A Nation Goes The Way Of Its Merchant Fleet

Congressional Interview: Representative Duncan Hunter (R-CA), Chairman, House Subcommittee on Coast Guard and Maritime Transportation

How can the U.S. maritime industry create a maritime policy?

Hunter: That’s Paul Jaenichen’s job at MarAd. They’re going to be formulating a strategy, and we’re going to have to write the law that allows different government agencies to enforce cargo preference and promote the best interests of the maritime community. That's going to be difficult because there are disagreements among different segments of the industry, but that's how it has to be done because you have to demonstrate the value cargo preference brings and why you should use American-flag ships to transport taxpayer-bought goods. So that has to be a law.

John Cartner has reached out to Transportation Secretary Anthony Foxx with a 10-point plan to revitalize the industry, but there really isn’t any maritime participation. The groups have been segmented for so long.

Hunter: That's why Jaenichen has to do it. He’s putting it together. We’re going to be able to see it too and have some input. But the problem is you have a lot of competing sectors in maritime. One group doesn't know what the other group is doing, so everybody might not like it. You have very different interests out there, so we’ll wait and see what he’s going to come up with, and we kind of have our own plan. But we are going to let MarAd and the various maritime interests come up with a policy and probably tear it down, fix it, talk about it, and go from there.

Title XI has about $450 million allocated to it, but there’s only $35 million available right now to fund new construction. Crowley agreed to build eight more product tankers at Aker Philadelphia at a cost of about $85 million each. There’s not enough money in the fund.

Hunter: Fred Harris of NASSCO and I talk about it all the time. Fred was my introduction to Title XI, first on the Armed Services Committee before I was involved with Transportation, so it was all military-side stuff. Fred taught me with a few good PowerPoint slides. So that's how I came to learn about its importance, and then when I became chairman of Coast Guard and Maritime Transportation it just all fit in. You’re right. It has to be refunded to support new construction.

There’s a proposal for dual-use ro/ro vessels that would be built and employed commercially but would be available to the military in time of need. DOD says they’ll fund the program in 2015, and they’re trying to fund it through Title XI. They’re looking for somebody to bring the legislation forward.

Hunter: When it comes to the Maritime Security Program we’re trying to find some synergy and some help from DOD. It’s not all Transportation’s responsibility. This should be part of DOD, and they have a much larger budget to close the funding gap, which is $12 or $14 million. That’s how close we are. For DOD that's not a lot of money. For the maritime side and Transportation and Coast Guard, that's a lot of money. Different-sized budgets: $650 billion versus $14 billion or $10 billion. So if we could find a way to get both of those together, it would work.

I’m on the Armed Services Committee and its Subcommittee on Seapower at the same time I’m doing Transportation, so that's what we’re kind of angling for. It’s cheaper for everybody. You need DOD money in Title XI. The money isn’t there for Transportation. We asked for it this year but we didn't get it. We were close. It's a big factor because $1 million in the fund equals $10 million in loans. So it’s not that expensive, but if DOD can kick in and use it for that purpose it’s genius.

If you look at the food aid program, when President Obama came in it was $2.4 billion. Now it’s $1.4 billion. Yet they want to feed more people. The math doesn’t work.

Hunter: You can’t do more with less. You can’t cut the military and say we’re going to do Syria, Libya, and we’re going to extend Afghanistan and be a peacekeeper in Asia Pacific.  You can’t do that. And you can’t feed more people with less money.

Representatives Ander Crenshaw (R-FL) and Adam Smith (D-WA) are leading a movement to change food aid to a pure cash-voucher system administered by NGOs. That would eliminate American farmers and the U.S. Merchant Marine from the equation. 

Hunter: What I learned in Afghanistan is you can’t just give money to Third World countries that don't have the capacity to support themselves. You have war lords, dictators, bad people running things. Or things are just kind of chaotic and it’s anarchy. You can’t just give them cash vouchers. You can’t just say “Here’s some money. Grow your own food.” If we’re going to do it, if we are going to grow American food and take it over there using American ships, we have to say we are American, see our U.S. hats, and hand it to them. We have to do it through USAID and other organizations and say “Here’s the food, from us. We’re good people. We like you and want you to be our friend too.”

