By
ROBERT W. KESTELOOT
CAPTAIN ROBERT W.
KESTELOOT, USN (Ret.), is founder and president of K Associates Ltd., of
Reston, Va., a maritime firm that specializes in merchant marine and
national security affairs. He also is a member of the Navy League's
Merchant Marine Affairs Committee. The author's last active-duty
assignment with the Navy was as director of strategic sealift on the staff
of the chief of naval operations. The views expressed here are his own and
not necessarily those of the Navy League.
The last four
years of the 19th century greatly influenced the early history of the
U.S.-flag merchant marine in the 20th century--which started, in a sense,
on the day in 1896 that Theodore Roosevelt became assistant secretary of
the Navy. This forceful young crusader was an ardent follower of Alfred
Thayer Mahan, whose writings first found favor in England, France, and
Germany before receiving the support of his own U.S. Navy superiors and,
eventually, the Congress and the administration.
The U.S.-flag
merchant fleet was then in a serious state of decline, having persisted
too long in the continued use of square-rigged sailing clippers while
other countries, notably England, transitioned to steamships. Only about
eight percent of U.S. cargo was being moved in American ships. The balance
was moving in foreign bottoms, which were annually increasing their share
of the market. These facts, as well as concern for the state of the U.S.
Navy--which had not experienced any sea engagements since the Civil
War--greatly influenced the economic views of the Congress. Mahan, through
his writings, provided a timely and politically acceptable point of view
for correcting the deteriorating condition of both the U.S. Navy and the
country's outdated merchant marine.
Mahan asserted
that a navy could justify its existence only by the protection of merchant
shipping. Describing the sea as a network of trade routes, Mahan cited
ancient precepts as well as modern history to prove that true national
greatness has been, in all ages and in all countries throughout the world,
based upon waterborne commerce. He maintained that the most powerful
navies have grown out of thriving merchant fleets, and that the purely
military navy is foredoomed to failure.
As assistant
secretary, Theodore Roosevelt reorganized the system of navy rank and
promotion, ordered great reserves of coal and ammunition and began new
projects at the arsenals and navy yards. He also, not incidentally,
encouraged the establishment of the Navy League of the United States and
helped support it financially. Due largely to his efforts, the Navy's
active fleet had reached an advanced stage of preparation when the United
States declared war on Spain in April 1898. Improvements to the U.S.-flag
merchant marine were properly left to others, and would take longer.
The
Spanish-American War of 1898, later described by some as a "splendid
little war," was short and decisive. Adm. George Dewey boldly entered
Manila Bay on 1 May and sank or burned every Spanish vessel there, then
quickly silenced the shore batteries. In the Caribbean, superior American
naval power annihilated two squadrons of Spanish ships on 3 July.
The American
fleet remained in Manila, and U.S. Army troops took up garrison in Cavite.
The supply of these forces with coal (for the ships), fodder (for the
cavalry animals), and food and other necessities (for the troops) became
the subject of the U.S. Flag Merchant Marine debate within the Congress.
The problem was a provision in law that required the War and Navy
Departments to provide "for the transportation of all supplies and
stores by contract with the lowest bidder, without regard ... to the
nationality of the vessel." Letters from the Secretaries of the Navy,
Commerce, and Labor Departments acknowledged that they were required by
law to award contracts to the lowest bidder, although they favored and
welcomed any legislation that would permit the shipment of public stores
in American bottoms.
Was
Mahan Wrong?
Logistics for the
Philippine theater of the war itself had been difficult at best and are
detailed in a Merchant Marine and Fisheries Committee report to the House:
"The
difficulties encountered by the United States Government at the
commencement of the Spanish War should not be forgotten. It was necessary
then to improvise a large fleet, not only of auxiliary cruisers, but of
transports and supply ships, equal in numbers to the entire regular
fighting fleet of the United States.
"After the
available resources of our own merchant marine had been exhausted, our
Government was compelled to purchase some 51 foreign steamers, aggregating
128,000 tons and costing nearly $10,000,000.
