US Merchant Marine: Reviving A National Asset CSC 1992 SUBJECT AREA General EXECUTIVE SUMMARY Title: US Merchant Marine: Reviving A National Asset Author: Major R. W. Ingles, United States Marine Corps Thesis: With the decline and deterioration of the US merchant marine over the last thirty years, the United States should procure the vessels needed to revitalize the US-flag merchant fleet which provides the strategic sealift necessary to support our future transportation in both peacetime and war. Background: The United States merchant marine is floating in a sea of turmoil for reasons economic, political, and international. Since 1950, the fleet has fallen from the largest and most modern in the world to the status of a fifth-rate merchant power. The resulting decline of our merchant marine has been virtually self-inflicted, caused primarily by Americans and not by forces outside our shores. An examination of US maritime activities, as witnessed in our last call to arms in the liberation of Kuwait, reveals maritime shipping was a critical factor in our buildup of offensive capability into the Persian Gulf region. However, multiple trips were required to carry the fight to our opposition. Had time not been on our side, this gradual buildup would not have been an option. The total number of merchant ships now available to our national defense is not sufficient to guarantee our national objectives will be met. The severe and worsening shortage in vessels of all types required to support our national security interests demands the immediate attention of our political and private industry leaders. An action plan by these leaders for reviving a devastated US-flag merchant fleet must be the call for the 1990's and beyond. No strategy or action can be adopted, nor succeed, without the basic ingredient of sound leadership. Only through sound and aggressive leadership can we sell the American public the need for immediate funding and programs necessary to revive this national asset. Recommendation: The United States should procure the vessels required to revitalize the US-flag merchant fleet which provides the strategic sealift necessary to support our transportation in both peacetime and war. US MERCHANT MARINE: REVIVING A NATIONAL ASSET Outline Thesis: With the decline and deterioration of the US merchant marine over the last thirty years, the United States should procure the vessels needed to revitalize the US-flag merchant fleet which provides the strategic sealift necessary to support our future transportation in both peacetime and war. I. US merchant marine decline A. Ships for national defense B. Types and capacities required C. Upgrading the fleet II. Perspective on the US merchant marine industry A. Historical role B. Present day concerns C. Dwindling fleet III. National emergency resources A. Military Sealift Command B. Ready Reserve Fleet C. Effective US-Controlled Fleet D. National Defense Reserve Fleet E. Foreign Flag Fleet F. Crewing IV. Action plan for revival A. Leadership 1. Political 2. Private B. Procurement C. Business efficiency improvements US MERCHANT MARINE: REVIVING A NATIONAL ASSET The sea serves as one continuous highway that encompasses most of the Earth, about 75% of its surface. In transport of significant quantity, where sealift is an alternative, sea transport enables the highest sustained rate of delivery. The reason is capacity, not the transit speed of the individual vehicle. As a means of meeting our mobility requirements for the defense agenda in the 1990's, the ability to project our power will underpin our strategy more than ever. (1:114) Our strategy demands that we be able to move large capacities of material to a crisis area at a pace and in numbers sufficient to field an overwhelming force. Sea transportation is a crucial factor in national defense as well as a key element of the Nation's economic power. It gives mobility to military personnel, equipment, and supplies in peacetime and in wartime operations. It is also critical to rapid mobilization and to providing mobility for rapid deployment forces. The requirements for defense transportation are many and varied, because the strategic frontiers of the United States now reach to the Western Pacific, Central Europe, and other regions far removed from the United States and because US forces are deployed in distant and widely separated areas. Effective and sufficient sealift is a major part of the broad field of transportation distribution. Men and material must be moved and distributed to military operational areas as dictated by the commander. This movement and distribution must meet operational necessities and accommodate industrial mobilization. Sealift transportation is an essential element to our sustainability in conflict wherever and whenever it may occur worldwide. As a result of a national lack of understanding of ships at sea, the United States faces a fundamental crisis at sea. Our US-flag merchant marine is experiencing heavy weather for reasons economic, political, and international. (9:29) The US is the biggest international trader in the world, importing and exporting the greatest volume of goods of any nation. Yet, this maritime nation, biggest of all shippers, has little or no direct control over the transportation used to move its goods. More importantly, providing the strategic sealift required to support our national objectives and interests in time of conflict is steadily declining. With the decline and deterioration of the US merchant marine over the last thirty years, the United States should procure the vessels needed to revitalize the US-flag Merchant Fleet which provides the strategic sealift necessary to support our future transportation in both peacetime and war. The high seas and ocean shipping have