The mission of the Maritime Administration (MARAD), an agency of the
Department of Transportation (DOT), is to improve and strengthen the U.S.
maritime transportation system—including infrastructure, industry,
and labor—to meet the economic and security needs of the nation.
MARAD also seeks to ensure that the United States maintains adequate shipbuilding
and repair services, efficient ports, effective intermodal water and land
connections, and reserve shipping capacity for use in time of national
emergency. The transfer of the U.S. Coast Guard as an entity under the
Department of Homeland Security on March 1, 2003, has left MARAD as the
principal advocate for an integrated waterborne transportation system
and federal programs supporting the marine mode within the DOT.
Shipping provides a vital link for mobilizing our armed forces for military
contingencies and for supporting civilian emergency response. However,
changing demographics, trading patterns, economic growth, and consumer
demand are straining the U.S. transportation infrastructure, intensifying
congestion, and increasing transportation-related pollutants. Expansion
of waterborne services could relieve congestion and improve air quality.
Strategic transportation planning at all levels of government, with a
greater focus on freight mobility, will be critical to addressing current
and future congestion as well as environmental issues within the transportation
system as a whole.
The United States began as a maritime nation. One of its earliest industries
was shipbuilding; by the middle of the 19th century, the United States
stood alone as the undisputed world leader in shipbuilding. In those early
days, U.S.-flag merchant vessels transported more than 90 percent of America’s
foreign trade. Today, while 95 percent (by weight) of the nation’s
overseas trade still moves by water, only about 3 percent is carried by
the U.S.-flag fleet. This change has disturbing implications for national
security and economic vigor. Without a U.S.-flag fleet the nation’s
foreign commerce and auxiliary sealift capability would depend exclusively
on foreign-flag ships. Auxiliary sealift provided by the U.S.-flag merchant
marine played a vital role in American successes in all wars and many
of the international crises in which U.S. forces have been involved.
Maritime Security Program
The continued existence of a privately owned U.S.-flag merchant marine
is vital to the nation’s security, since there is no completely
reliable alternative to the U.S.-flag fleet or trained U.S. citizen crews.
More than 84 percent of the military dry cargo transported during Operation
Enduring Freedom and Operation Iraqi Freedom were carried on U.S.-flag
ships. All of the U.S.-flag ships used by the Department of Defense (DoD)
during these sealift operations were crewed by U.S. citizens. U.S. economic
security also benefits from participation by the U.S.-flag fleet in the
movement of international trade. Without such a fleet, the United States,
the largest consumer market in the world, as well as thousands of U.S.
importers and exporters, would become entirely dependent on foreign entities
The presence of a privately owned U.S.-flag fleet provides an alternative
to foreign-flag carriers, some of which are government-owned or controlled
and/or have close affiliations with firms in their own countries that
compete with U.S. businesses.
The Maritime Security Act (MSA) of 1996 (Public Law 104-239) established
the Maritime Security Program (MSP) under Title VIA, Subtitle B, of the
Merchant Marine Act of 1936 (the 1936 Act). The MSP is intended to ensure
that an active U.S. merchant fleet, and the trained personnel needed to
operate both active and reserve vessels, will be available to meet future
national security requirements for sealift capacity. In addition, the
MSP ensures America’s continued presence in intermodal commerce
and provides a competitive bulwark against predatory pricing by foreign
carriers in the movement of U.S. import and export commerce.
The MSA established a 10-year, 47-ship program providing fixed annual
federal support payments of $2.1 million per vessel, subject to annual
appropriations, to participant companies. These payments partially offset
the higher costs of operating U.S.-flag liner ships in international trade.
The MSP gives DoD “assured access” to approximately 120,000
TEUs (20-foot equivalent units) of MSP participants’ ship capacity
and other intermodal assets. It substantially deregulates previous operating
restrictions placed on U.S. liner operators receiving direct federal support.
The MSP helps fulfill national goals to, among other things:
Foster and maintain a U.S. merchant marine force capable of meeting economic
and national-security requirements;
Improve the vitality and competitiveness of the U.S. foreign-trade liner
fleet and the U.S. citizen seafarers who serve onboard those ships;
Slow the precipitous decrease in the number of ships in the U.S.-flag
Stabilize the number of mariners available to crew U.S. merchant vessels;
Achieve adequate manning of merchant vessels for national-security needs
during mobilization; and Guarantee that the United States maintains the
capability to respond unilaterally to security threats in geographic areas
not covered by alliance commitments and otherwise meets sealift requirements
in the event of crisis or war.
Voluntary Intermodal Sealift Agreement
The MSA also directed the establishment of an Emergency Preparedness
Program to ensure sealift availability. Under the Maritime Administration’s
(MARAD’s) delegated authority in the Defense Production Act of 1950
and the 1936 Act, as amended, MARAD, in consultation with DoD and the
maritime industry, developed the Voluntary Intermodal Sealift Agreement
(VISA). In January 1997, the Secretary of Defense approved VISA for incorporation
in DoD planning as a sealift readiness program.
