SEAPOWER/MARITIME

Maritime Administration

Mission. The Maritime Administration (MARAD), an agency of the Department of Transportation, administers federal laws that foster and maintain a U.S. merchant marine capable of meeting the nation's shipping needs for domestic and international waterborne commerce and national security. MARAD also seeks to ensure that the United States enjoys adequate shipbuilding and repair services and possesses efficient and adequate port capacity complemented by effective intermodal water and landside transportation. The agency promotes the use of U.S.-flag vessels, manages an active reserve of ships in the Ready Reserve Force (RRF), maintains an inactive inventory of ships in the National Defense Reserve Fleet (NDRF), and ensures the availability of a pool of highly skilled merchant marine officers and seafarers through its operation of the U.S. Merchant Marine Academy at Kings Point, N.Y., and its support of six state maritime academies (in California, Maine, Massachusetts, Michigan, New York, and Texas).

More recently, with expanding economic globalization, a massive increase in international trade and cargo--and the corresponding growth both in environmental degradation and in the congestion of landside transportation--MARAD has sharpened its focus on logistics, ports, intermodalism, environmental activities, and international trade practices. Ensuring that there is adequate and environmentally sound transportation to meet future U.S. national-security and commercial needs requires a well-planned and truly integrated multimodal transportation system. Moreover, international standards have become increasingly important in maintaining the integrity of U.S. commerce and the competitiveness and strength of the U.S. maritime industrial base.

Historical Perspective

America is a maritime nation and, from the early days of its existence, has relied heavily on its merchant marine and maritime industries to establish and maintain its preeminence as a major economic power as well as to provide for its defense. From the first seagoing vessel launched by the Massachusetts Bay colony in 1631 and the first shipyard established in Maine in 1638, a fledgling America took its first steps as a maritime entity, producing its own vessels and sailing forth into the world of international commerce, using its merchant marine as an auxiliary to its Navy as protection for its expanding and highly lucrative trade.

International Trade. By the late 1780s, the upstart Yankee nation had added the West Indies and India--as well as Baltic, Mediterranean, and African ports--to its already flourishing trade with England, France, and China and could claim 124,000 deadweight tons (dwt) of shipping in its fleet. It took only a generation of Yankee ingenuity and persistence before the American-flag fleet was carrying nearly one million tons of cargo to ports around the globe. By 1826, moreover, U.S.-flag merchant vessels transported 92 percent of America's foreign trade.

Today, with the largest portion of the nation's ever-increasing global trade moving by water, only three percent is carried by the U.S.-flag fleet. This downward spiral has disturbing implications for America's national security and economic vigor. America must depend on its U.S.-flag fleet to carry its cargoes overseas in wartime or during military contingencies.

Moreover, oceangoing jobs employ 22,000 U.S. citizen-mariners, while maritime-related shoreside activities engage thousands more. U.S.-flag liner companies generate $8.5 billion annually in revenues, contributing hundreds of millions of tax dollars to their respective federal, state, and local governments. Without a U.S.-flag fleet, the nation's foreign commerce and its auxiliary sealift capability would depend exclusively on foreign-flag ships.

United States Shipbuilding. Well-endowed with factors of production, America stood alone as the undisputed world leader in shipbuilding until the 1850s. World Wars I and II further increased output during the 20th century. However, the nation's surplus of vessels amassed after World War II dampened world demand for new construction and forced the shutdown of most U.S. shipbuilding capacity.

Later, the Cold War spurred new naval construction. Large and sustained investments in core technologies, coupled with continuing major efforts in research and development programs, pushed the industry to new heights, and American shipbuilders again assumed a preeminent position, producing the world's most sophisticated, capable, and complex warships.

The sheer strength of domestic (primarily U.S. Navy) demand in this industry provided sufficient activity so that American shipbuilders did not have to compete in the international market. The end of the Cold War, however, brought a dramatic decline in new naval construction and ship-repair requirements, causing the industry as well as its supporting infrastructure to downsize rapidly.

Thus, the industry's 30-year concentration on naval construction diminished its commercial shipbuilding ability and posed a major challenge to its reentry into the international shipbuilding arena. The decline poses a major problem not only from the standpoint of national security, but also economically. Since the naval buildup of the 1980s, 75,500 production jobs have been lost in the shipbuilding and repair industry, more than a 50 percent decline. According to the U.S. Department of Labor, the U.S. shipbuilding and repair industry employed only 72,800 production workers in mid-1998.

American Shipbuilding Policy

Realizing the magnitude of the several complex challenges confronting the industry, the Clinton administration developed a strategy in 1993 to energize U.S. shipyards and ease their transition from defense to the commercial sector. The goal: to make America's high-quality shipyards and suppliers commercially competitive worldwide. The administration's plan, entitled "Strengthening America's Shipyards: A Plan for Competing in the International Market," consists of five parts:

Ensuring fair international competition;

Eliminating unnecessary government regulation;

Assisting international marketing;

Financing ship sales through Title XI loan guarantees; and

Improving commercial competitiveness through the MARITECH program, which was devised to supplement efforts already underway within the industry to compete internationally.

To implement the plan, Congress enacted the National Shipbuilding and Shipyard Conversion Act of 1993, included in the National Defense Authorization Act of 1993 (Public Law 102-484). That legislation expanded the existing Title XI Federal Ship Financing Program by authorizing the Secretary of Transportation to guarantee obligations issued to finance the construction, reconstruction, or reconditioning of eligible export vessels. It also authorized guarantees for shipyard modernization and improvement.

