Elaine L. Chao, Secretary of Transportation


Published Aug 26, 2017 3:40 PM by Tony Munoz

(Article originally published in July/Aug 2017 edition.)

How do you see your role as Secretary of Transportation? What are your major priorities?

Transportation reaches every corner of our nation and connects millions of Americans to jobs and essential services every day. It plays a central role in supporting and strengthening the U.S. economy. Transportation keeps our country competitive globally by increasing productivity across industries and is key to improving quality of life. With this much responsibility resting on our infrastructure, safety and efficiency are more important than ever.

However, it is no secret that our roads, rails, bridges and airspace system are out of date and crumbling, causing safety issues and making it harder to keep pace with the technology that moves people and goods more quickly and efficiently. America’s infrastructure needs revitalization and rebuilding, which is why the Administration is proposing a comprehensive plan to address these concerns – and it is something the Department is committed to as well.

Where does the maritime industry fit in the overall scheme of things - truck, rail, air and ships? Has its role diminished over the years?

The maritime industry is an integral component of the nation’s broader transportation network, and plays an important role in an efficient, intermodal system. The nation’s economic prosperity and national defense relies on a fully-integrated intermodal transportation system, with each mode linked to and complementing the others. Maritime has historically played a major role in this country’s economic growth and military power, and its importance remains.

A modern U.S.-flag fleet, crewed by skilled U.S. Merchant Mariners, is an important component of our national security. Ships are the most reliable and economical way to transport and deliver heavy vehicles, ammunition, equipment and supplies to our armed forces when and where they are needed. For example, the U.S.-flag fleet played a key role in in delivering over 90 percent of the supplies to our armed forces in Afghanistan in recent years.

In addition, the vital partnership between our armed forces and these commercial vessels sustains America’s Merchant Marine, providing good jobs for 2,400 U.S. mariners. In a domestic example, the Great Lakes waterborne trade is critical for the American steel industry, regional inland electrical utilities, and local construction companies. These businesses rely on Jones Act qualified vessels to deliver huge quantities of the base materials needed to function on a day to day basis.

Through poor planning, we have allowed commerce in our inland waterways to diminish. They carry less freight today than they did in the 1980s. U.S. coastal and inland waterways are both underutilized today, and the need for maritime transportation to alleviate landside congestion is at an all-time high.

You served as Deputy Administrator of MarAd and Chair of the Federal Maritime Commission 30 years ago at a time when U.S. flag lines and the MSC were much more vibrant than they are today. What can be done to revive them?

First, to maintain our competitiveness in international commerce, the U.S. must revive and protect its U.S.-flag fleet, which has declined in recent years. Our nation’s international competitors are investing heavily in their maritime assets, fleets and infrastructure, understanding that whoever controls the seas projects national power and influence abroad and controls its economic destiny. The U.S. must continue to invest in its maritime transportation industry to ensure a vibrant future with enough U.S.-flag vessels and American mariner jobs to serve and protect our national interests.

What is the future of the U.S. merchant marine and U.S.-flag lines?

By law and by national security directive, the U.S. government relies on the merchant marine to provide the ships necessary to meet our military sealift requirements, and the mariners – civilian volunteers – to command and crew the government and civilian sealift ships. That model has served the American people well from World War II through the wars in Iraq and Afghanistan.  

The future of the U.S. Merchant Marine and U.S.-flag fleets is uncertain, given the shrinkage seen in the U.S.-flag fleet in recent years. There are no longer enough qualified, available mariners to meet all of our sealift requirements. But the future of the industry can improve if our nation continues to invest in our maritime infrastructure, adheres to policies designed to ensure that our U.S. maritime partners can make a profit, and work to raise the level of awareness of the value and importance of this nation’s maritime industry to the American public.  

Our founding fathers understood that U.S. sea power was a critical component of America’s economic engine as well as its security and trade, and those requirements have not changed, which is why this Administration has signaled its support for our nation’s maritime assets.

The Jones Act is a bedrock of U.S. maritime policy - for both economic and national security reasons. What are your views on it, and how common are cabotage laws like the Jones Act in other countries? Does it help or hinder the U.S. in terms of global trade and other issues?

The Jones Act addresses both national defense and economic issues. The U.S. Merchant Marine and the Maritime Administration help ensure that our nation has the capacity to deploy combat equipment and supplies anywhere in the world on short notice, to surge and sustain our armed forces while they are in theater, and re-deploy safely when their mission is done. So, the Jones Act helps achieve many strategic national objectives.

The “build requirement” for the Jones Act is responsible for roughly 400,000 direct, indirect and induced jobs nationally, supporting the U.S. shipbuilding industry, which contributes over $36 billion to the gross domestic product annually and $24 billion in annual income for workers. It allows our nation to maintain a domestic and international maritime industry.