VISA’s objective is to provide vessel capacity, intermodal movement,
and cargo management for the shipment of DoD emergency cargoes. It serves
as the mechanism that assures the movement of ammunition and re-supply
(i.e., “sustainment”) cargo, and complements DoD’s organic
sealift capabilities used for the initial-deployment (“surge”)
phase of a military action. VISA can be activated in three stages, as
determined by DoD, with each stage representing a higher level of capacity
commitment. Currently, Stage I requires 15 percent of total enrolled capacity;
Stage II requires 40 percent; and Stage III requires 15 percent from MSP
vessels (and other vessels receiving federal subsidy), and 50 percent
from the remaining VISA participants.
To ensure coordination in planning and execution, VISA provides for a
Joint Planning Advisory Group, co-chaired by MARAD and the U.S. Transportation
Command, to discuss DoD requirements. Under the terms of VISA, participating
carriers are required to sign contingency agreements with DoD that commit
the appropriate portions of their sealift capacity and intermodal equipment.
During VISA activation, participants may implement approved carrier coordination
agreements to meet the needs of the Department of Defense and to minimize
the disruption of the participants’ services to the economy. One
of the goals of VISA is to ensure that sufficient civilian maritime resources
will be available to meet DoD deployment and essential economic requirements
in support of the U.S. national security strategy.
The MSP and VISA programs will slow the decline of the U.S.-flag merchant
fleet, but by themselves cannot reverse the continuing trend of a reduced
U.S.-flag presence in international ocean transportation. The MSA also
ensures that U.S. merchant mariners who are employed in strategic sealift
may have the same re-employment rights extended to military reservists
Ready Reserve Force
The Ready Reserve Force (RRF) ensures that the nation can maintain the
surge capability needed to respond unilaterally to security threats in
geographic areas not covered by NATO or other alliance commitments and
to meet other national sealift requirements in the event of war or other
crisis. The RRF fleet guarantees quick-response shipping with 68 vessels
designed to meet special military requirements, such as in-stream discharge,
the availability of non-unit containerizable equipment, and/or offshore
MARAD keeps RRF ships in designated states of readiness (as determined
by DoD) to enable them to be activated in four, five, 10, or 20 days to
meet military-surge sealift requirements. To respond quickly to military
emergencies in any area of the world, RRF vessels in higher states of
readiness—called Reduced Operating Status (ROS)—are outported
with small but highly trained crews on board. Vessels in 10- or 20-day
readiness status are berthed in one of the National Defense Reserve Fleet
sites. MARAD ROS vessels carried out over 25 72-hour sea trials in fiscal
year 2003 in order to more fully test the operational capabilities of
the RRF upon activation. The normal sea trial schedule was impacted by
the activation of vessels to support military operations.
RRF readiness is also tested in “turbo” activations, which
usually are short-interval exercises that include a sea trial when required,
practical, and possible. These sorties are generally of 24 hours duration
and serve to verify vessel material condition and readiness.
The skills practiced and gained during turbo activations were replaced
by the demands of world events during FY 2003. MARAD activated and delivered
within their readiness timeframes 36 RRF vessels for Operation Enduring
Freedom and Operation Iraqi Freedom. These 36 joined four prepositioned
vessels for a total of 40 RRF vessels supporting the Operations.
The Cape John and Cape Johnson, soon followed by the Cape Gibson, were
the first ships activated specifically for Operation Enduring Freedom/Operation
Iraqi Freedom in late October and early November 2002.
Surge sealift in support of Operation Enduring Freedom gained momentum
in early 2003. On the 10th and 13th of January, Curtiss and Wright were
activated to support Marine Corps operations. The oldest RO/RO constructed,
Comet, was activated on Jan. 15, 2003, and was ready for sea within its
readiness timeframe, clocking in at eight days, 10 hours, and 30 minutes,
well within its promised 10-day timeframe.
The morning of Jan. 17 witnessed the activation of an additional six
RO/ROs including: Cape Decision, Cape Diamond, Cape Race, Cape Rise, Cape
Vincent, and Cape Victory. The following day, Jan. 18, Cornhusker State
received an activation notice, which was the second time this vessel had
been activated for Operation Enduring Freedom. By Jan. 22, 2003, four
more ships, Cape Kennedy, Cape Knox, and Cape Domingo, joined Cape Taylor,
Cape Texas, and Cape Trinity, which had received an activation notice
two days earlier on Jan. 22, 2003.
