State of the U.S. Maritime Industry: Impacts of the COVID-19 Pandemic, House Hearing, February 9, 2021
Summary
This record (117-2) covers the February 9, 2021 remote hearing of the Subcommittee on Coast Guard and Maritime Transportation of the House Committee on Transportation and Infrastructure on impacts of the COVID-19 pandemic on the U.S. maritime industry, chaired by Salud O. Carbajal. The staff summary says approximately 41,000 non-fishing commercial vessels are U.S. flagged, of which approximately 85 operate in international commerce, and that the share of international cargoes on U.S. flagged vessels fell from 25 percent in 1955 to approximately 1.5 percent. Witnesses were Lauren K. Brand, Ben Bordelon, Mario Cordero, C. James Patti, Michael G. Roberts and Del Wilkins. In written answers, Wilkins urges accelerating the Coast Guard's Waterways Commerce Cutter program.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“State of the U.S. Maritime Industry: Impacts of the COVID-19 Pandemic, House Hearing, February 9, 2021.”
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[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
STATE OF THE U.S. MARITIME INDUSTRY: IMPACTS OF THE
COVID-19 PANDEMIC
=======================================================================
(117-2)
REMOTE HEARING
BEFORE THE
SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 9, 2021
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
______
U.S. GOVERNMENT PUBLISHING OFFICE
44-493 PDF WASHINGTON : 2021
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
PETER A. DeFAZIO, Oregon, Chair
SAM GRAVES, Missouri ELEANOR HOLMES NORTON,
DON YOUNG, Alaska District of Columbia
ERIC A. ``RICK'' CRAWFORD, Arkansas EDDIE BERNICE JOHNSON, Texas
BOB GIBBS, Ohio RICK LARSEN, Washington
DANIEL WEBSTER, Florida GRACE F. NAPOLITANO, California
THOMAS MASSIE, Kentucky STEVE COHEN, Tennessee
SCOTT PERRY, Pennsylvania ALBIO SIRES, New Jersey
RODNEY DAVIS, Illinois JOHN GARAMENDI, California
JOHN KATKO, New York HENRY C. ``HANK'' JOHNSON, Jr.,
BRIAN BABIN, Texas Georgia
GARRET GRAVES, Louisiana ANDRE CARSON, Indiana
DAVID ROUZER, North Carolina DINA TITUS, Nevada
MIKE BOST, Illinois SEAN PATRICK MALONEY, New York
RANDY K. WEBER, Sr., Texas JARED HUFFMAN, California
DOUG LaMALFA, California JULIA BROWNLEY, California
BRUCE WESTERMAN, Arkansas FREDERICA S. WILSON, Florida
BRIAN J. MAST, Florida DONALD M. PAYNE, Jr., New Jersey
MIKE GALLAGHER, Wisconsin ALAN S. LOWENTHAL, California
BRIAN K. FITZPATRICK, Pennsylvania MARK DeSAULNIER, California
JENNIFFER GONZALEZ-COLON, STEPHEN F. LYNCH, Massachusetts
Puerto Rico SALUD O. CARBAJAL, California
TROY BALDERSON, Ohio ANTHONY G. BROWN, Maryland
PETE STAUBER, Minnesota TOM MALINOWSKI, New Jersey
TIM BURCHETT, Tennessee GREG STANTON, Arizona
DUSTY JOHNSON, South Dakota COLIN Z. ALLRED, Texas
JEFFERSON VAN DREW, New Jersey SHARICE DAVIDS, Kansas, Vice Chair
MICHAEL GUEST, Mississippi JESUS G. ``CHUY'' GARCIA, Illinois
TROY E. NEHLS, Texas ANTONIO DELGADO, New York
NANCY MACE, South Carolina CHRIS PAPPAS, New Hampshire
NICOLE MALLIOTAKIS, New York CONOR LAMB, Pennsylvania
BETH VAN DUYNE, Texas SETH MOULTON, Massachusetts
CARLOS A. GIMENEZ, Florida JAKE AUCHINCLOSS, Massachusetts
MICHELLE STEEL, California CAROLYN BOURDEAUX, Georgia
KAIALI`I KAHELE, Hawaii
MARILYN STRICKLAND, Washington
NIKEMA WILLIAMS, Georgia
MARIE NEWMAN, Illinois
Vacancy
------
Subcommittee on Coast Guard and Maritime Transportation
SALUD O. CARBAJAL, California, Chair
RICK LARSEN, Washington BOB GIBBS, Ohio
JAKE AUCHINCLOSS, Massachusetts DON YOUNG, Alaska
SEAN PATRICK MALONEY, New York RANDY K. WEBER, Sr., Texas
ALAN S. LOWENTHAL, California MIKE GALLAGHER, Wisconsin
ANTHONY G. BROWN, Maryland JEFFERSON VAN DREW, New Jersey
CHRIS PAPPAS, New Hampshire NICOLE MALLIOTAKIS, New York
PETER A. DeFAZIO, Oregon (Ex SAM GRAVES, Missouri (Ex Officio)
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ v
STATEMENTS OF MEMBERS OF THE COMMITTEE
Hon. Salud O. Carbajal, a Representative in Congress from the
State of California, and Chair, Subcommittee on Coast Guard and
Maritime Transportation:
Opening statement............................................ 1
Prepared statement........................................... 4
Hon. Bob Gibbs, a Representative in Congress from the State of
Ohio, and Ranking Member, Subcommittee on Coast Guard and
Maritime Transportation:
Opening statement............................................ 5
Prepared statement........................................... 6
Hon. Peter A. DeFazio, a Representative in Congress from the
State of Oregon, and Chair, Committee on Transportation and
Infrastructure:
Opening statement............................................ 7
Prepared statement........................................... 7
Hon. Sam Graves, a Representative in Congress from the State of
Missouri, and Ranking Member, Committee on Transportation and
Infrastructure, prepared statement............................. 69
WITNESSES
Lauren K. Brand, President, National Association of Waterfront
Employers:
Oral statement............................................... 10
Prepared statement........................................... 12
Ben Bordelon, Chairman, Shipbuilders Council of America:
Oral statement............................................... 15
Prepared statement........................................... 16
Mario Cordero, Executive Director, Port of Long Beach, on behalf
of the American Association of Port Authorities:
Oral statement............................................... 21
Prepared statement........................................... 23
C. James Patti, President, Maritime Institute for Research and
Industrial Development, on behalf of USA Maritime:
Oral statement............................................... 27
Prepared statement........................................... 29
Michael G. Roberts, Senior Vice President, Crowley Maritime, on
behalf of the American Maritime Partnership:
Oral statement............................................... 33
Prepared statement........................................... 35
Del Wilkins, President, Illinois Marine Towing, on behalf of
American Waterways Operators:
Oral statement............................................... 40
Prepared statement........................................... 42
SUBMISSIONS FOR THE RECORD
Letter of February 2, 2021, from the American Association of Port
Authorities et al., Submitted for the Record by Hon. Alan S.
Lowenthal...................................................... 51
Submissions for the Record by Lauren K. Brand, President,
National Association of Waterfront Employers:
Letter of February 2, 2021, from the American Association of
Port Authorities et al..................................... 69
Letter of February 2, 2021, from David F. Adam, Chairman and
CEO, United States Maritime Alliance, Ltd. et al........... 69
APPENDIX
Questions from Hon. Rick Larsen to Lauren K. Brand, President,
National Association of Waterfront Employers................... 71
Questions to Ben Bordelon, Chairman, Shipbuilders Council of
America, from:
Hon. Rick Larsen............................................. 72
Hon. Garret Graves of Louisiana.............................. 73
Questions to Mario Cordero, Executive Director, Port of Long
Beach, on behalf of the American Association of Port
Authorities, from:
Hon. Bob Gibbs............................................... 74
Hon. Rick Larsen............................................. 75
Questions from Hon. Rick Larsen to C. James Patti, President,
Maritime Institute for Research and Industrial Development, on
behalf of USA Maritime......................................... 77
Questions to Michael G. Roberts, Senior Vice President, Crowley
Maritime, on behalf of the American Maritime Partnership, from:
Hon. Mike Gallagher.......................................... 77
Hon. Rick Larsen............................................. 80
Hon. Garret Graves of Louisiana.............................. 80
Questions to Del Wilkins, President, Illinois Marine Towing, on
behalf of American Waterways Operators, from:
Hon. Rick Larsen............................................. 91
Hon. Garret Graves of Louisiana.............................. 92
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
February 4, 2021
SUMMARY OF SUBJECT MATTER
TO: LMembers, Subcommittee on Coast Guard and Maritime
Transportation
FROM: LStaff, Subcommittee on Coast Guard and Maritime
Transportation
RE: LHearing on ``State of the U.S. Maritime Industry:
Impacts of the COVID-19 Pandemic''
_______________________________________________________________________
PURPOSE
The Subcommittee on Coast Guard and Maritime Transportation
will hold a hearing on Tuesday, February 9, 2021, at 11:00 a.m.
EST to examine the current state of the U.S. maritime industry
amid the ongoing COVID-19 pandemic. The hearing will take place
in 2167 Rayburn House Office Building and virtually via Cisco
WebEx. The Subcommittee will hear testimony from the American
Association of Port Authorities, American Maritime Partnership,
American Waterways Operators, the National Association of
Waterfront Employers, Shipbuilders Council of America, and USA
Maritime.
BACKGROUND
U.S. MARITIME INDUSTRY
U.S. MERCHANT MARINE AND FLEET
The U.S. Merchant Marine, the Nation's port system, and
supporting industries (collectively referred to as the U.S.
maritime industry), integrate our economy with a vast global
maritime supply chain system that moves more than 90 percent of
the world's trade by tonnage, including energy, consumer goods,
agricultural products, and raw materials.\1\ These industries,
vessels, infrastructure, and personnel also play critical roles
in national security, supporting our Nation's ability to
provide sealift for the Department of Defense (DoD) during
times of war and national emergency.
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\1\ Maritime Administrator Mark H. Buzby Testimony before the House
Committee on Transportation and Infrastructure Subcommittee on Coast
Guard and Maritime Transportation (March 6, 2019).
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The U.S. Merchant Marine is the fleet of U.S. documented
(flagged) commercial vessels and civilian mariners that carry
goods to and from, as well as within, the United States. These
vessels are operated by U.S. licensed deck and engineering
officers and unlicensed seafarers. During times of peace and
war, the U.S. Merchant Marine acts as a naval auxiliary to
deliver troops and war material to military operations abroad.
Throughout our Nation's history, the Navy has relied on U.S.
flagged commercial vessels to carry weapons and supplies and
ferry troops to the battlefield. During Operations Enduring
Freedom and Iraqi Freedom, U.S. flagged commercial vessels
transported 90 percent of sustainment cargoes moved to
Afghanistan and Iraq.\2\
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\2\ Id.
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The merchant marine was formally recognized in statute with
the passage of the Merchant Marine Act of 1920, portions of
which are now codified in Subtitle V of title 46, United States
Code. Section 50101(a) of title 46, United States Code, states
that ``[i]t is necessary for the national defense and the
development of the domestic and foreign commerce of the United
States that the United States have a merchant marine . . .''
Sections 50101(b) and 51101 of title 46, United States Code,
establish that ``[i]t is the policy of the United States to
encourage and aid the development and maintenance of the
merchant marine . . .'' and that ``merchant marine vessels of
the United States should be operated by highly trained and
efficient citizens of the United States . . .''
Currently, there are approximately 41,000 non-fishing
related commercial vessels flagged and operating in the United
States.\3\ The vast majority of these vessels are engaged in
domestic waterborne commerce, generally referred to as the
``Jones Act trade,'' \4\ moving over 115 million passengers and
nearly $300 billion worth of goods between ports in the United
States on an annual basis.\5\ Each year the domestic coastwise
fleet carries nearly 900 million tons of cargo through the
inland waterways, across the Great Lakes, and along the
Atlantic, Pacific, and Gulf of Mexico coasts.\6\
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\3\ The Waterways Journal How big is the Jones Act Fleet? (January
18, 2019) available at https://www.waterwaysjournal.net/2019/01/18/how-
big-jones-act-fleet/.
\4\ Merchant Marine Act of 1920, portions of which are now codified
in Subtitle V of title 46, United States Code.
\5\ National Strategy for the Marine Transportation System:
Channeling the Maritime Advantage 2017-2022 (Oct. 2017), available at
https://www.cmts.gov/downloads/
National_Strategy_for_the_MTS_October_2017.pdf; Economic Contribution
of the US Tugboat, Towboat, and Barge Industry (June 22, 2017),
available at https://www.maritime.dot.gov/ports/economic-contribution-
us-tugboat-towboat-and-barge-industry-study.
\6\ The U.S. Waterway System Transportation Facts & Information,
available at https://usace.contentdm.oclc.org/digital/collection/
p16021coll2/id/1429/.
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The U.S. Government-owned National Defense Reserve Fleet
(NDRF) consists of 100 government-owned vessels waiting in
reserve to provide additional domestic or international
logistic support with 46 vessels in the Maritime
Administration's (MARAD) Ready Reserve Force (RRF), a subset of
NDRF.\7\ The RRF vessels provide the initial surge of military
capability while the commercial fleet is responsible for the
ongoing sustainment.
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\7\ U.S. Department of Transportation, Maritime Administration.
(accessed Feb. 2, 2021) available at https://www.maritime.dot.gov/
national-security/strategic-sealift/strategic-sealift.
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Of the 41,000 U.S. flagged vessels, approximately 85 are
operating in international commerce moving goods between U.S.
and foreign ports.\8\ These vessels serve as a training and
employment base for the civilian mariners who serve aboard the
Government-owned fleet when they are called to deploy. The
percentage of international commercial cargoes carried on U.S.
flagged vessels has fallen from 25 percent in 1955 to
approximately 1.5 percent today.\9\ Over the last 36 years, the
number of U.S. flagged vessels sailing in the international
trade dropped from 850 to 85 vessels.\10\ This decline
corresponds with a decrease in U.S. mariners resulting in an
estimated shortfall of approximately 1,929 qualified mariners
needed to crew the Government-owned fleet.\11\ Since the DoD
relies on civilian mariners to crew the Government-owned fleet,
maintaining a pool of highly trained mariners through the
Maritime Security Program (MSP) is imperative.
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\8\ U.S. Department of Transportation, Maritime Administration.
(January 2021).
\9\ Id.
\10\ Id.
\11\ Maritime Admin. Mark H. Buzby Testimony before the House
Committee on Armed Services (March 8, 2018).
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Within the international U.S. flag fleet, up to 60 vessels
are enrolled in the MSP.\12\ Under this program, militarily
useful oceangoing commercial vessels each receive an annual
operating stipend of $5 million, which will increase to $5.3
million in fiscal year (FY) 2022, to provide military sealift
for the United States Transportation Command within the
DoD.\13\
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\12\ U.S. Department of Transportation, Maritime Administration,
available at https://maritime.dot.gov/national-security/strategic-
sealift/maritime-security-program-msp.
\13\ National Defense Authorization Act for FY 2020 (P.L. 116-92).
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U.S. PORTS AND MARINE TERMINALS
Public ports in the United States play an indispensable
role in local and regional economies throughout the nation.\14\
Ports generate business development and provide employment to
more than 13 million Americans, which includes those that work
at the ports themselves and those employed in global trade and
import/export support services.\15\ According to the American
Society of Civil Engineers (ASCE), there are 926 ports in the
United States, each essential to the Nation's competitiveness
by serving as gateways through which 99 percent of U.S.
overseas trade by volume passes.\16\ Ports are responsible for
$4.6 trillion in economic activity--roughly 26 percent of the
U.S. economy.\17\ The American Association of Port Authorities
(AAPA) reports that, seaport activities alone accounted for
$378.1 billion in federal, state, and local tax revenues in
2018.\18\
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\14\ Global Trade Magazine, 2020 U.S. Ports Summary (last accessed
May 26, 2020) available at https://www.globaltrademag.com/us-ports/.
\15\ Id.
\16\ ASCE, 2019 Infrastructure Report Card, Ports (Jan. 2017)
available at https://www.infrastructurereportcard.org/wp-content/
uploads/2017/01/Ports-Final.pdf.
\17\ Id.
\18\ AAPA, The Economic Impact of U.S. Seaports (2019) available at
http://aapa.files.cms-plus.com/2019_PortsFundingMap.pdf.
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America's port authorities play a key role in the business
of waterborne commerce. Their authority may also incorporate
other global trade hubs such as airports, industrial parks,
inland ports, and Foreign Trade Zones. Many of these
accommodate ocean-going cargo, as well as barges, ferries, and
recreational watercraft. More than 150 deep draft seaports are
located along the Atlantic and Pacific Oceans as well as the
Great Lakes, the Gulf of Mexico, Alaska, Hawaii, Puerto Rico,
Guam, and the U.S. Virgin Islands.\19\ Many of the country's
most prominent ports work closely with private industry in the
development and financing of maritime-related facilities.
Within the Nation's ports are more than 3,500 publicly or
privately held marine terminal operators (MTOs).\20\ MTOs
provide wharfage, dock, warehouse, or other marine terminal
facilities to ocean common carriers moving cargo in the ocean-
borne, foreign commerce of the United States.\21\
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\19\ Global Trade Magazine, https://www.globaltrademag.com/us-
ports/
\20\ MARAD, Maritime Transportation System Summary (2021) available
at https://www.maritime.dot.gov/outreach/maritime-transportation-
system-mts/maritime-transportation-system-mts.
\21\ Fed. Maritime Com. Marine Terminal Operators (2021) available
at https://www.fmc.gov/resources-services/marine-terminal-operators/.
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PORT INFRASTRUCTURE DEVELOPMENT PROGRAM
The ability of U.S. ports to increase capacity and move
freight efficiently--both domestically and globally--is
critical to U.S. competitiveness. Freight volumes are projected
to increase by 31 percent and U.S. foreign trade is projected
to double between 2015 and 2045.\22\ Without major improvements
to multimodal transportation infrastructure and technologies,
congestion resulting from greater volumes of freight could lead
to growing delays and failures in the supply chain.
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\22\ DOT Bureau of Transp. Statistics, Freight Facts and Figures
2017, Table 2-1.
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As required by Section 50302 of 46 United States Code,
MARAD established a Port Infrastructure Development Program to
better support the development of port facilities. The FY 2021
Consolidated Appropriations Act, P.L. 116-260, provided $230
million for the Port Infrastructure Development Program, with
$205 million reserved for grants to coastal seaports and Great
Lakes ports; a $5 million increase from FY 2020. Grants are
provided for infrastructure improvement projects that are
directly related to port operations, or intermodal connections
to ports that improve the safety, efficiency, or reliability of
the movement of goods into, out of, or around coastal seaports.
U.S. SHIPBUILDING INDUSTRY
The U.S. shipbuilding and ship repair industry is a major
component of the Nation's maritime supply chain; essential for
sustaining one of the world's largest navies, a Coast Guard
that protects thousands of miles of U.S. coastline, and the
domestic commercial fleet. Construction and repair shipyards
also provide a critical backstop to American seapower, ensuring
that the United States retains the capability to expand or
recapitalize its Navy or Coast Guard without relying on other
nations.
Today, the U.S. shipbuilding industry includes
approximately 125 active shipyards across the country.\23\ In
addition, there are more than 200 shipyards engaged in ship
repairs or capable of building ships, but not actively engaged
in shipbuilding.\24\ According to the U.S. Maritime
Administration, the U.S. shipyard industry supports more than
100,000 direct shipyard jobs across the United States, produces
$7.9 billion in direct labor income and contributes $9.8
billion in direct GDP to the national economy.\25\
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\23\ Center for Strategic and Budgetary Assessments, Strengthening
the U.S. Defense Maritime Industrial Base, A Plan to Improve Maritime
Industry's Contribution to National Security (2020).
\24\ Id.
\25\ MARAD, available at https://www.maritime.dot.gov/sites/
marad.dot.gov/files/docs/resources/3641/
maradeconstudyfinalreport2015.pdf.
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Other than ships required to be U.S.-built for the domestic
cabotage trade, popularly known as Jones Act \26\ trade, U.S.
commercial shipbuilding faces steep challenges from
shipbuilders in China, South Korea, and Japan. These heavily
subsidized foreign competitors accounted for over 90 percent of
the global shipping tonnage delivered in 2018.\27\
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\26\ Merchant Marine Act of 1920, portions of which are now
codified in Subtitle V of title 46, United States Code.
