Paul N "Chip" Jaenichen, the acting head of the U.S. Maritime Administration (MarAd), told the U.S. Senate Committee on Commerce, Science, and Transportation that if he is made the permanent Maritime Administrator he intends to focus on identifying ways to revitalize the U.S. Merchant Marine.
At a nomination hearing on Thursday, Jaenichen said, “The U.S. Merchant Marine engaged in international trade has steadily declined since World War II and currently carries less than 2 percent of our nation’s overseas trade. We need a strategy that will result in a significantly higher portion of U.S. overseas trade being carried on U.S. flag vessels.”
He continued, "This increased trade for U.S. flag vessels would provide greater demand for additional ships and more U.S. mariners to crew them.”
Jaenichen was named the deputy administrator at MarAd in July 2012
and the acting administrator in June of this year when David Matsuda
resigned. Jaenichen joined MarAd after a 30-year career in the Navy.
Jaenichen noted that the Department of Transportation is formulating a freight strategy that will include maritime.
In October, MarAd published a notice in the Federal Register
soliciting comments for a National Maritime Strategy Symposium on “cargo opportunities and sealift capacity. The public was asked to submit comments by Nov. 29, and a public meeting will be held in Washington on Jan. 14.
During the hearing, Jaenichen expressed support for the Jones Act, saying it is “critical to maintaining reliable coastwise trade and to ensuring the existence of a domestic maritime industry of shipbuilders, vessels and merchant mariners.”
“Without the Jones Act we would not have what is on the orderbook,” he said. “We have 18 ships — the first time in three decades that we have the construction in our shipyards of that magnitude. Plus, we have options for nine more ships. That is significant, and the only reason that has taken place is because of the Jones Act.” (Jaenichen was speaking about deep sea vessels.)
“Policies must be supported that will protect U.S. mariner jobs,” he said. “Sustaining a pool of qualified U.S. mariners is critical to meeting the nation’s security needs. Programs and policies such as the National Defense Reserve Fleet (NDRF) and its component Ready Reserve Force (RRF), the Maritime Security Program (MSP), cargo preference, the Jones Act and training at the U.S. Merchant Marine Academy and state maritime academies are all key to ensuring this pool of mariners is ready and available when needed to support military sealift requirements.
“Without these programs," he continued, "we will not have the skilled personnel needed.”
Senator Mark Begich, D-Alaska, expressed concern about testimony Jaenichen gave in September to the House Subcommittee on Coast Guard and Maritime Transportation that mentioned MarAd plans to invite comments on whether the agency’s existing U.S. citizenship criteria for operators of managers and agents of ships in the National Defense Reserve Fleet (NDRF) and Ready Reserve Fleet “benefit the nation’s maritime commercial and national security interests and provide the most current, effective and best approach for supporting NDRF operations.”
Last year, Maersk Line Ltd lost a protest
over a requirement that ship managers for Ready Reserve Force vessels be U.S. citizens “at all tiers of ownership." This effectively prevented the U.S. flag arm of Denmark’s AP Moller-Maersk Group from competiting for a contract, even though it is one of the largest contractors to the U.S. Navy’s Military Sealift Command. Jaenichen said the agency last examined that issue 20 years ago, and no decision had been made; the same rule has been in place since 1951. He said the agency wanted to revisit the issue because it has 50 ships with ship manager contracts coming up for renewal in 2015.
Begich also expressed concern about allowing foreign labor on U.S. flag ships.
Jaenichen noted, “We have to be able to increase the number of U.S. flag ships in the fleet. Without ships, you can’t trade the mariners that we need to man the government ships that we have, plus the MSC ships we have. If we were to activate all of them to support some kind of military operation or for a national emergency, that is one of the concerns we have.
"We are going to have to have a plan (regarding) how many can we bring in and what labor rate can be adjusted to make sure they are all U.S. labor. Today, under the current rules, 100 percent of the licensed officers have to be U.S. citizens and 75 percent of the unlicensed have to be U.S. citizens, and all of them must be documented and have U.S. Coast Guard licenses. We don’t see it necessary to change that, but we have to have a plan that if the ships come in, we have to be able to man them. If we can’t, they won’t come to the U.S. flag. And we have to have a strategy to do that. We want to be able to talk about that. ... There have been no decisions.”
Though Jaenichen did not discuss the subject, Begich also at the hearing questioned the cost of maintaining the U.S. Merchant Marine Academy at Kings Point, N.Y., estimating that it costs more than $300,000 to produce a graduate.
Begich said that was more costly than producing a graduate at Kings Point than at one of the state maritime academies and asked for an analysis on “why not just give scholarships and have people go to state academies. I know that is radical, and I'll probably get calls in seconds. ... I’d like to see a cost-benefit analysis.”