Jan. 24, 2003, was the largest one-day activation for Operation Enduring
Freedom/Iraqi Freedom when 14 RRF vessels received activation notices
including: Cape Ducato, Adm. Wm. M. Callaghan, Cape Henry, Cape Horn,
Cape Hudson, Cape Inscription, Cape Intrepid, Cape Isabel, Cape Island,
Cape Orlando, Cape Ray, Cape Washington, Cape Wrath, and Cape Edmont.
Other ships, which were prepositioned as part of the Army’s Prepositioning
Stock (APS) program and Afloat Prepositioning Force (APF), were reassigned
to this operation including: Petersburg, Cape Jacob, Chesapeake, and Gopher
State. In all, MARAD had 40 vessels supporting Operation Iraqi Freedom,
which maintained an operation tempo over 98 percent.
National Defense Reserve Fleet
The Ready Reserve Force is a component of the National Defense Reserve
Fleet (NDRF), which MARAD maintains. Non-RRF ships are operated infrequently.
Many are prepared for long-term storage in a preserved condition, and
some are awaiting disposal. The NDRF program was started after World War
II when the Merchant Ships Sales Act of 1946 was enacted. As ships used
for the war were retired, the program grew from 1,421 ships in the first
year to a high point of 2,277 ships in 1950. Ship sales, donations, and
disposal efforts have reduced the totals while other initiatives have
added newer ships to the program.
Prior to RRF operations, NDRF vessels supported emergency shipping requirements
during crises. During the Korean War, 540 vessels were activated to support
military forces. A worldwide tonnage shortfall from 1951 to 1953 required
over 600 ships to be activated to lift coal to Northern Europe and grain
to India. From 1955 through 1964, another 600 ships were used to store
grain for the Department of Agriculture. Another tonnage shortfall following
the Suez Canal closing in 1956 caused 223 cargo ships and 29 tankers to
be activated. During the Berlin crisis of 1961, 18 vessels were activated
and remained in service until 1970. The Vietnam conflict caused 172 vessels
to be activated.
As of Sept. 30, 2002, there were 272 vessels in the NDRF, of which 68
were in the RRF, 69 were in long-term storage, and 132 were ready for
disposal or being prepared for disposal. MARAD has received an appropriation
of $18 million in the FY 2004 budget to dispose of vessels. An additional
25 vessels, owned by other government agencies, were also being maintained
at NDRF facilities on a cost-reimbursable basis. The total number of vessels
in MARAD custody under the NDRF program at the end of FY 2003 was 297.
The original eight anchorages were consolidated into three where most
of the vessels are currently maintained. There are 93 in the James River
Reserve Fleet (JRRF) at Ft. Eustis, Va.; 43 in the Beaumont Reserve Fleet
(BRF) at Beaumont, Texas; and 92 in the Suisun Bay Reserve Fleet (SBRF)
at Benicia, Calif.
Obsolete parts and equipment from NDRF ships that are to be disposed
are made available to memorial ship organizations to help preserve the
operational or historical character of vessels. During FY 2003, 140 transfers
were completed, totaling approximately 2,700 items outstanding. The memorial
ships Jeremiah O’Brien, Red Oak Victory and battleship USS Massachusetts
were among the recipients. Long-term loans of historical artifacts for
public display are also made available to worthy organizations; currently,
590 items are on long-term loan. Special legislation allows donation of
vessels for specific historical purposes. No ships were donated during
the year. Donation legislation remains in place for ships Glacier and
NDRF vessels are made available to various groups for training purposes.
Ships in the Reserve Fleet anchorages are used for military, law enforcement,
and ship interdiction training by groups in the Navy and FBI. Ready Reserve
Force (RRF) vessels standing-by at port facilities are often used for
cargo handling training. A total of 82 separate training events were held
during the year including Navy, Army, and Marine Corps cargo-handling
units, as well as stevedores sponsored by the Pacific Maritime Association
(PMA). These RRF vessels also supported security exercises conducted by
antiterrorism units from both the U.S. Coast Guard and Marine Corps. During
FY 2003, RRF vessels participated in a total of 164 calendar days of training
United States Shipping
During 2001, U.S. corporations earned approximately $3.1 billion in freight
and charter revenues from the operations of U.S.-flag liner vessels, contributing
millions of tax dollars for federal, state, and local governments.
As of July 2003, the U.S.-flag cargo-carrying merchant fleet included
239 self-propelled oceangoing vessels (1,000 gross tons and over) and
64 Great Lakes vessels, including integrated tug barges. Also counted
in the U.S.-flag fleet were over 38,000 other cargo ships, tugs, barges,
passenger ships, and other vessels engaged in domestic waterborne trade.
The United States ranked 12th in the world in the deadweight tonnage of
its operational oceangoing commercial ships. The U.S.-flag share of America’s
seaborne foreign trade carried decreased in 2002, though, to 2.1 percent
(from 2.4 percent in 2001). The U.S.-flag percentage of liner trade also
decreased—to 6.4 percent from the previous 7.1 percent—during
the same period.