"An
excessive price was paid for many of these foreign craft, and some of
them, on careful examination, were found to be unfit for our exacting
service. ... In many instances the former officers and crews of these
purchased vessels refused to serve under the American flag and imperil
their lives in a war in which they had no interest. The lack of merchant
auxiliaries and ... trained sailors [was] a serious handicap upon our
whole military operations ... although a feeble third-rate power was our
antagonist."
The Committee
Report continued: "Experience has shown that in the time of war
American ships would cost far less to acquire and operate for efficient
service and are at once ready for any duty. But domestic vessels adapted
for this purpose cannot be expected to be available unless in time of
peace they can be built and operated in some business promising a fair
profit to their owners. This cannot be assured at the present time under
the competition of vessels of other nations, built, maintained, and
operated cheaper than American vessels can possibly be."
In 1904, a cargo
preference act was passed requiring that supplies shipped from the United
States for Army and Navy forces stationed in the Philippines were to be
transported in ships registered under the flag of the United States.
Although amended many times since, the 1904 Act is still law and provides
that "Only vessels of the United States or belonging to the United
States may be used in the transportation by sea of supplies bought for the
Army, Navy, Air Force, or Marine Corps."
The Departments
of War and Navy presumably adhered to the requirements of the 1904 Act,
but the results were not as spectacular as planned. There was insufficient
government cargo to achieve all that was envisioned by the Congress. In
any event, at the onset of World War I, the U.S.-flag commercial fleet
still was carrying only negligible amounts of cargo; English ships were
carrying the bulk of both America's imports and exports, including raw
cotton outbound for English mills.
The
Great War
As Great Britain
requisitioned her merchant ships to meet the demands of World War I,
American cotton rotted on the docks, despite a 1,000 percent increase in
shipping rates. To ease the crisis, Congress enacted emergency legislation
in 1914 to permit foreign-flag ships to be registered under the U.S. flag
for operation in foreign trades. Two years passed while the Congress
debated and finally passed the Shipping Act of 1916, which provided the
impetus for an enormous surge in ship construction. Although 1,409
oceangoing merchant ships were constructed as a result of the 1916 Act,
only a few were operational in time to be of use in "The Great
War." They were, however, instrumental in the recovery of England and
wartorn Europe.
The 1916 Act also
established a Shipping Board of five commissioners. One of the early
problems facing the Board was how to dispose of the huge surplus of
government-owned ships that had been built by American shipyards. After
lengthy debate, Congress enacted the Merchant Marine Act (MMA) of 1920.
The primary aim of the Act was to establish rules for the disposal of
surplus ships, but the MMA is memorable for other reasons. For the first
time, Congress issued a Declaration of Policy with respect to the
U.S.-flag merchant marine. Also, Section 27 of the Act included cabotage
language, championed by Sen. Wesley L. Jones of Washington, that
restricted trade between states to ships that are built in the United
States, registered in the United States, and manned by American citizens.
The Act itself is often called the Jones Act, therefore, rather than the
more-inclusive MMA.
Twelve years
later Franklin Delano Roosevelt (another former assistant secretary of the
Navy) was elected president and would justifiably boast, "I am my own
Secretary of the Navy." He also understood, and supported, the
merchant marine. In fact, he usually breakfasted weekly with Vice Adm.
Emory S. Land, chairman of the Maritime Commission from 1938 to 1947.
Following his
inauguration on 4 March 1933, Roosevelt sent a message to the Congress
asking whether or not the United States should have an adequate merchant
marine. He left little doubt that he personally favored a strong U.S.-flag
fleet that could compete with foreign shipping combines, allow the United
States to continue its trade in the event of a major foreign war, and be
able to provide the logistics ships required by the Navy in time of war.
Mahan
Vindicated
It took the
Congress over a year to answer FDR's question, and it did so in the form
of the Merchant Marine Act of 1936. With only minor changes to the policy
statement in the 1920 Act, the new Act stated emphatically that: "It
is necessary for the national defense and development of its foreign and
domestic commerce that the United States shall have a Merchant Marine:
(a) sufficient to
carry its domestic waterborne commerce and a substantial portion of its
waterborne export and import foreign commerce;
(b) capable of
serving as a naval and military auxiliary in time of war or national
emergency;
(c) owned and
operated under the U.S. flag by citizens of the United States;
(d) composed of
the best-equipped, safest, and most suitable types of vessels, constructed
in the United States and manned with trained and efficient citizen
personnel; and
(e) supplemented
by efficient facilities for shipbuilding and ship repair."
