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Study: U.S. vulnerable if merchant marine can’t keep pace with growing Chinese fleet

Feb 26, 2016 04:36 PM
The heavy-lift ship M/V Ocean Giant, operated by Crowley Liner Services, was reflagged to the U.S. registry in 2012 at Jacksonville, Fla. A recent study points out that China’s merchant fleet has grown to dwarf the size of the U.S.-flag bluewater fleet, which has dwindled to about 170 vessels.

Courtesy Masters, Mates & Pilots

The heavy-lift ship M/V Ocean Giant, operated by Crowley Liner Services, was reflagged to the U.S. registry in 2012 at Jacksonville, Fla. A recent study points out that China’s merchant fleet has grown to dwarf the size of the U.S.-flag bluewater fleet, which has dwindled to about 170 vessels.

The United States has taken an “abandon ship” approach to its merchant marine, just as China is set to become the dominant force worldwide, according to the authors of a report calling for urgent measures to revive the industry.

Patrick Bratton, chairman of history and international studies at Hawaii Pacific University, and retired U.S. Navy Capt. Carl Schuster, a visiting assistant history professor at the university, wrote in their report that the merchant marine is at its smallest size since the Spanish-American War. They calculate that there is a maximum of 170 U.S.-flagged vessels in Jones Act and international trade, compared with 3,900 Chinese ships in international trade alone.

The report zeroes in on the dangers of weakening the Jones Act and the high costs of the domestic merchant marine.

In an interview with Professional Mariner, Schuster said a possible remedy for much higher U.S. construction costs — up to three times that of shipyards in Southeast Asia — is to apply technical breakthroughs that domestic shipyards have developed for naval vessels.

“There are propulsion and design techniques, such as tri-hulls, that can be used to improve vessel efficiency to get more cargo delivered per ton of fuel,” he said. “This undermines the argument that the Jones Act should be ended because of high costs of construction.”

The report, titled “Sea Strangulation: How the United States Has Become Vulnerable to Chinese Maritime Coercion,” states that naval power is tied to the size of the merchant marine. “China could severely damage the U.S. economy, threaten our allies, hold our military hostage and deny critical supplies to Americans in locations such as Hawaii without firing a single shot,” the authors wrote. “Chinese-flagged vessels carry 90 percent of China’s seaborne trade. In contrast, U.S.-flagged vessels carry less than 2 percent of U.S. seaborne trade.”

According to the authors, the United States is making a great mistake in relying on foreign flags, which could prove disastrous if the nation gets involved in a major conflict. “Foreign-flagged ships are not under U.S. order and could elect to decline to enter ‘no-go areas,’ and there is historical precedent for this,” they wrote. “Moreover, in times of crisis, foreign-flagged vessels are more likely to be challenged by hostile countries, knowing that there is little chance of retaliation.”

Schuster said supporters of the foreign-flag policy wrongly use the first Gulf War as an example of cooperation.

“That was an unusual case,” he said. “The ships were operating under a United Nations resolution in which a number of countries were involved. It’s a totally different scenario when only the U.S. is involved.”

He said that the Chinese navy has become much more aggressive internationally, beginning in 2002 with official visits to 21 countries compared with virtually none in the previous 200 years.

The report noted there is a serious shortage of trained merchant sailors, and it would be difficult to find crew if the merchant fleet is expanded quickly.

Schuster acknowledged that operating costs of the domestic-flagged fleet are much higher in part because wages are higher. “One way to reduce costs could be to follow Europe’s example, where a ship making multiple calls at European ports pays only one fee,” he said. “A U.S.-flagged ship pays fees for each domestic port call.”

He criticized the push to cut costs by weakening the Jones Act to allow foreign crews to serve on inland waterways.

“The cheapest foreign crews are from countries that hate us,” Schuster said. “Imagine if a barge was to be used as a bomb at St. Louis, for example.”

Kathy Metcalf, president and chief executive officer of the Chamber of Shipping of America, told Professional Mariner that the group strongly supports the Jones Act.

“A central problem is the high cost of shipbuilding and operation,” she said. “The U.S. is not going to reduce wages to the level of some of the foreign flags. Some relief might well come from the International Maritime Organization’s audit program requiring flag-state ships to be inspected by other IMO members. This would bring flags-of-convenience vessels up to the standards of the U.S. and other nations, and make it harder for operators to cut costs.”

Metcalf said the aim of the U.S. merchant marine should be “following Lee Iacocca’s maxim to ‘work smarter.’ One way to do this could be for our merchant mariners to pay income tax only on earnings in U.S. waters. So, wages could be lowered but the income would be unaffected.”

The chamber opposes politicians’ calls to eliminate the U.S. global food security program — a major component of the merchant marine — and instead use direct payments to recipient countries.

“Experience shows that direct payments often go to the pockets of the wrong people,” Metcalf said. “With food aid, much more goes to the people who need it.”

Schuster said the overriding task for the maritime industry is to make ordinary Americans aware of the value of the merchant marine. 

“The country has forgotten how all those goods on the shelves get there,” he said.

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