Strategic Sealift Shortfall Solutions
AUTHOR Major Michael D. Boyd, USMC
SUBJECT AREA Training
TITLE: STRATEGIC SEALIFT SHORTFALL SOLUTIONS
THESIS: There exist solutions to remedy the ongoing
decline of the American flag fleet that can be executed
to provide the strategic sealift necessary to both deploy
U. S. forces to contingency areas and to give the
American economy the cargo shipping it needs to enhance
ISSUE: There has been a historical correlation between
sealift capability and the ability to deploy forces.
Once the greatest fleet in the world, our capacity to
sealift is now deficient to meet our current deployment
requirements, and is projected to worsen by FY2000. The
impact has been felt in the private sector, where the
merchant marine and shipyard/repair capabilities are dis-
appearing rapidly. The problem has been recognized at
the highest levels of both government and private
industry, and while the DOD effort has produced a "band
aid" fix with mothballed ships of questionable readiness,
there needs to be a comprehensive rejuvenation of the
American merchant marine flag fleet to provide a long
term solution. Four alternatives are proffered:
Reliance on foreign flag shipping, airlift augmentation,
privatization of the public assets or functions related
to providing a sealift capacity from the federal public
sector into the private sector (the preferred solution of
the author), and the current status quo (doing nothing
but talk about it). If there is no prompt and drastic
action taken to execute one of the possible alternatives,
then our sealift capacity will continue to decrease,
while our current partner in peace, the Soviet Union,
posssesses the second largest and most militarily-capable
fleet in the world, having garnered a large share of our
NATO allies imported product transportation market. The
problem with executing a solution for the problem is that
costs are inextricably intertwined with the common
perception of a world in which peace is diminishing the
CONCLUSION: We no longer possess a valid deterrent
posture, based on our sealift capability. If we wait
very long to take action to build up our strategic
sealift capability, history may be beyond our shaping due
to our inability to rapidly deploy our forces.
STRATEGIC SEALIFT SHORTFALL SOLUTIONS
THESIS STATEMENT. There exist solutions to remedy the
ongoing decline of the American flag fleet that can be
executed to provide the strategic sealift necessary to
both deploy U. S. forces to contingency areas and to give
the American economy the cargo shipping it needs to
enhance economic growth.
I. Historical perspective of sealift
A. Decline of flag fleet
l. Affect on Deployment Capability
2. Projections for the Future
3. Affect on the Marine Corps
4. Economic Repercussions
B. Recognition of the Problems
A. Reliance on Foreign Flag Shipping
1. Political Reliability Problems
2. Reduction of Allied Flag Fleets
B. Airlift Augmentation
1. Difficulty to Attain Strategic Airlift
2. Limited Lift Capability of Airlift
1. Definition and History
2. Types and Methods
(a) Contracting out Services
(b) Deregulating Statutory Monopolies
(c) Denationalizing Publicly Owned Assets
(2) AMTRAK Example
3. Detractors to Privatization
(a) Mismanagement in the Environment Example
(b) Corruption in Prisons Example
4. Application of Privatization
(a) Denationalization of RRF and NDRF
(b) Deregulation and Contracting Out
(1) National Sealift Policy
(2) Enforcement of Jones Act
(3) Enhancement of New Shipbuilding
(4) Deregulation of American
D. Status Quo- the "Do Nothing" Alternative
1. Politically and Fiscally Driven
2. Status of USSR Flag Fleet
A. Difficulties of Industrial Mobilization
B. Inevitable Loss of Deterrence Capability
STRATEGIC SEALIFT SHORTAGE SOLUTIONS
Over 75% of the earth's surface is covered by
water. Consequently, maritime projection of combat power
has universally confounded commanders. Both Julius Ceas-
ar and Adolph Hitler, although 2000 years apart, had to
contend with the 18 mile channel between Dover and Calais
in their attacks on Britain. Ceasar almost lost his
legions due to bad weather and adverse currents prevent-
ing the landing of his cavalry in 55 B.C., and Hitler,
due to his inability or unwillingness to cross the chan-
nel, ensured Britain's survival by enabling America to
build and man a vast armada of merchant marine shipping
that sustained the two-theater allied war effort with
men, equipment, and logistics. (17:27,212)
It is this American merchant marine flag fleet that
concerns me in meeting the potential deployment require-
ments that we embrace in our role as global peacekeeper.