The 1936 Act also
recognized the need for direct subsidies to cover the cost differentials
between American and foreign seafarers and between American and foreign
shipbuilders. These subsidies were provided to private shipping companies
in the form of Operating Differential Subsidies (ODS) and Construction
Differential Subsidies (CDS).
The section of
the 1936 Act that would have the greatest impact was one authorizing the
government to build ships and charter them to shipping companies for use
on foreign trade routes. The Act also provided for loans and mortgage
insurance.
The immediate
result of the Act was that existing U.S. shipyards were modernized, new
yards were built, and ship designs were standardized to produce serial
ships at low cost. The initial goal was to build 50 ships a year for a
period of 10 years, but as the war clouds over Europe thickened those
goals were increased and accelerated. Between 1939 and 1946 almost 5,000
commercial ships of all types were built in American yards and served as
steel bridges spanning both the Atlantic and Pacific Oceans. The Allied
victories over both Germany and Japan would have been impossible without
those vessels.
A
Problem Revisited
Following World
War II, a familiar problem existed: What should the United States do with
its surplus ships? The 1946 Merchant Ship Sales Act was more successful
than the MMA of 1920. The Maritime Commission first considered current and
future national requirements for a privately owned postwar American
merchant marine as well as a National Defense Reserve Fleet (NDRF) for
national emergencies. This was the first time that a merchant marine
providing for both commercial and defense needs was planned and
established. U.S. ship operators received first choice of the
approximately 4,000 ships up for disposal, then European allied nations
were allowed to buy ships at reasonable prices. More than 1,100 ships were
"sold foreign," and helped hasten the economic and political
recovery of wartorn countries.
But the return of
foreign-flag competition caused many U.S. ship operators to lay up their
ships. By1954, 43 percent of the privately owned U.S.-flag tramp ships
were laid up. As in the late 19th century, when the American merchant
fleet was slow to convert from sail to steam, the U.S. maritime industry
continued to use war-built ships--to the detriment of American shipyards
that had built the great WWII merchant fleet. The huge postwar aid
programs for the recovery of Europe specified that U.S. ships be allocated
"at least 50 percent" of the new cargoes generated by the
government-sponsored programs. Those cargoes kept the American fleet busy
in the immediate postwar period, but tended to blind the industry to the
need to modernize in order to compete with the newer and much more
efficient foreign-flag fleets.
The NDRF proved
its worth with the beginning of the Korean War in 1950.
Although many
NDRF ships operated superbly in support of allied forces in Korea, the
Maritime Administration (MARAD), recognizing the need to stimulate the
U.S. shipbuilding industry, ordered 35 Mariner-class ships, excellent
breakbulk ships that were originally operated for MARAD under General
Agency Agreements. After becoming familiar with the ships and gaining an
appreciation for their size, speed, and manpower-saving features, American
carriers purchased all 35 ships. Another 17 Mariners later were built by
the private sector.
50/50
and 5 Percent
One provision of
the Merchant Marine Act of 1936 covered cargo preference. After World War
II and until 1954, the U.S. Congress enacted enabling cargo-preference
legislation annually, or as needed. This series of laws allocated to
U.S.-flag ships "at least 50 percent" of the cargoes generated
by government-sponsored programs. In 1954, Congress passed Public Law 480,
"the Agricultural Trade Development and Assistance Act," which
continued the 50-percent apportionment of food-aid tonnage.
That same year,
Congress passed Public Law 664, popularly known as "the 50/50
Act," which specified that at least 50 percent of the tonnage of
certain government-generated cargoes--computed separately for dry bulk
carriers, dry cargo liners, and tankers--was to be transported on
privately owned U.S.-flag commercial ships.
By 1969, however,
it was clear that continued reliance on the policy embodied in the 1936
Act and the several cargo preference, subsidy, and cabotage laws was not
enough. The aging U.S.-flag fleet was carrying only 5 percent of America's
commercial exports and imports (compared to 43 percent in 1950).
