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United States Department of Transportation United States Department of Transportation

MARITIME RISK SYMPOSIUM

Thursday, November 14, 2019

REMARKS PREPARED FOR

MARK H. BUZBY

MARITIME ADMINISTRATOR

MARITIME RISK SYMPOSIUM

SUNY MARITIME – THE BRONX, NY

THURSDAY, NOVEMBER 14, 2019

 

Thank you, Dr. [Joe] Hoffman [Provost, VP, Acad. Affairs] for that kind introduction.

Good morning. It’s always a pleasure to be back at SUNY Maritime and I’m pleased to take part in this important discussion of maritime risk and the state of our industry. My thanks to our friends in the Coast Guard and here at SUNY Maritime for hosting this conference.

I’m very happy to bring you Secretary Chao’s greetings this morning. I must tell you that she is feeling pretty nautical these days having just been made an “Admiral of the Ocean Seas” at the annual AOTOS Dinner two weeks ago.

Those of you who were there know how much that honor meant to her, and I think it was just recognition for someone who has been as deeply involved in maritime affairs and has pressed for new policies and investments that will advance our industry. We are so fortunate to have her at the helm today. And as I told her on the night of the AOTOS dinner: “now there are TWO Admirals in DOT…but of course you are the senior Admiral, Ma’am!”

As Secretary Chao would tell you, safety is priority one at the Department of Transportation—that goes for every mode of transportation, from our skies above, to our pipelines below and up and down every road and rail, to every port, and across the oceans.

At the Maritime Administration, we of course are very focused on advancing the cause of safety for commercial operations in an environment that is demanding and filled with some of the largest and most complex moveable objects on earth.

I think that all of us would agree that safe operations—be it in a commercial vessel, a government vessel, or a recreational boat—begins with proper education and training, seasoned by experience. All those things help equip an operator to identify, assess, and avoid or mitigate risk.

You need only pay passing attention to the headlines to know that, despite all the modern technology, accidents and incidents continue to occur with alarming frequency. I point to the GOLDEN RAY capsize in Brunswick, GA, the CONCEPTION dive boat fire on the West Coast, collisions involving three different destroyers – two U.S. Navy and one Norwegian, and the spate of fires on containerships and RORO’s as evidence.

We’re also in an era where cybersecurity must be a priority for today’s mariners and for those we’re training for the future. The generation of mariners who we are training right now will have to contend with heavily networked and increasingly automated systems and cybersecurity threats that might take control and weaponize our ships, our cargos, and our terminals.

I am pleased to see that efforts here at SUNY Maritime and other maritime training facilities are beginning to include a robust focus on cybersecurity. We cannot let up there.

So, my entering solution to reducing and mitigating risk in the maritime industry is to make sure we’ve got highly-skilled and trained mariners, plus folks ashore keeping their vessels in top condition, and a growing, thriving industry that gives these mariners a robust experience at sea. Investing in maritime education and in the industry more broadly I think is the logical direction to go.

These are also critical components for strengthening the entire Maritime Transportation System, which by the way is part of the mission Congress gave us in the Merchant Marine Act of 1936: “To foster and promote the US Merchant Marine and the American Maritime Industry to strengthen the maritime transportation system – including landside infrastructure, the shipbuilding and repair industry, and labor – to meet the economic and national security needs of our Nation.” That was our charge 83 years ago, it’s what we’re still trying to do today.

So, I was asked to speak to the State of the Maritime Transportation System this morning, and quite frankly, looking around at this audience, I think that’s a task that most of you could tackle no problem, and some of you are probably better qualified than me – including many of you Cadets.

But since I’m the one standing up here, I’ll give it to you as I see it. If you please, I’ll address it in a few chunks: the internationally-trading sector; the domestic Jones Act sector; and the government sealift fleet.

So, let’s talk about the sailing Merchant Marine first.

The Internationally trading Fleet: 83 ships and holding about steady. A far cry from the 569 ships that were sailing under the stars and stripes when I graduated in 1979.

Just about all those 83 ships are there because of Maritime Security Program (MSP), cargo preference, and whatever commercial cargo they can successful bid on.

The good news is that we continue to see new tonnage rotating in, so the average age of the fleet is reasonable, and they are safe ships. Last month, ARC brought in three new ROROs with increased capacity, and I got an email just yesterday from Dave Zimmerman, President of Hapag-Lloyd USA, informing me that they had just flagged in a new container ship – the Rio Grande Express – making six under the U.S. flag.

I see some positive developments. After several years of a lack of a quorum, the Export-Import Bank is working through several new projects which will generate cargo to be carried as cargo preference cargo. Some of these are really big projects.