Our fleet of 1946 contained over 4000 ships. By 1969, it
had dwindled to 1100, (31:44) and at the present there
are less than 300 privately owned American vessels of
1000 tons or more in the active flag commercial fleet,
with that number dropping daily as ships are laid up and
sold for scrap. (38:4) We have gone from the premier
sealift power in the world to number ten overall. (1:4)
The President's Commission on the Merchant Marine and
Defense in July 1988 reported that we need an additional
155 militarily-useful ships to provide the sealift capa-
bility to deploy and sustain a single theater conflict.
(9:12) This is compounded by the NATO estimates that 3000
ships would be lost to attrition alone during the first
90 days of Atlantic theater operations. (20:69)
The 1984 Congressionally Mandated Mobility Study
(CMMS) computed the strategic sealift requirements for
major deployments at one million short tons of unit
equipment and sustainment. (6:172) Despite substantial
federal sealift enhancement programs to expand the Ready
Reserve Force in the past eight years to the tune of $7.5
billion, the U.S. total sealift capability stands at only
89% of this goal. FY2000 projections indicate that the
flag fleet decline will further reduce our capability to
Lest we think that these figures have no impact on
the Marine Corps, consider that Navy amphibious shipping
has slipped from 162 ships in 1967 to 63 in 1987. (27:44)
adding to the black bottom ship requirements, as the
Assault Follow On Echelon (AFOE) ship requirements alone
for the amphibious MEF can range as high as 56 cargo ships.
(40:C-2) In an era of CINC apportionment and interser-
vice role infighting, even the Marine Corps can consti-
tute a large deployment footprint, when one considers
that this represents over 20% of our total sealift capa-
The flag fleet decline has produced comcomittant
repercussions in commercial industry. As ships have gone
out of the inventory, over 76 commercial shipyards have
closed in the last five years, leaving only six private
sector commercial shipyards capable of conducting major
overhauls and drydock work on ships over 400 feet in
length in this country. (7:71) Additionally, there has not
been a single ship constructed in an American shipyard
since 1987. (30:101) Simultaneously, the demise of facilities
has been accompanied by a "brain drain" of talent as the
personnel who crew, repair, and construct ships are
rapidly leaving the maritime occupations for more secure
jobs. Employment in the U.S. merchant marine fell from
40,000 in 1970 to approximately 12,000 in 1987. (15:34)
The average age of a crewman is well over 50. Added to
this picture is that 200,000 pierside industry jobs have
been lost in the last five years, 52,500 being ship
production workers. (10:89) The criticality of the loss
of flag fleet capability can be best underscored by the
words of ex-President Reagan in a speech of January 17,
... the continuing decline of the U.S. merchant
marine and U.S. flag commercial shipping assets
is a matter of concern. This problem is com-
pounded by the decline of the U.S. flag fleet
which results in a reduction of the seagoing
workforce to man all our U.S. flag vessels...
The lack of merchant mariners in the near term
could impede our ability adequately to project
and sustain forces by strategic sealift.
As described above, the current trend of decreasing
merchant marine capability is disturbing, and requires
drastic action now to reverse this jeopardy to our
Four alternatives exist to address our present
problems and future shortfalls in power projection. None
is without its costs, if not in resources, then in risk,
but they are proffered as the personal feeling is that
America is already years short and billions late in this
FOREIGN FLAG SHIPPING
First of all, continued and expanded use of foreign
flag shipping appears to be perilously political in
nature. Politics in our complex world extend beyond
treaties into the private sector boardrooms of shipping
companies which may be reluctant to endanger their
status in foreign ports by hauling Uncle Sam's car-
goes. (1:4) Additionally, there is the difficulty of in-
ducing commercial shippers to go into harm's way and risk
ships and crews for bulk rate cargo revenues. Personal
experience recalls that American shippers refused to haul
American Embassy cargo into the Persian Gulf during the
Iran-Iraq Conflict; could we expect foreign flag ships to
do more for us, given the rapidly-decreasing 600- ship
navy, and its demonstrated inability to protect tankers
(and itself) from WWI vintage mines destruction? (7:70) Add-
itionally, our NATO allies, much more reliant on the
high seas for their continued economic sustainment, are
experiencing declines to their flag fleets similiar to
ours as they have been outpriced priced by the third
world shippers and the Soviet Union. (44: 72) They may
well not be able to provide the support that they
currently promise. (12:54)
For some of the same reasons, increased reliance on
air freight is fraught with peril. The CMMS set the
defense goal for airlift capability at 66 million ton-
miles per day of strategic (long range) cargo airlift.