\27\ United Nations Conference on Trade and Development, available
at https://unctadstat.unctad.org/wds/TableViewer/
tableView.aspx?ReportId=89493; Wall Street Journal, Costas Paris, Asia
State Players Wield Subsidies to Dominate Shipping (Dec.2, 2018).
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COVID-19 BACKGROUND AND IMPACTS
The COVID-19 pandemic has upended the world economies and
substantially impacted societies across the globe. According to
the Centers for Disease Control and Prevention (CDC), the
coronavirus (COVID-19) is a virus strain that can cause mild to
fatal respiratory illness to those persons it infects.\28\
First identified at the end of 2019 in Wuhan, China, the virus
is spread from person to person, usually via respiratory
droplets or through physical contact with surfaces with the
virus on it. As of late January 2021, COVID-19 had spread
worldwide with almost 99 million confirmed cases and more than
2 million deaths.\29\ In the United States, data released by
the Johns Hopkins Coronavirus Research Center on February 4,
2021, totaled 26,561,428reported cases and 450,887 deaths
attributed to COVID-19.\30\
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\28\ Centers for Disease Control and Prevention. (last accessed
February 3, 2021) available at https://www.cdc.gov/coronavirus/2019-
ncov/symptoms-testing/symptoms.html?.
\29\ World Health Org., Coronavirus Disease Dashboard (last
accessed January 25, 2021) available at https://covid19.who.int/.
\30\ Johns Hopkins Univ., COVID-19 Dashboard (last accessed
February 4, 2021) available at https://coronavirus.jhu.edu/map.html.
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According to CDC data and statistics, COVID-19 is the worst
pandemic in over 100 years since the 1918 influenza (H1N1)
pandemic broke out and took over 50 million lives across the
globe.\31\ In the initial months of the pandemic, many cities,
states, and entire countries remained on lockdown or operated
under stay-at-home orders. In the more recent months, countries
started to gradually re-open commerce and modify operations and
activities, although many countries have had to enforce
additional lockdown orders or travel restrictions as COVID-19
cases surged.\32\
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\31\ Fauci, A. IDWeek's 24 hours of COVID-19 ``Chasing the Sun''
2020 virtual meeting. (Oct. 21, 2020) available at https://
www.eventscribe.net/2020/IDWeek/
SearchByBucket.asp?pfp=ChasingTheSun&f=CustomPresField66&bm=Chasing%20th
e%20Sun.
\32\ U.S. Chamber of Commerce, Global Dashboard on COVID-19
Government Policies, (last accessed February 3, 2021) available at
https://www.uschamber.com/international-affairs-division/covid-
dashboard.
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GLOBAL SUPPLY CHAIN CHALLENGES
According to the Organization for Economic Cooperation and
Development (OECD), the global maritime industry has been
severely impacted by COVID-19, leaving virtually no market
segment spared.\33\ As countries entered lockdown, ocean
carriers across key trades, especially the trans-Pacific
trades, enacted capacity cuts, either by increasing the number
of blank sailings or by laying up vessels.\34\ U.S. ports
experienced a 7.3 percent drop in container volumes in the
first five months of 2020 caused by general shutdowns across
many key markets in nations affected by the COVID-19
pandemic.\35\ But as consumer trends shifted from in-person
consumption and entertainment to at home and online retail
purchases, the global supply chain failed to keep up; upending
long-standing trade patterns and causing bottlenecks at
ports.\36\ Containers are in high demand and short supply and
U.S. ports are struggling to keep up with volume which is
further complicated by a shortage of dock workers due to COVID-
19 outbreaks across the United States. The cost of shipping a
container of goods has risen by 80 percent since early November
and has nearly tripled over the past year due to a ripple
effect as cargo volume soars, containers pile up at U.S. ports,
and ships sit anchored offshore, waiting to unload their
cargo.\37\ More than one-third of the containers transiting the
world's 20 largest ports last month failed to ship when
scheduled.\38\ All the while American producers in the Midwest
are having difficulties finding available containers to export
their goods as carriers push to return containers to China as
quickly as possible.\39\ Industry fears the troubles effecting
the global supply chain are just starting as they see record
high pricing, and are bracing for increased delays and
disruptions despite capacity increases of more than 30 percent
in some routes such as the trans-Pacific.\40\
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\33\ OECD, COVID-19 and International Trade: Issues and Actions
(2020).
\34\ DHL, Global Freight Forwarding, Ocean Freight Market Update
(May 2020) available at www.dhl.com/content/dam/dhl/global/dhl-global-
forwarding/documents/pdf/glo-dgf-ocean-market-update.pdf.
\35\ Shipping Water, Container volumes almost fully recovered
despite large drop in the spring of 2020 (January 8, 2021).
\36\ The Washington Post, Pandemic aftershocks overwhelm global
supply lines (January 24, 2021) available at https://
www.washingtonpost.com/business/2021/01/24/pandemic-shipping-economy/.
\37\ Freightos Baltic Index (January 25, 2021) available at https:/
/fbx.freightos.com/.
\38\ The Washington Post, Pandemic aftershocks overwhelm global
supply lines (January 24, 2021) available at https://
www.washingtonpost.com/business/2021/01/24/pandemic-shipping-economy/.
\39\ Id.
\40\ Id.
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In March 2020, the Federal Maritime Commission initiated
Fact Finding No. 29, International Ocean Transportation Supply
Chain Engagement, in order to identify operational solutions to
cargo delivery system challenges related to COVID-19. This fact
finding was expanded in November 2020 to investigate potential
violations of Section 41102(c) of Title 46 United States Code,
Practices in Handling Property, by improper regulations and
practices.\41\
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\41\ Federal Maritime Commission, (November 1, 2020) available at
https://www2.fmc.gov/readingroom/docs/FFno29/
FF29_41102(c)_%20Supplemental_Order.pdf/.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Figure 1_Shippingwatch, Change in container volumes on major trades
(January 8, 2021) available at https://shippingwatch.com/carriers/
Container/article12674801.ece
WORKFORCE CHALLENGES
Global shipping depends on nearly two million seafarers
worldwide, who make it possible for the world to receive the
goods and products needed for everyday life.\42\ This is not
including the seafarers or longshoreman involved in other
trades, such as transportation of passengers, fishing, or
response, who are also vitally important to the maritime
industry. To much of the industry, maintaining operations
during the pandemic requires their frontline employees to
potentially be exposed to COVID-19 as they continue working
while other segments of the industry stopped operations and
furloughed employees as business faltered. Mariners working
onboard vessels engaged in the international trade face
lockdowns, mandatory quarantines, and travel and port
restrictions imposed by governments around the world. These
circumstances have created significant issues restricting crew
changes and repatriation of seafarers, raising humanitarian
concerns regarding the mental and physical safety of mariners
stuck onboard vessels. The abandonment of seafarers
internationally is among the many concerns that have arisen
during the pandemic.\43\
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\42\ Doumbia-Henry, C. Shipping and COVID-19: protecting seafarers
as frontline workers. (September 24, 2020). https://link.springer.com/
article/10.1007/s13437-020-00217-9.
\43\ Id.
---------------------------------------------------------------------------
Operators are also faced with social distancing
requirements and increased cost of acquiring Personal
Protective Equipment (PPE) for crew as public health measures
became stricter in an attempt to prevent and manage outbreaks
of COVID-19 on board vessels. Stricter public health measures
also affect ports and shipyards as employers and employees work
to prevent potential COVID-19 outbreaks.
U.S. INDUSTRY REQUESTS FOR ASSISTANCE
The ability to obtain PPE is dependent upon a well-
functioning global supply chain of critical medical supplies.
Ports, MTOs, and stevedores are continuing to find creative
ways to keep workers safe in order to keep the supply chain
functioning well. Those U.S. ports, MTOs, and stevedores, like
many other hard hit parts of the U.S. economy, are also seeking
federal help to shoulder additional costs tied to COVID-19 and
to weather losses in maritime transportation, including from
the cruise industry which is completely shut down in the U.S.
through March of 2021.
To date, little federal assistance has gone to the U.S.
maritime industry. Under the Coronavirus Economic Relief for
Transportation Services Act, included in the FY 2021
Consolidated Appropriations Act, P.L. 116-260, passenger
vessels carrying less than 2,400 passengers, ferries, and other
passenger transportation groups such as buses companies, were
provided access to $2 billion in funding. The passenger vessel
industry has been severely impacted by the COVID-19 pandemic.
The Passenger Vessel Association, which represents much of the
U.S. flagged passenger vessel industry, estimates lost revenue
for the U.S. industry in 2020 at $5 to $10 billion with about
80 percent of the workforce either furloughed or laid off, and
business for many has dropped 80 to 90 percent.\44\
---------------------------------------------------------------------------
\44\ Workboat, Covid-19 has bludgeoned the U.S. passenger vessel
industry (December 1, 2020) https://www.workboat.com/passenger-vessels/
covid-19-has-bludgeoned-the-u-s-passenger-vessel-industry.
---------------------------------------------------------------------------
In the 116th Congress, the Maritime Transportation System
Emergency Relief Program was included in the William A.
Thornberry National Defense Authorization Act of 2020, P.L.
116-283. This legislation provides comprehensive maritime
emergency relief authority to enable the Maritime
Administration to provide financial assistance to stabilize and
ensure the reliable functioning of the U.S. Maritime
Transportation System in the event of a national emergency or
disaster, including, the current COVID-19 public health
emergency. This relief authority has not yet been funded and no
other sector of maritime industry has received designated
COVID-19 federal assistance other than the passenger vessel
industry stated above. AAPA as well as 36 other industry groups
such as the National Association of Waterfront Employers have
asked Congress to consider funding the Maritime Transportation
System Emergency Relief Program, which would help allow them to
keep workers and customers safe and ensure supply chains
continue moving.
WITNESS LIST
LMs. Lauren Brand, President, National Association
of Waterfront Employers
LMr. Ben Bordelon, Chairman, Shipbuilders Council
of America
LMr. Mario Cordero, Chairman, The American
Association of Port Authorities
LMr. Jim Patti, Chairman, USA Maritime
LMr. Michael Roberts, President, American Maritime
Partnership
LMr. Del Wilkins, President, Illinois Marine
Towing, Inc., on behalf of American Waterways Operators
STATE OF THE U.S. MARITIME INDUSTRY: IMPACTS OF THE COVID-19 PANDEMIC
----------
TUESDAY, FEBRUARY 9, 2021
House of Representatives,
Subcommittee on Coast Guard and Maritime
Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 11:03 a.m., in
room 2167 Rayburn House Office Building and via Cisco Webex,
Hon. Salud O. Carbajal (Chair of the subcommittee) presiding.
Present in person: Mr. Carbajal, Mr. DeFazio, Mr. Larsen,
and Ms. Malliotakis.
Present remotely: Mr. Auchincloss, Mr. Lowenthal, Mr.
Brown, Mr. Pappas, Mr. Gibbs, Mr. Weber, Mr. Gallagher, Mr. Van
Drew, Mr. Rodney Davis, Mr. Graves of Louisiana, and Mr. Mast.
Mr. Carbajal. The subcommittee will come to order. I ask
unanimous consent that the chair be authorized to declare a
recess at any time during today's hearing. Without objection,
so ordered.
I also ask unanimous consent that Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions. Without objection, so
ordered.
For Members participating remotely, I want to remind you of
key regulations from the House Committee on Rules. Members must
be visible on video to be considered in attendance and to
participate, unless experiencing connectivity issues. Members
must also continue to use the video function for the remainder
of the time they are attending this meeting, and hearing,
unless experiencing connectivity issues or other technical
problems.
If a Member is experiencing any connectivity issues or
other technical problems, please inform committee staff as soon
as possible so you can receive assistance. A chat function is
available for Members on the Cisco Webex platform for this
purpose. Members can also call the committee's main phone line
at (202) 225-4472 for technical assistance by phone.
Members may not participate in more than one committee
proceeding simultaneously. However, for security reasons,
Members may maintain a connection to the software platform
while not in attendance. It is the responsibility of each
Member seeking recognition to unmute their microphone prior to
speaking, and to keep their microphone muted when not speaking,
to avoid inadvertent background noise.
As the chair of today's meeting and hearing, I will make a
good-faith effort to provide every Member experiencing
connectivity issues an opportunity to participate fully in the
proceedings.
And finally, to insert a document into the record, please
have your staff email it to [email protected].
With that, I will proceed to my opening statement.
Good morning and welcome to the first Coast Guard and
Maritime Transportation Subcommittee hearing in the 117th
Congress. Today, we will examine the state of the United States
maritime industry amid the ongoing COVID-19 pandemic. It is an
honor to chair this vital subcommittee, and I look forward to
working alongside my colleagues on both sides of the aisle to
support our maritime community and the United States Coast
Guard.
The maritime transportation system is vast and complex. It
touches virtually every aspect of American life, from movement
of passengers, the clothes we wear, to the cars we drive and
the fuel in those vehicles. When it is working well, it is easy
to forget the importance of our maritime system, as well as the
Coast Guard. And, as chair, I will strive to uplift this
important sector.
The Subcommittee on Coast Guard and Maritime Transportation
has a long history of bipartisan cooperation, and I look
forward to working with Ranking Member Gibbs to conduct
oversight and pass important legislation to support our
maritime industry and the Coast Guard.
I am sorry we cannot physically meet in person today for
this important first subcommittee hearing. I am sure, though,
that we will rise to the challenge to conduct the important
business, nonetheless.
I also want to thank the former subcommittee chair, Sean
Patrick Maloney, for the great work he did last Congress. He
worked tirelessly to improve our Coast Guard and to strengthen
the U.S. maritime industry, and we will work to build upon
those efforts. He leaves big shoes to fill.
The United States maritime industry includes four major
components: the internationally trading U.S.-flag fleet, the
domestic--or Jones Act--trades, also shipbuilders, and U.S.
ports. Commercial shipping carries more than 95 percent by
volume of U.S. overseas trade, and yet, the presence of U.S.-
flag fleet operating in international trade is diminishing.
In the past 35 years, we have seen the U.S.-flag fleet drop
from over 850 vessels to merely 85. Let me say that again: from
over 850 vessels to merely 85.
The United States merchant marine, which provides a living
wage to its American mariners, pays taxes in America, and
complies with American regulations, simply cannot compete with
foreign fleets that pay little to no taxes, comply with the
bare minimum regulations, and pay substandard wages.
The Merchant Marine Act of 1920, or Jones Act, safeguards
our country and economy and provides guaranteed work to
American merchant mariners, ensuring Government and civilian
goods, people and equipment are carried by U.S.-flagged ships
and U.S. citizens.
The domestic Jones Act trade includes more than 41,000
vessels, not including fishing vessels. In my district, which
encompasses Santa Barbara and San Luis Obispo Counties, and a
portion of Ventura County, maritime and seafaring is an
essential way of life, with the Ports of Los Angeles and Long
Beach just to the south, and the Pacific Ocean to the west. Our
community is rich in maritime history, or heritage.
My district is home to a vibrant passenger vessel industry,
but in the wake of this pandemic, much of the industry has had
to shut down its business and furlough employees. Many
passenger vessels operating in the Jones Act trade have lost
the entirety of their 2020 operating season.
Of the companies operating, most have experienced
reductions in revenue by as much as 90 percent and have laid
off or furloughed as much as 80 percent of their employees. And
while passenger vessels and ferries are one of the few sectors
of the maritime industry to receive Federal assistance, they
were left to compete for this assistance with other modes of
passenger transportation.
The remainder of the maritime industry has been left to
fend for itself. Operators have had to shoulder the burden of
increased costs of new safety measures, acquiring protective
gear, and complying with public health measures, while other
industries have received Federal assistance. Requests for
assistance have gone unanswered, while demand on our ports and
cargo-carrying U.S. fleet only increases as American commerce
increases.
I applaud President Biden for affirming support for the
Jones Act. The industry needs strong Federal support in order
to weather this storm.
One way to provide immediate assistance is by funding the
Maritime Transportation System Emergency Relief Program that
was passed into law last Congress, under the leadership of
Chairman DeFazio. For the first time, it created a program
within the Maritime Administration to provide financial
assistance to the maritime industry in times of national
emergency. We need to utilize this program and provide funding
to protect American maritime jobs and assist operators
struggling to stay afloat.
As we gather here today to hear from our witnesses on the
current state of the U.S. maritime industry, I want to take a
moment to stop and say thank you to our maritime workforce.
These crucial frontline workers show up, day in and day out, to
ensure our shelves are stocked and that Americans get their
essentials, while also facing their share of danger and loss
from COVID-19. Without your dedication, we would not be able to
weather this storm, so thank you.
My hope is that this hearing will help inform the committee
of the ongoing difficulties facing the maritime industry and
identify areas of support that will allow the industry to
emerge stronger than when the pandemic began. We must ensure
the Marine Transportation System continues to operate
seamlessly, and we must protect these essential frontline
workers. I look forward to hearing from our witnesses.
[Mr. Carbajal's prepared statement follows:]
Prepared Statement of Hon. Salud O. Carbajal, a Representative in
Congress from the State of California, and Chair, Subcommittee on Coast
Guard and Maritime Transportation
Good morning, and welcome to the first Coast Guard and Maritime
Transportation Subcommittee hearing in the 117th Congress. Today we
will examine the state of the United States maritime industry amid the
ongoing COVID-19 pandemic.
It is an honor to chair this vital subcommittee, and I look forward
to working alongside my colleagues on both sides of the aisle to
support our maritime community and United States Coast Guard. The
maritime transportation system is vast and complex. It touches
virtually every aspect of American life--from the movement of
passengers, the clothes we wear, to the cars we drive and the fuel in
those cars. When it is working well, it is easy to forget the
importance of our maritime system, as well as the Coast Guard, and as
Chair I will strive to uplift this important sector.
The Subcommittee on Coast Guard and Maritime Transportation has a
long history of bipartisan cooperation and I look forward to working
with Ranking Member Gibbs to conduct oversight and pass important
legislation to support our maritime industry and the Coast Guard.
I am sorry we cannot physically meet in person today for this
important first subcommittee hearing. I am sure though that we will
rise to the challenge to conduct the important business, nonetheless.
I also want to thank the former Subcommittee Chair Sean Patrick
Maloney for the great work he did last Congress. He worked tirelessly
to improve our Coast Guard and strengthen the U.S. maritime industry
and we will work to build upon those efforts. He leaves big shoes to
fill.
The U.S. maritime industry includes four major components: the
internationally trading U.S. flagged fleet, the domestic (or Jones Act)
trades, shipbuilders, and U.S. ports. Commercial shipping carries more
than 95 percent by volume of U.S. overseas trade. And yet, the presence
of the U.S. flag fleet operating in international trade is diminishing.
In the past 35 years we've seen the U.S. flag fleet drop from over 850
vessels to merely 85. The U.S. merchant marine, which provides a living
wage to its American mariners, pays taxes in America, and complies with
American regulations simply cannot compete with foreign fleets that pay
little to no taxes, comply with the bare minimum regulations, and pay
substandard wages.
The Merchant Marine Act of 1920 or Jones Act safeguards our country
and economy and provides guaranteed work to American merchant mariners;
ensuring government and civilian goods, people and equipment are
carried by U.S. flagged ships and U.S. citizens. The domestic Jones Act
trade includes more than 41,000 vessels, not including fishing vessels.
In my district, which encompasses Santa Barbara and San Luis Obispo
Counties, and portions of Ventura County, maritime and seafaring is an
essential way of life. With the Ports of Los Angeles and Long Beach
just to the south and the Pacific Ocean to the west, our community is
rich in maritime heritage. My district is home to a vibrant passenger
vessel industry but in the wake of this pandemic, much of this industry
has had to shut down its business and furlough employees.
Many passenger vessels operating in the Jones Act trade have lost
the entirety of their 2020 operating season. Of the companies
operating, most have experienced reductions in revenue by as much as 90
percent and have laid off or furloughed as much as 80 percent of their
employees. And while passenger vessels and ferries are one of the few
sectors of the maritime industry to receive Federal assistance, they
were left to compete for this assistance with other modes of passenger
transportation.