The Shipyard Act also established a National Shipbuilding Initiative (NSI) program to help the industrial base meet several national-security objectives. The goal of the NSI program is to help reestablish the American shipbuilding industry as an internationally competitive industry. Following are updates on MARAD's major activities under the auspices of the National Shipbuilding Initiative.

OECD Agreement

Legislative efforts continued in search of a compromise that would enable the United States to ratify the agreement to end foreign shipbuilding subsidies that was negotiated in 1994 by the U.S. Trade Representative through the multinational Organization for Economic Cooperation and Development (OECD).

That agreement, developed by the world's key shipbuilding nations, eliminates virtually all direct and indirect subsidies, establishes common rules for government-assisted financing, creates an innovative pricing mechanism to prevent ship dumping, and provides a means to settle disputes through binding agreements. Under the OECD agreement, the U.S Title XI program will be modified to meet its terms, which provide for a maximum repayment period of 12 years and a maximum financing coverage of 80 percent.

Although negotiation of the OECD agreement began as a U.S. initiative, there has been a protracted disagreement within the U.S. shipbuilding industry over the utility of the agreement. The large military-oriented yards have opposed the agreement, while small and medium-sized yards have supported it. Congress still must act on the proposal.

The key provisions of a proposed legislative compromise would strengthen protection of national security and the Jones Act and extend the current terms for Title XI loan guarantees to 1 January 2001. In July 1998, the Senate Finance Committee approved an omnibus trade bill that included implementation of the OECD agreement, but Congress recessed before the legislation could be further advanced.

Financing Ship Sales Through Title XI Loan Guarantees. The Title XI program, authorized under the Merchant Marine Act of 1936 and administered by MARAD, assists the U.S. shipbuilding and repair industry in developing and obtaining the private financing often critical to attracting domestic and foreign buyers.

Title XI, as modified by the National Shipbuilding and Shipyard Conversion Act of 1993, authorizes MARAD to guarantee up to 87.5 percent of loans, amortized over 25 years, to foreign purchasers of ships built in U.S. yards, or loans for modernization of U.S. yards. The current terms of the Title XI program would be modified as needed if the United States ratifies the OECD Shipbuilding Agreement.

The Title XI loan-guarantee program has been an important factor in improving the ability of U.S. yards to compete for international contracts. During fiscal year 1998, MARAD approved 12 Title XI financing guarantees amounting to approximately $734 million. The Title XI program continues to attract a substantial level of interest with approximately $528 million in currently pending projects and a portfolio of approximately $2.86 billion.

MARITECH. Through MARITECH, a five-year program of matching funds, the federal government is encouraging the shipbuilding industry to direct and lead the development and application of modern processes, procedures, and technology to improve the industry's competitiveness and to preserve the U.S. industrial base. The industry-led, industry-driven initiative--jointly sponsored by MARAD, the Defense Advanced Research Projects Agency, and the Office of Naval Research--provides up to $220 million over five years to private-sector industry consortia for the development of innovative ship designs and construction as well as improved processes and business procedures.

By September 1997, 66 MARITECH projects had been awarded for development of a wide range of improvements in shipbuilding technologies. In addition, 36 new commercial ship designs have been generated. MARI-TECH participants span 200 private-sector organizations in nine foreign countries and over 40 states.

National Maritime Resource and Education Center. MARAD has established a National Maritime Resource and Education Center to assist the U.S. shipbuilding and allied industries in improving their competitiveness in international commercial markets by offering a central source of information, expertise, and reference materials on commercial shipbuilding. The center also provides oversight and technical expertise in the administration of MARITECH projects.

Status of U.S. Shipbuilding

Commercial. In October 1998, a total of 56 vessels were on order in U.S. shipyards: 46 Navy ships and 10 commercial ships--including five new 46,000-dwt-class product tankers for the domestic trade (Newport News Shipbuilding), three 125,000-dwt crude carriers for the Alaskan North Slope transport market (Avondale), one chemical carrier (Alabama Shipyard), and one nonoceangoing ferry (Todd Pacific). During the first nine months of 1998, two oceangoing commercial ships were delivered--one chemical carrier (Alabama Shipyard) and one oceangoing ferry (Halter Marine). In addition, one smaller nonoceangoing ferry also was delivered (Todd Pacific).

Newport News has been constructing a series of "Double Eagle" product carriers. The first, owned by Mobil Oil, already has been delivered. It was followed by delivery of two vessels to Lightship Tankers III & IV, LLC, and one to Danneborg Rederi AS. National Steel and Shipbuilding Company also has been awarded a contract to design British Petroleum's (BP) next generation of crude carriers for the Alaskan trade. The Suez max-size double-hull BP tankers will have diesel electric power provided by two independent engine rooms, shafts, and propellers.

American Classic Voyages Company of Chicago and Ingalls Shipbuilding, a division of Litton Industries, signed a letter of intent in October 1998 to construct two passenger ships for the Hawaii interisland service, with options to build up to four additional vessels. These cruise ships would be the largest passenger vessels ever built in a U.S. shipyard and the first passenger vessels built in the United States since the early 1950s.

A MARAD survey of the U.S. shipbuilding industry showed that, as of June 1998, there were 160 additional vessels over 100 gross tons on order, consisting mostly of offshore supply vessels, various types of tugs, catamarans and other types of ferries, patrol boats, lift boats, and survey vessels. In addition, a number of U.S. shipyards had received orders to build approximately 1,000 barges of various types.