At the Maritime Administration, we are working hard at educating government entities on cargo preference requirements and the need to ship U.S. flag, and to strengthen our tracking mechanism to plug the cargo leakage. In Congress, MSP enjoys strong support, and once the 2020 budget is passed, we should see that program extended out to 2035 with appropriate stipend increases.

Which brings me to the domestic Jones Act Fleet. Despite all the negative rhetoric floating around – and there is plenty of it – is Mr. Colin Grabow here this morning? – I think we are in pretty good shape here. Congress remains very supportive – but we cannot take that support for granted – not for a minute.

The Jones Act helps support more than 125 shipyards and repair facilities, as well as 100 large ocean-going ships, 1,800 offshore vessels, and roughly another 39,000 smaller vessels in our domestic service—all built and repaired by American workers. 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.

As I make my rounds speaking to maritime leaders across the country, I am stating my view—loud and clear: the Jones Act is essential for America’s national and economic security, and I’m not going to stand by and allow it to be weakened or repealed: not on my watch.

We’re seeing developments right now that have the potential to strengthen the domestic maritime sector—but only if we protect the Jones Act. Natural gas as a maritime fuel is creating new opportunities; sparking shipbuilding projects on the Great Lakes and the Gulf Coast. I know of several projects that are just about ready to go forward for bulk movement of LNG too. There is a growing demand for domestic bunkering and carriage of LNG, and I am confident that we will see growth in this area.

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. Again, I’ve been briefed on projects, which include a robust Jones Act component.

But our global competitors see opportunities in these developments as well. And they’d love to get in on it. That is why defending the domestic trading ships in the Jones Act remains critical. As we’re developing new energy resources for America, we should ensure that American mariners reap the benefits.

America’s Marine Highways are another area of progress and innovation—many of those advances are centered right here in New York. With a growing population and our roads and rail at capacity, short sea shipping makes a lot of sense and is another way that we can boost the industry and mariner jobs. We recently announced several new Marine Highway designations so their projects are now eligible for federal funding. And we’re putting our federal dollars to work on other areas of maritime infrastructure, too, including $293 million of new port infrastructure grants, which we hope to release in December, and $20 million for small shipyards that we recently awarded to 26 different yards. We’ve got to continue to make investments in those supporting sectors which play such an important role in the MTS.

As a matter of fact, tonight – after I get back to DC in a few hours – I’ll be flying down to Beaumont, Texas tonight to be on hand to present an $18 million BUILD grant on Friday morning to help fund the rebuilding and enhancement of a pier that we use for movement of military cargo through that port. Ten other ports are receiving BUILD grants for upgrade work as well. But we’ve got to do more.

Many of those ports have a direct connection to our Ready Reserve Force and the government sealift fleet. My 46 RRF ships, which provide the critical initial surge sealift, are crewed by volunteer, civilian mariners – the same mariners who operate commercial ships in peacetime. We could not effectively deploy our forces to defend this Nation without those merchant mariners. In peace and War, right?

I still believe that we are about 1,800 mariner short to support a full sealift operation. We are working to get some more granularity for those numbers, as there are still those who doubt whether that is an accurate number. I hope we don’t have a situation where we find out for real that we’re short mariners; but I can’t operate on hope.

I have confidence in our sealift fleet to get the job done – but with risk – increasing risk. With a fleet whose average more than 45-years old and a 65% readiness, we will face increasing risk if we do not get on with recapitalizing that fleet quickly. As you probably know, we just did the largest one-day Turbo Activation of the fleet in the program’s history. The direction to do it came straight from SECDEF’s office.

About half of the force was activated: 33 ships- 27 from the RRF and 6 from MSC’s sealift fleet. The good news is: Most all made it to sea, some made it out and then broke down, and some did not make warranted speed. Overall, the exercise confirmed what we thought we knew for readiness, manning, and performance.

The fact remains though, that the Navy’s recapitalization strategy of upgrades, buy newer used, and build new, needs to be executed sooner than later. And, right now, while there is Congressional authorization to procure 7 foreign-built ships, the Navy budget only calls for one ship each in 2021 and 2022. MARAD will do the acquisition of those ships with input and oversite from TRANSCOM and the Navy. Despite that, we’ll get the ships bought, and are getting all the mechanisms in place to do that. So, risk-wise: moderate risk and trending toward greater risk.

We may well look back at this period as a major inflection point in the history of maritime. This is an industry with deep, old roots; 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, and we’ve got to keep evolving and moving forward.

It just takes the will to do so – and all of us who make up the Maritime community need to be pulling on the oars together to infuse our Nation with that will.

Thank you and God Bless.