The remainder of the maritime industry has been left to fend for
itself. Operators have had to shoulder the burden of the increased
costs of new safety measures, acquiring protective gear and complying
with public health measures while other industries have received
federal assistance. Requests for assistance have gone unanswered while
demand on our ports and cargo carrying U.S. fleet only increases as
American commerce increases.
I applaud President Biden for affirming support for the Jones Act;
the industry needs strong Federal support in order to weather this
storm.
One way to provide immediate assistance is by funding the Maritime
Transportation System Emergency Relief program that was passed into law
last Congress under the leadership of Chairman DeFazio. For the first
time, it created a program within the Maritime Administration to
provide financial assistance to the maritime industry in times of
national emergency. We need to utilize this program and provide funding
to protect American maritime jobs and assist operators struggling to
stay afloat.
As we gather here today to hear from our witnesses on the current
state of the U.S. maritime industry, I want to take a moment to stop
and say thank you to our maritime workforce. These crucial frontline
workers show up day in and day out to ensure our shelves are stocked,
and that Americans get their essentials, while also facing their share
of danger and loss from COVID-19. Without your dedication, we would not
be able to weather this storm. So, thank you.
My hope is that this hearing will help inform the Committee of the
ongoing difficulties facing the maritime industry and identify areas of
support that will allow the industry to emerge stronger than when the
pandemic began. We must ensure the marine transportation system
continues to operate seamlessly and we must protect these essential,
frontline workers. I look forward to hearing from our witnesses.
Mr. Carbajal. I now call on the ranking member of the
subcommittee, Mr. Gibbs, for an opening statement.
Mr. Gibbs. Thank you, Chair Carbajal, and congratulations
on your first hearing as the chair of the Subcommittee on Coast
Guard and Maritime Transportation. I look forward to working
with you in this 117th Congress.
I would also like to welcome to the subcommittee two new
subcommittee members on our side of the aisle: Jeff Van Drew,
who represents the U.S. Coast Guard Training Center Cape May,
through which all enlisted members of the Coast Guard enter the
Service, and the district formerly held by the long-serving
chairman of this subcommittee, Frank LoBiondo; and Nicole
Malliotakis, who represents the U.S. Coast Guard Sector New
York and Station New York, which are both located on Staten
Island. I also thank the witnesses for attending from wherever
they are located today.
I would like to know more about the reports that the U.S.
agriculture exporters are having trouble finding sufficient
containers to meet the needs of U.S. exporters. I am interested
in hearing from witnesses whether the pressure to swiftly
return empty boxes to China has impacted that availability of
containers for U.S. ag exports. I am particularly interested to
learn if the ag exports have been delayed, or have if there has
been a switch back to the use of bulk shipping of ag
commodities.
At the very end of the last Congress, the Maritime
Transportation System Emergency Relief Program was authorized
as part of the National Defense Authorization Act for fiscal
year 2021. I supported the adoption of that program as part of
the T&I Committee amendment, which also included assistance for
port development and mariner education and training. No funds
have been provided for this program.
Thirty-eight maritime organizations, including two
represented here today, have sent a letter to Congress seeking
emergency relief under the new program. The letter emphasizes
an overall annual decrease in maritime commerce in 2020.
However, the letter does not address the unprecedented surge in
traffic at U.S. ports which has occurred since August and is
expected to last through this spring.
I am interested in hearing from the witnesses what the
industry's emergency relief needs are in light of the ongoing
historic increase in container traffic at U.S. ports. And we
are especially seeing bottlenecks at our L.A. and Long Beach
Ports, and I know that today, the Wall Street Journal even had
an article about that.
Finally, I understand that the myriad of new, conflicting,
and ad hoc travel restrictions around the world has led to
delays in planned crew changes. This has left many mariners
trapped on their ships, unable to disembark or travel through
the countries from which they were scheduled to depart for
home. I have read that as many as 300,000 mariners have been
caught on ships well past the point of which they were due to
rotate off. I am interested in whether any U.S. mariners have
faced these difficulties, and, if so, what actions have been
taken to allow reasonable crew changes to proceed.
Again, I look forward to learning of the impacts of the
COVID-19 pandemic on the U.S. maritime transportation system,
ranging from U.S. shipbuilders and operators to our ports and
marine terminal operators.
[Mr. Gibbs' prepared statement follows:]
Prepared Statement of Hon. Bob Gibbs, a Representative in Congress from
the State of Ohio, and Ranking Member, Subcommittee on Coast Guard and
Maritime Transportation
Thank you, Chair Carbajal, and congratulations on your first
hearing as the Chair of the Subcommittee on Coast Guard and Maritime
Transportation. I look forward to working with you in the 117th
Congress.
I'd also like to welcome two new Subcommittee Members on this side
of the aisle: Jeff Van Drew, who represents U.S. Coast Guard Training
Center Cape May through which all enlisted members of the Coast Guard
enter the Service, and the District formerly held by the long-serving
Chairman of this Subcommittee, Frank LoBiondo; and Nicole Malliotakis,
who represents U.S. Coast Guard Sector New York and Station New York,
which are both located on Staten Island. I also thank the witnesses for
attending from wherever they are located today.
I would like to know more about reports that U.S. ag exporters are
having trouble finding sufficient containers to meet the needs of U.S.
exporters. I am interested in hearing from witnesses whether the
pressure to swiftly return empty boxes to China has impacted that
availability of containers for U.S. ag exports. I'm particularly
interested to learn if ag exports have been delayed, or if there has
been a switch back to the use of bulk shipping for ag commodities.
At the very end of the last Congress, the Maritime Transportation
Emergency Relief program was authorized as part of the National Defense
Authorization Act for FY '21. I supported adoption of that program as
part of a T&I Committee amendment which also included assistance for
port development and mariner education and training. No funds have been
provided for this program.
Thirty-eight maritime organizations, including two represented here
today, have sent a letter to Congress seeking emergency relief under
the new program. The letter emphasizes an overall annual decrease in
maritime commerce in 2020. However, it does not address the
unprecedented surge in traffic at U.S. ports which has occurred since
August and is expected to last through the spring. I am interested in
hearing from the witnesses what the industry's emergency relief needs
are in light of the ongoing historic increase in container traffic at
U.S. ports.
Finally, I understand that the myriad of new, conflicting, and ad
hoc travel restrictions around the world has led to delays in planned
crew changes. This has left many mariners trapped on their ships,
unable to disembark or to travel through the countries from which they
were scheduled to depart for home. I have read that as many 300,000
mariners have been caught on ships well past the point at which they
were due to rotate off. I am interested in whether any U.S. mariners
have faced these difficulties, and if so, what actions have been taken
to allow reasonable crew changes to proceed.
Again, I look forward to learning of the impacts of the COVID-19
pandemic on the U.S. Maritime Transportation System, ranging from U.S.
shipbuilders and operators to our ports and marine terminal operators.
Mr. Gibbs. Thank you, Chairman, and I yield back. And thank
you to all the workers out there that are doing their best, as
you said, fighting, trying to do all this under these
challenging times of COVID-19. I yield back.
Mr. Carbajal. Thank you, Mr. Gibbs.
I now would like to recognize our chairman of the T&I
Committee, Mr. DeFazio.
Mr. DeFazio. Thanks, Chairman Carbajal, and congratulations
on your new position. I know you represent a good section of
coast there in California and I know you have a deep interest
in maritime issues.
We are about to do another COVID relief package. We have
done several. Unfortunately, the maritime industry has not been
included in any of these. As the chairman said, I did write,
and we did pass the Maritime Transportation System Emergency
Relief Act last Congress. It was in the National Defense
Authorization Act, and became law January 1st.
We are giving the Maritime Administration specific
emergency authority to distribute financial relief and
assistance to any dramatically impacted links in the supply
chain during times of emergency, whether it is a pandemic or
something else. And we are here today, hopefully, to begin to
make the case to our fellow colleagues on the Appropriations
Committee that this is something that should be funded this
next year.
Beyond that, the chairman touched on the issue of the Jones
Act, and the fact that the U.S. fleet has shrunk to a minuscule
size in international trade. We cannot, and should not, have to
compete with foreign-flag vessels that are flagged in countries
that really don't exist, like Liberia. It used to be the Coast
Guard, a couple of retired Coasties were running Liberia out of
an office in Virginia. I don't know if they still are. And as I
have said to those particularly in the cruise industry, if you
need help, call the Liberian Navy. Oh, they don't have one.
We simply have to rebuild our domestic fleet, and the Jones
Act is absolutely key to that. This President has already
mentioned his strong support for the Jones Act, unlike the last
one, who didn't even know what it was, and his feckless so-
called economic adviser, Larry Kudlow, who wanted to grant
waivers or do away with the Jones Act.
So, I think we are beginning a building phase for America
here, or rebuilding phase. We used to be a great maritime
nation. We can be one again. But we can't compete with virtual
slave labor, poorly maintained ships, et cetera. So it is time
to strike out, level the playing field, and rebuild. As our
President says, build back better, and we are going to build
back better.
[Mr. DeFazio's prepared statement follows:]
Prepared Statement of Hon. Peter A. DeFazio, a Representative in
Congress from the State of Oregon, and Chair, Committee on
Transportation and Infrastructure
Thank you, Chairman Carbajal and Ranking Member Gibbs for convening
this hearing. After hearing excellent testimony from witnesses who
represent workers across all modes of transportation last week, this
hearing allows the committee to more closely examine the impacts of the
COVID-19 pandemic on the U.S. maritime supply chain and the maritime
workforce as well as strategies to improve our vital maritime
transportation industry.
In the year since the virus was first detected in the United
States, the maritime industry has endured significant hardships and has
experienced substantial impacts to business.
It is vitally important that this committee understand how the
pandemic has affected the reliability and efficiency of our maritime
industry and its workers, the gaps that still exist in protecting the
workforce from the virus, the lessons that have been learned from the
Federal Government's response to the pandemic so far, and potential
next steps to better protect the maritime industry and workforce from
COVID-19 and any future public health crisis we may confront.
With so much of U.S. trade and our national economy dependent on a
seamlessly efficient global maritime supply chain, it is critical that
we understand the impacts and implications moving forward as we shape
recovery actions and future responses to national emergencies.
The situation is complicated by the fact that certain portions of
the industry were not faring well before the pandemic. The
internationally trading fleet for instance, has shrunk to a paltry 85
vessels and carries less than 1.5 percent of the goods entering and
exiting our ports. Without a robust U.S. flag maritime industry, we
would not have the mariners needed go to war or supply our
internationally deployed members of the military.
Make no mistake about it; our Nation will recover from this
pandemic. The question is, what will be left of our maritime industry?
Unless we begin now to take constructive actions to shore up and
support all sectors in our maritime supply chain--from Coos Bay to
PortMiami--we will only frustrate our efforts to revitalize our
economy. The economy cannot recover without a working maritime supply
chain.
The critical workers employed throughout our maritime
transportation system have kept vital goods moving to medical
professionals and first responders, have ensured that our Nation's
shelves remain stocked, and have enabled commerce to continue flowing
during these dangerous and uncertain times.
I realize that the Congress has already committed trillions in
Federal aid to address the fall-out from the pandemic; however, no
dedicated funding has been provided to assist the maritime
transportation system.
That is why I developed the Maritime Transportation System
Emergency Relief Act (MTSERA) last Congress which was included in the
FY21 NDAA and subsequently became law on January 1, 2021. MTSERA
finally provides the Maritime Administration with specific emergency
authority to distribute financial relief and assistance to each link in
the maritime supply chain.
That is why this morning's hearing is important. We need to
understand the needs in order to best tailor assistance. But in doing
so, we must first think holistically.
It will do little good to address the financial issues affecting
our marine terminal operators, and do nothing to ensure that our
longshore workers and Coast Guard service members have the protective
gear they need to stay safe and healthy on the job.
Moreover, we can help our U.S. flagged fleet in the short term with
financial assistance, but if we do not address the system of unfair
international competition created by the flag-of-convenience system,
the fleet will not grow. This is our opportunity to ``Build Back
Better.''
Too much of our economic recovery and future prosperity rides on
what we do over the next couple of months to ensure that we have a
maritime industry, workforce, and supply chain able to move the
Nation's commerce reliably and efficiently. I urge members to join me
in that effort.
And with that, I want to extend my thanks to our witnesses for
making themselves available. I look forward to your participation in
this important hearing.
Mr. DeFazio. With that, I yield back the balance of my
time.
Mr. Carbajal. Thank you, Mr. Chairman.
With that, let me move on to our T&I Committee ranking
member, Mr. Graves. But before you go, Mr. Graves, I wanted to
take a minute to also recognize the other Graves on the
committee, Garret Graves, for sending us all those wonderful
king cakes. Thank you very much.
I was going to thank Sam Graves, and I realized it was
Garret Graves who sent us those cakes, so thank you very much.
With that, Mr. Graves. Actually, I am just informed that
Mr. Graves is not here, so we will move on.
I now would like to welcome the witnesses on our panel.
First, we have Ms. Lauren Brand, president of the National
Association of Waterfront Employers; Mr. Ben Bordelon, chairman
of the Shipbuilders Council of America; Mr. Mario Cordero,
executive director, Port of Long Beach, on behalf of the
American Association of Port Authorities; Mr. Jim Patti,
president, Maritime Institute for Research and Industrial
Development, on behalf of USA Maritime; Mr. Michael Roberts,
senior vice president, Crowley Maritime, on behalf of the
American Maritime Partnership; and Mr. Del Wilkins, president,
Illinois Marine Towing, on behalf of the American Waterways
Operators. Thank you for being here today, and I look forward
to your testimony.
Before we begin, I would like to recognize Representative
Garret Graves to say a few words about Mr. Bordelon.
Mr. Graves of Louisiana. Thank you, Mr. Chairman, and I am
glad you enjoyed the Mardi Gras king cake.
I want to introduce Mr. Ben Bordelon, who is chairman of
the Shipbuilders Council of America. Of course, that is the
national trade association that represents all of the domestic
shipbuilders, the shipyards that often repair our Navy and
Coast Guard vessels and build that fleet, as well as commercial
vessels in every class, in accordance with the Jones Act. And
that is really what represents our industrial base in the
shipbuilding industry.
Ben grew up in south Louisiana. We represent a large number
of the employees of Bollinger Shipyards. He was a graduate of
LSU, where he was an All-SEC football player. And I see my
friend Mr. Lowenthal. Alan, he went on to play professional
ball for the Chargers over in California. But Benis one of
those guys that worked his way up from project manager to vice
president for repair, and, ultimately, to CEO of Bollinger
Shipyards.
Most importantly, Mr. Chairman, I look forward to hearing
about how this important economic engine in south Louisiana,
Bollinger Shipyards, and, of course, wearing the hat as the
chairman of the Shipbuilders Council of America, how these
shipyards all across the country are faring during COVID, and
to hear how we could best provide support to the shipbuilding
industry around the United States, in terms of trying to help
them sustain through this COVID pandemic, including possibly
through the markup we are going to be doing tomorrow.
So I welcome Mr. Bordelon and all the witnesses, and look
forward to your testimony.
Thank you, Mr. Chairman.
Mr. Carbajal. Thank you, Mr. Graves.
I now would like to recognize Representative Davis to say a
few words about Mr. Wilkins.
Mr. Davis. Thank you, Mr. Chairman, and congratulations to
you on your new assignment as chair of this subcommittee. As a
guest of the subcommittee, I doubt I am able to come and sit at
many of your hearings, but I wish you and also Ranking Member
Gibbs the best.
And I will say, too, you know, especially succeeding my
good friend Mr. Maloney, the bar was pretty low for success for
you after Sean Patrick. So you are going to be able to do
extremely well, and we got a lot of high hopes for you, Mr.
Carbajal.
I do want to also say thanks to Garret Graves, too, for the
king cakes. And I certainly hope that none of you got the same
note I did that actually told me he wished I would choke on the
plastic baby found inside. But I took that as a joke, not an
insult from my fellow colleague on our side of the aisle and my
good friend from Louisiana.
But I am here to actually introduce a very good friend of
mine, and that is Del Wilkins. Del is a champion for waterways
and workers in the industries that use the waterways, not just
in my home State of Illinois, in his home State of Illinois,
but throughout our Nation.
He currently serves as the president of Illinois Marine
Towing and the vice president of northern operations and
business development at Canal Barge. And additionally, he
serves as the waterways chairman on the Illinois Chamber of
Commerce Infrastructure Council, and as a board member of the
American Waterways Operators.
As someone who has spent most of his career in the
waterways industry, there is no doubt Mr. Wilkins will provide
a wealth of knowledge at today's hearing on the state of the
U.S. maritime industry.
I looked at the rest of the witnesses, too. I am honored to
be able to sit here in this subcommittee with you all today.
And I do want to thank my friend, Del, for testifying.
I yield back the balance of my time.
Mr. Carbajal. Thank you, Mr. Davis.
Without objection, our witnesses' full statements will be
included in the record. Since your written testimony has been
made a part of the record, the subcommittee requests that you
limit your oral testimony to 5 minutes.
Ms. Brand, you may proceed.
TESTIMONY OF LAUREN K. BRAND, PRESIDENT, NATIONAL ASSOCIATION
OF WATERFRONT EMPLOYERS; BEN BORDELON, CHAIRMAN, SHIPBUILDERS
COUNCIL OF AMERICA; MARIO CORDERO, EXECUTIVE DIRECTOR, PORT OF
LONG BEACH, ON BEHALF OF THE AMERICAN ASSOCIATION OF PORT
AUTHORITIES; C. JAMES PATTI, PRESIDENT, MARITIME INSTITUTE FOR
RESEARCH AND INDUSTRIAL DEVELOPMENT, ON BEHALF OF USA MARITIME;
MICHAEL G. ROBERTS, SENIOR VICE PRESIDENT, CROWLEY MARITIME, ON
BEHALF OF THE AMERICAN MARITIME PARTNERSHIP; AND DEL WILKINS,
PRESIDENT, ILLINOIS MARINE TOWING, ON BEHALF OF AMERICAN
WATERWAYS OPERATORS
Ms. Brand. Thank you very much. Good morning, Chairman
Carbajal, Ranking Member Gibbs, and members of the
subcommittee. My name is Lauren Brand, and I am the president
of the National Association of Waterfront Employers.
The members of NAWE and I thank you for this opportunity to
relay what we are experiencing during these unprecedented
times. NAWE is the voice for U.S. marine terminal operators,
stevedores, and operating port authorities.
Our members are U.S. entities who are responsible for
safely and securely transporting freight and passengers between
vessels, trucks, and rail at ports in 34 States and Puerto
Rico.
Our terminals are located on the Atlantic, Pacific and gulf
coasts, the Great Lakes, and the inland waterway system.
Members also include the associations responsible for labor
relations and contract negotiations with the ILA and ILWU in
all coastal States. NAWE's members hire labor, fund the
purchase of cargo-moving equipment, construct intermodal
infrastructure and design systems that track each shipment.
I will present three issues today: prioritize vaccinations
in authorized ports at CDC-approved inoculation sites; address
funding of the Maritime Transportation System Emergency Relief
Program [MTSERA]; and promote innovative port and intermodal
infrastructure assistance programs for a network of
transportation corridors versus modal silos.
The health and safety of frontline portworkers remains our
number one priority. We have redesignated operating areas and
implemented protocols that meet or exceed CDC's guidelines. Now
we need vaccines for women and men who work on the waterfront.
To quote the leaders of the ILA, ILWU, PMA and USMX, ``in
recent weeks, COVID infections among frontline portworkers have
reached crisis levels in many locations. . . . [A]t the Ports
of Los Angeles and Long Beach, . . . almost as many longshore
workers tested positive in the first 3 weeks of 2021 as in the
first 10 months of the pandemic . . . . Other port regions
report similar, troubling increases.''
At times, we are facing a shortage of workers. We
respectfully request that the CDC work with States to designate
gateway port authorities and terminals as sites where all
essential waterfront and transportation workers can be
inoculated.