Even though the number of U.S.-flag oceangoing ships has declined in
recent years, the productivity of the fleet has improved substantially,
thanks primarily to the increased capacity of many ships. The average
capacity of liner vessels in the U.S.-flag fleet today is over 35,000
deadweight tons (dwt). Fleet productivity also has been enhanced by the
development of state-of-the-art intermodal systems that provide seamless,
door-to-door, just-in-time transportation worldwide. These advances also
have been applied to the movement of military shipments and have resulted
in significantly improved coordination and speed in the delivery of DoD
U.S.-flag ships are registered in the United States and are subject to
additional U.S. laws and regulations. Unlike their foreign-flag competitors,
U.S.-flag commercial ships must meet strict guidelines for the construction,
maintenance, environmental, and safety standards, resulting in increased
operation costs. To help these ships compete, and to provide an incentive
to remain under U.S. registry, Congress established a series of cargo
preference laws that assist ship owners in defraying costs associated
with maintaining their vessels under the U.S. registry. These laws, the
first of which was established in 1904, require that some government-sponsored
cargo shipped internationally be carried on U.S.-flag vessels.
When the government provides a benefit to help an American industry export
U.S.-made products, it often establishes a quid pro quo that requires
that a certain portion of the exports be carried on U.S.-flag vessels
(when such vessels are available at fair and reasonable rates). Two or
more industries therefore are assisted at the same time. The government
recaptures the added cost: (a) through taxes on the total gross revenue
of the U.S. carrier and (b) on the taxes generated as that total gross
revenue flows through the American economy. Without the combination of
the limited direct subsidy and the cargo-preference laws, the already
much-diminished U.S.-flag foreign trade fleet might well disappear completely.
MARAD’s website (www.marad.dot.gov/usflag) makes it easier for
exporters, importers, and government agencies to find available U.S.-flag
ships to transport cargo around the world.
Ship Operations Cooperative Program
The Ship Operations Cooperative Program (SOCP) brings together U.S.-based
maritime organizations to address common problems and to develop products
that satisfy its members’ common needs. Members work in unison to
achieve improved safety, efficiency, and environmental protection of ship
operations. Projects include collaborative work on the Mariner Administrative
Card (MAC), which has sparked interest from international circles such
as the International Labor Organization; video and CD-ROM productions
on topics directly related to Standards of Training, Certification, and
Watchkeeping Convention (STCW); mariner training requirements; Fuel Oil
Testing Data and Alternative Watch Schedules. In addition, SOCP has introduced
technologies with the potential for reducing the costs of maintaining
shipboard equipment as well as preventing equipment failure. SOCP has
also been a strong leader in taking action toward Mariner Recruitment
and Retention issues.
Maritime Labor and Training
The importance of labor to U.S. economic growth and national security
is reflected in MARAD’s commitment to foster a sufficient, well-qualified,
and safety-conscious maritime work force. Through support of programs
to improve the education, training, health, welfare, and safety of U.S.
citizen seafarers, MARAD is working to ensure the availability of an adequate
number of mariners to crew active U.S.-flag commercial vessels during
peacetime and in emergencies, as well as RRF ships activated for sealift
and/or humanitarian-assistance missions.
Maritime Issues and Challenges
Balancing the need for greater maritime security with the realities of
commercial shipping operations is the clearest and most important challenge
facing the American maritime industry.
One important initiative is the emphasis on short-sea shipping, also
known as coastwise shipping, which will begin to take hold in 2003 in
the northeastern part of the United States. The congestion along Interstate
5, the I-95 corridor, and other major interstate highways has forced transportation
planners to look at the nation’s coastal regions as an alternative
that would move freight from the nation’s crowded highways and railways
onto the waterways. Short-sea shipping might well represent, therefore,
not only the future of the Jones Act but also the vibrancy and viability
of a national Marine Transportation System (MTS) network—one that
extends throughout the United States as well as into Canada and Mexico.
On the international front, the United States and the People’s
Republic of China initialed the text of a new Maritime Agreement on July
31, 2003. This achievement culminates a negotiation that has lasted nearly
six years. The new agreement will open up significant new business opportunities
for U.S. carriers and transportation intermediaries doing business in
China. Once it is implemented, this agreement will remove basic restrictions
on U.S. carriers’ operations in China. There are several steps that
both sides have agreed to take before the agreement enters into force.
This process has already begun.
Additional information on the U.S. Maritime Administration may be obtained
Office of Congressional and Public Affairs
400 Seventh St., S.W.
Washington, DC 20590
Phone: (202) 366-5807
or (800) 99-MARAD
Fax: (202) 366-5063