percent of the sustainment cargo required for operations in Iraq and Afghanistan and stand ready to play a vital role in support of all future U.S. operations. The militarily useful capacity of the fleet is now at its highest levels ever to meet DOD’s requirements. Two new roll-on/roll-off ships entered the program last year adding 320,000 square feet of new capacity, greatly enhancing DOD’s ability to move heavy armored units worldwide. The FY 2019 President’s Budget Request includes $214 million for MSP to support a $3.6 million per ship stipend. While this request is less than the fully authorized level for MSP, it reflects hard choices as the Administration pursues rebuilding DOD capabilities. The Department supports MSP and recognizes the critical contribution it plays in the nation’s security.

Unfortunately, the U.S. commercial presence in the international maritime domain has been on a steady decline since its peak in World War II and is currently at the lowest level in American history. Of some 40,000 large, oceangoing commercial vessels in the world today, just 181 sail under the U.S. flag, including 81 vessels operating exclusively in international trade. While many factors have contributed to this decline, as Maritime Administrator, I take seriously my charge, as required by statute, to ensure that sufficient U.S.-flag ships and mariners are available to carry our Nation’s domestic and international commerce while meeting DOD sealift requirements.

Access to cargo is critical for ship operators to compete globally and to remain operating under the U.S. flag. Cargo preference laws keep U.S.-flag operators competitive by requiring shippers to use U.S.-flag vessels for the ocean-borne transport of a significant portion of certain cargoes purchased with Federal funds. Specifically, 100 percent of military cargo, and at least 50 percent of non-military Government owned or impelled cargo transported by ocean, must be carried on U.S. flag vessels subject to vessel availability, and fair and reasonable rates. A strong cargo preference mandate is vital to the sustainment of a U.S.-flagged, privately-owned commercial fleet and to the continued availability of American merchant mariners.

In addition to cargo preference laws, U.S. coastwise trade laws, commonly referred to as the Jones Act, help support national security priorities. Jones Act requirements support U.S. shipyards and repair facilities, as well as the supply chains that produce and repair American-built ships, and ensure that intermodal equipment, terminals and other domestic infrastructure are available to the U.S. military in times of war or national emergency. The Jones Act also requires the use of qualified U.S.-flag vessels to carry goods in domestic commerce, which includes transportation between and among the U.S. mainland, Hawaii, Alaska, and Puerto Rico. This requirement results in the employment of the majority of U.S. mariners. It also ensures that vessels navigating daily among and between U.S. coast ports and inland waterways are operating with U.S. documentation and crew rather than under a foreign flag with foreign crew. The U.S. merchant mariners of the Jones Act fleet are our “eyes and ears” on domestic routes and waters and add an important layer of security to our Nation.

MARINERS

Qualified U.S. merchant mariners are essential to operate the surge fleet of 61 Government-owned cargo ships in times of need, whether in peace or war. The use of Reduced Operating Status (ROS) crews onboard RRF ships is the multiplier to maintaining sealift readiness for contingencies. The mariners required to operate these vessels are civilians regularly employed on board U.S.-flag commercial ships. These mariners will be called upon to activate the surge fleet should there be a sealift mobilization, and we will need them all to keep our fleet sailing.

Because of the historically low number of ships in the U.S.-flag, oceangoing fleet over the past several years, I am concerned about the availability of a sufficient number of qualified mariners with the necessary endorsements to operate large ships (unlimited horsepower and unlimited tonnage) and to sustain a prolonged sealift mobilization beyond the first four to six months. Historically, the men and women of the merchant marine have always stood up in times of need to meet any task set for them and would likely extend their time at sea beyond normal tours if called upon to do so. However, it is critical to ensure we have enough qualified U.S. mariners to safely crew our Government vessels so that the readiness of the force is not negatively impacted.

The U.S. Merchant Marine Academy at Kings Point, NY, and the six state maritime academies graduate more than 1,000 entry-level new officers each year; however, there continues to be a shortage of mariners who have the credentials and experience to serve in senior-level positions. These positions include masters (captains), chief engineers, chief mates, and first assistant engineers/mates. On average, it takes 10 years to become a master or chief engineer. One of the contributing factors for this projected shortfall is the declining pool of U.S.-flag ships that employ these mariners.