NAWE's members thank Chairman DeFazio and members of this
committee for their leadership and steadfast support for
America's maritime industry. Our members handle containers
filled with consumer goods and manufacturing parts, bulk
products needed to build roads, U.S. grown agriculture and U.S.
manufactured cars and heavy equipment exported to other
nations, petroleum products needed to propel trucks, trains,
planes and automobiles, and, yes, they handle millions of units
of PPE and equipment needed to fight COVID. They are also
responsible for the safe, secure transfer of passengers,
luggage, and provisions onto and off of large and small
vessels, a sector of the industry that has been devastated.
MTSERA is the only program that has been made available to
this sector to defray costs incurred since March 2020, fighting
to safely work. Yesterday, the reconciliation amendment was
issued with no funding for the industries covered in MTSERA. We
respectfully encourage this committee to consider funding
MTSERA.
Additionally, yesterday, amendments to the Longshore Act
which are highly detrimental to maritime employers, have been
proposed without consideration or action by this committee. I
welcome the opportunity to discuss this important issue further
during this hearing's Q&A session.
The U.S. transportation system was designed in response to
the market. The market controls all cargo orders, builds
distribution centers to accommodate shipments, and orders the
trucks, chassis and railcars needed to move it all.
A consumer shift from buying services to buying goods has
led to the saturation of the maritime lane in the Pacific
Southwest and pushed this part of the import supply chain to
its limits. The volumes flowing through this trade lane change
faster than the system can reinvent itself.
The good news is that union dockworkers have been reliable
partners and eastbound rail transits have sustained scheduled
services. And while these challenges are most pronounced in one
region of our Nation, they demonstrate the risk to the system
posed by the current pandemic.
We encourage the development of port and intermodal
infrastructure assistance programs and policies that address
our system as a network of transportation corridors versus
modal silos.
For the record, I must let you know that the U.S. Coast
Guard has applied common sense and been very thorough while
conducting their mission and interactions with marine terminal
operators and stevedores during this pandemic, and for that, we
thank them.
In summary, NAWE's members remain committed to ensuring the
intermodal transportation needs of the U.S. are met, and we
look forward to your leadership in the 117th Congress, and your
continued support for the maritime industry.
[Ms. Brand's prepared statement follows:]
Prepared Statement of Lauren K. Brand, President, National Association
of Waterfront Employers
Good morning, Chairman Carbajal, Ranking Member Gibbs, and members
of the Subcommittee. Please accept our congratulations; we in the
maritime industry look forward to your leadership in the 117th
Congress. My name is Lauren Brand, and I am the President of the
National Association of Waterfront Employers (NAWE). The members of
NAWE and I thank you for this opportunity to relay what we are
experiencing during these unprecedented times.
NAWE is the voice for U.S. marine terminal operators, stevedores,
and operating port authorities. Our members are the U.S. entities who
are responsible for safely and securely transporting freight and
passengers between vessels, trucks and rail at U.S. ports in 34 States
and Puerto Rico. Our terminals are located on the Atlantic, Pacific and
Gulf Coasts, the Great Lakes and a portion of the inland waterway
system. Members also include the associations responsible for labor
relations and contract negotiations with the ILA and the ILWU in all
coastal states. I would like to request my formal written remarks be
entered into the record at this time.
We would like to share three items with you today:
1. Prioritization of vaccinations for the women and men who work
on the waterfront so that we can keep freight moving. NAWE has written
to the Governors of thirty-four States and Puerto Rico seeking
vaccination priorities. We respectfully request you instruct the Center
for Disease Control (CDC) to recognize ports as viable inoculation
sites for transportation workers.
2. Funding the Marine Transportation System Emergency Relief
Program (MTSERA). We thank Chairman DeFazio for his leadership in
drafting this and applaud you for your support in passing this
important piece of legislation last Congress. $3.5B will help the
maritime industry begin to recover.
3. Promotion of innovative port and intermodal infrastructure
assistance programs and policies that address our system as a network
of transportation corridors vs. modal silos.
______
Prioritize vaccinations for the women and men who work on the
waterfront so that we can keep freight moving.
NAWE's members hire labor, fund the purchase of cargo moving
equipment, construct intermodal infrastructure and design systems that
track each shipment. At the hearing held on May 29, 2020, I reported on
significant COVID-19 related challenges. Today, the health and safety
of waterfront workers remains our number one priority. We have
redesigned operating areas and implemented protocols that meet or
exceed CDC guidelines. Now we need vaccines for the women and men who
work on the waterfront.
To quote from a letter issued by the leaders of the ILA, ILWU, PMA
and USMX \1\: ``Since the start of the pandemic last year, America's
maritime workforce has answered the call of duty to keep our ports open
for business and warehouses and store shelves fully stocked . . . In
recent weeks, however, COVID infections among frontline port workers
have reached crisis levels in many locations . . . For example, at the
Ports of Los Angeles and Long Beach, America's largest port complex,
almost as many longshore workers tested positive in the first three
weeks of 2021 as in the first 10 months of the pandemic, from March
through December of 2020. Other port regions report similar, troubling
increases.''
---------------------------------------------------------------------------
\1\ International Longshoremen's Association (ILA) is the largest
union of maritime workers in North America, representing upwards of
65,000 longshoremen on the Atlantic and Gulf Coasts, Great Lakes, major
U.S. rivers, Puerto Rico and Eastern Canada. The International
Longshore and Warehousemen's Union (ILWU) represents approximately
40,000 longshoremen in the States of Alaska, Washington, Oregon, Hawaii
and California. The Pacific Maritime Association (PMA) negotiates and
administers the maritime labor agreements with the ILWU for the 29 U.S.
West Coast ports. The United States Maritime Alliance, Ltd. (USMX) is
an alliance of container carriers, direct employers, and port
associations serving the East and Gulf Coasts of the U.S.
---------------------------------------------------------------------------
At times we are facing a shortage of workers. Imagine the number of
employees needed to be ready for a 24-hour security detail . . . and
then they are quarantined due to exposure to COVID-19. How quickly can
a critical team be replaced? We respectfully request that CDC work with
States to designate gateway port authorities and terminals as sites
where all essential waterfront and transportation workers can be
inoculated. Vaccination sites designated at ports for essential workers
represent a practical way to protect the waterfront and ensure the
integrity of the supply chain. This will be an expedient way to serve
thousands who work in or around a single location. Ports have the space
to make this happen. We are willing to work with the CDC and States on
this initiative.
______
Funding the Marine Transportation System Emergency Relief Program
(MTSERA).
The MTSERA program is vital to this industry. It is historic in
that rather than passing a one-and-done stimulus program, MTSERA is a
true disaster relief program that includes this pandemic situation.
Declared March 13, 2020, the pandemic has been raging for eleven months
now, and is projected to continue its impact well into 2022. Funding
MTSERA at $3.5B or more, will begin to enable this industry to recover.
Each of our members is a key leader in the movement of freight. They
handle containers filled with consumer goods and manufacturing parts,
bulk products needed to build roads, agriculture shipped overseas to
feed other nations, export cars and heavy equipment that is made in the
U.S., petroleum products needed to propel trucks, trains, planes and
automobiles, and, yes, they handle thousands and thousands of boxes of
PPE and equipment needed to fight COVID. The expenses incurred meeting
CDC guidelines for sanitation, separation and protection of workers is
steadily increasing. Some have been able to continue infrastructure
projects, while others have had to put them on hold. A full twenty-four
percent are also responsible for the safe, secure transfer of
passengers, luggage and provisions onto and off of large and small
vessels. These are U.S. taxpayers who will have not been able to work
for over 18 months or more before this pandemic is over. We are losing
uniquely skilled workers during this down time. The resulting financial
hit is a hard, stressful blow to employers and workers alike. MTSERA is
the only program that has been made available to this sector.
______
Promotion of innovative port and intermodal infrastructure assistance
programs and policies that address our system as a network of
transportation corridors vs. modal silos.
Which leads me to the question: how quickly can freight move in a
system that is stretched beyond its capacity? You may be aware that the
maritime trade lane into the Pacific Southwest is saturated. This is
primarily due to a consumer shift from buying services to buying goods.
Our intermodal transportation system was designed in response to
the market. The market demanded where roads and rail would be built and
selected their ports of entry. The market defined expected cargo flows,
built distribution centers to accommodate their projected shipments,
and ordered the number of trucks and chassis needed to move it all.
COVID-19 has changed the volumes flowing through this trade lane faster
than the system can reinvent itself.
Today's demand for retail products, agricultural exports, PPE and
equipment to fight COVID-19, finished components to support domestic
manufacturing, raw material to support heavy industry, and continual
personal protective equipment has pushed the system to its limits.
Ninety-eight percent of the international fleet of container ships are
currently being utilized and are at sea. Using our nation's number one
gateway of Los Angeles and Long Beach as an example, this import supply
chain has been challenged with record-breaking volumes of cargo orders.
As a result, a series of related challenges have clogged the import
supply chain:
the inland distribution centers are operating at, or
above, designed capacity,
because inland warehouses are full, import cargo is being
stored ``on wheels'',
and containers are being parked in auxiliary yards
between the port and the warehouse which has essentially exhausted the
supply of chassis.
What is the impact to terminals? Loaded containers are dwelling on
marine terminals for eight days; marine terminals have been designed to
securely store containers for half that amount of time. Today cargo
volumes at terminals are ``dense''; containers that are normally
stacked 3-high are now being stored 5-high.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chart source: U.S. Bureau of Economic Analysis
Here is one example of what is happening: a trucker is dispatched
to pick up your container, which is now probably at the bottom of that
stack, requiring the stevedore to move four other containers to
retrieve your load. These added container moves degrade terminal
efficiency while vastly increasing operating costs . . . and the truck
driver has been kept waiting. The good news is that union dockworkers
have been reliable partners and are working five-plus days a week and
Eastbound rail transits have sustained scheduled services.
As of last week, there were 37 container ships at anchor outside
the two ports of Los Angeles and Long Beach, awaiting a berth in port.
We estimate that equates 185,000 loaded containers at anchor awaiting
off-load. This is the scope and scale of our challenge. Every shipper
is anxiously awaiting their cargo. Every load is critical. Everyone
wants their goods yesterday. We recognize this pressure, as these goods
are necessary to bolster our Nation's economic engine.
While these challenges are most pronounced in one region of our
nation, they demonstrate the risk to the system posed by the current
pandemic and the immediate need to prioritize maritime workers for
vaccines and invest in the industry's ability to withstand the
financial pressures and recover. To date, operations in other regions
have been able to handle issues as they arise, but even where terminals
are not experiencing significant operational delays, they still
requiring additional sanitizing--especially between shifts--to allow
safe work in the pandemic.
We encourage the development of port and intermodal infrastructure
assistance programs and policies that address our system as a network
of transportation corridors vs. modal silos. And we stand ready to work
collaboratively with others in the maritime industry, State and Federal
entities to innovate and implement such programs.
In summary, Marine terminal operators, stevedoring firms and
operating port authorities remain committed to ensuring the intermodal
transportation needs of the United States are met. For the record, I
must let you know that the U.S. Coast Guard has been thorough and
applied common sense while approaching their mission and in
interactions with marine terminal operators and stevedores during the
pandemic. For that we thank them.
We appreciate the dedication of this Subcommittee and your
continued support for the maritime industry.
Mr. Carbajal. Thank you, Ms. Brand.
Mr. Bordelon, you can proceed.
Mr. Bordelon. Thank you. And on behalf of the Shipbuilders
Council of America, I would like to thank Chairman Carbajal,
Ranking Member Gibbs, and members of the committee for the
opportunity to provide testimony on the impact of the COVID-19
pandemic to the U.S. shipyard industry. I ask that my entire
testimony be submitted for the record.
I am here today as chairman of SCA, which represents both
shipyards and suppliers that comprise the critical domestic
shipyard industrial base. I am a proud third-generation
shipbuilder, and I serve as president and CEO of Bollinger
Shipyards in south Louisiana. Founded as a machine shop by my
grandfather, Donald Bollinger, in 1946, here we are, 75 years
later, and still today remain the largest privately owned and
operated shipbuilder in the United States.
The U.S. shipyard industrial base is a diverse and critical
manufacturing sector of our Nation's economy. Shipyards are
engaged in designing, building, maintaining and repairing
vessels of all sizes for Government customers, local and State
governments, and the 40,000 commercial vessels that operate in
domestic commerce.
While our industry has faced enormous challenges throughout
the pandemic, I am proud to report that, as a designated
essential industry, your American shipyards never shut down.
Our workers continue cutting steel and coming to work despite
some very challenging circumstances.
In response to the pandemic, the SCA established an
emergency COVID-19 task force that met weekly, starting March
2020. The task force gathered information and shared industry
best practices amongst our membership, our Federal partners,
and with Congress.
Shipyards responded immediately and took action by
establishing their own crisis response teams and implementing
new policies, like limiting company travel and modifying work
and shift schedules. In addition, managing supply chain
disruptions became essential to mitigate production delays.
Because of the pandemic, the biggest drivers of schedule
and cost impacts have been increased rates of absenteeism,
sometimes as high as 30 percent at some of our member yards,
unexpected loss of supervision, and delayed equipment
deliveries due to supply chain challenges.
While these and other COVID-related costs have impacted
every area of our business from our workforce and finance teams
to our IT and technical infrastructure, they have been and
remain necessary to keep our people safe and our programs on
schedule. SCA and its members are appreciative of Congress
passing the CARES Act in 2020, but the scale of the pandemic's
impact have grown since then.
The lack of appropriate funds for pandemic-related expenses
has placed a significant burden on the shipyard industrial base
due to the uncertainty of if, when, and how reimbursements may
come. As the Congress considers recovery efforts, SCA would
support incentivizing investment in vocational training and
development of critical skill workers.
The Congress' continued support of and the administration's
enforcement of existing laws will also be key to our industry's
recovery in the wake of the pandemic. SCA was pleased that in
the first week in office, President Biden issued an Executive
order reaffirming his support for the Jones Act, and identified
it as a critical tool to support the development of American
jobs.
In addition to supporting the Jones Act, SCA encourages the
Congress to provide stable and predictable budgets for the U.S.
Navy and Coast Guard that are necessary to grow and sustain
those fleets for national security purposes. We are very proud
that our shipyards and suppliers have met the challenge of the
pandemic, and we look forward to working with you all to
continue those efforts.
Thank you, again, Chairman Carbajal and Ranking Member
Gibbs, for allowing me today the opportunity to testify along
such distinguished witnesses. I look forward to your questions.
Happy Mardi Gras.
[Mr. Bordelon's prepared statement follows:]
Prepared Statement of Ben Bordelon, Chairman, Shipbuilders Council of
America
On behalf of the Shipbuilders Council of America (SCA) I would like
to thank Chairman Carbajal, Ranking Member Gibbs and members of the
Committee for the opportunity to provide testimony on the state of the
U.S. shipyard industry, specifically the impact that COVID-19 has had
on our industrial base and the opportunities we see on the horizon. I
ask that my entire testimony be submitted for the record.
I am testifying today as Chairman of the Shipbuilders Council of
America, the national trade association for the U.S. shipyard industry.
SCA is comprised of 83 member shipyard facilities and 104 industry
partner member companies, many that are small and represent the vital
supply and logistics chain that comprise the U.S. shipyard industrial
base.
I am a proud third-generation shipbuilder and serve as president
and CEO of Bollinger Shipyards. Founded as a machine shop by my
grandfather, Donald Bollinger, in 1946, today we are the largest
privately owned and operated shipbuilder in the United States and a
leading designer and builder of high performance military patrol boats,
ocean-going double hull barges, offshore oil field support vessels, tug
boats, rigs, liftboats, inland waterways push boats, barges, and other
steel and aluminum products. While we have both commercial and
government customers, we are especially proud of our work for the
United States government where we have designed, built, and delivered
more than [182] and counting U.S. Navy and Coast Guard vessels since
1984--over 165 of those high-speed Coast Guard cutters.
The U.S. shipyard industrial base is a diverse and critical
manufacturing sector of our nation's economy. Shipyards are engaged in
building, maintaining and repairing vessels of all sizes for the U.S.
Navy, U.S. Coast Guard, U.S. Army, NOAA, Maritime Administration, local
and state government customers and the 40,000 commercial vessels that
operate in domestic commerce.
The ships built for these customers are some of the most
technologically advanced in the world and are only possible because of
the significant contributions of U.S. shipyard workers and the
associated supply chain that support jobs in all 50 states.
COVID Impacts to the Industry
Though the COVID-19 pandemic greatly impacted the shipyard
industry, I am proud to report that with the workforce designated
essential workers, your American shipyards never shut down and have
been cutting steel and coming to work throughout the past year. The
COVID-19 pandemic impacted the U.S. shipyard industry by introducing
additional costs and delays related to production, workforce and our
critical supply chains and there is uncertainty as to how those delays
and costs will ultimately be addressed by the government and commercial
customers.
In response to the pandemic, the SCA established an emergency
COVID-19 task force that met weekly beginning mid-March 2020. The task
force conducted industry surveys, shared industry best practices and
resources and provided this information to our government partners,
including the Navy Industrial Base Task Force, the Maritime
Administration and the DHS Maritime Security Committee. Additionally,
we know the dedication our members have to their teams and while they
were sharing essential information with us, we were also providing them
with real-time information from Washington so they could plan and make
the best decisions for their companies and workforces. Regular
communication with those groups helped facilitate questions related to
testing, personal protective equipment (PPE) and additional assistance
from the Federal Emergency Management Agency (FEMA).
The shipyard industry has a long culture of safety and we are
dedicated to the health and safety of our employees. When the pandemic
crisis began, our industry was prepared to meet unique demands and
adjusted to protect our workers by shifting our operations, providing
additional PPE and issuing safety guidance as we learned more about the
virus.
Shipyards took immediate action to keep employees safe with many
facilities establishing their own crisis response teams, limiting
company travel and spreading out the work force as much as possible in
our facilities. Additionally, managing supply chain disruptions became
a critical component to mitigate production delays as well as
reassigning our workforce to complete other tasks while those delays
were absorbed. There have been associated costs to these changes in
every area of our business from our workforce and finance teams to IT
and our technical infrastructure to absorb the changes necessary to
continue working while keeping people safe.
The biggest drivers of schedule and cost impacts have been
increased rates of absenteeism, sometimes as high as 30% at some of our
member yards, unexpected loss of supervision, late equipment deliveries
due to other production delays in the supply chain and inability of our
suppliers to travel to oversee complex discussions with our engineers.
Almost a year into the pandemic, facilities are continuing to
adjust to this new normal and implementing innovative policies to limit
workplace spread of COVID-19. Like any industry on the frontlines, we
continue to focus on the health and wellness of our employees and
adjust our work environments to make sure our teams come to work and
leave safely. However, challenges persist and many of our members'
shipyard facilities are expected to face production delays and cost
impacts.
Congress and the Administration need to be aware of the impact our
yards are having in their communities and the essential work they are
completing for the good of our nation. Shipyards were essential
economic drivers in their communities pre-pandemic and will be
essential to the long-term economic recovery of those communities.
During this time when so many in our country are out of work, the jobs
associated with shipbuilding and ship repair have been incredibly
resilient, allowing working people to continue bringing home paychecks
to their families.
CARES Act and Additional Congressional Response to Pandemic
SCA and its members are appreciative of Congress passing the CARES
Act in 2020. Section 3610 of the CARES Act authorized government
contractors to be reimbursed for employees who could not work as a
result of COVID-related closures. The U.S. shipyard industry was deemed
essential from the beginning of the pandemic and shipyards have since
remained in operation. For these companies, Section 3610 has largely
not been applicable.
The scale of the pandemic's impact was not known when the Congress
passed the CARES Act legislation. Then-Under Secretary of Defense
(Acquisition and Sustainment) Ellen Lord testified before the House
Armed Services Committee that without additional funds, the Department
of Defense would have to use modernization and readiness funds to plug
gaps caused by the pandemic. The lack of appropriated funds for those
expenses has placed a significant burden on the shipyard industrial
base due to the uncertainty of if, when, and how reimbursements will be
distributed.
Absorbing these COVID-related costs without the necessary
appropriated reimbursements could seriously jeopardize the shipyard
industrial base which would have a degrading effect on our national
security.