Accordingly, President Richard M. Nixon sent to the Congress a proposed
program that he said would "replace the drift and neglect of recent
years and restore this country to a proud position in the shipping lanes
of the world." He signed the Merchant Marine Act of 1970 on 21
October 1970.
The 1970
legislation called for the construction--in American shipyards over a
10-year period--of 300 ships that would operate in U.S. foreign trade. It
also expanded the availability of CDS and ODS to bulk carriers and
tankers. Payment of the construction subsidy was to be made directly to
shipbuilders, not ship owners.
The
Devil in the Details
Unfortunately,
the 1970 Act failed to revitalize the U.S.-flag merchant marine as
promised. The Maritime Administration favored and approved a mix of ships
consisting of large tankers and oil/bulk/ore (OBO) carriers. Preference
also was given to expensive large barge-carrying ships such as the Lighter
Aboard Ship (LASH) ships as well as large container ships. But the timing
was wrong. The international demand for tankers and bulk carriers was low
because of overtonnage in a depressed market, and inflation pushed the
cost of the barge and container ships even higher.
Another problem
affecting tankers and OBO ships was the tying together of the operating
subsidy and an essential trade route as designated by the Maritime
Administration. This requirement ignored the fact that tankers and bulk
ships operate in a "spot" market--i.e., they trade worldwide
wherever there is business, not on a specified route, and the industry had
no interest in building such ships with route restrictions attached.
The Arab oil
embargo, which started in late 1973, quadrupled oil prices and served as
the death knell of the ambitious ship construction plan of 1970. Only two
OBO ships were built under the 1970 Act (but 24 tankers were built and
subsidized for operations exclusively in foreign trade). One major problem
with the 1970 Act was that government attempted to tell the industry what
kind of ships to build instead of asking industry to build ships that
would be commercially competitive as well--and also would be available to
meet national-defense needs.
The
Reagan Years
By 1980, less
than 4 percent of America's export and import waterborne trade was moving
in U.S.-flag ships. An extensive nine-point maritime program was put
forward in 1980 by presidential candidate Ronald Reagan to rebuild the
U.S. merchant marine. Once elected, however, Reagan did nothing to
implement the program. The reported reason was that the OMB (Office of
Management and Budget) staff conducted a review of maritime programs
during the transition period and concluded that "National security
arguments do not provide a strong justification for the provision of
public assistance to the [maritime] industries."
Because OMB
policy decisions almost always translate directly into budget decisions,
few were surprised when Construction Differential Subsidies were
discontinued and funding authority was discontinued both for Operating
Differential Subsidies and Title XI ship construction loan guarantees.
One other OMB
conclusion about shipbuilding deserves mention: "Navy ship
construction and private ship overhaul and repair work are sufficient to
maintain the shipbuilding mobilization base determined to be required in a
national emergency." In the two decades since that finding it has
become abundantly clear that OMB was as wrong as any federal agency could
possibly be.
There was a
certain amount of irony in the later Reagan decision to establish a Rapid
Deployment Force that would rely on the country's merchant marine for
transportation--several years after having been told that "national
security arguments" do not justify public assistance.
Nonetheless, the
Navy did turn to the industry for assistance, and the industry responded.
While the Air Force would have the task of deploying personnel to the
world's hot spots when needed, the Navy would provide prepositioned ships
loaded with unit equipment, ammunition, field hospitals, and a complete
range of resupply and repair equipment that could arrive nearly
simultaneously in a port near the combat zone for a "marry-up"
of troops and equipment.
Among the
"First to Fight" would be one or more Marine Corps Brigades with
three brigade sets of equipment and 30 days of supplies in 13 ships
geographically spread among the Atlantic, Pacific, and Indian Oceans and
known as the Maritime Prepositioning Force, or MPF.
Army
and Air Force Sign Up For Sealift
Support
equipment, supplies, and ammunition also were prepositioned afloat for the
Army and the Air Force, which eventually required 25 afloat prepositioning
ships. The Navy also undertook to enlarge the Ready Reserve Force (RRF) to
a total of 96 ships, many of them roll-on/roll-off (RO/RO) ships, plus
specialized ships such as crane ships and aviation logistics support
ships. Eight fast sealift ships were partially converted to Army RO/ROs
and placed in four-day reduced operating status (ROS-4), and two hospital
ships (1,000-bed capacity each) were converted from two tankers. In all,
$7.4 billion was spent by DOD in the 1980s to create a Strategic Sealift
Force capable of carrying supplies to U.S. forces overseas almost anywhere
in the world.