been critical to the Nation's security and economic well-being from the earliest days of our history. One of the first acts of the Congress in 1789 was directed toward the promotion of US shipping, trade, and industry, and toward the development of an American merchant fleet. (17:21) Since 1950, the US merchant marine has fallen from the largest and most modern in the world to the status of a fifth rate merchant fleet. The resulting decline of our merchant marine to its present tragic condition is virtually self-inflicted, caused primarily by Americans and not by forces outside our shores. (7:44) To identify the root causes of the failure of US-flag liner shipping, we need to recognize that this situation to a great extent has resulted from what the United States did to itself, not from what other countries have done to us. An examination of US maritime activities reveals a bleak picture. As witnessed in our last call to arms in the defense of Kuwait, maritime shipping was a critical factor in our buildup of offensive capability in the Persian Gulf region. However, multiple trips were required to carry the fight to our opposition. Had time not been on our side, this gradual buildup would not have been an option. The total number of merchant ships now available to our national defense is not sufficient to guarantee our national objectives will be met. A severe and worsening shortage in vessels of all types, needed to provide the logistic and strategic support for our national security interests, demands our immediate attention. In 1970, the US-flag merchant fleet consisted of 843 ships of various types. Of this figure, only 552 comprised the active fleet. By 1987, almost 10 years later, the active commercial merchant fleet was down to 369. Unless this declining trend is reversed, the number of active vessels will shrink to about 220 by the year 2000. (5:7) Just as alarming as the negative statistics regarding total numbers of vessels, the types and capacities of ships required to meet our current military and commercial demands is also alarming. The majority of this aging fleet consists of bulk carriers and aging freighters. Many have outlived their usefulness and are fast becoming dinosaurs in an age of new technology, quicker off-load activities, and containerization. There appear to be two needs of the military services for limited war readiness that are not being met qualitatively by the merchant marine. First, a satisfactory method of carrying and discharging wheeled and tracked vehicles, and, second, a small ship (450-foot length, not over 20-foot draft, 3000-to 5000 ton capacity) that can be used to transport cargo overseas at a fast rate of speed (20 knots) and discharge rapidly (in eight hours) in small harbors and/or beaches having slopes steeper than 1 to 15. (14:47) This technology exists today with strategic lift (also called fast sealift) vessels capable of meeting both transport needs at speeds in excess of 20 knots. The US shipping industry falls further behind daily in numbers of ships, capacity of ships, and age of ships. As long as the US maintains the status of a maritime nation and engages in trade and commerce abroad, the greater part of goods and products will be carried by ships at sea. As long as the US finds it necessary to project power forward to operational theaters of war, ships will be required to transport weapons, equipment and personnel. General Duane H. Cassidy, USAF, former Commander-in-Chief, US Transportation Command, provided this testimony before the US Senate: Perhaps the most disturbing situation I have encountered since assuming command of US TRANSCOM is the deter- ioration of the US Maritime industry and the implications for national strategy. Strategic sealift capacity is encountering a steep, rapid decline which we must immediately seek to check. We rely upon the civilian transportation to join with us to project national powers overseas. The health of the commercial transportation carriers is as important to our warfighting capability as is the readiness of our combat forces. They go hand in hand. What is the situation today? To gain a perspective on the US Merchant marine industry, it is imperative to examine its past, present, and future role. By any standard of measurement the US has the greatest global maritime commitments, naval and commercial, in the world. Besides promoting commerce, an additional purpose of the merchant marine is to aid in national defense. Maritime capabilities impact upon national security in two ways. First, maritime capabilities are historically significant attributes of defense capabilities, consisting of a threefold linkage of naval power, a shipbuilding base essential to support a navy, and a merchant or transport fleet (both government and private). Second, these industries make meaningful contributions to economic well-being, not only through employment, investment and technological advances, but also by assuring a stable trading environment immune from embargoes or cutoffs that might result from excessive reliance on foreign shipping. (6:5) There are many ways in which the merchant marine can contribute. Primarily, in both peace and war, the merchant marine transports most of the material to support military forces. Such material may be destined for support of either US or allied forces and will be carried by ships from the Military Sealift Command, Ready Reserve Fleet, Effective US Controlled Merchant Fleet, Foreign Flag Fleet, and, in a worse case scenario, National Defense Reserve Fleet. Each of these resources has its drawbacks and dilemmas. The requirements of World War I and World War II caused large increases in ship construction and enlargements of the merchant fleet. Generally, the US has not maintained a high degree of