Planning for a Post-Pandemic Shipyard Industrial Base
Our experience with the ongoing pandemic has also reinforced the
industry's need to shore up our domestic manufacturing capabilities,
supply chains, facilities and workforce. In a 2015 report, the Maritime
Administration determined the Economic Benefits of the U.S. shipyard
industry supports nearly 110,000 skilled craftsmen in the Nation's
private shipyards building and repairing America's military and
commercial fleets.\1\ The report found the U.S. shipbuilding industry
supports nearly 400,000 jobs across the country and generates $25.1
billion in income and $37.3 billion worth of goods and services each
year. In fact, the MARAD report found that the shipyard industry
creates direct and induced employment in every State and Congressional
District and each job in the private shipbuilding and repairing
industry supports another 2.6 jobs nationally. This data confirms the
significant economic impact of this manufacturing sector, but also that
the highly-skilled workforce and industrial base needs stability and
predictability to train the next generation of the U.S. shipyard
workforce. We expect MARAD to update this report in the first quarter
of 2021 which will provide us an updated snapshot of where the industry
stands through this pandemic and the concurrent economic downturn.
---------------------------------------------------------------------------
\1\ ``Economic Importance of the U.S. Shipbuilding and Repairing
Industry''. Maritime Administration (MARAD), November 2015
---------------------------------------------------------------------------
U.S. shipyards and shipyard suppliers pride themselves on
implementing state of the art training and apprenticeship programs to
develop skilled craftspeople that can cut, weld, bend and build truly
first of kind vessels and technologically advanced ships. However, the
shipbuilding industry, like so many other manufacturing sectors, faces
an aging workforce.
Our industry has continued to look at best practices for attracting
the next generation workforce by highlighting the opportunities to
learn high-skilled labor and the corresponding wages that can be earned
without a four-year degree. Our shipyards work with regional partners
to establish the curriculum needed for apprenticeship and vocational
education at community colleges and local technical schools.
We encourage the Congress to look at opportunities to incentivize
investment in vocational training and development of these critical
skilled workers. This not only supports the requirements needed for our
military customers but supports additional needs and opportunities in
new commercial markets such as offshore renewable energy.
Providing Market Stability
To grow and develop the next generation of shipyard workers, U.S.
shipyards require market stability across sectors so that companies can
make the required investment in their people and facilities to meet
demand.
The domestic commercial market is sustained by the Jones Act, which
provides market certainty and stability. This law helps to ensure the
existence of a domestic shipbuilding and ship repair industrial base.
We were pleased that in his first week in office, President Joe Biden
issued an Executive Order reaffirming his support for the Jones Act and
identifying it as a critical tool to support the development of U.S.
jobs. The Jones Act sustains a domestic market for which carriers,
operators and shipyards vigorously compete. When the Jones Act is not
enforced or undermined by shortsighted policy, there can be detrimental
influences on the larger domestic maritime industry and U.S. job
creation.
A 2017 decision by the Customs and Border Protection (CBP) has
allowed [certain] foreign-built, foreign-crewed and foreign-owned
offshore supply vessels to operate in violation of the Jones Act. This
has resulted in the cancellation of numerous construction contracts to
build new ``Made in the U.S.A.'' vessels because of the uncertainty
introduced by executive-fiat and in contravention of Congressional
intent. Not only does the cancellation of contracts have an immediate
dampening impact to the domestic industry, but it initiates a vicious
cycle wherein future opportunities could also be reconsidered or
rescinded. The cancellation of contracts also dampens the domestic
industry's ability to invest in their workforce and modernize their
facilities to make them more safe and efficient.
I raise this issue as an example of how a decision by an agency to
not enforce the Jones Act can have an adverse impact on commercial
shipbuilding that reverberates throughout the entire shipyard
industrial base, further raising costs and destabilizing its ability to
support national defense requirements. We encourage the Congress to
consider identifying and closing loopholes to the Jones Act that
currently exist by providing clarity on matters related to visa issues
and heavy lift operations that are integral to success and viability
this critical commercial market.
Instead of seeking to undermine the Jones Act and undermine the
critical shipbuilding manufacturing sector, the United States
government, both the Administration and the Congress, should be
promoting policies that actively encourage the expansion of the
shipyard industrial base.
Efforts by this Committee in its support of the most recent U.S.
Coast Guard Authorization Act provided clarity about the Congressional
intent of the application of the Outer Continental Shelf Lands Act
(OCSLA) to all aspects of development of offshore energy, not just
production. That language, which was adopted into the full FY21
National Defense Authorization Act (NDAA), resulted in several
shipyards confirming orders to construct new vessels to serve the
burgeoning offshore wind market. Again, these policies result in jobs
for American workers--so critical at this time of economic upheaval in
our country.
Other efforts by members of this Committee have also seen the
potential benefits of ensuring access to our own domestic energy
production. As the United States has become the world's leader in
energy production, we should encourage that our domestically produced
natural resources, including LNG, be transported on U.S. vessels under
such policies as proposed by Congressman Garamendi's Energizing
American Shipbuilding Act. Not only would that help us regain a
foothold on the international shipping market where we've ceded ground
to heavily subsidized and government-backed shipyards, but there is a
direct relationship from the construction of LNG tanker vessels to the
recapitalization of our strategic sealift fleets because of the
stabilization it would bring to the shipyard supplier base and
shipyards generally.
In addition to preserving opportunities for commercial shipyard
interests, SCA encourages the Congress to support stable and
predictable budgets for the U.S. Navy and Coast Guard. The recently
released Battle Force 2045 concept would see the fleet grow far beyond
today's 296 ships. Simultaneously, the United States Coast Guard is
undertaking efforts to recapitalize essential assets and programs. To
be clear, SCA advocates for policies and budgets that support our
members' combined interests and refrains from promoting specific
platforms or mixes of ships.
To meet the demands that these plans would require, the U.S.
shipyard industry would need a substantial and sustained investment of
both money and time, in both shipbuilding and readiness.
The increase in shipbuilding and ship repair to meet the Navy's
plan would require U.S. shipyards to expand their work forces and
improve their infrastructure to meet the increased demand for vessels--
a requirement our Nation's shipyards are eager to provide. But to build
these ships in a timely and affordable manner, stable and robust
funding is necessary to sustain those industrial capabilities which
support Navy and Coast Guard shipbuilding. It is important to note that
today many of our shipyards and suppliers that compete to build these
national security assets are sustained by commercial shipbuilding and
repair so they are viable when the time comes to build and repair the
national security fleets.
Congress has the tools to provide for the use of acquisition
strategies that enhance cost reduction rather than requiring the entire
procurement cost of a ship to be funded in one fiscal year. Alternative
funding approaches such as advanced procurement, incremental funding
and block buy contracting could increase stability in U.S. government
shipbuilding plans and increase the number of ships that could be built
for the same amount of procurement funding.
Through the use of advanced procurement, Congress can define the
full cost of a ship in an initial appropriations act but incrementally
defer some appropriated funds to future years. For the shipbuilding
industry and the supplier base, this creates an early financial
commitment which enhances job security and encourages capital
investment. Additionally, advance procurement can reduce the total
construction cost of a ship through improved sequencing or year-to-year
balancing of shipyard construction work and the purchase of batch items
that can be manufactured in an efficient and economic manner.
Incremental funding, where cost is divided into two or more annual
measures, allow for expensive items, such as large Navy ships, to be
procured in a given year while avoiding or mitigating budget ``spikes''
and major fluctuations in year-to-year budget totals. Incremental
funding would also allow construction to start on a larger number of
ships in a given year so as to achieve better production economies. An
added benefit often not considered is a reduction in the amount of
unobligated balances associated with DOD procurement programs.
Beyond that, Congress can consider block buys of ships. Block buy
contracting permits a department to use a single contract for more than
one year's worth of procurement of a given kind of ship without having
to exercise contract options for each year after the first year.
Purchasing ships through block buy contracting would enable shipyards
to leverage ``hot'' production lines--those assembling current ships--
and streamline the acquisition process for these vessels. Additionally,
taking advantage of ``hot'' production lines as opposed to starting new
classes of ships and reducing build ``centers'' can save the government
significant money and get to the target fleet size more rapidly.
In addition to funding the construction of Navy and Coast Guard
vessels, there must be similar commitments to fund the ``tail''--the
maintenance of the current and new ships entering the fleet. It is not
possible to get to the target fleet size if the services do not
maintain the ships that they currently have, for their expected service
lives, while building new ships. Congressional initiatives such as the
recently extended OPN Pilot and relaxing upward obligation requirements
are moving in the right direction. Reversing the Navy's momentum of
cancelling planned modernizations and decommissioning Aegis Cruisers
would help the industrial base as well as keep more ships in the fleet
to meet our ever-increasing commitments around the world.
Another area of significant concern for government fleets is the
recapitalization of the nation's strategic sealift fleet, which ensures
that unitized military cargo can be delivered to the war front.
Currently the average age of the ships in this fleet is nearly 40 years
old, and the number of ships that will reach the end of their
programmed service lives over the next decade will reduce sealift
capacity by more than 25 percent. The Navy, in partnership with
TRANSCOM and MARAD, is working through a plan to recapitalize that
fleet through a combination of service life extensions, acquiring used
commercial ships, and investing in new-build construction at U.S.
shipyards.
In order to build and maintain these ships in as timely and
affordable manner, stable and robust funding as well as stable
construction rates and long-term procurement vehicles are necessary to
sustain those industrial capabilities which support Navy, Coast Guard
and other government shipbuilding and ship maintenance and
modernization programs. These programmatic attributes provide the
horizon and incentives required by industry to make risk-balanced
investments in support of our national defense needs. To meet the
demand for increased vessel construction while maintaining the vessels
we currently have will require U.S. shipyards to expand their work
forces and invest in their physical infrastructure in varying degrees
depending on ship type and ship mix. Therefore, undermining the Jones
Act through lack of proper enforcement directly impacts the ability of
the nation to meet our own national security objectives.
Impact of Foreign Competition in Shipbuilding
Over the last twenty years, with significant government policy and
financial assistance, the global shipbuilding capacity grew
dramatically, primarily in Asia. At its peak Asian shipbuilders had
captured 92% of the world commercial shipbuilding market. Despite the
recent severe and sustained downturn in the world commercial
shipbuilding markets, Asian governments have doubled down on the
support of their shipbuilding industries. Policies like direct
government subsidies and government-supported shipbuilding credit pools
being used in Asian countries will continue to distort the global
shipbuilding market.
A recent UN report notes that ``in several Asian countries,
Governments have taken various initiatives to support the shipbuilding
industry. The use of public funds to finance shipbuilding prompted a
complaint at WTO against the Republic of Korea in November 2018, on
grounds that it may grant subsidies that may have a substantial impact
on the price of ships, ship engines and maritime equipment, affecting
trade flows in these products. At the same time, the shipbuilding
industry in several European countries has called for increased
Government support to help achieve the target of zero-emission shipping
by 2050 (JOC.com, 2018a, 2018b)'' \2\
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\2\ https://unctad.org/system/files/official-document/
rmt2019_en.pdf
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These countries are investing and financing their shipyard
industries because they consider it to be an issue of national
sovereignty. The Congress and Administration need to recognize this
distortion of the shipbuilding markets as they consider the actions
needed to protect and support the U.S. shipyard industrial base. This
begins with ensuring that the Jones Act is fully enforced.
Conclusion
The nation's shipyard industrial base has met the challenge of
COVID-19 and continued to show its value to the nation. The shipyard
worker stayed on the front lines and worked through the pandemic in
difficult conditions. Looking towards the future, continued investment
from Congress is essential to support the U.S. Navy and U.S. Coast
Guard in their recapitalization of critical shipbuilding programs for
their fleets. Simultaneously, the commercial market will continue to
respond to industry demands for domestic shipbuilding, so long as there
is stability and predictability in the market.
On behalf of our members at the Shipbuilders Council of America and
personally as a President and CEO of Bollinger Shipyards, I want to
reiterate my sincerest gratitude for all this Committee has done for
the U.S. maritime industry and ask for continued Congressional and
Administrative support on these initiatives and enforcement of the
Jones Act because it is essential to maintaining the critical U.S.
shipyard industrial base that supports our national security fleets.
Thank you again Chairman Carbajal and Ranking Member Gibbs for
allowing me to testify alongside such distinguished witnesses today. I
look forward to your questions.
Mr. Carbajal. Thank you, Mr. Bordelon.
Mr. Mario Cordero, you may proceed.
Mr. Cordero. Good morning, Chairman Carbajal, Ranking
Member Gibbs, and members of the subcommittee. My name is Mario
Cordero. I am the executive director of the Port of Long Beach.
Today, I am testifying to you as chairman of the board of the
American Association of Port Authorities, the unified voice of
the seaport industry in the Americas.
First, I would like to congratulate a fellow Californian on
being named chairman of this distinguished subcommittee in the
117th Congress. Chairman Carbajal, thank you for your service
to the State's ports and harbors. I would also like to thank
the subcommittee and the full committee chairman, Chairman
DeFazio, and former Chairman Maloney, for your recognition of
the important role played by the ports and your work to
establish the Maritime Transportation System Emergency Relief
Program, and unlock the Harbor Maintenance Trust Fund.
Finally, I would like to recognize and honor the frontline
workers who have died from COVID-19. We have lost many good
people. Our Nation's seaports deliver vital goods for
consumers, facilitate the export of American-made goods, create
jobs, and support local and national economic growth. Ports
also play a crucial role in our national defense, a point
acknowledged through the designation of 17 of our Nation's
ports, including the Port of Long Beach, as strategic seaports
by the Department of Defense.
According to Martin Associates, an internationally
recognized economic and transportation consulting firm, prior
to the outbreak of the COVID-19 pandemic, the total economic
value generated in terms of revenue to businesses, personal
income, and economic output at U.S. coastal ports accounts for
$5.4 trillion, roughly 26 percent of GDP. This research also
showed over 31 million Americans are employed in jobs generated
as a result of port activity.
Since the beginning of the COVID-19 pandemic, AAPA has
remained in regular contact with members to monitor the impact
of the pandemic and to communicate regarding the need for
Federal relief and recovery. I would like to highlight how
impressive the collaboration within the industry has been.
As the former Chair of the Federal Maritime Commission, I
am truly pleased on how the ports across the country, and, in
fact, the world, have worked together to ensure safety of
workers and minimize supply chain disruptions.
However, portworkers are greatly impacted. In California,
cases of COVID-19 among International Longshore and Warehouse
Union members are captured by a dockworker self-service portal,
established by the Pacific Maritime Association, where members
of the ILWU can report they have been tested positive and
qualify for emergency paid sick relief. Since March of last
year, across California, cases reported in the portal total
1,497.
To protect our workforce, minimize disruptions to our
maritime transportation system, and power our economic
recovery, I raise the following issues to this subcommittee:
Number one, we need assistance to prioritize vaccinations
and provide more testing for portworkers and other
transportation system personnel.
Two, we need Congress to fund the Maritime Transportation
System Emergency Relief Program to help ports mitigate COVID-19
impacts and protect workers. The COVID-19 pandemic caused 2020
to be one of the most erratic and volatile years, in terms of
container volumes. By the end of the year, total waterborne
trade volume was down 4.8 percent compared to the prior year,
and the value of trade dropped 11.3 percent, totaling nearly
$200 billion. The cruise industry was closed for nearly the
entire year of 2020, without a date at this point to resume. By
funding this new maritime relief program, Congress can sustain
critical supply chains and ensure that maritime operations
continue at a high level that Americans have come to depend on.
Number three, investments in our Nation's trade
infrastructure will help power economic recovery.
President Biden recently spoke of the need to take a two-
step approach to respond to this pandemic, rescue and recovery.
The first two issues I mentioned, we focus on rescue, but it is
important to also address recovery. Ports build during crisis
and we invest. We serve as an engine for economic prosperity in
our communities and provide access to markets across the globe
for communities nationwide.
AAPA has identified $20 billion in multimodal and rail
access needs at these ports. As populations shift and cargo
volumes grow, we continue to embrace e-commerce. These
investments will be critical to ensuring that the United States
has a 21st-century multimodal freight network to compete
globally and deliver locally.
I noted earlier in my recent remarks at the Port of Long
Beach that in crisis, we build. As we recover from the impacts
of this pandemic, we have an opportunity to transform our
infrastructure.
And finally, we ask that harmful trade practices that have
hurt American consumers and businesses be reevaluated. I
believe we have an opportunity to reassess the country's trade
and tariff policies, and to assist our businesses in conducting
international business. This is vital to our economy.
Chairman Carbajal, Ranking Member Gibbs, and members of the
subcommittee, our Nation's ports are committed to sustaining
critical responsibility in supply chains nationwide. Congress
can help accomplish these goals. Again, I appreciate the
opportunity to testify today and look forward to your
questions. Thank you.
[Mr. Cordero's prepared statement follows:]
Prepared Statement of Mario Cordero, Executive Director, Port of Long
Beach, on behalf of the American Association of Port Authorities
Good morning Chairman Carbajal, Ranking Member Gibbs, and members
of the Subcommittee.
My name is Mario Cordero, and I am the Executive Director of the
Port of Long Beach. However, today I am testifying before you as the
Chairman of the Board of the American Association of Port Authorities
(AAPA). I would like to thank the Coast Guard and Maritime
Transportation Subcommittee and the Transportation and Infrastructure
Committee for working to ensure that our nation's maritime
transportation system remains functional during the ongoing pandemic.
Your recognition of the important role played by our ports and by our
partners throughout the maritime supply chain has been critical, as has
your work to establish the new Maritime Transportation System Emergency
Relief Program. I appreciate the opportunity to be here today to
discuss the impact of the ongoing COVID-19 pandemic on our nation's
port authorities.
Before I continue, I would also like to congratulate a fellow
Californian on being named Chairman of this distinguished subcommittee
in the 117th Congress. Chairman Carbajal, thank you for your service to
the state's network of ports and harbors. I would also like to commend
and congratulate the Committee on passage of the Water Resources
Development Act of 2020, which included a provision to unlock the
Harbor Maintenance fund. This historic, landmark legislation has been
at the forefront of AAPA's advocacy efforts to improve America's
economy, infrastructure and competitiveness, and we are thankful for
the Committee's tireless work to see this legislation enacted.
AAPA is the unified voice of the seaport industry in the Americas,
and my testimony is given on behalf of state and local public agencies
located along the Atlantic, Pacific, and Gulf coasts, the Great Lakes,
and in Alaska, Hawaii, Puerto Rico, Guam, and the U.S. Virgin Islands.
For more than a century, AAPA membership has empowered port authorities
to serve global customers and create economic and social value for
their communities. Today, AAPA represents ports in our nation's Capital
on urgent and pressing issues facing our industry, promotes the common
interests of the port community, and provides critical industry
leadership on security, trade, transportation, infrastructure,
environmental and other issues related to port development and
operations.
AAPA's members remain committed to the continued flow of freight
and goods to markets across the nation and across the globe. I am here
today to discuss the economic and operational impacts the COVID-19
pandemic has had on our ports, and to discuss what opportunities the
future holds for our industry. It is critical that we take steps to
continue to combat this virus to ensure that disruptions to our
maritime transportation system are minimized.
But more importantly, as we continue to weather the impacts of the
pandemic we risk losing valuable members of our community. I would like
to recognize and honor the frontline workers, both in the maritime
industry and otherwise, who have died from COVID-19. We've lost many
good people.
Seaports are Vital to the United States Economy
Port authorities are governmental entities that own facilities at
one or more ports. While the role of port authorities in port
operations vary, most ports can be categorized as Operating Ports or
Landlord Ports. Operating Ports own and construct port facilities, own
cargo handling equipment, and hire labor to move cargo through port
premises. At these operating ports, stevedores hire dockworkers to move
cargo between ships and the dock. Landlord Ports, on the other hand,
own the land and wharves of a port and lease these premises to our
partners in the Marine Terminal Operator industry.
Our nation's seaports deliver vital goods to consumers, facilitate
the export of American made goods, create jobs, and support local and
national economic growth. Ports also play a crucial role in our
national defense--a point acknowledged through the designation of 17 of
our nation's ports as ``strategic seaports'' by the Department of
Defense.
According to Martin Associates \1\, an internationally recognized
economic and transportation consulting firm, prior to the outbreak of
the COVID-19 pandemic the total economic value generated in terms of
revenue to businesses, personal income and economic output at U.S.
coastal ports accounts for $5.4 trillion, roughly 26 percent of GDP.