DOD has been struggling ever since to meet this require-
ment, and are approximately at 70% of that goal. (14:47)
Current projections of meeting this goal by FY 2000 rests
on the willingness of Congress to appropriate funds for
the new short-airfield capable cargo aircraft (C17) that
will cost $117 million per copy for a total of $35.7
billion. (5:30) This project is in jeopardy, according to
the Transcom managers, and stretchout of the acquisition
process is already in motion amongst the Congressional
budget crunchers. (41:405)
The crux of the matter with airlift is that, without
even considering the maintenance, crew rest problems,
and susceptibility to attrition from enemy actions, the
airlift resources are but drops in the proverbial power
projection bucket. One merchant ship can carry the
equivalent of 600 C141 loads of equipment or supplies.
(14:52) One army division would require over 2500 C5 and
C141 sorties. (14:49) The bottom line is that 95% of all
cargo would still require sealift movement. (5:31)
This author considers the solution of choice to turn
about the decline of the flag fleet and provide an ade-
quate sealift capability for war as well as commerce to
lie in "privatization".
Privatization is a relatively new concept in this
country, as Webster's has no listing, and it is best
defined as "turning over government businesses to pri-
vate enterprise". (11:281) Historically, privatization
was known, although by other terms, as early as the 1400s
when the Tudor Accession to the throne of England led to
privatization of England's monasteries, and plots of
common land. (3:2)
Accordingly, as befits history, Britain has been
the world leader in the privatization movement. After the
postwar nationalization of British industry in the 1940s,
the election of Prime Minister Thatcher in 1977 led to a
widespread divesting effort to sell off state-owned
enterprises to the private sector, to include sealift
shipping. (26:15) Pointing out the benefits reaped by
government through privatization in increased private
sector employment and corporate tax base, and lowered
government bureaucratic overhead, the sales of British
Petrol, Gas, and Airports in 1986 enabled the British
Government to lower the basic income tax from 28% to 25%.
(3:47) Buoyed by these and similar unprecedented suc-
cesses, countries as diverse as Portugal, India, Japan,
France, and Sr Lanka have joined in the privatization
game. Even Cuba allowed citizens to own their own homes
for the first tame since 1959. (l8:4)
To understand how privatization may aid the flag fleet,
one must first look at its types and methods. There are
three basic types of privatization open to government:
contracting out public services, deregulating statuatory
barriers that hinder private firms from competing with
the public sectors and denationalizing publicly owned
Contracting out public services to private sector
companies makes it possible for the government to pay
potentially reduced rates for services through
competitive bidding. A good example close to home in
the military has been the civilianization of many
maintenance and housekeeping functions formerly
performed by military members. The latest talk is to
privatize the commissaries and post exchanges. (20:144)
Deregulating statutory monopolies and licensing
barriers that hinder private sector firms and
essentially negate their ability to compete with public
sector organizations makes it possible for the private
sector to compete with public services. The British
deregulation was found to actually improve the stability
of public functions by providing private sector competi-
tion. By causing public sector organizations to become
more efficient, they were able to lower their cost over-
heads, if in fact they were not privatized. (3:127)
Denationalization involves directly selling
publicly owned assets or firms into the private
sector. (3:29) As previously mentioned, deregulation can be
used to make public enterprises more attractive, but must
be combined with a comprehensive program by the
government to create an environment wherein the sale
becomes possible. A good example of a public relations
effort providing the ambience to ensure successful
privatization is the mad rush to buy shares of British
Telcom in 1984 when it was put on the market. Its pre-
vious reputation of slow and poor service had been count-
ered by intensive P.R. (24:12) Another example closer to
home was the public stock offering sale of Consolidated
Rail Corporation (Conrail). Formed out of the ruins of
the old Penn Central Railroad in 1976, it was upgraded
and by 1981, it was making a tidy profit when ex-President
Reagan proposed it for sale. However, even after
Congressional authorization, it took five years to
complete the sale, as lobbyists from rail corporations,
public spending coalitions and congressmen from the
affected region bickered over the need to keep the system
intact after its sale. (23:41)
On the other hand, inability in this process has
rendered the government virtually helpless to economize
the services provided by the National Railroad Passenger
Corporation (AMTRAK.). Created by the 1970 Rail Passenger
Service Act, $11 billion has been spent to keep it
operating to date. Despite attempts to cutback services
by Presidents Ford, Carter and Reagan, intensive lobbying
efforts have kept every line operationg, while the tax-
payer subsidizes 60% of the cost of every ticket.