The U.S. shipbuilding and repair industry invested more than $244 million in 1997 in its continuing effort to upgrade and improve yard facilities and production processes aimed at enhancing their competitiveness. Over the past 10 years the industry has made capital investments in excess of $2 billion. Preliminary numbers available at MARAD indicate that the industry will exceed the capital investment projections for 1998 of $256 million.

The Title XI loan-guarantee program has been an important factor in improving the ability of U.S. shipyards to compete for international contracts. The Astro Offshore Corporation construction contract to Atlantic Marine Inc. was made possible by a Title XI guarantee.

Military. The Navy shipbuilding program for the years 1999­2003 is expected to fund a total of 41 ships, an average of 8.2 ships per year, which is a sharp decline from the 1980s when annual construction averaged 19 ships per year. The five-year plan proposed includes seven conversions, one nuclear carrier refueling, and four SLEPs (service-life extension programs), as well as the construction of at least one military sealift ship.

The Navy's sealift construction program is providing additional work for U.S. shipbuilders. In October 1998, 12 new LMSR (large, medium-speed, roll-on/roll-off) sealift ships (T-AKRs 300­305 and T-AKRs 310­315) were on order, six with Avondale and six
with National Steel and Shipbuilding Company (NASSCO), with deliveries scheduled between 1998 and 2002.

World Shipbuilding

In December 1997, the world order book for commercial vessels consisted of 2,604 vessels over 1,000 gross tons, a decline of 7.1 percent from December 1996. Japanese shipyards accounted for 35 percent of the gross tonnage on order; South Korea ranked second with 33.1 percent, followed by the People's Republic of China with 5.6 percent. The United States ranked 14th with 1.0 percent, a substantial increase since December 1995.

Orders for new-construction commercial vessels can be expected to increase beyond the year 2000. Drewry Shipping Consultants Ltd. projects total worldwide demand between 1997 and 2010 in the range of 370 million dwt, including more than 109 million dwt of new construction--new tankers and dry bulk carriers, primarily--in the 1998­2000 period.

The Oil Pollution Act of 1990, which requires that all tankers operating in U.S. territorial waters after 2015 be double-hulled, has spurred a dramatic increase in double-hull construction. Approximately 1,500 tankers enter U.S. waters each year. Construction of very large crude carriers also will increase so that aging ships (those built before 1980) can be replaced. Some 40 percent of the world fleet will be more than 25 years old by 2000.

United States Shipping

As of July 1998, the U.S.-flag merchant fleet included 287 oceangoing vessels (1,000 gross tons and over) as well as 68 Great Lakes vessels and over 40,000 other cargo ships, tugs, barges, passenger ships, and other vessels in domestic waterborne trade. There was a net decline of two oceangoing vessels during the year. The United States continued to rank 11th 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 declined in 1997 to 2.8 percent (from 2.9 percent in 1996). The U.S.-flag percentage of liner trade, carried in newer containerships, increased from 8.1 percent to 9.0 percent.

Even though the number of U.S.-flag oceangoing ships has declined in recent years, the productivity of the fleet has improved substantially. The average capacity of liner vessels in the U.S.-flag fleet today is over 38,000 dwt. Fleet productivity also has been enhanced since 1997 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 delivery of Department of Defense (DOD) cargoes.

Commercial shipping continues to be critical to the well-being of the U.S. economy for both economic and defense reasons, as recent events have repeatedly emphasized. The recent intervention by the Federal Maritime Commission in U.S. international trade with Japan and the Shanghai Shipping Exchange to remove discriminatory practices against the American consumer and the ongoing negotiations by MARAD in these cases--and now with Brazil and China as well--were possible only because the United States has a merchant fleet of its own. Having a U.S.-flag merchant fleet engaged in international trade gives the United States the legal standing to intervene to protect its economy.

However, like other profit-oriented corporations, vessel owners will register their ships under the U.S. flag only if there is a measurable economic benefit to their shareholders. Because of higher U.S. construction, maintenance, environmental, and safety standards, it almost always costs more to operate U.S.-flag vessels than it does to operate foreign-flag ships. There is limited direct U.S. government assistance to help support a minimal liner fleet. Since 1904, to provide the economic incentive to shareholders to maintain their U.S. registry, the Congress has enacted a series of so-called "cargo-preference laws." When the government provides a benefit to help American industry export U.S.-made products, it establishes a "quid pro quo" requiring the exports to 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. These cargo-preference laws generate about $900 million dollars per year of base-cargo revenue for U.S.-flag vessels, allowing them to then seek additional commercial cargoes totaling more than $8.5 billion in total revenues. The actual cost of the cargo-preference laws is negligible because the difference between the cost of using foreign-flag versus U.S.-flag is relatively low. The government recaptures most and perhaps all of the added cost, moreover, through taxes on the total gross revenue and 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 diminished U.S.-flag fleet would disappear entirely.

Global Shipping

For many years, the international liner industry has been in tumult for a number of reasons: vessel capacity growth exceeded cargo volume increases, driving rates down; low-cost carriers upgraded services but continued to offer lower rates; and shippers, anxious to remain globally competitive, continually demanded more service. As a result, carriers have been emphasizing vigorous cost-reduction efforts. One of the most significant results has been the emergence of intermodal operating alliances and mergers. In 1997, as carriers continued to seek even greater global coverage and operating efficiencies to increase their competitiveness, several corporate mergers occurred among major global liner operators, including two U.S.-flag carriers that merged with foreign-flag lines. This trend continued in 1999 with the announced merger between Sea-Land Services and Maersk. In addition, U.S. international ocean-shipping regulatory reform, enacted in October 1998 and put into effect on 1 May 1999, is expected to increase competition among carriers involved in U.S. international waterborne commerce.