competitiveness in ocean shipping since the Civil War. In 1900, US foreign trade tonnage only amounted to 9 percent carried by US-flag ships. (17:22) In 1936, legislation was passed to establish a solid base for US-flag shipping and to ensure minimal dependence on foreign shipping in times of national stress and emergency. Known as the 1936 Merchant Marine Act, this policy declaration prescribes that the Nation's merchant marine shall be: 1. Sufficient to carry its domestic water-borne commerce; 2. Sufficient to carry a substantial portion of its water-borne foreign commerce; 3. Sufficient to provide shipping service on the essential trade routes for maintaining the flow of the domestic and foreign water-borne commerce at all times; 4. Capable of serving as a naval or military auxiliary in time of war or national emergency; 5. Owned and operated under the US flag by US citizens insofar as practicable; 6. Composed of vessels constructed within the United States; 7. Manned by US citizens; and 8. Serviced by efficient American-owned facilities for construction, repair, and insurance. (17:24) The historical role and function of the US merchant marine remains basically the same as it has since 1936 with few modifications. What has changed is the competitive nature of the industry facing stiff competition from the world market. The decline of the US-flag fleet became particularly noticeable in the 1960's as foreign carriers increasingly took over the movement of goods in US foreign trade and as the US shipbuilding industry became less competitive. The share of the overall foreign trade carried by US-flag ships fell from 21.6% in 1958 to only 7.8% in 1967. (17:26) Furthermore, about three-fourths of the US merchant marine ships were now 20 years old or older. (17:26) With the US rapidly dropping out of the competitive and lucrative commercial market, another concern is the weakening of our strategic lift. The act of 1936 was federally promoted through subsidies and meant to build a fleet of primarily civilian-owned and operated US-flag merchant fleet. This act was considered to be a strategic imperative in support of our maritime policies. The merchant fleet must not only be capable of carrying tonnage requirements, but it must also have the proper mix of ships to transport vital imports and exports and to meet the Nation's emergency military needs. The dwindling capabilities of the US Merchant Marine to meet national security needs in a major emergency are questioned by many analysts, particularly the ability to meet immediate ship tonnage requirements with present resources. Although the US is the world's largest ocean trader, the US Merchant Marine now ranks tenth in both number of ships and deadweight tonnage among merchant fleets of the world. Much needs to be done to reverse the alarming deterioration of this nation's maritime industries and to strengthen the sealift component of the national defense effort. If the trend is not reversed, the US will face certain disaster by the year 2000 in its ability to respond to national security requirements. The US merchant fleet, though limited in numbers of ships and tonnage capacity, draws its resources from several sources during national emergency. Each source has drawbacks and dilemmas which, when combined, add up to a no win situation. The Military Sealift Command (MSC) operates only about thirty sealift vessels. These assets are government owned and operated. The chief rationale for maintaining a government-owned fleet is the quick response capability it presumably would have in today's world of instant crises. (18:122) By being controlled by the US government they are virtually dedicated towards missions involving our national security. One main element of the MSC mission is to provide contingency sealift support for military forces worldwide. (3:11) Most of the ships are employed in full-time support of maritime pre-positioning programs conducted by the Army, Air Force, and Marine Corps. The limitation of MSC shipping is that there just isn't enough to support the amount of supplies, equipment, and ammunition that should be afloat to meet multi-theater commitments. MSC shipping was designed for initial response in a theater for a quick strike action, not long and sustained support of Corps level operations. More than $7 billion has been invested on the sealift improvement effort to provide maximum transport capability and medical support with minimum delay. For this amount, the following MSC ships have been purchased or long-term leased: 13 maritime pre-positioning force, 13 afloat pre-positioning force, 8 fast sealift, 2 hospital, and 2 aviation logistics support. (2:9) The Ready Reserve Fleet (RRF) is also very limited in size (about ninety ships). This program was devised to improve the response mechanism in time of crisis. Under this program, those commercial carrier companies who enroll ships and desire to carry defense cargo must agree to make half of their ships available for call up under certain mobilization conditions. However, as was seen in the prolonged Vietnam war, the diversion of merchant ships from commercial to defense purposes greatly weakened an already poor and non-competitive US-flag merchant marine. One of the lessons learned during Desert Shield/Desert Storm was the need for more sealift. We moved more equipment than has ever been moved in history in the same time period. But problems for sealift included not enough roll-on, roll-off capability in the RRF. (8:8) The Effective US Controlled Merchant Fleet (EUSC) is owned by US citizens or corporations. These ships are licensed and fly the flag of other countries. Sometimes called the "runaway fleet," these ships are not always available to our contingency and operational responsiveness and often the