I don't think they’re going to get as much food under a voucher system. They’re going to have a lot of graft and corruption, and it’s going to do much less for us in terms of impact if we do it that way. I don't know why the Administration did this all of a sudden because they could have just said “We’re not going to change. You might get less money, but we’re not going to change what we’re doing.” That would have been smarter. We’re going to fight them here. There’s no way they can beat us.

That’s an important issue for us. We need more deepwater ships. There were a lot of bright young cadets at the Propeller Club luncheon the other day. They want to get on a ship. They’re looking for a job, and I told them there are some ships on the domestic side but on the deepwater side it's a bad situation.  We can’t compete.

Hunter: Until everybody abides by the same rules – environmental, labor policies, working conditions – we can’t compete.

We can’t compete with the Europeans because they have socialized health care. If you look at the Ukrainian rust buckets that deliver food, they have Asian crews and Ukrainian captains. We can’t compete with that low cost, but we shouldn't have to. We have a $5.8 trillion import/export economy, yet we have only100 ships participating in this trade. We as an industry want to grow that deepwater fleet. The total cost of the U.S. Merchant Marine is $180- something million for MSP and $95 million for food aid. That’s not a lot of money for the government, and it creates a lot of jobs. There are over 44,000 jobs associated with that.

Hunter: Industrial-based sea power and the ability to make ships and have ship drivers and ship crews when you need them are essential. You always need them. We always have emergencies. You can tell the way a nation goes by the strength of its navy and merchant fleet. It’s been that way for thousands of years. The decline of nations matches the decline of their navies and their ability to support their own populations and to travel safely through the oceans and reach out and touch people in other lands.

We all know you’re an advocate for the industry. I just wanted to catch up with you personally.

Hunter: I’m happy to do it. It’s one of my dream jobs. I’m lucky to have guys like Fred Harris to walk me through things and see how they work and show me the different shipyards in the nation. You have the Coast Guard segment of this. You have the whole tuna fleet segment of this. You have all the intermodal waterways and inland waterways. The way they all tie in with the entire transportation picture is how we look at it now.

Under Bill  Shuster’s (R-PA)leadership as Chairman of Transportation & Infrastructure, we don’t look at things as segmented anymore. It makes everything click into place as opposed to doing different things for trains and different things for trucks and different things for ships. It’s one big organism. To see it that way is more complex, but that's what you have to do because otherwise what you do in one of those sectors could have detrimental effects in another. I don’t think the President understands the significance or importance of maritime as a cornerstone of the nation’s strength. I just don't think he gets it.

He doesn't. No funding for Title XI. No maritime policy. And going after food aid and our deepwater fleet.

Hunter: This crosses over with Navy shipbuilding too because NASSCO, with the defense cuts that have taken place, was able to get commercial contracts for six new product tankers to help take up the slack. That really helped them because otherwise when you have a big trough with no military contracts you have to start laying off workers. If you have the ability to build commercial ships, it all works together. There’s a saying I use all the time: “Whoever controls the ocean controls the world.” And it’s been true for thousands of years and will be true in the future.

How can you be a strong nation on the water with our 95,000 miles of coastline and 22,000 miles of inland waterways if we can’t get enough money from the Harbor Maintenance Fund to fix the infrastructure? We need to release the money so our harbors can be dredged and are deep enough to handle post-Panamax ships. I think this is critical.

Hunter: Shuster’s working on that as Chairman. But it’s not going to happen quickly because the money is tied up. The Appropriations Committee took the money and said thanks for that and we’re going to use it for other things. But with this new water bill we’re going to start bringing it back. Make sure we take a little bit more back until we get to where we can use the maintenance tax to fix harbors, which is how it’s supposed to be used. – MarEx