Remarks Prepared for
Mark H. Buzby
International Propeller Club Annual Convention 2019
Hyatt Centric French Quarter - 800 Iberville St, New Orleans, LA
Thursday, October 17, 2019 - 1230
Good afternoon. Thank you, Admiral for that kind introduction. It’s a pleasure to be back with the Propeller Club again this year to discuss how the Maritime Administration is helping our industry “sail into the future.”
I also bring the greetings of U.S. Secretary of Transportation Elaine L. Chao. We couldn’t have a better champion of U.S. maritime than Secretary Chao and her leadership comes at a critical time for our industry.
I know she’d also want to pass along her gratitude to the Propeller Club for its outstanding advocacy for the U.S. maritime industry.
If you look at our priorities at the Maritime Administration and at the Propeller Club’s Statement of Principles, you’ll find we’re both on the same course and speed.
We share the belief that a strong and growing U.S. maritime industry is critical for America’s economic and national security.
Our great Nation was of course founded as a maritime nation. As a young, coastal power, the ability to defend our shores and to trade among the States and internationally were essential to our protection and our growth.
But, throughout our history, we’ve allowed our naval and commercial power to wax and wane. When challenges arose, we would rush to rebuild our strength at sea, only to allow it to wither again as threats passed.
That’s problematic because, as famed naval strategist Alfred Thayer Mahan observed: “control of the sea, by maritime commerce and naval supremacy together, means predominant influence in the world.”
I believe that Mahan’s words remain true: global influence is tied to the strength of both our Navy and the U.S.-flag commercial fleet. It is about protecting this great Nation, our allies and interests; it is also about controlling our trade to grow our economy and support American jobs.
I recently spoke to a group of young Army officers at headquarters and posed this question to them: “How do you think you get to war?”
After some blank stares (remember, they were junior officers...), I told them that while a few might go in the back of a C-17, the preponderance of their combat maneuver forces – the rolling stock – and the sustainment for their forces – would get there by a ship crewed by volunteer civilian mariners.
I can assure you that after that meeting they understood, as I know you do, that virtually everything the military requires in a deployment moves by ship. Some of those ships are government-owned, such as the 46 vessels of the Maritime Administration’s Ready Reserve Force, or RRF. Four of those ships—ROROs CAPE KENNEDY, CAPE KNOX, and Fast sealift ships ALTAIR, and BELLATRIX—are homeported in the New Orleans in a reduced operating status.
The U.S. Merchant Marine performs a unique mission: military sealift. My RRF ships, which provide initial surge sealift, are crewed by volunteer, civilian mariners – the same ones who operate commercial ships in peacetime. We could not effectively deploy our forces to defend this Nation without those merchant mariners.
Just last month, we conducted a turbo activation to test the readiness of the RRF. There were challenges, but they were overcome, largely due to the efforts and expertise of members of America’s merchant marine.
I have confidence in our Merchant Marine to get the job done. But I have concerns when it comes to the vessels of the RRF, which average more than 44-years old. Congress has recently gotten this issue on its scope and, with the Navy’s recapitalization strategy, we believe we can get the RRF where it needs to be. But the pace is too slow; that does need to be addressed.
The bottom line is this: without a strong and growing fleet of U.S. commercial vessels operating in peacetime, and without the civilian mariners who crew them, America’s military sealift effort would be dead in the water.
That’s why many of us are speaking up about the state U.S. flag shipping and its relationship to our national defense.
By any measure, the United States Navy is unmatched – number 1 in the world. But that’s only half of Admiral Mahan’s sea power equation. The other half is that commercial fleet. And it is not where it needs to be.
In fact, of the more than 40,000 large, ocean-going merchant ships of all nations currently sailing internationally, only 82 are U.S.-flag ships. That put us at number 22 in the world.
These vessels employ the highly-skilled, unlimited tonnage mariners we need to crew both the government-owned and commercial sealift ships. Fewer U.S.-flag ships mean fewer mariner jobs, and fewer trained mariners for sealift. Plain and simple, we need more ships, and we need more mariners to sail them.
Programs like the Maritime Security Program (MSP) are designed to ensure that we maintain an absolute bare minimum of commercial sealift capability – and access to the global logistics networks that come with them – to serve our nation’s needs in times of emergency. We do that by offering U.S. flag operators a modest $5 million annual stipend per ship to remain under U.S. flag.
As I remind my friends in Washington, it is a challenge to remain under the U.S.-flag when the annual cost differential between operating under a U.S. flag and that of a flag of convenience is nearly $6.5m a year because foreign flag shipping is often highly subsidized. We’ve got to help level that playing field for our ships to be able to compete. MSP helps to do just that.
Cargo preference statutes which guide 100 percent of DOD cargo and at least 50 percent of non-military U.S. government cargo aboard U.S.-flagged ships if they are available are key elements of the U.S. flag equation, too.