Maritime Security Program

The continued existence of a privately owned U.S.-flag merchant marine is vital to the nation's military and economic security. During national emergencies, there is no completely reliable alternative to the U.S.-flag fleet of commercial ships and/or to the availability of trained U.S. citizen crews. Nearly 80 percent of the military dry cargo transported during the Persian Gulf conflict was carried on U.S.-flag ships, and more than 30 percent was carried on commercial U.S.-flag ships as part of normal liner operations or under time-charter to the Department of Defense, with no disruption to commercial service. All of the U.S.-flag ships used by DOD during these sealift operations were totally crewed by U.S. citizens.

U.S. economic security also benefits from the participation of the U.S.-flag fleet in the movement of U.S. international trade. Without a U.S.-flag 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 for transportation. 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 or have close affiliations with firms in their own countries that compete with U.S. businesses.

In recognition of the need to foster a strong and competitive U.S. merchant marine, the Clinton administration proposed and Congress enacted legislation to revitalize the U.S. merchant marine. The 104th Congress approved the maritime revitalization legislation by a voice vote in the House of Representatives and by a substantial majority (88­10) in the Senate. The Maritime Security Act (Public Law 104-239) established the Maritime Security Program (MSP) under Title VI, Subtitle B, of the Merchant Marine Act of 1936.

This maritime program 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 national security requirements for sealift capacity. MSP participants also will provide intermodal shipping services and systems--including ships, cargo-carrying capacity, intermodal equipment, and related management services--to DOD to support the emergency deployment and sustainment of U.S. military forces. In addition, the MSP will ensure America's continued presence in international commerce and provide a competitive bulwark against predatory pricing by foreign carriers in the movement of U.S. import and export commerce.

The Maritime Security Act establishes a 10-year, 47-ship program providing fixed federal-support payments of $2.1 million per vessel per year, subject to annual appropriations, to participant companies to partially offset the higher costs of operating U.S.-flag liner ships in international trade.

The MSP costs only half as much as the previous maritime support program and provides the Department of Defense with "assured access" to more than 120,000 20-foot-equivalent units (TEUs) 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. It extends reemployment rights to U.S. merchant mariners, similar to those provided to military reservists who voluntarily leave their peacetime employment to crew government strategic sealift ships in a contingency.

The MSP will help fulfill the shared administration and congressional goals to:

Foster and maintain a U.S. merchant marine 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 on board those ships;

Reverse the precipitous decrease in the number of ships in the U.S.-flag fleet;

Stabilize the number of mariners available to crew U.S. merchant vessels;

Achieve adequate manning of merchant vessels for national security needs during a mobilization;

Ensure that sufficient civilian maritime resources will be available to meet defense deployment and essential economic requirements in support of the U.S. national security strategy; and

Ensure 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 companion sealift emergency-preparedness program to the MSP is the new Voluntary Intermodal Sealift Agree-ment (VISA), organized under MARAD's authorities contained in the Merchant Marine Act of 1936 and the Defense Production Act of 1950, which was approved by the secretary of Defense in January 1997 for incorporation in DOD planning as a sealift readiness program.

VISA's objectives are to provide intermodal sealift support to DOD in time of war or other national emergency, or whenever the secretary of Defense determines it is necessary for national security. This will enable DOD to secure space to transport military supplies and equipment. Under the terms of VISA, participating carriers are required to commit a portion of their intermodal sealift capacity to DOD; MSP participants are required to commit 100 percent of the capacity of enrolled vessels along with the proportionate amount of their total transportation resources. VISA thus provides DOD with access to the shipping companies' worldwide intermodal networks, including vessels, trains, trucks, and cargo-handling equipment, cargo-tracking and -control systems, and traffic- and logistics-management services.

In return, the carriers are able to rationalize capacity and pool resources, giving them a more predictable and stable business environment. Moreover, DOD will extend preferential treatment to participating ship owners when military cargoes are assigned in peacetime.

The MSP and VISA programs are the result of several years of bipartisan and interagency collaboration. The two programs will slow the decline of the U.S.-flag merchant fleet, but by themselves will not reverse the continuing trend of a reduced U.S.-flag presence in the international ocean transportation arena.

Ready Reserve Force

Sealift is essential to execute the nation's forward-defense strategy and maintain a wartime economy. The U.S. national-sealift objective is to ensure that sufficient military and civil maritime resources will be available to meet defense deployment and essential civilian economic requirements in support of the U.S. national security strategy. During national emergencies, there must be adequate sealift available on a timely basis to support both the deployment and the sustainment of U.S. military forces overseas.

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 crisis or war. The RRF fleet (currently 91 vessels) guarantees that quick-response shipping and sealift are available to support the early stages of deployment before a sufficient number of commercial ships can be marshaled.

MARAD keeps RRF ships in designated states-of-readiness (as determined by DOD) to enable them to be activated in 4, 5, 10, 20, or 30 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-, 20-, or 30-day readiness status are berthed in one of the National Defense Reserve Fleet sites located in James River, Va., Beaumont, Texas, and Suisun Bay, Calif. Once RRF vessels are activated in support of a DOD exercise or operation, they come under the operational control of the Military Sealift Command.