commitment of the assets becomes embodied in heated political debate for their use. Not readily available to the US merchant marine, is the Foreign Flag Fleet. These assets operate voluntarily and, often, political drawbacks exist, especially in those instances where perceived interests of the foreign nations (in which the ships are owned and registered) do not coincide with those of the US. If these assets are to be called upon, the development and bonding of a strong coalition with agreed-upon goals must have the priority of all concerned. The last asset available is the National Defense Reserve Fleet (NDRF). Primarily made up of the mothballed "Liberty" ships from the World War II era, the NDRF ships, which now average 45 years of age, might be better candidates for razor blades needed by troops rather than sealift support. (10:38) The disadvantage with this program is they are now limited in number (only about two hundred ships) and would require an extensive activation process. The majority of these ships are too slow and would require expensive technological upgrading of propulsion, navigational, and electrical systems. Additionally, by the standards established today for tonnage capability, is it worth the taxpayers dollars to revive this antiquated and rusting fleet? In addition to the drawbacks and dilemmas each of these fleets pose, the entire merchant marine industry suffers from a shortage of qualified personnel. The shrinkage of seafaring personnel in the civilian sector is down to 29,000 people dependent upon 13,000 billets. (16:50) In an industry that operates 24 hours a day, every day of the year, this shortage takes its toll in readiness. Of national defense interest, periods of national emergency or war can impose exceptional operational demands on ships, or their small crews may not have the versatility required of joint naval-merchant operations. (16:50) Moreover, many of these personnel are of foreign descent and who cannot be compelled by the US to enter combat areas. Some personnel, for example those from NATO countries, may be called to service by their own nations. Both the Merchant Marine Act of 1936 and the Seaman's Act of 1937 contain provisions limiting the use of alien seaman on American-flag vessels. On the subsidized vessels, all unlicensed (i.e., non-officer members except stewards) crew are required to be US citizens. On non-subsidized vessels in the coastal and non-contiguous trades (i.e., Hawaii and Alaska), some non-citizens are permitted, but all non-citizens must be resident aliens. Ever since the nineteenth century, American citizenship has been required of all officers on US-flag merchant vessels. With such legal restrictions hampering the effectiveness of the labor force, it is necessary to draw upon a merchant seaman reserve to compensate for any loss of foreign descent. (12:6) Over the past ten years, the US has invested heavily in upgrading strategic sealift capabilities. However, the merchant marine structure has been the victim of neglect despite this modernization effort. An action plan by our leaders for reviving a devastated US-flag merchant fleet must be the call for the 1990's and beyond. There is no question that the merchant marine industry as a whole remains a vital element in meeting national security needs. During Desert Shield/Desert Storm, over 3,035,387 short tons of cargo and 2,758 passengers were transported from ports of embarkation in the United States and Europe to ports of debarkation in the Gulf region. This was accomplished with over 459 shiploads. However, only 179 of these vessels were of US registry. The remainder were provided by European, Korean, Japanese, and Kuwaiti vessels. Private ownership is still very much the underlying principle of a viable merchant marine, as stated: The dilemma of the American Merchant Marine grows out of the fact that it is a private industry required to perform a public function. . . .of providing a service adequate for the water-borne commerce of the United States and one capable of serving the nation as a naval and military auxiliary in time of war or other national emergency. It was clearly indicated in present law (Merchant Marine Act, 1936) that Congress designed to preserve private ownership "insofar as practicable" and recognized that the cost to the taxpayer was not to be regarded as a gratuity but as an investment by the government to assure the flow of its domestic and foreign water-borne commerce and the immediate availability to the nation of an auxiliary fleet in time of trouble. US Maritime Commission, 1937 Had our political leadership and US maritime community acted accordingly through the years and really believed in its context, the US-flag merchant fleet would not be in its present deplorable state. (11:44) It is through the statement of private ownership "insofar as practicable" that the fleet will be saved. Through strong and aggressive leadership by our elected officials and the corporate leaders of the merchant marine industry, the US should procure and man the vessels needed to revitalize the US-flag merchant fleet. Over the last decade or more, much has been written about a devastated US-flag merchant fleet. Presidential candidates have suggested in their campaign orations that something must be done to salvage it. But the situation has grown steadily worse and the US-flag merchant fleet dwindles in size and American shipyards continue to go out of business. (11:44) General Robert H. Barrow, former Commandant of the Marine Corps, once commented: In order to achieve maritime superiority there is a compelling need to produce ships, military and civilian, so we may maintain freedom of the seas, provide deterrence at sea, and project that power from the sea should deterrence fail. Equally