Maritime administrator says time is running out for Merchant Marine

William G. Schubert, the Department of Transportation’s new maritime administrator, doesn’t mince words.

William G. Schubert, recently appointed head of the U.S. Maritime Administration, wants the sectors of the industry to stop fighting each other and to begin working together in support of their common interests.
   Image Credit: Courtesy US Maritime Administration

‘We cannot afford to have a fractious maritime community at the expense of a U.S. maritime presence throughout the nation and world,’ Schubert said recently in a talk before the Propeller Club in Washington, D.C. ‘I believe that the U.S. maritime community needs to realize that there isn’t much time to waste. An unproductive cycle of attacking one group after another in order to look out for one’s self interest simply cannot exist in this new environment. Self-destructive behavior within the industry can easily spell the end.’

Later, during an interview in his office, Schubert elaborated on the same theme. Reaching consensus has been extremely difficult for the maritime industry, he said, because it is divided into so many different segments. However, he warned that the industry is running out of time.

‘We are just going to have to start working together,’ he said. ‘I think, to be honest with you, I think there’s a point here where I’m seeing some of that. I think everybody understands that we can’t continue this unproductive cycle.’

Schubert acknowledged that the various elements of the maritime industry will never agree entirely. But, he continued, ‘if one group is working with another group to get something good for everybody, something that’s positive for the maritime industry, there should be a quid pro quo here, in the sense that everybody will cooperate on what each other’s interests are. That’s tough, but we have to start looking at it that way.’

Touching on the decline of the Merchant Marine, Schubert said that U.S. carriers ‘must be profitable or else there won’t be any U.S.-flag ships.’

Schubert is reluctant to point the finger at labor for the decline in the merchant fleet. U.S. labor unions have made ‘a very good-faith attempt to work with management to keep costs in line,’ he said. ‘There has been a lot of progress in that area. American seamen’s wages are part of the manning issue we’re struggling with right now. It has to be a profession that pays enough money, or qualified people won’t want to do it.’

Refusing to accept the decline of the Merchant Marine as inevitable, Schubert said, ‘if we don’t do anything, make no effort to promote sound policy to reverse and stop the decline, it presents all kinds of problems. One thing is for sure: If we don’t do anything, it’s going to get worse. We are not going to accept that. We are going to be persistent. I have to be a nag on behalf of the industry and that’s something I think I can do constructively.’

Schubert said that mariners must be compensated for ‘being away from their families and making the commitment required of a 24-hours-a-day job. You can’t expect people to want to do that unless they are compensated at least on something equivalent to their competitors.’

Schubert asserted that ‘the real problem’ is in the operating cost of a vessel. He cited the U.S. tax code as a particular impediment.

While the carriers have to pay taxes on foreign earnings, ‘many of their competitors don’t pay any taxes at all,’ Schubert said. ‘Other flags have a cost structure that is very difficult to compete against.’

Schubert said the United States does not have an official administration position on the tax issue but that ‘we will be looking very carefully at what some of the European countries have done in the area of tax reform.’

A version of the tax reform mentioned by Schubert is contained in a bill introduced last November by Rep. James L. Oberstar (D-Minn.). That measure, the Merchant Marine Cost Parity Act of 2001, would create an alternative tax on qualifying shipping activities in U.S. foreign trade. The bill would also treat certain income of merchant seamen as excludable from gross income.

Schubert, whose relationship with the Maritime Administration goes back to 1986, wasn’t prepared to blame MarAd for all of the Merchant Marine’s problems. While MarAd may have been created long ago to promote the U.S. cargo fleet, Schubert believes that MarAd, ‘needs to keep up with just how the market operates. We are an advocacy agency. We need to reassess our programs and look at resources and reallocate resources the best way to meet our mission. I pledged from the very beginning that I will do that in my administration.’

Schubert returned to his advocacy theme in explaining MarAd’s role in the development of port security measures. ‘We are here to promote international commerce and shipping,’ he said. ‘So it’s our position that as policy is developed to implement security at the ports, we want to be at the table, and are there, to formulate policy because we are representing the commercial interests.’

Noting that all the various agencies are working closely with Transportation Secretary Norman Y. Mineta on security issues, Schubert said he wants a cargo container policy that will work for the various modes involved – ship, truck and rail.

‘We have much closer relationships with the U.S. Customs Service, the Federal Maritime Commission. The American people deserve no less than a joint effort,’ he said.

While transportation security may be at the top of the agenda at the Department of Transportation, Schubert said, ‘We at the Maritime Administration cannot ignore a larger task that looms over all of us – building an American maritime policy for the 21st century.’

Among MarAd’s priorities is the reauthorization of the maritime security program, which received $98.7 million for this fiscal year. Vessels supported by this program are committed to carry military cargo during war or national emergencies.

‘We have to start working today to renew that program, not only to renew it but to make it better,’ the administrator said. ‘That’s a key program and has a high priority.

Other areas might include the tax policy and the replacement of aging vessels. Also high on the list is the secretary’s Marine Transportation System, a long-range plan for improving ports, waterways and intermodal connections. It is to be revised in light of the events of Sept. 11.

Schubert also suggested that better use should be made of America’s navigable waterways to relieve highway congestion. ‘It’s obviously much easier to try to utilize the waterborne system, coastwise and intercoastal, than to build highways,’ he added. ‘It’s something we can look at.’

River traffic will never take over from trucks, he said, but additional carrying capacity is needed because highways are already overloaded, while international trade is expected to double or even triple in the next 20 years.

‘We should expand that infrastructure by making better use of our assets, and that, in my mind, is better use of the waterways, better and more energy-efficient, faster vessels with the frequency and speed to induce people to use the service.’

Looking into the future, Schubert said he believed that there would be an increase of regional efforts to solve traffic congestion. He foresees new efforts to use the waterways to move cargo from one port to another, instead of bringing cargo to a congested hub and then moving it inland over crowded highways. ‘And we’re going to be there to support those efforts.’

Education and manning are also high on Schubert’s mind.

‘The biggest problem we have is that most American people just don’t realize just how important the maritime industry is,’ he said. ‘We have to do a better job of educating people of that.’

That education, he said, could extend to members of Congress, who will be invited to visit the U.S. Merchant Marine Academy and the Global Maritime and Transportation School to get a closer look at how the Merchant Marine operates.

The same with manning. ‘If we get to the point where our domestic and international fleets shrink any more, it will be very tough to man the ready reserve fleet in a national emergency,’ Schubert said. ‘We have time to do something about it now, but in five or 10 years it will be much more difficult.’

A graduate of the Merchant Marine Academy, Schubert made it clear that he does not intend to preside over the demise of the U.S.-flagged cargo fleet.

‘I have a seagoing family. Not only do I have a master’s license and have sailed for 12 years, I have five other members of my family in this generation that have chosen the honorable profession of going to sea. Even though my son doesn’t necessarily want to follow in his father’s footsteps – he’s 19 years old – I have a grandson out there. I would like to have him get the opportunity to sail on a U.S.-flag ship if he decides that’s what he wants to do.’