The RRF meets or exceeds every measure of reliability and performance. During fiscal year 1998, the operational reliability of ships activated from the RRF was 99 percent over more than 1,600 operational days. All 36 of the RRF vessels activated under "no notice" criteria during this period were available to DOD within the assigned time requirements.

In recent years, RRF vessels have provided DOD with needed surge and sustainment sealift during several operations involving U.S., NATO, U.N., and other allied forces, including:

Operations Desert Shield/Desert Storm/Desert Sortie in 1990­1991. MARAD activated 79 RRF vessels to transport urgently needed supplies and materials to the Persian Gulf.

Operation Restore Hope in 1993­1994. Several RRF vessels transported military cargo to Somalia in support of the U.N. relief effort, and an RRF troop ship was activated to repatriate and return troops from Somalia.

Operation Uphold Democracy in 1994. Fourteen RRF vessels transported military cargo from various U.S. ports to Haiti.

Operation Quick Lift in 1995. Two RRF ships were activated to support NATO peacekeeping activities in Bosnia.

Operations Vigilant Warrior and Vigilant Sentinel in 1995. Eight RRF vessels supported military operations in the Persian Gulf.

Exercise Joint Endeavor in 1996. Two RRF vessels were activated to provide logistical support to the British Expeditionary Forces in Croatia.

Exercise Tandem Thrust in 1997. Two RRF ships were activated for a U.S.-Australian amphibious exercise in northeast Australia.

Exercise Foal Eagle/Freedom Banner in 1998. Two RRF vessels supported the U.S./ROK (Republic of Korea) naval/military exercises in South Korea.

War Risk Insurance

MARAD administers the standby emergency War Risk Insurance Program in accordance with the statutory authority of Title XI of the Merchant Marine Act, 1936, as amended. The program encourages the continued flow of U.S.-foreign commerce during periods when commercial insurance cannot be obtained on reasonable terms and conditions. It protects vessel operators and seafarers against losses resulting from war or warlike actions. The program was activated in 1990 for operations Desert Shield and Desert Storm, during which war-risk insurance policies were written on 388 military contracted vessels; the Navy estimated that the program saved the government over $436 million in premium costs. The program was also successfully activated during operations in Somalia and Haiti.

The U.S. Port System

U.S. Ports. Since colonial times, U.S. ports have played a major role in U.S. economic development and national security. Ports continue to play an important role in meeting the demands for commercial and military waterborne service. These demands are the first link in a chain of economic activity that contributes in several measurable ways to the national economy. U.S. ports are a vital link in that economic chain. The national benefits associated with the movement of foreign and domestic waterborne commerce are significant. Throughout the economy, this activity creates 13.1 million jobs, contributes $743 billion to the gross domestic product, and provides almost $200 billion in federal, state, and local taxes. U.S. ports handle more than two billion tons of foreign and domestic trade, and serve as critical interchange points within the nation's intermodal transportation system. With the recent changes in the U.S. national defense strategy and the downsizing of the U.S. military, greater reliance will be placed on the U.S. port system for the deployment of forces in times of national emergency.

MARAD works with industry and other federal agencies to assist in addressing the critical challenges that lie ahead. Dredging is one of the critical issues confronting America's ports. MARAD, in cooperation with other agencies, has been examining ways to improve the dredging process and to encourage the beneficial use of dredged material. The nation's waterborne trade is expected to at least double in the next 20 years. To meet this projected growth, ports must expand their terminal facilities. MARAD administers a program that conveys surplus federal property to state and local public entities for the development and operation of port facilities. The purpose of this program is to create jobs, revitalize local economies, and increase port capacity. MARAD also encourages ports to become involved in the administration's Brownfields Initiative, which is designed to return contaminated urban industrial sites (brownfields) to productive use. The use of brownfields can help provide ports with land for expansion and economic growth for local communities.

National Port Readiness. MARAD is the permanent chair of the National Port Readiness Network (NPRN), a coalition of 10 federal agencies and organizations directly responsible for supporting the deployment of military forces through U.S. ports during contingencies and defense emergencies. MARAD and DOD cooperatively determine the status of strategic ports with port planning orders and engage in port terminal facility site planning as well as annual port-readiness exercises. MARAD serves as the strategic liaison for commercial port operations during actual national defense emergencies.

Domestic Shipping

The effective water transport of U.S. national cargoes within the United States is the backbone of the U.S. national maritime security system. Domestic waterborne shipping provides more than 124,000 direct jobs to the U.S. economy, including 80,170 vessel billets and 17,247 shipyard jobs. The workers in those jobs constitute a critical national resource and could be easily used in alternative transportation or war-production jobs in the event of a national security emergency.

MARAD continues to emphasize the importance of the Jones Act to America's national security by, among other things, guaranteeing U.S. control of essential transportation assets in both peace and war. The Jones Act ensures that U.S.-owned, -crewed, and -built ships will be available to transport domestic cargo during a national emergency. MARAD is proactive in the advancement of Jones Act trade by providing a compliance assistance program to shippers looking for coastal-qualified U.S.-flag vessels.

Intermodal Transportation Access

The U.S. economy, international competitiveness, and national security all are increasingly dependent on the effectiveness of the intermodal transportation system. Intermodal connections between U.S. transportation modes are typically the weakest links in the national transportation system. As the land/water transportation interface, U.S. ports and terminals are the pivotal links for the movement of U.S. international trade. Approximately 95 percent of America's overseas international trade, measured by volume, passes through U.S. ports. It has been predicted that the nation's international waterborne freight will triple by 2020. This unprecedented growth in international freight poses an enormous challenge in terms of ensuring the continued unimpeded access to U.S. ports by both land and sea.