compelling is the need to enhance our strategic mobility and sustainability to ensure that when force presence is required, we can respond rapidly and with credibility. The US has lost the competitive edge and spirit. To build and man the vessels required, the procurement process needs a jump-start from the top of our political system. Leadership in resolving the nation's maritime problems and pushing for adequate funding begins at the White House. As an initial step in reversing the downward trend in the US maritime industries, the President, by executive order, needs to state what our national maritime policy is. He should reaffirm the need to build a strong and viable merchant fleet, relate that need to national security and defense requirements, and assign responsibility to the applicable federal agencies to take the requested actions. For immediate effect, the President should issue a National Security Decision Directive to all federal departments and agencies concerned to take all steps within their current authority and discretion to pressure and begin the rebuilding of the US-flag merchant fleet. (4:23) It is up to the President to decide what, if anything, can be done to help the US merchant marine and ensure that adequate wartime sealift is available. Only he can break the stalemate that has prevented action to address the strategic sealift needed for our security, with the essential first step being the reaffirmation and restatement our national maritime policy. In addition to executive branch action, Congress needs to implement a procurement and charter program which would lead to the construction of commercially viable yet military useful container Roll-on/Roll-off and dry and liquid cargo ships suitable both for mobilization requirements and for commercial endeavors as well. According to former Senator Jeremiah A. Denton, a retired Navy admiral: The United States must build back to a balanced US-flag fleet of at least 650 active and ready reserve merchant ships as a norm. Some of the ships could initially be procured on a competitive worldwide basis. But, to provide the shipyard industrial base from which adequate mobilization is possible, a sustained domestic shipbuilding program of at least 12 merchant ships per year is needed. What is the cost in terms of dollars for this build- up? According to The Commission on Merchant Marine and Defense, in a letter from its chairman Senator Denton, an allocation of $13 billion in federal expenditures over the next 11 years would be required. The letter further explains this proposal would build 244 merchant ships, of which 194 would be built in the United States. This would generate more than 43 billion dollars in gross national product and create 100,000 new jobs. (11:46) This "action plan" as provided by the commission merits serious consideration and prompt action, not only by the President and Congress but by the American people as well. The time has come to go ahead at full speed and act decisively to put this plan into effect. To put this plan into perspective, consider the estimated cost of $300 billion per year in current defense expenditures. It would seem that the cost of such a proposed revival is a small fraction of the total defense budget over the next 11 years. With recently announced drawdowns in troop strength and cancellation of big ticket items, such as further production of the B-2 bomber and the Seawolf submarine, it appears very affordable to bail out a sinking US-flag merchant fleet. Our private sector leadership also has equally challenging responsibilities. While the federal government is initiating and spearheading a joint public and private effort to rebuild the US-flag merchant fleet, leaders within the merchant marine industry must search for ways to improve business efficiencies. Acknowledging that the principles of economics and sound business practices dictate a natural desire to minimize costs and maximize profits, from their perspective the best solution to the nation's maritime ills might be those that use the principles of economics to advantage. Solving the problems of the US-flag merchant fleet are a recognized necessity and there is an unprecedented opportunity for effective solutions that could be implemented in the immediate future. One has to wonder why previous administrations and private sector leadership could have pledged their souls to preserve national security, and yet allow our ocean lifelines to come under almost complete control of foreign interests. There are several options that can be followed to correct the problems and ultimately reverse the decline of our merchant marine. However, none of these strategies for action can be adapted, nor will they succeed, without the basic ingredient of sound leadership. After all, the best definition for leadership is a simple one: "leadership is leading." (7:48) In fostering a merchant marine, then, the United States has the opportunity to show the world how ocean shipping can become vastly more economical through improvements both in technology and in methods of operations. (13:1) Now that would be leading! BIBLIOGRAPHY 1. Bush, George. National Security Strategy, of the U.S. 1991-1992. Washington, D.C.: Brassey's (US), Inc. 1991: 114. 2. "Desert Shield sealift; Bringing, beans, bullets and bandages." Editorial. All Hands Special Issue-Number 892: 9. 3. Daniel, Jr., Lt. Col. Marshall E. Defense Transportation Organization: Strategic Mobility in Changing Times. National Defense University, 1979: 11. 4. Hessman, James. D. "A Program To Reverse the Maritime Decline." Sea Power March 88: 23. 5. Hessman, James D. "Disaster by the Year 2000." Sea Power May 88: 7. 6. Hiton, Robert, Paula J. Pettavino, and Harlan K. Ullman. 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