As Prepared: Industry Day Event
Good morning and thank you all for joining me today. I want to give you an update on the work of the Maritime Administration to start off, but this event is intended to be a dialogue – and we will follow Chatham House Rules for the morning – no recordings, no attribution;
I hope that I can hear how your companies, employees and mariners are faring, how we can help, and to answer any questions that you have. I have my senior staff here as well so they can contribute. We recently completed a bi lateral engagement with S Korea. I know several of you planned to attend but were unable to - both Liberty and APL had vessels in port New Port Busan the day we visited, Friday, Aug 18th - happy to talk briefly about that trip as well.
I know that I’ll see many of you that are attending the Sealift Executive Working Group meeting over the next two days, as I’m taking that opportunity to finally accept Dave and Augie’s invitation to visit Piney Point and the SIU’s training facilities (having seen MITAGS, AMO’s, and MEBA’s facilities), visit the MARAD and DOT Continuity of Operations sites, and meet the seaman apprentices who are taking great care of our Training Ship, FREEDOM STAR.
I asked for this meeting ahead of the EWG so as to not take away from that session, while being able to sit down with you and discuss my priorities over the next two years of the Administration. (Again, Chatham House Rules!)
MARAD continues to do the work of recapitalizing and growing our strategic sealift capacity, in both our commercial fleets and the federally managed Ready Reserve Force.
Commercial Sealift Programs
The Tanker Security Program (TSP) is currently funded for 10 vessels, with 9 vessels working under operating agreements. MARAD has solicited applications for the final vessel slot and will make a selection in the near future.
The TSP is authorized to expand to 20 vessels in FY 24, but not yet formally appropriated; MARAD is currently working with industry to assess the impact of an expansion of the fleet.
The Maritime Security Program (MSP) remains funded for 60 vessels, with 58 vessels currently sailing under operating agreements. MARAD has solicited to fill the two open agreements, and we will award operating agreements very soon.
Additionally, every MSP carrier will soon receive amended and updated MSP Operating Agreements for all of their vessels that reflects the program authorization extension to 2035 and the EMBARC requirement, which we will discuss more this afternoon.
Ready Reserve Force Recapitalization
The MARAD Ready Reserve Force Fleet Recapitalization Program to date has received delivery of four used ships: CAPE ARUNDEL, CAPE CORTES, CAPE SABLE and CAPE SAN JUAN.
We anticipate that a fifth ship, CAPE STARR, will be delivered in the coming month.
In total, the five ships will provide over 1.1M SQFT of military useful sealift capacity.
All four ships are currently being modified to meet strategic sealift requirements. Additionally, they are undergoing the reflag/reclassification process, working toward a US Coast Guard Certificate of Inspection (COI). (Two are at last imminent.)
MARAD, through its Vessel Acquisition Manager, is continuing a third global search and screening to identify ships available for additional purchase. (meaning we have funding for at least one more vessel in FY 23 and one in FY 24 – costs determinant - and authorization to go to 9 vessels.)
MARAD is also executing the service life extension for many ships in the RRF ship that will be retained for several more years. Our focus is on systems maintainability, serviceability and to increase the readiness reliability of the fleet. We too struggle at times with supply chain and parts availability, workforce and certainly domestic dry dock capacity to service the fleet … especially the larger ships like the Fast Sealift Ships and LMSRs.
Our ship managers and the mariners they employ work hard on maintaining the fleet. The rising costs of maintenance and labor, doesn’t get completely offset by the funding from Navy which we receive. So at times, it does remain a struggle … would like to have more crew in Reduced Operating Status but that sees a trade-off with maintenance costs.
Ready Reserve Force Operations
The Ready Reserve Force continues a period of high use. There are currently seven RRF vessels operating in support of DOD missions around the globe.
Thank you to Labor for your support of the last Turbo Activation - As we get to the end of the fiscal year, many of you know this is also the time when USTRANSCOM will call for test activations of a number of RRF ships. We/ I don’t know how many or when exactly, but this happens nearly every year. I know that it will put a strain on the labor pool, so this is fair warning and an ask with our labor partners in the room to (again) keep close tabs on your members for we’ll need them again.
Additionally, the summer training cruise season is coming to an end: all-told, MARAD’s training ship fleet were active and underway for nearly 500 sea days this fiscal year providing training opportunities for about 2,000 cadets/midshipmen.
National Security Multi-mission Vessel
Speaking of training vessels, The National Security Multi-mission Vessel effort continues apace, with four of five vessels currently under construction at Philly Shipyard and multiple vessels hitting milestones.
