Present Industry Status

PIS-BuildThe United States continues to depend primarily on oceanborne shipments for its international trade. As the world’s largest trading nation, the United States exports and imports about one-fourth of global merchandise trade in value annually. The largest part of this merchandise trade – over 1.3 billion metric tons of cargo – is moved by water. Another billion tons of cargo is carried in domestic waterborne movements, which serve over 90 percent of the U.S. population. Based on current projections, by the year 2020 U.S. foreign trade in goods may grow to four times today’s value and almost double its current tonnage, and inland waterways traffic will increase by one-third.

The United States once relied on a huge fleet of relatively small ships to provide the commercial and sealift shipping capacity appropriate for its trade. Since the end of World War II, the U.S.-flag vessel fleet has been in a continual state of decline. As of January 2013, the United States ranked 24th in number of oceangoing vessels and 22nd in a gross tonnage compared to other merchant fleets by country of owner. Today, the U.S. fleet’s share of oceanborne commercial foreign trade, by weight, continues to be less than five percent. Other traditional maritime powers have experienced similar declines.

While the number of vessels in the U.S. fleet has shrunk, at the same time many nations have built an international maritime presence as a means of projecting visibility and earning hard currency. These registries may not require the same level of protection for seafarer health, welfare and safety as on U.S.-flag vessels. Often, foreign-flag vessel owners do not pay any corporate income taxes on revenues earned in U.S. foreign commerce, and the crews frequently do not pay income taxes to any country. By comparison, vessels operating under the U.S. flag are subject to all the taxes and regulatory laws applicable in the United States.

Changes in maritime technology and reductions in crew sizes have contributed to a contraction of the industry’s supply of vessels and manpower.

Even though the size of the U.S.-flag fleet has declined in recent years, the productivity of the fleet has improved substantially. Today’s fleet includes ships and barges, and also containers, chassis, computer-based data systems, rail and truck interchanges, warehouses, piers, cranes, terminals, and highly skilled people ashore and at sea. Technological advances have greatly improved the flow of cargo, resulting in virtually seamless movement of goods from origin to destination anywhere in the world. These advances have also been applied to the movement of military shipments.

The U.S.-flag industry continues to invest in the expansion and modernization of the fleet.. NASSCO, a west coast subsidiary of General Dynamics, has finalized a contract with TOTE, Inc. to design and construct two, 3,100 TEU liquefied natural gas (LNG) powered container vessels, the first of which was delivered in October of 2015. In addition, NASSCO has contracted for the construction of eight LNG-conversion-ready product tankers, five for an affiliate of American Petroleum Tankers and three for Seabulk Tankers, Inc., the first of which was delivered in December of 2015. Aker Philadelphia Shipyard delivered two product tankers to Exxon and has announced an agreement with Crowley Maritime Corporation to construct four product tankers with an option for an additional four tankers scheduled for delivery between 2015 and 2017. Matson Navigation Company has signed a contract with Aker Philadelphia Shipyard for two new containerships with dual fuel engine technology capable of operating on LNG. Crowley Maritime Corporation took delivery of the last of a 17 unit series of articulated tug-barges and placed an order for two LNG powered vessels with VT Halter Marine. Also, a number of ferries and tugboats have recently been delivered with new orders also contracted for delivery in the future.

The maritime issues and challenges facing the nation are significant and complex. The present and future ability of the U.S.-flag fleet to serve as a contributor to economic sovereignty and national security remains a challenge. Changes in world political trends and economies occur constantly. The 104th Congress understood the precarious situation the Nation faced when it overwhelmingly adopted the Maritime Security Act of 1996. This measure established the Maritime Security Program to support a fleet of militarily useful U.S.-flag commercial vessels and American-citizen crews necessary for the military and economic security of the Nation. In 2003, Congress reaffirmed its support for the U.S.-flag fleet by expanding the fleet to its current contingency of 60 vessels.