The first test of
that force was triggered by Iraq's invasion of Kuwait on 2 August 1990 and
the start of Operation Desert Shield on 7 August. It also was the first
test for the four-year-old single unified command for transportation, the
United States Transportation Command (USTRANSCOM), which had been created
as the result of a Packard Commission recommendation in 1986.
Improving on
procedures developed by its predecessor, the Joint Deployment Agency,
USTRANSCOM coordinated the efforts of its three component commands: the
Air Force's Military Airlift Command (MAC), the Navy's Military Sealift
Command (MSC), and the Army's Military Traffic Management Command (MTMC).
During the period from early August 1990 to 10 March 1991 approximately
9.7 million tons of cargo, including petroleum, oil, and lubricants, were
transported to the Persian Gulf area by sea and air--94.4 percent of it by
sea.
The strategic
sealift forces performed about as well as could be expected, given the
lack of prior-year funding for maintenance and for RRF ship activation
exercises. Of the 76 ships activated from the RRF, many took longer than
scheduled to activate. Ships designated for a five-day breakout took, on
average, 11 days. It took an average of 16 days to break out 10-day ships.
Once activated, however, the RRF maintained a respectable 93.5 percent
reliability rate.
Looking
Ahead
There were other
problems, though. Qualified seafaring personnel became increasingly
difficult to find. During Desert Shield and Desert Storm, commercial
mariners worked for months without vacations because it took nearly every
available off-duty mariner to activate the RRF ships and Fast Sealift
ships. Nearly all commercial U.S.-flag ships that were in temporary lay-up
also were activated by their owners because there were government cargo
contracts to be filled. Industry schools developed crash courses to
certify members whose qualifications had lapsed, then closed their doors
and sent their instructors to sea.
The first among
the several lessons learned from the Gulf War was the need for additional
RO/ROs. Funding was provided by Congress to build 14 new large
medium-speed RO/ROs (LMSRs) and to convert five existing ships to the LMSR
configuration. This program is nearly completed.
The second lesson
learned was the need for daily maintenance of the most essential ships in
the RRF. Today, 56 RRF ships have activation times of four or five days,
and are constantly manned (with nine or ten crewmembers). Should these
ships be activated, the maintenance crewmembers--who have the on-board
familiarity essential for rapid transition from inactive to active
status--would sail with the ships on their first voyage. The
early-activation ships are homeported near their probable DOD loading
ports, and do not require the assistance of a shipyard for activation.
Despite the new
ships and increased standards of readiness for the RRF, there are growing
concerns over the future of strategic sealift. The combination of
demographics and declining seagoing employment opportunities--coupled with
increased mandatory training requirements for mariners--does not bode well
for meeting crewing requirements for future activations of
government-owned strategic sealift ships. The average age of RRF ships,
moreover, is more than 32 years. The day is fast approaching when they
will require mass replacement, and that translates into a major budget
problem.
The last
significant 20th-century maritime legislation with defense implications
was the Maritime Security Act of 1995, which passed in 1996 by an
overwhelming Senate vote of 8810. The 1995 Act established the maritime
security program (MSP), which replaced the expiring ODS program by
providing, for 10 years, $2.1 million a year for each of 47 ships enrolled
in MSP. In exchange, the companies that own and operate the ships agreed
to make cargo capacity and their entire intermodal network equipment and
expertise available to DOD when needed to meet national-defense
requirements. MSP funding requires annual appropriations by the Congress.
MSP is considered
to be beneficial to the country in general and to DOD in particular. It
keeps 47 ships in international trade, which ensures that the nation
retains a voice in the setting of cargo tariff rates and in representation
in the International Maritime Organization and other world maritime
agencies. The leveraged impact of these 47 ships should not be
underestimated. Because of existing vessel-sharing agreements and
alliances with other ship-operating companies of the world, the MSP
contracts open up cargo space on literally hundreds of ships worldwide.
Whither
Anon?
