Reinventing Sealift

By Lieutenant Commander Sean T. Connaughton, U.S. Naval Reserve

This massive sealift was not without difficulties. There were operational problems with several naval sealift vessels and many of the ships in the RRF were not ready in the planned activation periods. The overall decline in the U.S. oceangoing merchant fleet limited the number and types of ships available, and also meant that there were few trained and experienced mariners to man the RRF. Many merchant ships were unavailable because of commercial commitments.

Following Desert Storm, in 1992, a Department of Defense analysis of U.S. lift requirements concluded that the United States needed to augment the number and capacity of lift assets to meet both planned commitments and unplanned contingencies. A follow-on analysis conducted in 1995 in light of the two major regional contingency strategy found that U.S. lift-in particular, sealift was inadequate.

The recommendations offered by these studies-more fast sealift and maritime prepositioning ships and augmentation of the RRF, particularly with more roll-on/roll-off (RO/RO) vessels-were pursued by the Department of Defense. Contracts were awarded for conversion and construction of fast sealift ships and large medium-speed roll-on/roll-off (LMSR) vessels. The Maritime Administration (MarAd), with DoD funding, began to procure more RO/ROs and other necessary vessels for the RRF. It appeared that the military side of the sealift equation was moving in the right direction.

Unfortunately, this is not the present situation. The fast sealift ship and LMSR programs generally are behind schedule and over budget. Procurement of additional maritime prepositioning ships has been delayed. At the urging of U.S. shipyards, Congress mandated that all vessels added to the RRF be U.S. built, effectively ending the incomplete RRF procurement program. These problems are accompanied by a decrease in the number of naval support ships and an aging amphibious warfare fleet. Add to this the block obsolescence of the National Defense Reserve Fleet and one must conclude that the U.S. military sealift program is profoundly flawed.

Condition of the U.S. Merchant Fleet

The problems experienced by the military sealift program dictate the use of the other side of the sealift equation: the commercial shipping industry. But it is well known that the U.S. merchant fleet is in decline. From a high of 3,500 in 1945, the number of U.S. privately owned oceangoing vessels has declined to 322 today. This decline is mirrored by a decline in foreign merchant vessels owned or operated by U.S. corporations. The number of effectively controlled U.S. vessels has fallen to 360.

These decreases coincide with an ebb in the number of U.S. merchant mariners. MarAd reports that the total number of U.S. mariners employed on oceangoing vessels has fallen to 7,627. During Desert Shield/Desert Storm, this number was insufficient to generate a cadre of personnel for manning the ships in the RRF.

Congress has taken some steps to update government support for the U.S. merchant fleet. On 8 October 1996, President Bill Clinton signed the Maritime Security Act, which continues contracts under the operating subsidy program of the Merchant Marine Act of 1936 and authorizes the establishment of a new ten-year assistance plan the Maritime Security Program-that will support the operations of up to 47 U.S.-flag vessels in the foreign commerce of the United States. The new program has few restrictions-eligible vessels may be built in foreign yards-and will be administered as one-year renewable contracts, provided funding is available in subsequent years.

In return for this assistance, participating operators agree to make their ships and other commercial resources available upon request by the Secretary of Defense during time of war or national emergency. They also are required to operate eligible vessels in the foreign commerce of the United States and certain domestic areas such as Guam for at least 320 days in any fiscal year.

However worthy the goals of the Maritime Security Act, its impact will be limited because of the small number of vessels that can participate. The Maritime Security Program may sustain a limited U.S. sealift capacity, but it certainly will not expand it.

New Solutions

Unless further action is taken, there will be neither ships nor personnel available to satisfy U.S. military needs in the next national emergency. It's time to review current U.S. maritime policies and explore alternative measures to address our sealift needs.

Cut the Shipyard-Sealift Umbilical Cord . Discussions of U.S. sealift almost always involve an examination of the U.S. shipbuilding industry-but the interests of the shipbuilding and shipping industries frequently are diametrically opposed.

The cost of ship construction is the largest capital expenditure for a ship owner. Ship owners and operators operate in an extremely competitive market, where the slightest difference in cost and service can lead to the demise of a company. If an owner pays more than the going market price for his vessels, he will not have sufficient revenues for debt service and operating costs. Currently, U.S. shipbuilding costs are much higher than those of most foreign competitors.

Yet, practically every U.S. maritime promotional program attempts to link shipbuilding and ship operating. For a ship owner or operator to take advantage of guaranteed financing or tax-deferred investment funds or engage in protected domestic trades, the vessel must be built in a U.S. shipyard. Non-U.S. ship repairs on U.S. vessels are subject to a protective tariff. Until passage of the Maritime Security Act, a vessel had to be built in a U.S. shipyard for its owner or operator to be eligible to receive operating subsidies or carry U.S. government preference cargoes.

Supports for U.S. ship owners and operators must be divorced from supports for the U.S. shipbuilding industry. This may be accomplished in part if the Organization for Economic Cooperation and Development agreement to eliminate practically all U.S. and foreign shipbuilding support programs is implemented. However, U.S. ratification of this agreement is being fought (so far, successfully) by the U.S. shipyards. Delinking shipbuilding from ship ownership is a critical step toward a viable sealift program.

Money Does Matter . Capital flows to the investment that offers the best possibility of profit. Shipping involves a large investment of capital, but as a general rule, it does not offer a high rate of return. It currently is not advantageous vis-a-vis other investment options for financial institutions or investors to invest in U.S. shipping or for corporations to own or operate U.S. shipping.

Inducements must be offered to attract investors and companies to finance and/or own U.S. shipping. This includes tax and financing incentives, but also reforms of various financial and environmental laws that some view as expanding investor liability. Financial incentives to invest in U.S. shipping are just as, if not more, important to promoting sealift than direct subsidies. The latter may maintain a fleet, but the former will build one.