(18:166) It is theorized that AMTRAK will never be done
away with or privatized until the political lobbyists are
overwhelmed by the government's ability to make this
"great white elephant train" profitable. (21:14)
There are numerous detractors to the ideas and
practice of privatization, and their rationale, although
simplistic and narrowly scoped, requires mention.
On the environmental side of privatization, the
potential sale of government lands by the Reagan
administration was severely criticized. The short-term
nature of private sector managers as exemplified by
over-grazing, deforestation and overfarming that
resulted in sucn tragedies as the Dust Bowl of the
1930's were cited as indications that land resource
management must be entrusted to the government. (22:20)
Probably the most powerful detractor is the potent-
ial for corruption in conjunction with privatizing ef-
forts. Case studies have demonstrated that the shift of
functions from private to public is often spurred by
exposure of corruption, as in the movement to federalize
prisons in 1891. It took almost 100 years for the
public as well as the government to consider privatizing
the penal function, even considering the vast federal
drain on taxes and administration, due to the corruption
that became public shame in the 19th century. (18:149)
APPLICATION OF PRIVATIZATION
Having illustrated some of the successes, potental
gains, and frustrations and dangers along the road to
privatization, one may well ask what is there to priva-
tize and what role would privatization play in enhancing
our flag fleet?
Simply stated, it is this author's opinion that the
$7.5 billion that has been spent by the Reagan
administration in building and maintaining public
assets, the Ready Reserve Fleet (RRF) and the National
Defense Reserve Fleet (NDRF), fully government owned and
maintained, could be better spent in enhancing the U.S.
flag fleet through privatizing these assets and/or the
functions they provide. This effort will require a combi-
nation of denationalization, deregulation, and contract-
ing out services to accomplish our goal of providing both
the strategic sealift lift for wartime and peacetime
Denationalization. The RRF ships, 92 at present,
when added to the NDRF ships, 131 Liberty Class ships of
WWII vintage, represent a sizable "band-aid approach" to
enhancing U.S. strategic sealift capacity, as the moth-
balled shipping provides few jobs and little work for
U.S. shipyards and shipbuilders. (5:31) By selling off these
resources to American shipping companies and providing
Operational Differential Subsidies (ODS) to make them
competitive with foreign shipping, we would have the
ships on hand as well for peacetime aswell as wartime.
Vice depending on laid-up, mothballed ships to go to
underworked, understaffed shipyards for massive over-
hauls, the ships would be underway instantaneously, as
diverted from their commercial routes. Would there be
costs involved in this option? Absolutely, but current
costs ($1 million per ship/per year) (33:101) would be
exchanged with increased GNP that would offset the
potential outlays by the increased tax revenues generated
by a rejuvenated maritime industry. It is estimated
that the government would get back $1.25 n tax revenues
from every dollar invested in this effort. (7:72) More import-
antly, the generation of a highly trained cadre of seamen
and shipbuilders and repairers that this country needs to
maintain both peacetime and wartime sealift capacity.
Deregulation and Contracting Out. Recognizing the
implications of the continuing decline of our sealift
capacity on national defense, Congress enacted Public Law
98-525 which established the Commission on Merchant Mar-
ine and Defense, charged with the responsibility to make
recommendations for legislation and actions by both the
executive branch and the private sector "to foster and
maintain a U.S. merchant marine capable of meeting
national security requirements". (30:39) In the four
years that the Commission was in existence, the yearly
reports to the President gradually took a trend, not
towards denationalizing the RRF or NDRF, but towards
enhancing the private sector operations by maximizing the
revitalization through government protections and subsid-
ies designed to make private sector more attractive
to use than government owned assets, and more competitive
against foreign sealift sources. (15:34) Summarized
below are some of the recommendations to the President
published in the Commission's fourth report, many of
which contain the aspects of deregulation and contracting
out that privatization espouses.