U.S. Marine Transportation System

MARAD and the U.S. Coast Guard jointly undertook an initiative by Secretary of Transportation Rodney E. Slater to redefine the current and future needs of the U.S. Marine Transportation System. This initiative is intended to support a safe and environmentally sound world-class waterways system that improves U.S. global competitiveness and national security. Marine transportation is now characterized by many diverse organizations engaged in a complex environment, often working independently and for the accomplishment of different goals.

During a series of seven federally sponsored regional listening sessions, MARAD and the Coast Guard brought together the principal stakeholders--other federal entities, state governments, industry, and local and state port authorities--to discuss mutual problems. In November 1998, Secretary Slater convened a national conference to address the key issues identified in the regional listening
sessions and other outreach efforts to develop potential solutions to these problems.

TEA-21

MARAD recently has worked with the Department of Transportation to address intermodal freight infrastructure requirements included in the Transportation Equity Act for the 21st Century (TEA-21). The overall funding level of approximately $175 billion for fiscal years 1998-2003 is a major provision important to marine freight transportation infrastructure requirements, and provides an increase of 11 percent over the Intermodal Surface Transportation Efficiency Act's funding. This includes a 30 percent increase in funding for core highway programs, such as the National Highway System, which includes the designation of major connectors to marine ports and terminals. TEA-21 also increases--by 30 percent, to $8 billion--the funding for the Congestion Mitigation and Air Quality Improvement (CMAQ) Program. The CMAQ program will continue to provide U.S. ports and terminals opportunities to flex investments in intermodal freight facilities that will result in improvements to air quality and in the relief of congestion.

One of the bill's priorities is to improve the transportation corridors and border crossings needed to connect with foreign markets and to capitalize on the growing trade generated by the North American Free Trade Agreement. The National Corridor Planning and Development Program and Coordinated Border Infrastructure Program are funded with $700 million in TEA-21.

TEA-21 preserves a strong voice in transportation planning for freight and shipping interests, and initiated an intermodal freight connector study (due at the end of 1999).

Cargo Handling Cooperative Program

The primary purpose of the Cargo Handling Cooperative Program (CHCP) is to increase the productivity of U.S. marine freight transportation companies through cargo handling research and development. A public-private partnership, the CHCP is designed to pursue innovative cargo-handling developments that increase the productivity and cost effectiveness of cargo operations.

The program's principal focus is on the movement of international and domestic freight through the use of advanced technologies in infrastructure design, seamless international-transportation networks, and more efficient communication and information flows. Initiatives to enhance such a transportation system are based on a system-level approach to freight transportation from origin to destination. This allows for the development of a framework wherein segments of technologically advanced transportation networks are developed in relation to total system requirements.

Intelligent Transportation Technologies

In June 1998, MARAD participated in an Intermodal Freight Identification Technology Workshop to develop a process that would harmonize freight technology and help advance and improve U.S. competitiveness by creating a seamless, intermodal freight movement system. The 1998 workshop brought together more than 150 leaders from the public and private sectors to forge a collaborative agenda to address interoperability issues in intermodal freight location and identification. Industry and government attendees discussed their current systems and future requirements for freight identification and location (containers, trailers, etc.) across the modes and international borders.

CCDoTT

MARAD, in partnership with the U.S. Transportation Command and California State University Long Beach, manages the Center for the Commercial Deployment of Transportation Technologies (CCDoTT), which serves as the focal point of an innovative program to demonstrate existing, emerging, and developing technologies in cargo handling, tagging, tracking, information management systems, and high-speed sealift. The technologies involved, if fully exploited, will help the military deploy quickly, expand the ability of commercial transportation to accommodate military surge cargo, and minimize disruptions to commercial transportation.

Maritime Labor and Training

An adequate work force of merchant mariners trained to operate today's modern, technologically advanced vessels is critical to U.S. economic and national security needs. The ability of the United States to sustain its domestic and international waterborne commerce and successfully implement U.S. national and international policies could be disrupted or impaired without a skilled, knowledgeable, and competent manpower base.

An estimated 98 percent or more of the equipment and supplies required for a mobilization effort must move by sea. The United States therefore needs assured access to sealift and cannot rely totally on foreign sources for the success of military initiatives. The success of DOD sealift operations during a crisis clearly depends upon the nation's ability to move cargoes swiftly and reliably to the area of operations on active and reserve U.S.-flag merchant ships crewed by U.S. citizen-seafarers.

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 or humanitarian-assistance missions.

Employment of oceangoing seafarers, including licensed and unlicensed mariners aboard privately owned subsidized and nonsubsidized shipping, totaled 6,542 jobs in August 1998, a decline from 6,871 a year earlier. The ratio of seafarers to jobs remained the same, about 2-to-3. Overall, the number of mariners and officers decreased to 15,000. Total employment of longshoremen in Atlantic, Pacific, Gulf Coast, and Great Lakes ports rose slightly, to 23,588.

U.S. Merchant Marine Academy

The U.S. Merchant Marine Academy, dedicated in 1943, is recognized worldwide as an outstanding maritime educational institution, graduating approximately 180 licensed officers yearly. The Academy is a tuition-free four-year accredited college operated by the Maritime Administration of the U.S. Department of Transportation. Candidates for admission must be nominated by a congressman or senator and must compete for vacancies allocated by state in proportion to its representation in Congress. Current enrollment is approximately 950. In 1974 the Academy became the first of the federal academies to admit women.