Broadening the Concept of U.S . Current U.S. law restricts foreign ownership and investment in U.S. shipping. There also are restrictions on whether vessels are eligible to carry preference cargoes or benefit from support programs, even if the vessel owner or operator is a U.S. corporation.

The concept of nationality in shipping has changed. The days are gone when a ship owner financed through a domestic bank, built a ship in a domestic shipyard, and then operated that ship with a domestic crew under domestic register. Today, a ship owner may "own" a ship with a multinational consortium, use multinational financing to build in a foreign yard, and then operate under an open registry with multinational crews, with the ship or portions thereof chartered to other companies.

This is the reality of the modern shipping industry. The United States should eliminate prohibitions and limitations on foreign investment, ownership, and operation of U.S. shipping. Laws limiting the availability of promotional programs to all but "pure" American companies must be further liberalized. The goal is to make the United States a more open and less hostile place to invest in shipping.

Better Access to Civilian Lift Assets . Most plans for accessing U.S. sealift assets were developed after World War II and refined during the Cold War. They anticipated a total war with the Soviet bloc, where all available U.S., allied, and neutral shipping simply would be commandeered to fight the third Battle of the Atlantic.

During Desert Shield/Desert Storm, these plans caused frustration for both the military and the civilian transportation industry. Shipping assets committed to commercial trade could not just be withdrawn from service without serious disruptions.

Because regional operations such as Desert Storm will be the norm for the foreseeable future, DoD and MarAd have to revise access programs to reflect current economic and military realities. Flexibility and adaptability have to be incorporated into the call-up process to avoid commercial disruption. If for no other reason, the United States must do this to ensure that the civilian sealift assets have a commercial trade to return to after a call-up and thus will be available for the next crisis.

Making Equipment More Transportable . The commercial industry stresses standardization in vessels, facilities, and cargo containers to facilitate the movement of cargo and the rapid turnaround of vessels. The military stresses specialized vessels and equipment to facilitate flexibility. As a consequence, the types of vessels shipping executives purchase may be of limited military value.

This problem is exacerbated by the fact that much current U.S. heavy equipment, designed to counter the Soviet threat, was either in place or prepositioned in Europe. Because of size, weight, and storage concerns, most of it cannot be transported on the majority of available commercial shipping. This makes the military dependent on an ever declining number of militarily useful ships such as RO/ROs and heavy-lift vessels.

The military needs to be more familiar with existing commercial transportation infrastructure and equipment and anticipate using such assets. It should incorporate commercial specifications in its equipment-the next generation of equipment should be rapidly transportable via the commercial intermodal transportation system-and sealift programs. Plans need to be developed for the rapid conversion of commercial vessels, particularly containerships, to be at least marginally useful.

Building the U.S. Mariner Pool . The decline in U.S. merchant vessels obviously affects the pool of trained and experienced mariners available to man sealift assets in an emergency. Retirees, individuals with river and towing experience, and naval reservists do not have the same skills as mariners with current training and expertise in deep-sea merchant shipping.

The U.S. government should encourage U.S. citizen mariners to work on foreign merchant shipping. Foreign ships and personnel often are portrayed as substandard, but many of the newest, most modern, and best equipped and manned merchant vessels in the world are foreign registered. Consequently, there actually is a growing demand worldwide for skilled mariners.

MarAd should develop a program to encourage U.S. and foreign shipping companies to use American mariners, as well as provide support and training to Americans who serve on foreign ships. Graduates from the U.S. Merchant Marine Academy and state maritime colleges should be allowed to serve on foreign ships to meet their service obligations. Individuals serving on foreign ships should receive tax incentives if they agree to be accessible in an emergency.

The Foreign Equation . The U.S. military using foreign vessels for support always raises national security concerns-from espionage to mutinies and sabotage. But foreign ships manned by foreign seamen have been used to support practically every U.S. military operation since the Revolution. It would be nice to use only U.S. ships and seafarers in an emergency, but the reality is that both are in short supply, even in the best of times.

DoD and MarAd must make preparations to use foreign ships and seamen in times of crisis. This may include stand-by contracts for the use of foreign shipping and plans to hire foreign seafarers to supplement crewing on U.S. vessels. It makes no sense to pretend foreign shipping is a security liability during peacetime, then use it when U.S. sealift shortfalls become evident during a crisis.

Conclusion

The basic principles of current U.S. maritime programs and priorities grew out of the experiences of the 1930s and 1940s. The world the United States faces today is different in practically every way. It is time to take a fresh view of our maritime policy, to ensure that the sealift needed to fight the next regional conflict is available, and at the same time strengthen a fading U.S. industry.

Commander Connaughton is a naval reservist assigned as an Individual Mobilization Augmentee in the Office of the Secretary of Defense. A graduate of the U.S. Merchant Marine Academy, he is an attorney in private practice in Washington, D.C.

 

 
 

Conferences and Events

Maritime Security Dialogue

Tue, 2014-10-14

Please join us for the launch of a new Maritime Security Dialogue series, featuring: Admiral Jonathan Greenert, USN, Chief...

Defense Forum Washington 2014

Newseum - Knight Conference Center

2015 WEST Conference

View All

From the Press

Featured Dinner Speaker & Book Signing

Thu, 2014-10-23

Featured Dinner Speaker & Book Signing

Thu, 2014-10-23

Why Become a Member of the U.S. Naval Institute?

As an independent forum for over 135 years, the Naval Institute has been nurturing creative thinkers who responsibly raise their voices on matters relating to national defense.

Become a Member Renew Membership