This research also showed over 30.8 million Americans are employed in
jobs generated as a result of port activity. Ports also generate
significant tax revenue, with $47.1 billion of direct, induced and
indirect federal, state and local tax revenue created through the
economic activity taking place at ports across the nation.
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\1\ 2018 National Economic Impact of the U.S. Coastal Port System.
(2019, March). http://aapa.files.cms-plus.com/
Martin%20study_executive%20summary%202018%20US%20coastal
%20port%20impacts%20final.docx
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How Has the COVID-19 Pandemic Impacted Ports?
Since the beginning of the COVID-19 pandemic, AAPA has remained in
regular contact with members to monitor the impact of the pandemic, to
communicate regarding the need for federal relief and recovery, and to
give our members the opportunity to share best practices with one
another as they manage this ever changing and ongoing crisis. On this
latter point I would like to highlight how impressive the collaboration
within the industry has been; typically the fiercest of competitors--
ports have set aside market share aims in favor of keeping port workers
safe and healthy, and getting goods to the frontline of the COVID-19
pandemic, as well as to consumers like you and me. As the former chair
of the Federal Maritime Commission, I have been truly impressed with
how ports across the country and the world have worked together to
ensure safety of workers and minimize supply chain disruptions.
However, like nearly all aspects of life, our ports have endured
significant impacts over the past year.
The COVID-19 pandemic caused 2020 to be one of the most erratic and
volatile years in terms of container volumes. Early in the year,
China's efforts to stem the pandemic led to the shuttering of factories
which led to cancelled sailings. Coupled with a drop in consumer
spending here in the United States as shutdowns were implemented to
stop the spread of the COVID-19 virus, we experienced significant drops
in volumes across the industry throughout the first half of 2020. By
November commercial cargo volumes had declined across the industry--
with total waterborne trade volume down 5.5% compared to the prior
year, while the value of trade dropped by 12.7% totaling $200
billion.\2\
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\2\ U.S. Census Bureau, FT920--U.S. Merchandise Trade: Selected
Highlights (2020, January).
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In the spring, the U.S. economy seemed headed for an historic
collapse. Millions of people lost their jobs. At the Port of Long
Beach, following a slowdown in spring 2020 our container volumes began
to rebound in May with record volumes by July. The year concluded with
a December that turned out to be our busiest month ever. The year 2020
was like a crescendo in nature. We started soft, in a sea of
uncertainty and we finished strong, topping 8.1 million TEUs.\3\ It was
our best year ever.
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\3\ Polb.com. Retrieved January, 2021, from https://polb.com/
business/port-statistics/#latest-statistics
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These surges in cargo have led to challenges--from container
shortages for the United States export market, to issues of chassis
availability. But despite these challenges and others, goods and cargo
have continued to move through our ports.
For the Port of Long Beach--in crisis, we build. We were determined
to build toward recovery and continue our stated mission--to be an
international gateway for the reliable, efficient and sustainable
movement of goods for the benefit of our local and global economies.
To be clear, each port has been impacted differently. For every
port like the Port of Long Beach that experienced surges in cargo over
the course of the year there is a port that saw cargo declines with
little recovery. One thing is clear--no port been spared the impact of
the COVID-19 pandemic. While there were encouraging signs at the end of
the year for some of those ailing, the outlook for the coming year
remains uncertain.
Cargo and goods have continued to flow during this unprecedented
moment in history in large part thanks to the work of frontline port
employees and dockworkers. This has been a testament to the dedication
of our maritime workforce. Like frontline workers nationwide though,
port workers have not been spared from impacts of the pandemic.
Ports, working with marine terminal operators and others operating
within port footprints, have put in place protocols to maintain the
health, safety, and well-being of our employees and all involved in the
movement of goods and cargo throughout our facilities. AAPA has worked
with our members to establish recommended COVID-19 protocols and best
practices for the port industry.
These recommendations include protocols for when a port employee or
third-party worker at a port receives a positive COVID-19 test,
including following all CDC and local health department guidance
regarding contact tracing, notifying local health agencies, isolating
and disinfecting equipment, vehicles, or workspaces typically used by
the COVID-19 positive employee, notifying workers who may have been in
contact with the positive employee, and isolating and disinfecting
workspaces, equipment, and vehicles where an employee may have passed.
Critically, confidentiality also must be respected.
AAPA has also recommended options and best practices for cleaning
and sanitizing port property. These recommendations begin by advising
adherence to CDC guidelines on ``Cleaning and Disinfection for
Community Facilities.'' We also recommend that workstations be
disinfected following shifts, that high touch surfaces be disinfected,
that bathrooms be disinfected with aerosol spray following each use,
that ample hand sanitizer be provided to port workers, and that nightly
deep cleaning of staff buildings and facilities be undertaken.
Finally, AAPA has shared recommendations to limit port employee
exposure to COVID-19. These recommendations stress the importance of
social distancing, the supply and use of personal protective equipment,
modifying schedules and shifts to limit contact, and the use of virtual
meeting platforms where possible.
Despite these precautions, port workers are still being impacted.
In California, cases of COVID-19 among International Longshore and
Warehouse Union (ILWU) members are captured by a dockworker self-
service portal established by the Pacific Maritime Association (PMA)
where members of ILWU can report that they have tested positive and
qualify for emergency paid sick leave. While we do not have direct
access to this portal or the information provided to the portal, since
March of last year across California, cases self-reported into the
portal is 1,497 cases. Of that, according to the portal data, 939 cases
tested positive for COVID-19. It is important to note that, to the
extent members may choose not to get tested or choose not to report a
positive test, the positivity rate does not reflect the positivity rate
of the total population of longshore workers.\4\
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\4\ Information shared by the Pacific Maritime Association and
International Longshore and Warehouse Union
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Even with current protocols in place for cleaning and social
distancing, infection rates appear to be increasing at a time when
Ports are experiencing high-levels of cargo volumes, including imports
of essential goods and personal protective equipment. With positivity
rates exceeding that in the general population and with an escalating
number of workers testing positive, if additional action is not taken
to ensure more testing and vaccination of port workers, we risk
jeopardizing the fluidity of the movement of cargo.
While acting as hubs of commerce, ports are also a beacon of
tourism in many communities. According to the Cruise Lines
International Association, the cruise industry generates more than $53
billion USD in economic activity in the United States and supports
421,000 American jobs.\5\ However, since the onset of the pandemic
passenger movements have virtually ceased and remain nearly
nonexistent. Operations are not expected to resume for months. Ports
across the country have continually worked alongside cruise line
partners to safely and responsibly accommodate vessels that were
impacted by the virus while navigating severe economic impacts to their
communities.
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\5\ Contribution of the International Cruise Industry to the U.S.
Economy in 2018. (2019, November). https://cruising.org/-/media/
research-updates/research/contribution-of-the-international-
cruise-industry-to-the-us-economy-2018.pdf
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AAPA appreciates the Center for Disease Control's (CDC) leadership
as it has worked to protect the American public from the spread of
COVID-19, and we were grateful for the opportunity to provide comments
to Docket No. CDC-2020-0087 regarding cruise ship planning,
infrastructure, and resumption of passenger operations. This issue is
of vital importance to our cruise port members as the CDC considers
future public health guidance and preventative measures relating to
travel on cruise ships.
AAPA has endorsed recent legislation introduced by Senators Rick
Scott (R-FL) and Marco Rubio (R-FL), the Set Sail Safely Act, to
establish a federal Maritime Task Force and private sector advisory
committee aimed at facilitating the safe resumption of cruise. AAPA's
member seaports stand ready to work in partnership and collaboration
with vessel operators to safely resume cruising in the United States,
and look forward to continuing dialogue with the CDC, this
Subcommittee, and others in Congress on how best to accomplish this
goal.
Key Recommendations
Fund the Maritime Transportation System Emergency Relief Program to
Help Ports Mitigate COVID-19 Impacts and Protect Workers
As the Committee considers additional actions to respond to the
ongoing pandemic, AAPA believes it is critical that the Maritime
Transportation System Emergency Relief Program be funded. Originally
introduced and supported by Chairman Peter DeFazio and former Coast
Guard and Maritime Transportation Subcommittee Chairman Sean Patrick
Maloney, this new program was created in the National Defense
Authorization Act of 2020 (P.L. 116-283). It authorizes the Maritime
Administration to solicit applications for aid from those across the
maritime industry, both inland and coastal, entities both public and
private, and provide grants to those most in need due to emergencies or
disasters. This includes aid to help mitigate the impacts of the
ongoing COVID-19 pandemic, ensure the health and safety of port
workers, and provide the relief necessary to those in the maritime
industry ailing as a result of the pandemic.
It is essential that the U.S. maritime industry maintain a state of
readiness and sustain our critical responsibility in the supply chains
that provide food, medical equipment, and other essential goods for the
citizens of this country. By funding this new program and giving the
Maritime Administration the resources necessary to provide grants to
manage expenses incurred due to the ongoing pandemic, Congress will
help ensure that maritime operations continue at the high level that
Americans have come to depend on.
Prioritize Vaccination and Provide More Testing for Port Workers and
other Transportation System Workers
It is also critical that COVID-19 vaccines flow predictably, be
made available to port workers, and that these workers be categorized
for Phase 1 allocations. In late December 2020, the CDC's Advisory
Committee on Immunization Practices (ACIP) made its recommendation on
allocation of vaccinations to essential workers, categorizing them in
Phase 1. However, some confusion has resulted from a distinction made
in the CDC's vaccine allocation guidance between what are termed
``frontline essential workers,'' categorized under ``Phase 1b,'' and
``other essential workers,'' categorized under ``Phase 1c.'' This
distinction is not made by the Department of Homeland Security's (DHS)
Cybersecurity and Infrastructure Security Agency (CISA) in its Guidance
on the Essential Critical Infrastructure Workforce, and clarification
is necessary.
The surges we have seen in recent months in COVID-19 cases have
escalated the exposure to the virus of essential workers--including
those at ports. The safe, efficient movement of cargo underpins a
strong and resilient economy, and the administration of vaccines to
port workers and other essential transportation infrastructure workers
adds an effective measure towards mitigating the spread of the virus
throughout port facilities, and provides an effective measure in
ensuring that we have the capability and capacity to continue to move
cargo through our facilities. While education, facial coverings, other
protective equipment, social distancing where practicable, and
extensive cleaning and hygiene regimes are effective, vaccines provide
a critical tool in continuing to ensure our workforce remains capable.
Many ports have sought to apply to have their unused space to
provide their individual states a point of distribution to be used by
the state for a vaccine site. As the Congress considers additional
funding for vaccine distribution, ensuring that ports and other hubs of
transportation activity are prioritized as vaccination sites would be a
helpful tactic to get port workers and other transportation workers
vaccinated more quickly and can help supply each state with a
facilities with the capacity to adequately administer the vaccine at
scale. To date, no port has been successful in becoming a point of
distribution, though as vaccination efforts continue and as federal aid
for these facilities expand our members will continue to look at ways
to ensure the health and safety of port workers.
While vaccination is critical to ensuring the safety of our
workforce, COVID-19 testing is a critical tool in this effort. Rapid,
frequent testing is the best way to know who among port workers have
active COVID-19 infections. Additional federal resources to allow for
frequent testing of port workers will give ports and our partners in
labor the insights necessary to protect our critical frontline workers.
Invest in our Nation's Trade Infrastructure to Power the Economic
Recovery
President Biden recently spoke of the need to take a two-step
approach to respond to the pandemic--an approach of rescue and
recovery. The first two recommendations here focused on rescue--
ensuring our ports have the resources necessary to address this crisis
and remain able to fulfill their critical role in our national supply
chains and ensuring that our critical workforce is vaccinated and able
to keep our economy moving--but it is important to address the next
phase of recovery.
Ports exist to facilitate an integrated, end-to-end supply chain.
We optimize goods movement. We build and invest. We serve as an engine
for economic prosperity in our communities and provide access to
markets across the globe for communities nationwide.
Ports serve as the beginning point for our nation's multimodal
freight system. For the decade spanning 2018-2028, AAPA identified $20
billion in multimodal and rail access needs at ports.\6\ Federal
investment in these multimodal projects can leverage billions of
dollars in additional port investment. As populations shift, as cargo
volumes grow, and as we continue to embrace e-commerce and direct to
consumer shopping, these investments will be critical to ensuring the
United States has a 21st century multimodal freight network to compete
globally and deliver locally.
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\6\ The State of Freight III--Rail Access + Port Multimodal Funding
Needs Report. (2018, May 16). https://aapa.files.cms-plus.com/PDFs/
State%20of%20Freight%20III.pdf
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I noted earlier in my remarks at the Port of Long Beach--in crisis,
we build. I hope this Subcommittee and the full Transportation and
Infrastructure Committee will take steps necessary to invest in our
ports and in our nation's trade infrastructure. As we recover from the
impacts of this pandemic, we have an opportunity to transform our
infrastructure.
President Biden put it best: we can create ``millions of good-
paying jobs that put Americans to work rebuilding our roads, our
bridges, our ports to make them more climate resilient, to make them
faster, cheaper, cleaner, to transport American-made goods across our
country and around the world. That's how we compete.''
Reevaluate Harmful Trade Practices
I will also note, that prior to the outbreak of the COVID-19
pandemic, trade and tariff policies put in place under the previous
Administration were in the process of being implemented. These tariffs
were beginning to negatively affect trans-Pacific trade. Fortunately,
as the first impacts of the COVID-19 pandemic were beginning to be
felt, the Trump Administration provided a measure of relief to American
consumers from these tariffs.
I hope that the Biden Administration will take the opportunity to
reassess this country's trade and tariff policies. By doing so, we can
assist our businesses in conducting the international business that is
so vital to our economy.
Conclusion
Over the past year, since the beginning of the COVID-19 pandemic,
ports and port workers have tirelessly worked to continue to move
cargo, to ensure that food, medical equipment, and other essential
goods are available for the citizens of this country. While we have
faced challenges, we are proud of the fact that ports have remained
open.
Once again, I appreciate the opportunity to share with the
Subcommittee the impacts of the ongoing pandemic on the port industry,
and I hope you will consider the steps outlined here that Congress
could take to help ports and the maritime industry maintain a state of
readiness and sustain our critical responsibility in the supply chains
nationwide.
Mr. Carbajal. Thank you, Mr. Cordero. Next, we have Mr. Jim
Patti. You may proceed.
Mr. Patti. Thank you, Mr. Chairman, Ranking Member Gibbs,
members of the subcommittee. My name is James Patti. I am
chairman of USA Maritime, a coalition that includes shipping
companies operating U.S.-flag vessels in our Nation's foreign
trades, maritime labor unions representing the men and women
who crew these vessels, and their related maritime
associations.
Our companies own and operate the 60 militarily useful
U.S.-flag commercial vessels enrolled in the Maritime Security
Program, and carry defense and nondefense Government cargoes,
pursuant to the U.S.-flag cargo preference shipping laws.
At the outset, we thank you for your support for the
Maritime Security Program, and for your leadership in enacting
legislation to determine whether our Nation's cargo preference
laws are being fully enforced.
We also appreciate your efforts that led to the enactment
of the Maritime Transportation System Emergency Relief Act,
which will, once funded, allow those in need in the maritime
industry to apply for assistance and respond to COVID-19 or
other emergency.
Since the onset of the pandemic, the companies and unions
in USA Maritime have worked tirelessly to protect the lives of
American mariners, address the professional and personal
hardships they endure because of COVID-19, and to ensure that
the essential economic and defense services provided by our
industry remain available. Nevertheless, and despite the
essential protocols and practices put in place, more needs to
be done.
Most importantly, we are asking that American mariners and
cadets working aboard our U.S.-flag vessels, be considered for
expedited access to the COVID-19 vaccine. Such access will help
to ensure that mariners remain available to crew the vessels
necessary to support American troops deployed overseas, and
protect America's economic and military security.
As General Stephen Lyons, commander, United States
Transportation Command, has said, quote: ``When our Nation goes
to war, so does the maritime industry. Today, as in the past,
the Defense Department relies on U.S.-flag vessels, global
trade routes, and expert mariners . . . in times of crisis,''
end quote.
Expedited access is also important, because many of these
mariners, already designated as critical transportation
infrastructure workers, help deliver the medicine, personal
protective equipment, food and other supplies desperately
needed by those suffering from COVID in our country and around
the world.
Due to the time spent at sea, the fact that mariners live
and work closely together in multigenerational settings for
months at a time, and the exposure to individuals aboard their
vessels in foreign ports who do not follow necessary safety
procedures and protocols, mariners face a significant and
elevated risk from COVID-19. These risks are exacerbated by the
lack of medical care aboard ship when a crewmember becomes
infected while underway, because they are all too often denied
access to medical care in foreign ports.
In addition, crew rotation, pre- and post-employment
quarantine, the repatriation of sick or injured seafarers,
travel restrictions, and the need for uniform testing
protocols, remain major concerns for the U.S.-flag shipping
companies and maritime unions engaged in the U.S. international
trades.
Finally, Mr. Chairman, the COVID-19 pandemic has made it
all too clear how vulnerable our commercial sealift readiness
capability is, due to the current maritime manpower shortage,
estimated by the Department of Defense to be as much as 1,800
mariners in the event of a protracted conflict.
The reality is that less than 2 percent of America's
foreign trade is carried on U.S.-flag vessels. Until this is
changed, the current manpower shortage will not be erased.
While it may sound overly simplistic, without cargoes, vessels
don't sail, and mariners don't have jobs.
This not only means funding and support for the programs
and policies currently in place, including the cargo preference
laws, the Maritime Security Program, and the newly authorized
tanker security fleet, but also requires strong and innovative
action on the part of our industry, Congress, and the
administration.
We are convinced that by working together, we can develop
and implement programs and policies that will increase the
amount of America's foreign trade carried aboard U.S.-flag
ships, increase the number of vessels operating under the U.S.
flag, and increase the number of jobs for American mariners.
We are encouraged by the maritime policy objectives put
forward by President Biden, including his recent Buy America
Executive order, which includes maritime services within its
scope, as well as by the confirmation of Mayor Pete Buttigieg
as Secretary of Transportation and the appointment of Ms.
Lucinda Lessley as Deputy Maritime Administrator.
In conclusion, on behalf of the USA Maritime coalition, I
would like to again thank you and the members of this
subcommittee and committee for your support. I look forward to
answering your questions.
[Mr. Patti's prepared statement follows:]
Prepared Statement of C. James Patti, President, Maritime Institute for
Research and Industrial Development, on behalf of USA Maritime
Good morning Chairman Carbajal, Ranking Member Gibbs and Members of
the Subcommittee:
My name is C. James Patti. I am President of the Maritime Institute
for Research and Industrial Development and Chairman of USA Maritime.
USA Maritime is a Coalition whose membership includes shipping
companies operating U.S.-flag vessels in our nation's foreign trades,
including all the U.S.-flag shipping companies having vessels enrolled
in the 60-ship Maritime Security Program; the maritime labor unions
representing the licensed and unlicensed men and women who crew these
vessels; and their related maritime associations. I appreciate the
opportunity to appear on behalf of USA Maritime to discuss the current
state of the U.S.-flag international merchant fleet.
The development and implementation of programs and policies that
support this fleet, enhance its economic viability and enable it to
compete for a larger share of America's foreign trade are extremely
important to our ability to support the economic and military security
of our country. Consequently, we are extremely pleased that this
hearing is being held and that we have been given the opportunity to
present our views.
As this Committee knows, throughout our history the United States
has depended on a strong, active, and militarily-useful privately-owned
U.S.-flag merchant marine to protect, strengthen and enhance our
nation's economic, homeland and military security. U.S.-flag shipping
companies and the loyal, reliable American mariners who crew their
vessels are extremely proud of the role they play as our nation's
Fourth Arm of Defense, and they are always ready to respond to our
nation's call in times of war or other international emergency,
providing the commercial sealift readiness capability, intermodal and
logistical networks and civilian maritime manpower necessary to support
America's interests and to supply American forces deployed overseas.
It is important to understand that the number one priority of the
Department of Defense United States Transportation Command (USTRANSCOM)
is ``warfighting readiness'' and its mission is ``to project and
sustain combat credible forces needed to deter war, protect the
security of our nation, and win decisively should deterrence fail.''