The first National Security Multi-mission Vessel, EMPIRE STATE, was christened on June 26th. (Many of you attended, thank you!) The vessel has conducted builder’s trials and is expected to be delivered in a few weeks. We are planning for an arrival date of September 18 at Fort Schuyler but there’s still a few more items that have to be completed.
NSMV II, PATRIOT STATE, was launched on July 5th, with planned delivery to MARAD in early 2024.
For NSMV III, STATE OF MAINE, fabrication is underway, keel was laid in May 2023 and is now being assembled in dry dock.
Steel cutting and fabrication are underway for NSMV IV, LONE STAR STATE, which means that there are four training ships are under construction at one time.
I’m also happy to note that President Biden visited Philly Shipyard on July 20th to highlight work (steel cutting) for an offshore wind construction vessel that was directly enabled by the ongoing NSMV work there. The NMSV program is a driver for continued good work at U.S. shipyards.
MARAD supports the operation of Jones Act vessels and continues to ensure that our civilian federal agency and Department of Defense partners and their contractors are following cargo preference rules.
For the past two years, MARAD has coordinated with the Department of Energy Loan Program Office and their loan recipients and potential applicants to ensure compliance with cargo preference requirements. So far, DOE has funded $30 billion in loans for long-term, multi-year energy projects through their programs such as the Clean Energy Finance Project and the Advanced Technology Vehicle Manufacturing Loan Program.
MARAD’s coordination with DOE will result in cargo opportunities upward of 100,000, 40-foot containers/breakbulk cargoes for the U.S.-flag fleet. DOE currently has applications requesting $125.8 billion in financing for 185 proposed projects located across 45 U.S. states and territories, which will likely result in more cargo opportunities for the U.S. fleet.
MARAD works closely with USTRANSCOM and SDDC to quickly resolve misunderstandings within commands as to whether certain cargo is subject to cargo preference. For instance, recently, the Office of Management and Budget released a list of Made in America waivers that permits several DOD entities to acquire military equipment overseas but does not exempt them from cargo preference requirements. Accordingly, we reminded all the DOD supervising contracting officers of their continued obligation to use U.S. flag ships.
MARAD continues to assist FEMA during natural disasters, most recently, the wildfire on Maui in Hawaii. FEMA used our assistance in locating afloat berthing for 300 first responders, fire, police, and FEMA workers. MARAD provided its first concept within five hours of FEMA’s request and continues to provide them with vessel options though it looks like they have taken care of the berthing needs for the FEMA response and recovery members.
MARAD regularly locates coastwise-qualified vessels for shippers. In the aftermath of the Montana railway bridge collapse this June, a large shipment for Boeing was disrupted and the shipper contemplated requesting a Jones Act waiver. Within hours, MARAD conducted a market survey and found two U.S.-flag carriers and three U.S.-flag barge services available to transport the shipment which helped eliminate the need for a waiver.
MARAD continues to be committed to provide a safe work environment for our mariners on board our ships.
This afternoon, we will be hosting our Quarterly EMBARC meeting, which I hope many of you will be attending. We invite all EMBARC enrolled carriers, unions, academies, industry, and government stakeholders to participate.
We will be providing updates on the EMBARC program and the collective effort across the industry to prevent and respond to SASH at Sea. You will also hear from the USCG and CGIS with what they are doing to combat Sexual Misconduct in the Maritime Industry.
As many of you know, the EMBARC standards which were released in December of 2021, have now been operational on some of your vessels for over a year. As of today, every carrier receiving a federal subsidy has enrolled in EMBARC. We now have 18 enrolled operators participating in the EMBARC program and continue to reach out to others for enrollment.
I’d like to recognize our most recent additions to the EMBARC program, US Marine Management Inc. and Seabulk Tankers. Thank you to all who have enrolled and are actively hosting cadets on your vessels. I commend you for your commitment to meaningful change in the maritime industry.
As many of you may be aware, at the direction of Congress in the FY 2021 NDAA, (Yes I am blaming COVID) MARAD has developed a five-year strategic plan to recruit, train, and retain merchant mariners. We are getting close to a release date. Overall, the Plan addresses the four elements described in the Act:
Merchant mariner recruitment,
Merchant mariner training,
Merchant mariner retention, and
Demonstration and research priorities related to the above three elements.
To address these elements, the Plan considered prior Reports to Congress as well as previous and current actions taken by MARAD. Additionally, it includes input from multiple stakeholders including Federal agencies that have an ongoing interest in mariner workforce recruitment and retention.
