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
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
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
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
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
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
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
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
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
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
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.
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.
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
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
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
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
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
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
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
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
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
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
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
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
Kings Point, NY 110241699
Phone: (516) 7735391 or (800) 7326267
Fax: (516) 7735390
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
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
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:
Great Lakes Maritime Academy
1701 E. Front Street
Traverse City, MI 496863061
Phone: (616) 9221200
Fax: (616) 9221318
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
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
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
6 Pennyfield Avenue, Fort Schuyler,
Throggs Neck, NY 10465
Phone: (718) 4097220
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
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
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
The Office of Congressional and Public Affairs
400 Seventh Street, S.W.
Washington, D.C. 20590
Phone: (202) 3665807