The U.S.-flag maritime industry is a key resource relied upon by
USTRANSCOM to fulfill this mission.
As stated by General Stephen Lyons, Commander, USTRANSCOM in
December 2020, ``When our nation goes to war, so does the maritime
industry. Today, as in the past, the Defense Department relies on U.S.-
flag vessels, global trade routes and expert mariners to comprise a
naval auxiliary in times of crisis.''
Of course, the current state of affairs of the U.S.-flag
international fleet and its ability to provide the capability our
country needs are impacted by COVID-19. As with other segments of the
maritime industry, the U.S.-flag shipping companies and maritime labor
organizations belonging to USA Maritime have been affected by COVID-19
and in some extremely important areas continue to be.
We are seeing demand for container shipping remaining at a high
level while companies operating Roll-on Roll-off ships and Multi-
purpose heavy lift ships are experiencing an improving market. For
those operating tankers, however, the market is still somewhat
depressed. Of course, with the full impact of the new variants of
COVID-19 yet to be determined, it is impossible to predict with any
accuracy what the market and demand for shipping services will be in
the months ahead.
We appreciate the work done by Committee Chairman Peter DeFazio,
former Subcommittee Chairman Sean Patrick Maloney and other members of
this Committee and Subcommittee to enact the Maritime Transportation
System Emergency Relief Act (MTSERA). This program, once funded, will
allow those maritime industry companies and entities and maritime
training facilities who need the assistance now or in the future to
seek grants from the Maritime Administration in response to COVID-19 or
other emergency.
Since the onset of the pandemic, maritime labor and their U.S.-flag
shipping companies have been working with each other as well as with a
number of Federal agencies and departments, including the Maritime
Administration, the United States Coast Guard, the United States
Transportation Command, the Department of State, the Federal Maritime
Commission and others to put in place the measures that help protect
the lives of American mariners and ensure that the essential economic
and defense services provided by our industry remain available. The
support given to our industry by these and other Federal agencies is
greatly appreciated.
While over the past eleven months safety practices and protocols
have been developed and put in place within our industry there are
still COVID-19 related issues that need to be resolved. Most
importantly, while we clearly understand and appreciate that there are
many segments of the American workforce who need expedited access to
the COVID-19 vaccine, it is extremely important that American mariners
and cadets working aboard Maritime Security Program vessels and other
U.S.-flag vessels in the foreign trades receive such access. Otherwise,
with the differences in vaccine administration procedures among the
states, it may be months at the earliest before mariners receive a
vaccine.
Due to the time spent at sea and the number of countries visited by
merchant mariners in the course of their employment, there is a
significant and elevated risk of COVID-19. American mariners are
continually exposed to individuals in foreign ports who board their
vessels who do not follow necessary safety procedures and protocols. If
a crewmember tests positive for COVID-19 the vessel, depending on the
jurisdiction, may be taken out of service and it, along with the entire
crew, may be placed into quarantine for an undetermined period of time.
The quarantine and cleaning of the vessel is not only time consuming
and extremely expensive for the shipping company, but the delay means
that the vessel's cargo will not arrive at its destination when
expected and when needed. In the case of commercial cargo, including
the delivery of essential medical and other supplies, this may have a
detrimental impact on consumers and businesses and, most importantly,
on the first responders and other essential workers relying on the
delivery of medical supplies and equipment. In the case of military
cargo, such disruptions raise the distinct possibility that the lives
of American troops overseas may be affected and the ability of the
Department of Defense to protect the interests of the United States
threatened.
Seafarers live and work closely together in multi-generational
settings aboard ship for months at a time. The close contact and risk
of exposure is exacerbated by the lack of medical care aboard ship when
mariners become infected while underway or when denied shoreside access
to medical care in foreign ports, a situation which occurs all too
often. One infected crew member may quickly infect the entire ship's
crew, most often with no medivac available and frequently with no port
of refuge that will allow mariners to disembark and seek medical care.
Although mariners are trained to stabilize a sick or injured
crewmember, they have always been able to obtain medical care in
foreign countries and ports. Since COVID-19 however, mariners are as a
general rule not allowed ashore to receive medical attention unless it
entails a ``life threatening'' situation.
As stated by Vice Admiral Dee Mewbourne, Deputy Commander, United
States Transportation Command, ``The merchant mariners who support the
. . . U.S.-flag international shipping industry are vital to our
national security and provide the necessary capacity to move forces,
supplies, and equipment when needed.'' Admiral Mewbourne went on to say
that ``we are well aware of the challenges in mission accomplishment
when a merchant mariner has to undergo restrictions on movement,
quarantine, or medical treatment due to the COVID pandemic.''
Admiral Mewbourne's comments once again highlight the fact that
American mariners are a key component of the commercial sealift
readiness capability relied upon by the Department of Defense and we
appreciate USTRANSCOM's efforts to address the vaccine distribution
effort as it pertains to American mariners. We urge Congress and the
Administration to similarly consider American mariners in the
development and implementation of a strategy and overall plan for the
distribution of the COVID-19 vaccine.
In addition, crew rotation, pre- and post-employment quarantine,
the repatriation of sick or injured seafarers and travel restrictions
are major concerns for the U.S.-flag shipping companies and maritime
unions engaged in the U.S. international trades. As stated previously,
there is a serious problem obtaining adequate medical care in foreign
ports where the local authorities will not allow the mariner to leave
his vessel. This is compounded by the difficulty relieving sick or
injured mariners and sending them home from locations where there is no
established process in place and the government or local authority in
question is unwilling or unable to act.
Severe restrictions persist regarding entering or departing from
foreign airports and territories for crew changes aboard military and
commercial shuttle ships overseas, impeding the ability of mariners to
get to their vessels or to return home, compounding the personal and
professional hardships they endure. In addition, mariners like all
other travelers are now required, upon entry into the United States, to
present a negative COVID-19 test, taken within three calendar days of
departure. Overall, while crew rotation delays have been generally
reduced, many isolated but nonetheless serious cases still occur.
We appreciate the assistance we have received from Members of
Congress, the Maritime Administration, Department of Defense and the
State Department to address crew rotation and related issues,
especially those involving sick or injured mariners. It is important,
not only to the overall efficient operation of our fleet but to the
health and morale of American mariners that the crew have access to
reliable and professional health care in ports across the globe whether
it involves COVID-19 or for other injuries and illnesses that arise
during a long voyage. We need to take care of the people keeping the
supply chain flowing.
Looking forward, we believe that one of the most important lessons
learned to date from the ongoing COVID-19 pandemic and its continuing
impact on the U.S.-flag international fleet and the men and women who
crew these vessels is that we must continue to address the shortfall in
the number of qualified and available U.S. citizen mariners to crew the
government and privately-owned vessels used by the Department of
Defense in time of war or international emergency. As stated by
USTRANSCOM Commander General Lyons in November 2020, ``With 85 percent
of our forces based in the continental United States, nearly 90 percent
of our military equipment is expected to deploy via sealift in a major
conflict. In order to deploy those forces, we require safe, reliable
and ready U.S.-flagged vessels [and], mariners to crew those ships. . .
.''
Without the capability provided by the U.S.-flag international
fleet and its civilian American mariner workforce, the Department of
Defense would be forced to either dedicate its resources to replicate,
at significant cost to the American taxpayer, the commercial sealift
readiness capability provided by our industry or to entrust the
security of our Nation and the safety and supply of American troops to
foreign flag of convenience vessels crewed by foreign nationals who may
not support U.S. defense operations. To do so would be to jeopardize
the lives of American servicewomen and men who will no longer be
guaranteed the supplies and equipment they need to do their job in
support of our country.
We can address this shortfall in the American maritime manpower
pool by ensuring that greater amounts of government-generated and
commercial cargoes move on U.S.-flag ships, thereby increasing the size
of the U.S.-flag fleet and the number of American merchant mariners to
crew the vessels needed to meet Department of Defense requirements. As
history shows, American mariners have never failed to sail into harm's
way when needed by the United States. There is no guarantee--no reason
to believe--foreign flag of convenience vessels and their foreign crews
will do the same. As we go forward, even as we continue to confront the
COVID-19 pandemic, it is essential we focus on ways to not only
maintain but to increase the number of vessels operating under the
U.S.-flag so that we can increase the number of American maritime jobs.
For example:
Cargo Preference: Without cargo, vessels do not operate and
mariners do not have employment. Working in conjunction with the
Maritime Security Program, our nation's cargo preference laws ensure
that the U.S.-flag international fleet has the base of cargo needed to
support U.S.-flag vessel operations. U.S.-flag cargo preference
shipping requirements mandate that a percentage of U.S. taxpayer
financed exports and imports be transported on privately-owned U.S.-
flag commercial vessels, to the degree such vessels are available at
fair and reasonable rates. It is important to understand that every
U.S.-flag vessel--whether it has been selected to participate in the
Maritime Security Program or not--has important military utility by
providing the employment base necessary to maintain the cadre of
American merchant mariners needed by the Department of Defense. The
full implementation of the cargo preference requirements to transport
U.S. government cargoes helps guarantee that American maritime jobs
will not be outsourced to the benefit of foreign maritime workers and
that the dangerous decline in the number of available American merchant
mariners will not worsen.
To this end, we are encouraged by the recent ``Buy America''
Executive Order issued by President Biden which includes maritime
services within its scope. This affirmation of support from the highest
office in the land sends a clear message that U.S.-flag vessels and the
jobs they provide and support are key elements of the Administration's
economic policy. In addition, legislation initiated by this Committee
to require an audit of cargo preference implementation and enforcement
was incorporated into the final FY'21 defense authorizations
legislation (PL 116-283) and demonstrates continued Congressional
support for existing U.S.-flag cargo preference shipping requirements.
We appreciate this support for U.S.-flag cargo preference shipping
requirements and ask your help to ensure that all Federal agencies
which ship ocean cargoes fully comply with the spirit and the letter of
the Congressionally mandated audit. We also look forward to working
with this Subcommittee to consider changes to the cargo preference laws
that will further enhance and expand U.S.-flag vessel operations and
American maritime jobs.
Maritime Security Program: The Maritime Security Program (MSP) and
its fleet of 60 privately-owned militarily-useful U.S.-flag commercial
vessels and their U.S. citizen crews form the backbone of America's
commercial sealift readiness capability. Since the inception of
military operations in Iraq and Afghanistan in 2002, 98 percent of the
cargoes have been transported to the region on either U.S.-flag
commercial vessels or U.S. Government owned and/or controlled vessels--
all of which are crewed by U.S. citizen civilian merchant mariners. In
fact, since 2009, privately-owned U.S.-flag commercial vessels and
their civilian U.S. citizen crews transported more than 90 percent of
the sustainment cargo needed to support U.S. military operations and
rebuilding programs in Iraq and Afghanistan. Vessels enrolled in MSP--
all of which are also enrolled in the Voluntary Intermodal Shipping
Agreement program, a related sealift readiness program, and all of
which are crewed by United States citizen civilian mariners--carried 99
percent of these cargoes.
Today, the Maritime Security Program provides an employment base
for approximately 2,400 U.S. merchant mariners, all of whom are
qualified to sail on oceangoing vessels and can be relied upon to crew
the privately-owned and government vessels needed by the Department of
Defense. In addition, the Maritime Security Program provides the
Department of Defense with access to the essential multibillion-dollar
global network of intermodal facilities and transport systems
maintained by companies participating in the Maritime Security Program.
A 2006 report prepared for the National Defense Transportation
Association and Military Sealift Command concluded that at that time
``the likely cost to the government to replicate just the vessel
capacity provided by MSP dry cargo vessels would be $13 billion.'' In
addition, the United States Transportation Command estimated that it
would cost the Government an additional $52 billion to replicate the
global intermodal systems made available to DOD by MSP contractors who
are continuously developing, maintaining, and upgrading their logistics
systems. Instead of the minimum estimated $65 billion it would cost the
taxpayer if there were no MSP, a fully funded MSP will continue to
provide DOD with the militarily-useful U.S.-flag vessels, U.S. civilian
maritime manpower, and the global intermodal systems it needs at a cost
to the taxpayer of $318 million in FY'22.
For these reasons, we ask Congress to fund the Maritime Security
Program at its Congressionally authorized level of $318 million in
Fiscal Year 2022 so that these vessels will continue to operate under
the United States-flag with American mariners and provide the
commercial sealift readiness capability needed by the Department of
Defense.
Tanker Security Fleet: In a letter to Congress in 2019, General
John Broadmeadow, then-Deputy Commander, U.S. Transportation Command,
warned that today's fleet of U.S.-flag tankers ``is insufficient to
meet certain war plan requirements.'' He further went on to say that
``As our mobility analysis continues to refine requirements, a 10-
tanker program will be a welcome start to begin to address the gap in
U.S.-flagged bulk fuel delivery.''
Similarly, a report released in February 2020 by the Center for
Strategic and Budgetary Assessment noted that the Department of Defense
``faces a gap of approximately 76 fuel tankers to meet surge sealift
requirements. A Tanker Security Program would be a rapid and cost-
effective means to help address this gap . . . .'' The report further
noted that under a tanker security fleet program, ``militarily useful
tankers would participate in the Voluntary Tanker Agreement, be
equipped with capabilities for delivering fuel at sea via consolidated
logistics tanking and would carry crews trained to support military
operations during contingencies.''
In response, and with the support of Members of this Committee, the
FY'21 defense authorizations legislation (PL 116-283) authorizes the
establishment of such a tanker security fleet. This fleet will be
comprised of 10 U.S.-flag U.S.-crewed product tankers to help reduce
our military's reliance on foreign flag vessels by increasing the
amount of fuel supplied and transported by American mariners on U.S.
flag commercial vessels, consistent with the priorities of our national
defense.
We ask all Members of Congress to support funding for this program
as authorized by Congress ($60 million in FY'22). We also look forward
to working with Congress to ensure that this program not only enhances
commercial sealift readiness and supports the Department of Defense
supply chain but that it attracts additional vessels to the United
States-flag and increases the number of jobs available to American
mariners.
In conclusion, we cannot discuss the state of affairs of the U.S.-
flag international fleet without addressing the reality that less than
2 percent of America's foreign trade is carried on U.S.-flag vessels.
This has resulted in a precipitous and dangerous decline in the number
of U.S.-flag ships engaged in the international trades with a
corresponding decline in the U.S. citizen civilian mariner manpower
pool.
We believe it is imperative that the downward trend in the number
of vessels operating under the U.S.-flag not only be stopped but
reversed, and that the outsourcing of American maritime jobs to the
benefit of foreign workers be ended. This not only means funding and
support for the programs and policies currently in place, including the
cargo preference laws, the Maritime Security Program and the Tanker
Security Fleet, but requires strong, positive and innovative action on
the part of our industry, the Congress and the Administration working
together to develop and implement meaningful and effective programs and
policies that will increase the number of commercially viable U.S.-flag
vessels, increase the number of American maritime jobs, and increase
the amount of America's foreign trade carried aboard U.S.-flag ships.
We look forward to working with you and your colleagues not only on
the issues addressed above but on other initiatives, including those
for example that result in Federal tax policy and laws that incentivize
shippers to utilize U.S.-flag vessels and encourage, rather than
discourage, investment in the U.S.-flag shipping industry; that promote
bilateral shipping and cargo sharing agreements with our trading
partners; and that include a greater reliance on U.S.-flag vessels as a
means to achieve energy efficiency and a cleaner environment. In this
way, our ability to serve as a military auxiliary in time of war will
be enhanced, further guaranteeing that the United States will have the
U.S.-flag ships with American crews it needs to provide the assured
logistics the Department of Defense requires.
On behalf of the organizations belonging to the USA Maritime
Coalition I want to again thank you Mr. Chairman, Ranking Member Gibbs
and the Members of this Subcommittee for your support and stand ready
to provide whatever additional information you may require.
Mr. Carbajal. Thank you, Mr. Patti.
Next, we will proceed with Mr. Michael Roberts. You may
proceed.
Mr. Roberts. Thank you, Mr. Chairman. Chairman Carbajal,
Ranking Member Gibbs, members of the subcommittee, I am honored
to appear before you on behalf of the American Maritime
Partnership, or AMP. AMP is the largest coalition of American
maritime interests ever assembled, representing almost all
segments of the domestic maritime industry, producing 650,000
jobs nationwide.
As in my written testimony, I would like to speak briefly
today about three issues, COVID, offshore wind, and China, but
I have two preliminary comments before I get to those.
First, for those who may be new to American maritime, you
should know that labor and management stand together on
virtually every policy issue. I believe this is because of the
unique role we play in promoting our national security, and it
is important to recognize, especially in a highly polarized
environment.
Secondly, let me touch on the Jones Act, which is the
legislative foundation for the American domestic maritime
industry. The central requirement of the Jones Act is that
those who carry cargo between two American points must use
American ships with American workers, and must obey American
laws, a pretty simple proposition.
Ships flying the flag of China or Liberia or some other
flag of convenience can carry cargo in our import-export trades
between America and a foreign country, but not within our
domestic markets. Almost all countries that have a coastline
have similar laws.
The Jones Act has overwhelming bipartisan support in
Congress and has been supported by every American President in
modern times, including President Biden, who explicitly
endorsed the Jones Act in his Executive order on Buy America,
and we appreciate that very much.
The American maritime industry, which the Jones Act
supports, has performed remarkably well through this pandemic.
The character and culture of American maritime continues to
drive leaders at every level to find solutions, to keep people
safe, and keep supply chains moving.
Government agencies have also helped, providing regulatory
flexibility and in other ways. We also appreciate the very
important maritime legislation passed in the last Congress,
including MTSERA, which has been discussed and which enables
the Maritime Administration to do more.
Not enough has been done yet, however--and this builds on
Jim Patti's comments--for those essential frontline workers to
keep them healthy. We are telling them to continue working, and
the companies are doing what we can and they can to keep them
safe. But for mariners, working means living onboard the ship.
It is a congregate living setting, in CDC's terms, like a
nursing home or a fire station, except that mariners live in
that bubble for weeks at a time. They should have priority
access to testing before entering that bubble, and they should
have priority access to vaccines in phase 1b, right after
senior citizens and frontline healthcare workers.
The next issue, the development of offshore wind power,
represents what may be a generational opportunity for American
maritime, producing dozens of vessels and tens of thousands of
jobs. We are very grateful for the work of many current and
former members of this committee in having legislation enacted
by the last Congress that confirms this work is, in fact, in
our domestic economy, and subject to the Jones Act. Investment
is already moving forward and jobs are being created, based, in
part, on that legislation.
This is one example of American maritime's commitment to
improving sustainability, which includes cutting-edge
investments to fuel cargo ships with liquefied natural gas,
prototype development of electric-powered vessels, and research
in many other areas of maritime sustainability.
Finally, many believe that after COVID, the most
significant national security challenge we face is geopolitical
competition with China. The maritime industry has clearly been
targeted. According to CSIS, the Chinese Government has spent
almost $15 billion annually for more than a decade to support
its shipping and shipbuilding industry.
The result is that China built 1,291 large commercial ships
in 2019, compared to 8 built in the United States. More than
6,000 Chinese-flag commercial ships sail the ocean versus less
than 200 flying the U.S. flag.
We believe this demands a strong policy response.
Thankfully, because of the Jones Act, we still have commercial
shipbuilding in the United States, and we have a modern fleet
of U.S.-flag vessels, crewed by American mariners, to meet the
needs of American domestic commerce, but a great deal more is
obviously needed if we are going to respond effectively to
China's maritime ambitions.
With that, I want to thank you again, Chairman Carbajal and
Ranking Member Gibbs, and will welcome your questions.
[Mr. Robert's prepared statement follows:]
Prepared Statement of Michael G. Roberts, Senior Vice President,
Crowley Maritime, on behalf of the American Maritime Partnership
I. Introduction
Mr. Chairman, Mr. Ranking Member, Members of the Subcommittee.
Thank you for the opportunity to be with you today. I am Michael
Roberts, senior vice president of Crowley Maritime, a major American
domestic shipping company. We are a diversified marine transportation
and logistics company based in Jacksonville, Florida. We employ about
3,000 American mariners, and have invested nearly $3 billion in vessels
built by American workers in U.S. shipyards. Vessels in our fleet serve
customers in Alaska, the U.S. West, East and Gulf coasts, the Caribbean
and Central America. Thank you for the opportunity to talk to you today
about ``the state of the American maritime industry during the COVID-19
pandemic.''