I can’t stand here before you today without mentioning the Jones Act and its vital importance to the health of the maritime industry and our national security. There have been many op-eds written lately – much of them slanted and based on long debunked falsehoods or poorly researched data.
Let me be crystal clear: the Jones Act is the fundamental cornerstone of our nation’s maritime policy, and has been for the past 99 years. As I have testified before Congress on many occasions, without it, our domestic maritime industry afloat and ashore would fold. It is a critical element of our national security.
The Jones Act helps maintains America’s shipbuilding capacity, supporting over 125 shipyards and repair facilities. In addition to 100 large ocean-going vessels in this fleet, it supports roughly 41,000 smaller vessels in our domestic service—all built and repaired by American workers—with a collective 73.8 million tons of cargo capacity.[i] It’s an American jobs machine, resulting in $54.0 Billion in U.S. economic output and supporting the employment of nearly 650,000 Americans.[ii]
Those jobs are very much on our minds—due to our sealift requirements, but also because these are good paying American jobs that can support a family. It is very much in keeping with President Trump’s maxim that “Economic issues are national security issues, and national security issues are economic issues.”
You won’t see a sector of our economy that better or more accurately reflects that view than the maritime industry.
Thankfully, there are positive signs for the future.
You’re seeing advances in the energy sector positively affecting growth in U.S. maritime. LNG as a domestic fuel source is helping to spark shipbuilding here on the Gulf coast and on the Great Lakes. Natural gas as a maritime fuel is creating new opportunities in Jones Act shipping; I know of several projects that are just about ready to go forward.
And then there is the wind energy industry that is about to burst onto the scene along the U.S. East coast bringing with it a likely surge in Jones Act support vessels.
Back at DOT, we recently made a new and deep commitment to our shoreside infrastructure with a Port Infrastructure Development Program that should deliver nearly $300 million of new grant funding to help strengthen, modernize, and improve our country’s maritime systems and gateway ports.
We also moved out the door nearly $20 million in grants to support capital improvements at 28 U.S. small shipyards as a part of the small shipyard grant program.
That’s an investment in the more than 400,000 Americans whose jobs are supported by our small shipyards.
And no issue is more central to the future of this industry than its future workforce. The attention we’re paying to maritime education—from Kings Point and our state academies, to the local community college that are training welders, shipwrights, and deck crewmen, to the maritime high schools that are sparking a young person’s love for the sea—is critical for a strong America today and well into the future.
I am tremendously proud that we’re making much needed new infrastructure investments at the 76-year old U.S Merchant Marine Academy, and investing in replacement training vessels for our state maritime academies, the most visible evidence of which is the National Security Multi-Mission Vessel, or NSMV.
The NSMV has been a long time coming. And I must thank Secretary Chao for her leadership in pushing this acquisition. We’ve been working on replacing the aging state academy ships for more than a decade. Congress has now fully funded two ships; we’ve named a construction manager, TOTE Service, Inc.; they’re closing in on naming a shipyard; and we’re hopeful that when the appropriations process finishes for the coming year, we’ll have funding for a third new vessel.
If all goes well, this fall we’ll be investing nearly a billion dollars in three new, Jones Act-compliant ships that can serve our state academies well into the future to help prepare our next generation of deck officers and engineers. And we’ll keep pressing to replace all of these aging training ships. We are cutting steel and building new ships – I love saying that!
And I think you’ll be impressed by the capabilities the NSMV will deliver. We’ll not only provide a first-class training ship for our state academies, but a platform that will support our Nation’s needs in disaster relief and other critical missions. We’re getting a lot of bang for the buck out of the NSMV; it’ll pay dividends for years to come.
I can’t help but think that these investments by the Administration and by Congress are a bipartisan endorsement of the importance of a strong merchant marine. It also illustrates that our advocacy for this industry pays dividends, even if it does take longer than we might want. But the work pays off, which is why we’re keeping at it.
We may well look back at this period as a major inflection point in the history of maritime. This is an industry as old as time; it’s one marked by a spirit of independence; it is slow to change, like altering the course of a VLCC! But the speed of change in the world is reshaping the industry.
We’re now under pressure to innovate rapidly, to be cleaner, and more efficient. The global nature of the industry requires increasing cooperation. And the technology being deployed is leaps and bounds ahead of where it was when I walked out of Kings Point, with precision navigation, autonomous technologies, and other advances coming online. We might be witnessing a shift as monumental as that from sail to steam.
So, it is an exciting and tumultuous time in the industry. But Admiral Mahan’s words still ring true. You can trust that I – and all my shipmates at that Maritime Administration – are leaning into the challenges to help to grow the U.S. maritime industry and to protect the Nation to the best of our abilities. Thank you.
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