The FY 2017 NDAA directed MARAD to convene a working group consisting of agency and maritime industry representatives to examine and assess the size of the pool of qualified U.S.-citizen mariners necessary to support the U.S.-flag fleet in times of national emergency and make recommendations to enhance the availability and quality of interagency data. This report, submitted through MARAD to Congress last month estimated a shortfall of 1,800 qualified mariners. The estimate assumed that all qualified mariners would voluntarily report when called upon, and that there will be no ship losses or personnel casualties. Given this assessment, I am working closely with the USTRANSCOM, MSC, the U.S. Coast Guard, and the commercial maritime industry to develop proposals to maintain an adequate number of trained mariners, and to ensure our mariners receive specialized training to operate in contested waters, such as chemical, biological, and nuclear defense training, marksmanship, and shipboard damage control in the event of an attack. Additionally, we are working to better track licensed mariners who may no longer be sailing, but could serve if needed, and to develop tools to understand and analyze changes in the numbers of fully qualified mariners trained and available to meet the Nation’s commercial and sealift requirements at any given time.

CONCLUSION

Our military’s surge sealift capabilities rely on our Nation’s commercial fleet and the mariners who crew these ships—in both peace and war. The decline of the U.S.-flag fleet and the availability of qualified U.S. mariners are of great concern to MARAD and we are exploring a range of options to increase the size of the U.S.-flag fleet with our stakeholders and the Administration. MARAD will continue to leverage, as appropriate, the current mainstays of the merchant marine to support strategic sealift: the Jones Act, MSP, and cargo preference. However, as illustrated by the President’s National Security Strategy, we live in an increasingly competitive world which requires us to rethink how we address long-term strategic issues facing the industry. I am also reminded by a quote from naval historian Alfred Thayer Mahan, that “control of the sea, by maritime commerce and naval supremacy together, means predominant influence in the world.” I believe that while MARAD can support the sealift needs of USTRANSCOM today, we are uncomfortably close to the edge of not being able to fulfill this critical mission in the near term because the world has changed and the previous assumptions regarding a benign environment may no longer be true. You have my commitment that we will consider any and all options intended to foster, promote, and develop the U.S. maritime industry.

Thank you for the opportunity to discuss the role of the merchant marine in meeting our Nation’s sealift needs. I appreciate this Subcommittee’s support for maritime programs and I look forward to working with you to advance maritime transportation interests of the United States.

The State of the U.S. Flag Maritime Industry

STATEMENT OF MARK H. BUZBY ADMINISTRATOR,
MARITIME ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION,
BEFORE THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION, U.S. HOUSE OF REPRESENTATIVES, 

THE STATE OF THE U.S. FLAG MARITIME INDUSTRY,
January 17, 2018

MARITIME TRANSPORTATION INFRASTRUCTURE

Ports and the U.S. Marine Transportation System are critical to our Nation’s economy and to the wellbeing of the U.S. Merchant Marine.  As required by 46 U.S.C. § 50302, MARAD established a port infrastructure development program called StrongPorts to better support the development of our port facilities. That program delivers tools and technical assistance to ports and works with state and local partners to integrate ports and maritime transportation into the larger U.S. surface transportation system.  MARAD also oversees funding for port infrastructure projects provided through the DOT grant programs.

The America’s Marine Highway Program (AMHP) is designed to expand the use of our Nation’s navigable waterways to relieve landside congestion, reduce air emissions, provide new transportation options, and generate other public benefits by increasing the efficiency of the surface transportation system. There are currently 24 designated Marine Highway Routes.

The program encourages partnerships with a variety of stakeholders including shippers and manufacturers, truckers, ports and terminals, ocean carriers, and domestic vessel operators to create new supply chain options that use our waterways. America’s Marine Highway projects also allow for the optimization of equipment relocation and help to reduce wasteful movement of empty shipping containers.

CONCLUSION

At MARAD, we strive to serve the American people and uphold their right to a government that prioritizes their security, their prosperity, and their interests. MARAD implements programs that promote the economic competitiveness, efficiency, safety and productivity of the U.S. maritime transportation system while ensuring that sealift capability and capacity is available to support the national and economic security needs of the Nation.

I appreciate the Subcommittee’s continuing support for maritime programs and I look forward to working with you on advancing the U.S. Maritime Industry in the United States. I will be happy to respond to any questions you and the members of the Subcommittee may have.

How DOT is Balancing the Need for the Secrecy Necessary to Ensure Homeland Security with the Public’s Right to Know How Its Government is Carrying Out Its Duties