U.S. National Security Requires a Viable and Reliable U.S.-Flagged Commercial Fleet

U.S. National Security Requires a Viable and Reliable U.S.-Flagged Commercial Fleet
U.S. Navy photo by MC2 Travis Litke
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The Trump Administration’s commitment to restoring U.S. military preeminence extends beyond improving readiness and energizing modernization efforts. It also focuses on reinvigorating a defense industrial base that has been allowed to erode over the past quarter-century. Deterring but, if necessary fighting future great power conflicts will depend on the capacity of private U.S. companies to simultaneously expand production, repair damaged platforms and equipment and supply U.S. and allied forces fighting on distant continents.

Recent assessments of the U.S. industrial base have identified several critical vulnerabilities that could compromise the military’s ability to conduct high-intensity warfare. One of these is the ability of the U.S.-flagged sealift fleet to meet the transportation demands created by the overseas deployments and operation of large combat formations in a war zone. Simply put, the U.S.-flagged sealift fleet has been allowed to erode to the point that it is of only barely sufficient size and capability to meet the demands created by relatively small contingencies such as those conducted in this century in Southwest Asia.

General Darren McDew, USAF, Commander of U.S. Transportation Command, provided a stark warning of the consequences of further erosion of the U.S. commercial sealift fleet:

An aging organic sealift fleet coupled with a reduction in U.S.-flagged vessels threatens our ability to meet national security requirements. The U.S.-flagged fleet has been in steady decline since World War II as a result of decreasing demand and the rising cost of the U.S.-flagged fleet compared to international fleets. In 1951, 1,288 U.S.-flagged ships were registered in the United States. In 1990, the fleet was down to 408 ships, and in 2013 just 106. Today, 82 U.S.-flagged ships operate in international trade, representing a 25% reduction in just the last 5 years. .... If the fleet continues to lose ships, a lengthy, mass deployment on the scale of Desert Shield/Desert Storm could eventually require U.S. Forces to rely on foreign-flagged ships for sustainment.

Support for a U.S.-flagged commercial sealift fleet is one of the few economic areas where the U.S. government, Republican and Democratic administrations alike, has practiced what amounts to industrial policy. And rightly so. The maintenance of a viable and reliable capability to move military-relevant cargoes around the world in support of U.S. forces abroad is critical.

Much of the responsibility for maintaining a viable and effective U.S. commercial sealift capability, including ships, ports and mariners, rests with the Maritime Administration (MARAD), an agency of the Department of Transportation. MARAD uses a number of programs, agreements, and special financing arrangements to support the U.S. commercial cargo fleet, shipyards, and training of mariners.

Two of MARAD’s main tools for assisting the U.S. commercial fleet are the Maritime Security Program (MSP) and the Voluntary Intermodal Sealift Agreement (VISA). These programs are designed to assure the availability of sufficient U.S. commercial sealift capability and the supporting infrastructure to sustain U.S. military operations overseas in an emergency.

The MSP provides supplementary funding, currently $5 million per ship annually, for a specific number of U.S.-flagged, privately-owned ships which conduct international commerce but which are available under agreement to respond to Department of Defense (DoD) requirements during war and national emergencies. Currently, the MSP fleet consists of 60 vessels in a mix of container ships, roll-on/roll-off carriers, and heavy lift platforms.

The VISA program is similar to MSP insofar as it too is a partnership between the U.S. government and the maritime industry to provide the DoD with assured access to commercial sealift, terminal facilities, and supply chain management services to support the emergency deployment and sustainment of U.S. military forces. VISA participants commit to providing a graduated level of carrying capacity to DoD based on a three-stage activation system. In return, these participants receive preference regarding the transportation of DoD cargoes in peacetime. VISA allows DoD access to a broader range of vessels than are in the MSP, including tankers.

A third way that MARAD ensures the availability of a U.S-flagged sealift fleet is through the cargo preference program. This program mandates that U.S. government shippers use U.S.-flagged ships, if available, to transport 50 percent of any oceangoing cargo that either directly or indirectly involves the government. Except in wartime, food aid cargoes are the single greatest source of preference cargoes. Removing or even reducing the 50 percent preference would be highly damaging to the U.S. commercial transport fleet.

Because the cargo preference program can necessitate that U.S. government departments and agencies pay higher shipping prices, it has led to some intra-governmental tensions. The U.S. Agency for International Development has argued that it should be allowed to ship more food aid on foreign carriers to stretch its budget. There are reports that even some DoD agencies responsible for the movement of bulk supplies have sought to circumvent the cargo preference requirements.

Finally, while not under MARAD jurisdiction, there is the Merchant Marine Act of 1920, also known as the Jones Act. The Jones Act places restrictions on what is called cabotage, the movement of goods between U.S. ports and on U.S. waterways. It mandates that only U.S. built and flagged vessels conduct this trade and that at least 75 percent of the crews of these ships be U.S. citizens. In addition, the Act restricts the foreign steel content of repair work on U.S.-flagged vessels, thereby restricting such activities to U.S. shipyards. 

The cost of MARAD’s programs to support a viable and effective U.S. commercial sealift capability amounts to a small fraction of the projected $65 billion it would cost the government to replicate this capacity and the intermodal infrastructure and global cargo networks provided to the DoD by private-sector MSP participants. For a relatively small expenditure, a critical national security capability can be maintained.

Daniel Gouré, Ph.D., is a vice president at the public-policy research think tank Lexington Institute. Goure has a background in the public sector and U.S. federal government, most recently serving as a member of the 2001 Department of Defense Transition Team. You can follow him on Twitter at @dgoure and the Lexington Institute @LexNextDC. Read his full bio here.

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