There is talk in Washington of transporting U.S. energy exports (particularly oil and LNG) on U.S.-flag ships, yet there are no U.S.-flag VLCCs or Suezmaxes or LNG carriers, nor do we currently have the capability to build them. What are your views on this topic, and how can the government assist the domestic shipbuilding industry?

The U.S. was in fact one of the first nations to construct large LNG carriers, launching 16 vessels during the period 1977 through 1980, and there are U.S. mariners with the skill sets to sail these vessels. So, the capability is proven, although it will take time to re-establish the capability, particularly for building the cargo tanks. In 2016, one of the Small Shipyard Grant recipients completed a LNG barge that will be used to bunker US-flag vessels. The barge delivery and other shipyard activities in LNG propulsion have improved the capacity of the United States towards building future LNG carriers.

The government has the following programs to support the shipbuilding industry: Small Shipyard Grants, the Capital Construction Fund (CCF) program, and the Title XI program.

What should be done to upgrade our aging infrastructure of inland waterways (locks and dams)? More than a quarter of the nation's trade is carried on the inland waterways, including the Great Lakes, and they are in dire need of repair.

In addition to the Administration’s $1 trillion infrastructure initiative, which will include minimum new federal funding, there are other options for financing infrastructure that have not been effectively utilized. Public-private partnerships have already been successfully utilized in some states and are widely used globally. Some states do not allow private sector investment in public infrastructure and this barrier needs to be removed. Public private partnerships, or “P3s”, are very popular overseas in Britain, Australia and many other countries. 

But many investors say the chief impediments to private infrastructure investments are the regulatory and permitting processes that can delay projects for decades. The Administration is exploring ways to streamline these processes, use funds more effectively, defer risk to private investors, and allow private investors to bring finance and return revenues to specific projects. With the Army Corps and other federal partners, we are also exploring ways to target funding and investment more effectively for construction, operation and maintenance of infrastructure.

What about the nation's more than 300 ports? Many have taken the initiative - often with federal help - to deepen and dredge their harbors to handle today’s larger vessels. Do you see this as a priority?

Economists say investments in ports provide the best return of any transportation project – nearly $7 for every dollar invested – but securing financing, while a significant challenge, may not be the biggest hurdle facing ports. Streamlining regulations to make these big projects more attractive to private investors will be the biggest challenge. Targeting funding and investment more effectively will also go a long way in helping to incentivize projects of regional and national significance.

You have served under four different presidents. Will President Trump be good or bad for maritime?

President Trump will be good for maritime. He and the entire Administration are committed to improving, rebuilding and revitalizing all of our nation’s infrastructure – including maritime.

The U.S. is a major exporter of everything from grain and coal to machinery and auto parts, yet it carries a big negative trade balance. What can be done to stimulate U.S. exports and enhance our role in the global trade picture?

In this new age of mega-sized container ships and intense international competition our country is faced with the enormous task of reviving aging and undersized port and river/waterway infrastructure, including our locks and dams. Fortunately, maritime industry leaders are beginning to identify and enter into new partnerships and business ventures in this sector. In this globalized, competitive 21st century maritime economy, this has become a necessity.

Coming decades may well see an increase in the need for maritime transportation, as our population grows and our roads and highways become increasingly congested. In fact, domestic and international freight flows are expected to rise 45 percent in the next 30 years while our country’s growing population is projected to increase by nearly 80 million over that same period.

Our port and maritime enterprises will need to grow and modernize in order to attract new business and increase freight shipments. To be successful in coming decades, maritime interests must refine the compatibilities needed to work alongside other modes and integrate the maritime transportation system with our roads and highways, trucking and railways and, increasingly, air freight.

You have worked in both the public and private sectors over a career spanning nearly 40 years. What are the differences between the two? Can government be run like a business?

The private sector is largely driven by the bottom line. There are clear indicators of success, which can be measured, and if an enterprise is going in the wrong direction it can be adjusted and corrected in a nimble fashion. The government is very different. The executive branch cannot act alone—it must follow the laws made by Congress and upheld by the courts. Indicators of success are often unclear, and it takes much longer to create change.

This Administration is committed to trying to step up the pace of change in the government by applying private sector principles of accountability and transparency to ensure sound decision-making and investments throughout our public programs and projects.

What is your biggest challenge right now?  

The President has announced a very ambitious program for the U.S. Department of Transportation: rebuilding, repairing and revitalizing our transportation infrastructure, modernizing our Air Traffic Control System and streamlining the permitting and approval processes for new infrastructure. All of this takes time, effort and dedication by leadership and the transportation professionals who keep our system running.

What is your passion? What drives you?

Connecting Americans to opportunity is what has driven me throughout most of my career, including while I was Secretary of Labor. I want to serve the country by ensuring its citizens are equipped with the essential tools they need to improve their quality of life for themselves and their families.

How would you describe your management style?