MARAD’s preparation for the Plan included a rigorous SWOT —strengths, weaknesses, opportunities, and threats—analysis of the mariner workforce and the identification of key strategies supporting the following six broad goals: Our focus is to make this document relevant and real – and actionable.
Strengthen mariner workforce development programs
Support mariner education and training institutions
Improve mariner workforce diversity, equity, inclusion, and accessibility
Ensure the availability of a skilled and sufficient mariner workforce for national security
Support maritime innovation
Ensure superior policy execution and stewardship of resources
Maritime Education and Training
Also, MARAD recently released a Federal Register Notice inviting applicants for the next round of Center of Excellence for Domestic Maritime Workforce Training and Education designation. Eligible institutions include Community or Technical colleges, and Maritime Training Centers that have demonstrated a commitment to educate a high quality workforce for the industry. The application period closes September 18th.
The recently enacted Cadets Act increased the upper age limit for enrolling in the Student Incentive Program (SIP) by linking it to the age limit for accepting a US Navy Reserves Officer Commission which is now 42 years. Thank you Senator Peters and Congressman Bergman.
Based on our discussions with the State Maritime Academies, this would help a significant number of older applicants including veterans to enroll in the SIP program. As these students will have an obligation to serve the nation upon graduation, they will help enhance our supply of sealift qualified mariners.
Finally, I am happy to see the USCG leadership efforts toward updating the Merchant Mariner Licensing Data system.
MARAD’s Office of Environment and Innovation has been working on several initiatives that I want to highlight.
For several years now MARAD, through the Office of Environment and Innovation, has been working with other government agencies (e.g. EPA, DOE, NOAA, USCG, etc.) on both the Senior Executive and staff level to address maritime decarbonization. Part of this effort is to strategize and align agency programs to assist industry with achieving decarbonization goals set forth under this Administration and internationally at the IMO. Additionally, MARAD is engaged with several recent initiatives such as the Zero Emission Shipping Mission and work on green corridors.
MARAD is working on the development of maritime decarbonization strategy. The strategy will tier off of the US National Blueprint for Transportation Decarbonization.
MARAD is continuing to support several R&D projects through the Maritime Environmental and Technical Assistance (META) program focused on major environmental challenges such as emissions reduction and decarbonization, aquatic invasive species, and vessel-generated underwater noise.
Mandated in the FY23 NDAA, MARAD will be establishing a US Center for Maritime Innovation.
Investing in Ports
Finally, I want to discuss the work that MARAD and the Department of Transportation are doing to invest in the nation’s port infrastructure. As you all know, a healthy American freight network is critical for shipping, and MARAD and the Department are committed to improving the resilience and throughput of our port and waterway network.
Port Grant Programs
The Port Infrastructure Development Program (PIDP) provides funding to ports in both urban and rural areas for planning and capital projects with the goal of improving the movement of goods – and strengthening port and related freight infrastructure to meet the nation’s freight transportation needs NOW and ensure our port infrastructure can meet the needs of the FUTURE.
In addition to blue water port infrastructure improvements, we’re also dedicating resources to benefit domestic shipping through the U.S. Marine Highway Program, which provides funding eligibility for eligible Marine Highway projects and connectors.
The funding will help expand marine highway services on our nation’s navigable waterways to reduce congestion, alleviate supply chain bottlenecks, and move goods more quickly from ships to shelves.
Award announcements for both the Port Infrastructure Development Program (PIDP) and the United States Marine Highway Program (MHP) should come later this year.
Both grant application periods closed in April. For PIDP, there is more than $662 million in Federal funding available for awards and were 153 eligible applicants. For Marine Highways, there is $12.4 million in funding available for awards and were 24 eligible applicants.
The Department of Transportation’s Freight Logistics Optimization Work (FLOW) initiative continues to grow, now with 55 participants, up from an initial group of 18 when it was launched in 2022.
Over the last year the initiative has transitioned from defining a user case to building a data dissemination tool to, over the next few months, active data use by participants.
As a reminder, FLOW is a voluntary data sharing program housed within the Bureau of Transportation Statistics: using a “give to get” model, a participant that shares anonymous data on freight volume and capacity can access the platform that provides an aggregated view of macro-level supply and demand at U.S. ports.
The FLOW team met with stakeholders at DOT Headquarters earlier this spring to onboard new participants and work through stakeholder “visioning” for a final version of the platform as participation grows.
With that, I’d like to open the floor up to attendees today for any questions they might have for me or the leadership team here, or to discuss any issues that they’d like to bring to my attention.