All Academy graduates incur an eight-year U.S. Naval Reserve commitment, obligating them to serve in time of war or national emergency, if activated. Academy graduates also are committed to a five-year maritime service obligation, requiring them to obtain a merchant marine officer's license on or before graduation and to maintain the license for at least six years. This service obligation may be satisfied as an officer aboard U.S. merchant ships, or in shoreside maritime or intermodal transportation industry positions if afloat employment is not obtainable. Active military duty in any branch of the armed forces also satisfies the obligation.

The Academy has kept its educational program responsive to the needs of America's maritime industry and to U.S. national security requirements, both in its four-year undergraduate curriculum and in its continuing education program. Students receive B.S. degrees in the following areas of study: marine transportation; marine engineering; marine engineering systems; the ship's officer program, which provides the marine transportation major with some fundamental engineering skills; the dual-license program, which fully integrates the marine transportation and engineering curriculum; logistics and intermodal transportation; or the shipyard and marine engineering management program. Over the years, new emphasis has been placed on important emerging areas in the industry. The breadth of coursework and hands-on training prepares graduates to become not only merchant mariners, but leaders in the maritime industry.

Superintendent: Rear Adm. Joseph D. Stewart, USMS

Nomination Information: Candidates should contact their congressman or senator and request nominations at the end of their junior year of high school. Completed applications must be received by the 1 March deadline, and candidates must qualify scholastically and physically. Eligibility considerations include high school academic records, class rank, SAT or ACT scores, and leadership potential.

Costs: Upon entrance, each midshipman pays a fee of $4,852 to cover student activities, personal services, and the cost of a personal computer.

Financial Aid: Pay received by a midshipman is $558 a month during two training periods aboard ship. While the Academy does not offer financial aid, its Financial Aid Office can assist students with identifying and applying for assistance from external student loan sources.

For more information contact:

Office of Admissions
U.S. Merchant Marine Academy
Steamboat Road
Kings Point, NY 11024­1699

Phone: (516) 773­5391 or (800) 732­6267
Fax: (516) 773­5390
Website: www.usmma.edu

State Maritime Academies

The six state maritime academies (in California, Maine, Massachusetts, Michigan, New York, and Texas) conduct training and offer academic programs that yield highly skilled deck and engineering officers for employment in the U.S. merchant marine. In addition to training engineering and deck officers, individual schools specialize in maritime port management, marine sciences, international business, logistics, and other maritime-related areas of study.

By authority of the Maritime Education and Training Act of 1980, MARAD provides annual funding for student assistance, school-ship maintenance and repair, and training-ship fuel oil (when available) to the six state academies. Qualified students are eligible, at a total federal program cost of $1.2 million per year, to receive student incentive payments (SIPs) of $3,000 annually, for no more than four academic years, to offset the cost of uniforms, books, and subsistence.

In return, SIP recipients must sail or work in maritime-related employment ashore for three years, accept a commission in the Naval Reserve or other reserve component of the U.S. armed forces (making these qualified seafarers available for sealift support), and obtain a U.S. Coast Guard merchant marine officer's license--they must maintain that license for six years after graduation.

MARAD also provides training vessels to the five coastal academies for use in at-sea training and as shoreside laboratories. These training ships are critical to the ability of the state maritime academy programs to familiarize students with ship systems and to train them in ship safety, fire fighting, and damage control. The training ships ensure that students are able to gain the practical experience of living and working aboard ship and are able to put to sea more safely.

California Maritime Academy

Located on San Francisco Bay, the California Maritime Academy is a campus of the California State University system, offering an accredited B.S. in marine transportation, facilities engineering technology, marine engineering technology, or mechanical engineering, with a license as a third mate or third assistant engineer issued by the U.S. Coast Guard, or a certified plant engineer-in-training license.

An accredited B.S. in business administration without the Coast Guard license is available. The degree offers options in Transportation, Maritime Management, Logistics & International Business, and Management.

Active- and inactive-duty commissioning programs are available for the U.S. Navy, the U.S. Coast Guard, and the U.S. Navy/Merchant Marine Reserve.

For more information, contact:

Director of Outreach
California Maritime Academy
P.O. Box 1392
Vallejo, CA 94590­0644

Phone: (707) 648­4224
Fax: (707) 649­4773
E-Mail: enroll@csum.edu
Website: www.csum.edu

Great Lakes Maritime Academy

An affiliate of Northwestern Michigan College (NMC), the Great Lakes Maritime Academy has been jointly designated by the U.S. Maritime Administrator and the governors of the states touching on the Great Lakes as a regional academy in support of the Great Lakes shipping industry. Deck officer graduates are legally and professionally qualified to serve as pilots of the largest bulk carriers in the Great Lakes trade immediately upon graduation. Engine officer graduates are specifically trained to operate and maintain shipboard equipment unique to the industry as well as all other machinery and systems commonly found aboard ships worldwide.

A four-year degree option is available for Maritime Academy students through Ferris State University, leading to a B.S. degree in maritime management, and is conducted concurrently with the maritime program entirely at the Academy/NMC/University campuses in Traverse City, Mich.