As a woman in mostly male-dominated industries – labor, transportation and finance – I learned the importance of being well prepared and mastering subject matter expertise very early in my career. Now as a leader, I believe in the importance of a team approach.

In an increasingly complex world, it is important to build a team that is inclusive and diverse, which is key to gaining a richer understanding of the environment in which we live and work. Each person brings his or her own perspective, and with these multiple perspectives leaders can gain a better understanding of the challenges they face and craft better solutions. It’s also important to me to mentor young people and help them gain the skills necessary for leadership.

Where would you like to see the DOT when you leave office?

It is important to see our nation’s infrastructure working for all of our citizens, in both rural and urban communities. Every community has unique transportation needs that require customized solutions, especially when the different needs of rural and urban communities are considered. What a particular town or city may need can vary drastically across the country. There is no one-size-fits-all approach that works for every community.

We are also experiencing rapid change and innovation in transportation technology. Moving forward, it will be critical that we safely and efficiently integrate this new technology into our transportation system.

Your own personal story is an inspirational one with all kinds of firsts. Tell our readers about it - how you came to the U.S. at the age of eight with no English and went on to Mount Holyoke and Harvard Business School and a hugely successful career in both business and government. 

My father came to America first. Our young family was separated for three long years while he was establishing himself here in America, and trying to get the money and paperwork to bring my mother, my two sisters, and me to America. When I arrived in America, the initial years were very challenging. It was very difficult to adapt. I didn’t speak the language, couldn’t eat the food, didn’t understand the traditions, customs, nor culture of America. We had no family nor friends when we first arrived.

I worked very hard although it didn’t seem hard at the time. Surrounded by the love of my parents and in the safe and secure home they provided, it was just what was necessary. I still remember how I learned English that first year. At school, not understanding English, I just copied whatever was on the blackboard into my notebook. Every night, after working three jobs, my father would return home and sit with me to review my notebook, translating that’s day’s lessons from English to Chinese.

I would often flip the “p’s” and “q’s” and the “b’s” and “d’s” because I didn’t understand the alphabet. So, it made translating my notebook and the day’s lessons a bit challenging for my father. But, he was always so patient, and thus the bonds between father and daughter deepened during these experiences. That’s how I learned English.

What influence has your father's career as a shipowner and maritime executive had on you?

Maritime and transportation have played a significant role throughout my entire life. My father won scholarships to attend university and studied navigation. He began his career as a merchant mariner and became one of the youngest sea captains of his time at the age of 29. So, this profession has deep and lasting roots in my career and in my heart.

As the daughter of a merchant mariner, I fully appreciate the challenges and rewards of the seafaring life. He was away at sea for months at a time. For me, my father was the principled leader who inspired me early in life. In his life, he faced many challenges but he was always optimistic, forward-looking and steady in his core values. 

Your whole family have been huge successes - you and your parents and sisters. What is the Chao family secret for success?

My parents imbued us with the belief that with a good education, hard work, a positive attitude and perseverance, a person can achieve anything. Some of the most important attributes my parents imparted to me and my sisters was to help others and to appreciate the value of financial independence for women and contributing to society.

Tell us about some of your extracurricular and philanthropic activities. The Chao family has been a generous donor to a wide range of causes.

My parents dedicated their lives to helping others and have instilled that tradition in me and my sisters from a very young age. Our family is very committed to helping young people access higher education and thus greater opportunities to build better lives for themselves and their families and become better leaders in a rapidly changing international global community. 

In honor of my mother and her lifelong mission to improve higher education, the Ruth Mulan Chu Chao Center was built on Harvard Business School’s campus, the first building named after a woman in Harvard’s 380-year history and the first building named after an Asian-American. They have established many scholarship programs, including the Ruth Mulan Chu and James Si-Cheng Chao Family Fellowship at Harvard.

My parents are people of faith who believed to whom much is given, much is required. They are modest, humble people who always gave anonymously. It wasn’t until my mother, Ruth Mulan Chu Chao, passed away on August 2, 2007, that my father began to make his giving public. You’ve heard the story of my parents’ life journey. My father, Dr. James S. C. Chao, believes that, without my mother, he would not have been able to advance in life. Throughout her life, she was self-effacing, quietly in the background, always helping my father in his endeavors. She was key in establishing the various philanthropic efforts. He wanted the world to be inspired by her spirit of love, hope, optimism, determination, and altruism, and her many contributions to society.

You and your husband, Senator Mitch McConnell, are two of the most powerful people in Washington. What do you talk about over the dinner table?

We talk about normal everyday things like who is taking out the trash!

What do you like to do in your spare time? Do you have any hobbies? Are you a reader?

I’m a great history buff and Netflix fan!

What else should our readers know about Elaine Chao?

That I am the oldest of six daughters who are all trailblazers in their own chosen paths and generous philanthropists as well. – MarEx  

Tony Munoz is Publisher and Editor-in-Chief of The Maritime Executive.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.