Establish a National Sealift policy which would
commit the government meeting both national defense
and economic sealift requirements through both
(DOD) and private sector capabilities. This policy
was signed last October and represents the first effort
by both private add government officials to cooperative-
ly seek solutions to our sealift shortfalls. (46:89)
Revitalize the U.S. flag fleet in foreign trade in
direct competition with foreign shipping sources. (9:31) The
"Jones Act", Section 27 of the Merchant Marine Act of
1920, requires that all cargo moved between U.S. ports be
done by U.S. flagged ships. However, as has been pointed
out, even government agencies (required to use U.S. flagged
ships by law) have been found to use foreign shipping to
move the majority of their cargo. (16:28) The obvious
solutions to either enforce the existing regulations or
to increase the ODS to make our shipping assets competi-
tive have yet to be applied.
Another suggestion calls upon the government to
encourage American shippers to upgrade all obsolete and
outdated shipping (which includes the bulk of our RRF and
NDRF, and engage in a government-subsidized building
project to provide shipping that will be competitive
technologically as well as cost-wise from the reductions
of crews and maintenance that are possible from using
existing technology upgrades to forge a new flag fleet.
(9:57) Included in this program would be low-cost loans,
federal1y guaranteed, to subsidize the sizeable costs to
build a ship in America, almost three times as much as in
Japan or the Far East. (44:28)
Deregulation of the American flagging requirements
has been suggested to enable American shipping to become
competitive. The exodus of American shipping companies
to flag their ships under Panamian or Liberian Flags of
Convenience (FCC) was due to the severe safety
regulations imposed on American Flag shipping.
Consequently, although owned and operated by American
companies, these ships, known as Effective U.S.
Contro1led (EUSC) shipping, can not be counted upon for
strategic sealift in the same way as American Flag ship-
ping, and there is considerable debate as to the degree
to which they would be provided in contingency response.
(14:69) These ships, 367 in all, contain all but three
passenger ships operating in the U.S. littoral waters,
and sizeable numbers of new and efficient cargo ships.
Just as an example, it cost approximate1y $20 million
per ship to reflag three commercial Roll-On-Roll-Off
(RORO) ships bought from Norwegian companies and moth-
balled into th RRF in 1986. If American shipping compa-
nies could be lured into reflagging their ships into
American flags through either economic inducement or
regulation relaxation, the sealift shortfalls could be
substantially reduced without any further action. (7:72)
The fourth alternative is that we do nothing in the
face of our current strategic sealift shortfall. Unfor-
tunately, given the current politics of peace and detente,
and the euphoria that will surely drive America's leader-
ship to reduce and eliminate her active military
strength, there seems to be little incentive to build and
maintain merchant ships and enhance the ability to rapid-
ly deploy combat forces, based on an ill-definable and
uncertain threat of the present and future.
Unfortunately, our former adversary, the Soviet
Union, has been building a merchant marine that far out-
strips our own. From the ruins of WWII, they now
have built a fleet of more than 2500 ocean-going cargo
and cruise ships, capable of military use as demonstrated
by their ongoing military export to both client states
and arms buying third world nations. (13:74) They were
able to build and maintain this huge flag fleet by
significantly undercutting sealift cargo tariff rates
worldwide during the 1970s, and continue to build new
ships with the funds generated therein. (10:78) As an
indication of their progress, they now haul over 80% of
France's oil imports. (13:74). Currently number two in
Frances oil imports. (13:74). Currently number two in
the merchant fleet world, (5:31) the "Evil Empire" is now
more capable than both we and our NATO allies to provide
us with strategic sealift for the next major crisis.
America has had the national will and industrial
might to come from greater power projection shortages in
past conflicts, ala WWI and II. Our mobilization of
industry has been unmatched, our touted ability to rise
from catastrophe is something legendary. However, the
modern workplace, with the technological complexity that
requires between 14-18 years to develop an new weapons
system and field it does not give us the security blanket
of knowing that we have the time to build and use the
ships that we will need to project our forces in time to
preserve the peace. (47:24) In our effort to provide a
balance of power deterrence, it could be restated that
"for the lack of a ship, the next battle will be lost".
As Admiral Eccles theorized over 30 years ago that
"Logistics is the-bridge between the national economy and
the military capabilities of the nation," so too it can
be extrapolated that the sealift capability of a nation
determines that nation's ability to deploy and mass its
forces at the crucial point. We no longer have the
sealift necessary to accomplish our peacekeeping
missions. If we do not take prompt and drastic actions,
we never will.
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