As a new century
starts, FDR's question of whether or not the United States requires an
adequate merchant marine is still timely. So, too, is Mahan's observation
in The Influence of Sea Power upon History, 16601783, in which he
comments on the problem of creating a merchant marine in the absence of
strong interests convinced of its necessity. The solution of that problem,
he said, rests with the economists rather than with the military. "In
a representative government," Mahan asserted, "any military
expenditure must have a strongly represented interest behind it, convinced
of its necessity."
Many of the
problems resulting from the possession of a less-than-adequate merchant
marine are shared by the Departments of Transportation and Defense, which
suggests an obvious truism: Organizations that share mutual problems
should seek a single synergistic solution--spelled out below.
The
Department of Defense
Two major areas
of DOD concern are the decline in the seafarer manpower pool and the age
of the RRF, which requires massive recapitalization over the next ten
years. There already are too few mariners to man the RRF ships. This
problem will quickly become worse because of the aging commercial work
force and the decline in new accessions. The robust state of the U.S.
economy and the changing nature of going to sea--with longer family
separations and fewer port visits--are major contributing factors to the
latter problem. Emerging international training requirements, supported by
the United States and desirable worldwide to improve safety of life at
sea, will further limit the pool of qualified mariners. The added training
requirements will not only take time to achieve, but also increase
manpower costs.
Constraints on
Defense Department acquisition funding are not expected to allow
replacement of the RRF ships. The average LMSR acquisition price tag was
$350 million. The replacement of more RRF ships with new construction will
be considered unaffordable, but the opportunity to convert existing
tonnage has all but disappeared.
The
Department of Transportation
The Department of
Transportation also has two major problems: highways and the U.S. merchant
marine. Many of the north/south coastal interstates are heavily congested,
mostly by trucks. They also are plagued with an aging infrastructure that
is rapidly deteriorating.
On the maritime
side of the Department, American shipbuilders appear unable--for reasons
totally unrelated to either their skills or efficiency--to match the cost
of foreign-built commercial ships. Fewer job opportunities and the
decreased attractiveness of a seagoing career are the apparent causes of
the decline in the seafarer manpower pool. Moreover, many foreign ship
operators employ Third-World labor, and China has now entered the
international labor market, making the situation worse. The end result is
that U.S. ship operators and maritime unions are having problems meeting
the manning requirements of U.S.-flag ships.
A
Partial Answer?
One possible
answer to many of the problems described is the creation of an active RRF
that operates every day and returns money to the U.S. Treasury. A
government-funded build-and-charter program that leases ships to private
industry to operate in the protected Jones Act trades might obviate much
of the need to maintain and pay for an inactive RRF. A fleet of RO/RO
ships able to move large trucks up and down the open U.S. coastal waters
could mitigate congestion on the interstates while also contributing to
traffic safety and pollution reduction. A similar fleet of feeder ships to
move intermodal containers from major ports to smaller ports would further
reduce highway traffic.
Ships of these
types could be built in series, as were the Mariner-class ships of the
1950s, in U.S. shipyards at a cost estimated to be approximately $115
million for a feeder ship and $140 million for a heavy RO/RO. Both types
of ships would be equipped with identical engines, generators, auxiliary
equipment, and machinery control systems. They would have the same
superstructures, bridges, ship control systems, and navigation and
communications equipment. Only their cargo sections would differ. The
resultant savings would be significant, both in construction costs and for
crew training. Over a 25-year lease period, studies show, each ship would
return, on average, an estimated $190 million to the Treasury. The U.S.
seafarer manpower pool would grow to a size capable of supporting defense
requirements, and DOD would have ships readily available for contingency
use.
Some things never
change, however. Which means: (1) that the harsh lessons of the 20th
century probably will have to be relearned in this new century; and (2)
that the cyclical rise and fall of the U.S.-flag merchant marine will
continue indefinitely. In his later years even Mahan contradicted his
earlier precept that a prosperous nation must carry its own trade.
Testifying in 1904 before the Merchant Marine Commission he said it would
be desirable for the United States to have its own merchant fleet, but he
also said that he did not favor providing financial assistance to the
merchant marine that might otherwise go to the Navy, because the Navy is
primary.
Next article: The
Political Ocean
Back to: 2000 Almanac of Seapower Table of Contents |
