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The State of the U.S. Merchant Marine

Booming Industry Contributes Nearly $100 Billion to Economy, Supports Almost 500,000 U.S. Jobs & Is Meeting Demands of U.S. Energy Production

Published Sep 10, 2014 2:01 PM by The Maritime Executive

On Wednesday, September 10, the Subcommittee on Coast Guard and Maritime Transportation met to examine issues impacting the U.S. merchant marine. The Subcommittee heard from representatives from maritime industry and labor organizations.  

Also discussed were U.S. Merchant Marine laws and programs including the Jones Act, cargo preference, Food for Peace, LNG permits, marine highways, the Maritime Security Program and the Ready Reserve Force. Watch the full hearing above for further information.

"The export of LNG offers an opportunity for the United States merchant marine to expand and to create significant new job opportunities for American mariners," said Don Marcus, president of the International Organization of Masters, Mates and Pilots.

Chairman Duncan Hunter opened the hearing by saying:

“The Subcommittee is meeting today to review issues impacting the U.S. merchant marine, the important role it plays in our economy and national security, and ways we can work together to strengthen and expand the merchant marine.

The U.S. maritime industry currently employs more than 260,000 Americans, providing nearly $29 billion in annual wages.  There are more than 40,000 commercial vessels currently flying the American flag.  The vast majority of these vessels are engaged in domestic commerce, moving over 100 million passengers and $400 billion worth of goods between ports in the U.S. on an annual basis.  Each year, the U.S. maritime industry accounts for over $100 billion in economic output.  

Beyond the important contributions to our economy, a healthy merchant marine is vital to our national security.  Throughout our history, our nation has relied on U.S. flagged commercial vessels crewed by American Merchant Mariners to carry troops, weapons, and supplies to the battlefield.  During Operations Enduring Freedom and Iraqi Freedom, U.S. flagged commercial vessels transported 63 percent of all military cargos moved to Afghanistan and Iraq. 

Unfortunately, over the last 35 years, the number of U.S. flagged vessels sailing in the international trade has dropped from 850 to less than 90.  Less than two percent of the world’s tonnage now moves on U.S. flagged vessels.  In the same period, we have lost over 300 shipyards and thousands of jobs for American mariners.  For the sake of our national and economic security, we need to reverse this trend.

We cannot rely on foreign vessels and crews to provide for our national security.  It is critical that we maintain a robust fleet of U.S. flagged vessels to carry critical supplies to the battlefield, a large cadre of skilled American mariners to man those vessels, and a strong shipyard industrial base to ensure we have the capability to build and replenish our naval forces in times of war. 

I know the new Maritime Administrator is hard at work on a national maritime strategy that will hopefully include recommendations to strengthen the merchant marine.  As soon as the strategy is complete, I look forward to calling him before the Subcommittee to present it.  In the meantime, representatives of maritime industry and labor have been working on a similar proposal at the request of Ranking Member Garamendi and myself.  I look forward to hearing about that proposal today, as well as other recommendations our witnesses may have.

If we want to grow our economy and remain a world power capable of defending ourselves and our allies, we must work together to strengthen our merchant marine.  I thank the witnesses for appearing today and look forward to working with them.”

At the start of the hearing, Hunter also noted the low attendance by lawmakers at the meeting compared with hearings on aviation or trucking. "We have to build support," Hunter said. "I think the industry has to do a better job of talking to Congress."

Witnesses included:

Mr. Mark Tabbutt, Chairman, Saltchuk Resources | Written Testimony

Mr. Niels Johnsen, Chairman/CEO, International Shipholding Corporation | Written Testimony

Mr. Don Marcus, President, Masters, Mates and Pilots | Written Testimony

Mr. Matthew Paxton, President, Shipbuilders Council of America | Written Testimony

Mark Tabbutt, Chairman of the Board of Saltchuk, one of the country’s most recognized transportation and distribution companies, was testifying on behalf of the American Maritime Partnership (AMP). “Our industry is experiencing an extraordinary renaissance and its contributions to America’s economic, national and homeland security have never been more important,” said Tabbutt.  “The largest sector of our domestic marine transportation industry supports our energy infrastructure with the movement of crude, refined petroleum products, and chemicals and has seen dramatic growth as a result of the shale oil revolution. This is driving record levels of new vessel construction orders and deliveries in American shipyards.”

Tabbutt updated the subcommittee on the growth in domestic vessel construction and noted that the American shipyard sector is seeing a significant resurgence in construction for all types of vessels including containerships, roll-on/roll-off vessels, dredges, offshore supply vessels, large articulated tug-barges, and tankers. Tabbutt also noted that the state-of-the-art vessels being built are more productive, energy efficient, and environmentally friendly. 

Matthew Paxton, president of the Shipbuilders Council of America (SCA), also testified that the state of America’s commercial shipbuilding industry is strong, more vibrant than ever, and that U.S. shipyards are experiencing dramatic growth as a result of the shale oil revolution and record levels of new vessel construction orders and deliveries.

"The state of the U.S. commercial shipyard industry is the strongest it has been in decades,” said Paxton.  “Our industry, which includes thousands of businesses supporting vessel construction, is a vibrant manufacturing sector employing hundreds of thousands of Americans in all 50 states. Commercial markets are witnessing a boom not seen in decades, representing billions of dollars in new investments to our economy. This is all while American shipyards continue to deliver the largest and most sophisticated Navy and Coast Guard in the world.”

“This is a very exciting time for our industry because U.S. shipyards are quickly becoming world leaders in innovation as they construct new technologically advanced vessels like the first LNG powered containership in the world,” Paxton said.  Shipyards also have a big impact on their local communities and the country at large. With more than 300 facilities located in 27 states, and a supplier base that can be found in all 435 Congressional Districts, each direct job leads to almost three indirect jobs nationally.”