For more information contact:

Recruiter
Great Lakes Maritime Academy
1701 E. Front Street
Traverse City, MI 49686­3061

Phone: (616) 922­1200
Fax: (616) 922­1318
E-Mail: jurokos@nmc.edu
Website: www.nmc.edu/~maritime

Maine Maritime Academy

Maine's seafaring heritage continues at Maine Maritime Academy, a college offering students the opportunity for an associate's, bachelor's, or master's degree. Maine Maritime awards the B.S. degree with majors in marine engineering operations, marine engineering technology, marine systems engineering, nautical science, marine transportation, power engineering, ocean studies, small-vessel operations, marine management, and a new major in international business and logistics.

For more information, contact:

Office of Admissions
Maine Maritime Academy
Castine, ME 04420

Phone: (207) 326­2206
Fax: (207) 326­2515
E-Mail: admissns@bell.mma.edu
Website: www.mainemaritime.edu

Massachusetts Maritime Academy

Founded in 1891, the Massachusetts Maritime Academy has evolved into a four-year accredited coeducational college, preparing graduates for careers both at sea and ashore. The college offers students four academic majors: marine engineering, marine transportation, facilities and environmental engineering, and marine safety and environmental protection. A five-year program offering a dual major in marine engineering and marine transportation also is available. The Academy also offers six academic concentrations: business management, electrical power, facilities and environmental engineering, marine fisheries, marine transportation, and mechanical engineering.

For more information, contact:

Director of Admissions
Massachusetts Maritime Academy
Academy Drive, Buzzards Bay
Cape Cod, MA 02532

Phone: 1 (800) 544­3411
Fax: (508) 830­5077
E-Mail: MMADMIT@mma.mass.edu
Website: www.mma.mass.edu

State University of New York Maritime College

Founded in 1874 as the New York Nautical School, SUNY Maritime College, located at Fort Schuyler, the Bronx, N.Y., is the oldest of the state maritime colleges. The primary mission of the college is to prepare young men and women to become licensed U.S. merchant marine officers (third mate or third assistant engineers) and to assume industry leadership positions afloat and ashore.

Course work in preparation for B.S. or B.E. degrees is offered in marine engineering, marine electrical and electronic systems engineering, marine operations, facilities engineering, naval architecture, the humanities, marine transportation, and marine environmental sciences. An AAS degree is offered in marine technology/small vessel operations. An M.S. degree also is offered in transportation management.

For more information, contact:

Director of Admissions
State University of New York
Maritime College
6 Pennyfield Avenue, Fort Schuyler,
Throggs Neck, NY 10465

Phone: (718) 409­7220
Website: www.sunymaritime.edu

Texas Maritime Academy (Texas A&M University)

At Texas A&M University at Galveston, the ocean is the classroom. Ocean voyages, sailing in Galveston Bay, beachfront experiments, and independent study complement the rigorous classroom experience at Texas A&M University at Galveston.

Texas A&M University at Galveston is a totally ocean-oriented campus offering academic degrees, research, continuing education programs, and public service in marine science, engineering, business, and transportation. TAMUG provides undergraduate academic instruction in seven marine and maritime-related degree programs in marine biology, marine sciences (oceanography), marine engineering technology, marine transportation, marine fisheries, maritime systems engineering (ocean/civil), maritime administration (policy/business), and maritime studies.

For more information, contact:

Office of Student Relations
Texas A&M University at Galveston
P. O. Box 1675
Galveston, TX 77553­1675

Phone: 1­87­SEAAGGIE (toll-free)
Fax: (409) 740­4731
E-Mail: seaaggie@tamug.tamu.edu
Website: www.tamug.tamu.edu

Maritime Issues and Challenges

Many complex maritime issues and challenges face the nation. Changes in world political trends and economies, domestic and international public-sector budget priorities, and state-of-the-art technologies occur constantly. The United States once relied on a huge fleet of relatively small ships to provide the commercial and sealift shipping capacity appropriate for its trade. Over time, much larger vessels and a sophisticated network of interrelated, intermodal equipment have supplanted that fleet.

Today's fleet includes not only ships and barges, but also containers, chassis, computer-based data systems, rail and truck interchanges, piers, cranes, terminals, and, most importantly, highly skilled people ashore and at sea. Technological advances have greatly improved the flow of cargo, resulting in the virtually seamless movement of goods from origin to destination anywhere in the world. 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 Department of Defense cargoes.

The United States must have a strong and vigorous maritime industry to ensure the national and economic security of the nation. The strategic goals of the Maritime Administration envision a competitive U.S.-flag fleet to transport domestic and international waterborne commerce, a domestic shipbuilding industry that prospers in the domestic and international marketplace, and a technologically advanced maritime transportation infrastructure.

In recent years, the two most important maritime policy accomplishments were passage of the National Shipbuilding and Shipyard Conversion Act of 1993 and the Maritime Security Act of 1996. The overwhelming bipartisan support in Congress for these maritime revitalization initiatives during a time marked by other vital national priorities stands as an affirmation of America's commitment to the nation's maritime industry. That commitment must continue unabated.

During the years ahead, the Department of Transportation will advocate a variety of maritime policies to arrest the further decline in America's maritime infrastructure. But these policies alone will not meet the challenges that the U.S. maritime industry faces in the 21st century. Working together, the federal government and the maritime community must move forward to meet these challenges and ensure that the United States maintains a commercial maritime industry adequate to meet the economic and national security needs of the nation.

Additional Information on the Maritime Administration may be obtained from:

The Office of Congressional and Public Affairs
Maritime Administration
400 Seventh Street, S.W.
Washington, D.C. 20590

Phone: (202) 366­5807
Fax: (202)366­5063
Website: http://www.marad.dot.gov.