I am here today in my capacity as president of the American
Maritime Partnership (AMP). AMP is the largest maritime legislative
coalition ever assembled. Our organization includes all elements of the
American domestic maritime industry--shipping companies, ship
construction and repair yards, mariners, and pro-defense organizations.
Our focus is America's domestic shipping law, the Jones Act, which
requires that cargo moved by water between two points in the United
States be transported on American vessels by American mariners.
As I will discuss in more detail below, it is in times like these--
when our domestic transportation industry and our nation faces a
historic pandemic--that we are well served by American mariners on
American vessels in American waters.
II. What is the Jones Act?
The Jones Act is the fundamental law of the domestic maritime
industry. As mentioned, the Jones Act requires that cargo moved between
two points in the United States by water is transported on vessels that
are U.S.-flagged, U.S.-owned, U.S.-crewed and U.S.-built. The Jones Act
and related coastwise laws are the underpinning for the American
domestic maritime industry, which is comprised of more than 40,000
vessels and supports 650,000 jobs with an economic impact of more than
$150 billion annually, according to a study for the Transportation
Institute by PricewaterhouseCoopers.
The reason we have a Jones Act can be encompassed in one word--
security. The coastwise laws of the U.S. are essential to the continued
economic security of the U.S. transportation system and to the
maintenance of a U.S.-flag fleet to support that system. The Jones Act
ensures that American mariners are constantly on the watch on our
inland waterways, promoting homeland security. And finally, the Jones
Act is critical to ensuring that our country has both the mariners and
the sealift capacity to go to war, which is essential to our national
security.
The value of the Jones Act is even clearer during this pandemic. As
can be seen by the breakdown of the supply chain for basic medical
goods at the beginning of the COVID-19 pandemic, America cannot be
wholly dependent on foreign countries for our basic needs. The Jones
Act ensures that America will have the ability to transport our own
goods by water and a defense industrial base that is not hamstrung by
unfair foreign competition. Today's domestic U.S.-flag fleet has proven
its capabilities to meet the demands of the pandemic, and our mariners
have risen to the call of their essential worker status.
III. Summary of Key Points
Today I would like to leave you with three main points:
First, despite the massive challenges associated with COVID-19,
this subcommittee can be assured that the American domestic maritime
industry will continue to deliver the goods that are essential to our
nation despite one of the most difficult work environments in a
generation. We take our responsibility as frontline workers very
seriously and understand our obligation to ensure that America's
critical supply chains are not interrupted. In these difficult times,
our nation's economic, homeland, and national security can only benefit
from an all-American industry like ours. I'm proud to tell you today
that our industry has risen to the occasion to keep America moving
during this historic pandemic. But there is more the government can do
to support America's maritime frontline workers to help keep them safe
and able to keep domestic supply chains intact.
Second, one very positive development for the American maritime
industry during this difficult period is the emergence of the offshore
wind industry. This is one of the most important emerging markets for
our industry, and we are proud to be full partners in the development
of offshore wind as a renewable energy source. This partnership is
expected to produce tens of thousands of jobs, tens of billions of
dollars in economic output, and play a significant role in
decarbonizing electricity production in the United States. American
Maritime is excited to be playing a key role in realizing those
expectations, as we are a dynamic and competitive industry that strives
for best-in-class safety, efficiency and environmental stewardship.
Third, China's shipping and shipbuilding industries have
experienced dramatic growth in recent years, fueled by its export
economy and extraordinary support from the Chinese government. The
result is a Chinese commercial maritime industry that puts U.S.
national security interests at risk both in peacetime and in the event
of conflict. Americans have learned during the pandemic that depending
on China for face masks and other critical supplies is not in our
country's best interest. America must develop a thoughtful and
effective policy response to China's maritime ambitions. A growing
number of experts and scholars have begun to do this, and have found,
among other things, that the starting place for such a policy is to
reinforce and expand support for the American domestic maritime
industry and the Jones Act. We share that view, as we will discuss in
more detail below.
I will now take these three main points--our industry's response to
COVID-19, the growing offshore wind industry, and concerns about
China--in turn:
IV. COVID-19 Impacts on the Domestic Maritime Industry
I last testified before this subcommittee in May 2020, only two
months into the pandemic. Then, as now, the maritime industry was
recognized as essential by the Department of Homeland Security, meaning
that we continue operating throughout the pandemic. Our ability to keep
operating and deliver the goods for America is due to the men and women
of our maritime workforce--those who work on the docks; those on board
the containerships, tankers, bulkers, dredges and other vessels; those
who pilot these vessels safely into port; and thousands of others who
contribute to the safe and efficient operation of our domestic maritime
supply chain. We are grateful for the dedication of these men and
women. Because of their commitment and adherence to appropriate
protocols we have been largely successful at ensuring the safety of
these essential workers while continuing service to our customers. We
also appreciate the continued efforts of U.S. government maritime
authorities--the U.S. Coast Guard, Maritime Administration, U.S.
Transportation Command and others--for their leadership on these
issues. The foundation of collaboration between government and industry
that has been built on national security, safety, and other issues has
enabled real progress to be made in these extraordinary times.
But there is still work to be done. Most importantly, we need to
better ensure that the maritime workforce remains as free of COVID-19
as possible both for safety reasons and so that the domestic supply
chain remains intact. Companies have had to improvise during the
pandemic, developing special operating protocols to protect employees
based on the best information available and developing testing and
other safety protocols to ensure, to the best of our ability, that
mariners entering the ``bubble'' of a ship are not infected with COVID-
19. While testing, quarantine and other measures have been mostly
successful, we are operating on borrowed time as the possibility of a
COVID-19 outbreak severely impacting our domestic supply chain is an
everyday reality.
We have seen glimpses of the potential impacts that such an
outbreak could produce. Ports are backed up due to a surge of imports,
but also a lack of workers due to COVID-19 infections. An overreaching
government response to a suspected COVID-19 case onboard a cargo ship--
where the ship is ordered to anchor instead of to a secure, controlled-
access dock--could have enormous supply chain impacts. This is
especially true for a non-contiguous area like Hawaii, Alaska or Puerto
Rico, where the potential quarantine of an entire vessel, instead of
the vessel's crew, is of great concern. A single vessel may account for
a large portion of the weekly commerce of the communities in the
noncontiguous U.S. trades, such that any delay, no matter how slight,
may have a serious impact on those states and territories being served.
The most important solution to these threats is to prioritize
mariners for the COVID-19 vaccination and, in the interim, ensure that
mariners have access to rapid testing. We were grateful that the
Cybersecurity and Infrastructure Security Agency recognized the
importance of the maritime industry and ensured that maritime workers
were broadly covered as part of the critical infrastructure guidance
released in March. That recognition allowed the industry to continue
operating but did nothing to help reduce the risk of coronavirus
exposure while continuing the work. We also appreciate very much that
Federal Maritime Commissioners Maffei and Bentzel recently urged the
Biden Administration to prioritize mariners for vaccination and rapid
testing, emphasizing the mariner's critical role in moving medical
supplies, personal protective equipment, and handling an unprecedented
amount of consumer goods flowing into our nation's ports. But that is
not enough. It is past time that the federal and state government
agencies having direct input and actual authority over mariner safety
do likewise.
As vaccines start to be rolled out across the country, it is
crucial that our domestic mariners receive priority access as they work
to move essential cargoes, ensuring that our grocery stores are
stocked, our fuel is delivered, and the vital commerce that sustains
this nation remains flowing.
V. American Maritime Environmental Leadership
At the same time that the pandemic has challenged our industry, we
are also looking towards the future. Offshore wind is a critical new
market for American Maritime and we are excited about the opportunity
to support the production of renewable energy while ensuring that these
jobs are filled by American workers. We also appreciate President
Biden's strong support for the Jones Act in his recent Buy American
Executive order, which confirmed that the Jones Act is ``an opportunity
to invest in America's workers as we build offshore renewable energy,
in line with the President's goals to build our clean energy future
here in America.''
The potential scope of this market is enormous, with 19 offshore
wind projects off the East Coast already planned. These offshore wind
farms will consist of more than 2,100 wind turbines that will produce
some thirty gigawatts of electrical power when fully installed and
operational by 2030. The American Wind Energy Association (now part of
American Clean Power) has projected that the development and operation
of these wind farms will produce $57 billion in investment and 45,000
to 83,000 jobs by 2030. Further offshore wind farm projects are likely
to be proposed on the Atlantic, Gulf and Pacific coasts of the United
States as these projects are successfully developed.
Other countries that are ahead of the United States in installing
offshore wind power have benefited greatly from various government
support programs. The EU has at this time some 3,072 offshore wind
turbines installed vs. 7 in the U.S., producing 23 gigawatts of
electricity. Further, the cost of offshore wind power generation in the
EU has declined steadily with technological advances in the newer
turbines. Like the Europeans, America will need prudent government
policies to jumpstart offshore wind development in this country.
Regulatory measures needing attention include a more predictable
permitting process; a possible regional approach to local content
requirements; prompt Coast Guard regulatory actions related to the
vessels required to install and service offshore wind turbines; and
support and planning for the necessary port infrastructure. However,
offshore wind energy in the United States will benefit from the lessons
learned in the EU, including, for example, the ability to install
turbines with power generation capacities that are 3 to 4 times more
powerful than first generation installations in the EU.
American Maritime is eager to invest in offshore wind
opportunities. At the same time, we exist in a highly capital-intensive
business and our investments in vessels and other infrastructure are
long-term. We make those investments in reliance on U.S. law as it
stands today and as it has generally stood for over 100 years. The
recent confirmation in the FY2021 National Defense Authorization Act
that all American laws, including the Jones Act, apply to offshore wind
development on the Outer Continental Shelf provides us the certainty
needed to invest in long-term offshore wind assets.
With this confirmation and the promise of a large new market for
American assets, operators are already beginning their investments in
ships to meet emerging needs. AMP member Great Lakes Dredge and Dock is
moving forward with the design of the first Jones Act compliant
inclined fallpipe vessel for subsea rock installation, a critical
vessel for the building of offshore wind assets. Dominion Energy
recently announced the beginning of construction for the first Jones
Act compliant offshore wind turbine installation vessel, which is
expected to be available to support wind turbine installations by the
end of 2023. Other American companies are building service operation
vessels to support the development of offshore wind off the East Coast.
Our members stand ready to support the development of America's
offshore wind network and we look forward to supporting this important
renewable energy source.
Beyond offshore wind, American carriers are investing in new,
environmentally friendly assets to support a more sustainable maritime
industry. Shipping is the most energy-efficient mode of mass cargo
transportation, and domestic carriers are taking important steps to
improve their environmental footprint. For example, in the non-
contiguous container trades, American carriers have recently upgraded
their vessels to be some of the cleanest in the world. AMP members TOTE
and Crowley recently built new state-of-the-art ships powered by
liquefied natural gas (LNG) for the Puerto Rico trades. AMP member
Matson also took delivery of their newest vessel last December, one of
two combination container/roll-on, roll-off ships that were built to
run on a dual use LNG system. At the same time, AMP member Pasha Hawaii
is building two LNG-fueled containerships in Brownsville, Texas that
will eventually serve the Mainland-Hawaii trade lane.
Fueling these ships with LNG reduces emissions significantly,
including a 100-percent reduction in sulfur oxide (SOx) and particulate
matter (PM); a 92-percent reduction in nitrogen oxide (NOx); and a
reduction of carbon dioxide (CO2) of more than 35 percent per
container, compared with fossil fuels generally used in the
international maritime industry. American Maritime expects that the
development of alternatives such as hydrogen fuel cells and/or
renewable energy and storage technology may eventually lead to zero
carbon propulsion solutions for marine vessels. Such technology is in
its infancy, however, and any commercially scalable alternative is
likely decades away. Given the very substantial benefits LNG provides
in reducing overall emissions as compared to conventional marine fuels,
U.S. policies should support the use of LNG as we transition toward a
carbon-free future.
Investments in environmental innovation are occurring across the
domestic U.S.-flag industry. American naval architects and engineers
design these innovations and thousands of workers in American shipyards
and related businesses build these vessels, helping to sustain our
marine research and development capabilities and our shipbuilding
industrial base and providing jobs for a new generation of American
seafarers needed to meet military sealift requirements.
VI. National Security and the Challenge of China's Maritime Ambitions
As noted at the beginning of my testimony, support for the Jones
Act and the American maritime industry is rooted in part on the
recognition that military conflicts have historically depended on
sealift to supply American troops in overseas engagements. American-
crewed ships are much more likely than foreign flag ships to answer the
call when American troops need resupply in different parts of the
world. This is particularly true when the maritime domain is contested
by our enemies. America also needs shipbuilding expertise and capacity
so that it can build different types of militarily useful vessels if
needed during a conflict. Our maritime policies, including the Jones
Act, are therefore designed to assure that we retain a critical mass of
Americans who know how to build and operate large ships and a core set
of vessels and facilities, all so that we have something to scale up in
the event of a military contingency. We could not create these
capabilities and assets on a timely basis out of nothing. Without that
critical base provided by American Maritime, we would be extremely
vulnerable in a military conflict.
In addition to helping assure American control over our maritime
supply chains in connection with an overseas conflict, the Jones Act
also helps assure that Americans control our domestic supply chains,
including those serving Hawaii, Alaska, and Puerto Rico and within the
continental United States. The performance of these supply chains
during the pandemic has certainly demonstrated the value of American
Maritime control over them. Allowing foreign control over those supply
chains would create serious vulnerabilities. For example, allowing
state-owned Chinese shipping companies to control the route between
Hawaii and the mainland would be obviously unacceptable, as the Chinese
carriers could use their economic leverage over Hawaii's maritime
logistics supply chain for purposes that would be contrary to our
interests. In this scenario, economic pressure could be used against us
even in the absence of a military conflict.
This Subcommittee has taken a serious look into the subject of
China's maritime ambitions. In its October 2019 Hearing, ``China's
Maritime Silk Road Initiative: Implications for the Global Maritime
Supply Chain'' this Subcommittee heard from experts at the Department
of Defense and other organizations concerning the maritime component of
China's Belt and Road Initiative (BRI). It is well worth reviewing that
testimony, which focused primarily on Chinese strategic investments in
ports around the world. The geopolitical significance of those
investments was made clear, with the Department of Defense witnesses
noting, ``Beijing has now explicitly linked China's global development
framework with its overseas military ambitions.'' Further, ``[g]iven
China's demonstrated history of using economic leverage to exact
political retribution against other countries, we are concerned these
projects will increase partner nations' concessions from or exposure to
Chinese influence or pressure.''
Other testimony made clear that the Chinese government's strategic
commitment to its maritime industry extends well beyond investments in
ports:
``The Chinese economy is not a free market. It is a state-
managed economy with an industrial policy. The Chinese
government is transparent in its plans and goals. When it
identifies strategic sectors, it uses a whole-of-government
approach to build them up. . . . The Chinese shipping and
shipbuilding industries are the beneficiaries of this policy,
to the detriment of the U.S. industries.''
This is according to Carolyn Bartholomew, who is the Chairman of
the U.S.-China Economic and Security Review Commission. Her testimony
briefly summarizes the growth of the Chinese state-owned shipping and
shipbuilding sectors, and notes that, ``[s]ubsidies for Chinese
shipbuilding SOEs have harmed the U.S. shipbuilding industry's ability
to compete in the global market, and have led to shipyard closings and
a reduced U.S. vendor base over the past several decades.''
A substantial body of information has been developed since that
hearing. In the past year at least three studies and reports on this
subject have been issued:
``Strengthening the U.S. Defense Maritime Industrial
Base,'' Center for Strategic and Budgetary Assessments (CSBA), Bryan
Clark, Tim Walton and Adam Lemon (March 2020). Among other things, this
study found that a robust maritime industry, including a strong
shipbuilding base and a ready pool of mariners, are important in this
era of great power competition. However, the domestic maritime industry
is facing pressure from subsidized foreign competition, especially in
China, that undermines their ability to operate. The report explains
that the threat of China in the maritime domain is significant, saying
``the Chinese government has also slowly but systematically gained port
access around the world for commerce, logistics and naval operations''
as part of its goal of ``boost[ing] trade and global influence by
economic, political and military means.'' The report highlights that
the Jones Act is important to preventing further erosion of the
domestic fleet due to pressures from China, noting the ``[Jones Act]
guards against the ability of China--the world's largest merchant
marine and global port management system--to take over shipping to U.S.
territories and gain local influence during peacetime, only to threaten
or deny shipping to CONUS during a crisis or conflict.''
``Hidden Harbors--China's State-Backed Shipping
Industry,'' Center for Strategic and International Studies (CSIS), Jude
Blanchette, Jonathon E. Hillman, Maesea McCalpin and Mingda Qui (July
2020). This report sought to quantify the extent of Chinese government
support for its state-owned shipping and shipbuilding sectors. After
reviewing the different methods of Chinese whole-of-government support,
it offered a conservative estimate that such support totaled ``roughly
$132 billion between 2010 and 2018 . . .'' Most of the quantifiable
support came in the form of loans from state-owned banks, along with
direct subsidies and equity infusions. More opaque forms of support
include indirect subsidies, certain regulatory policies and forced tech
transfer and IP theft.
``China's Use of Maritime for Global Power Demands a
Strong Commitment to American Maritime'', Navy League of the United
States (November 2020). This report highlighted the importance of
maintaining a strong domestic maritime industry in the face of
heightened threats from China. Specifically, the Navy League noted that
``China understands it is critical as a national security issue to
maintain a heavy industry in shipbuilding, in particular because it
drives a range of other industries that are necessary to maintain a
high level as a producing nation. Furthermore, the capabilities to
build commercial ships are the ones that the Chinese are using to be
able to mass produce their Navy ships.'' In response to this targeted
investment in shipbuilding, the Navy League recommended a number of
policies to strengthen the domestic maritime industry, while noting
that ``it is clear that the Jones Act plays an important role in
keeping American shipyards operational when competing against heavily
subsidized foreign yards.''
These studies show vividly that if China has targeted the shipping
and shipbuilding industries as strategic to their larger objective of
competing with the United States as a global superpower, they have
assumed a commanding lead. The Navy League study mentioned above shows
that of the 2,873 large commercial vessels under construction in 2019,
1,291 were built in China as compared to 8 in the United States.
Similarly, large commercial vessels under the Chinese flag totaled
about 6,000 as compared to less than 200 large commercial vessels
flying the U.S. flag.
The vulnerability that this massive disparity creates for American
security interests should be clear. In the event of a conflict, China
is developing an overwhelming maritime logistics advantage to keep its
supply chains functioning, while America would be increasingly
challenged to do so. And even in the absence of a military conflict,
China is gaining market power over international commercial supply
chains that it can leverage to its advantage and to America's
disadvantage in ways not yet foreseen.
America should have a policy response to this problem. As a
starting point, it should reaffirm the essential nature of the Jones
Act and the American maritime industry it helps foster. It should also
provide a roadmap to effectively deny China success in its geopolitical
maritime ambitions.
VII. America's maritime workers
Please allow me to conclude with some remarks about American
mariners and other workers. These are the men and women who are
responsible for ensuring that our nation's supply lines have not been
interrupted by the pandemic. It is not an exaggeration to say they are
true American heroes. In these situations, it is overwhelmingly to our
benefit that these mariners and maritime workers are Americans who are
committed to the safety and security of our nation. The Jones Act
ensures that these essential workers remain on the job, and we are
grateful for this Subcommittee's longstanding support for this crucial
law.
Again, thank you for allowing us to be with you today for one of
the first Coast Guard and Maritime Transportation Subcommittee hearings
of this Congress. We are grateful for the chance to tell our story and
to emphasize to you the exciting growth of our industry. I will be
pleased to answer any questions you might have.
Mr. Carbajal. Thank you very much, Mr. Roberts. Next, we
will proceed with Mr. Del Wilkins.
Mr. Wilkins. Thank you. Good morning, and, again, thank you
for the opportunity to testify with you and before you today. I
thank you, my good friend, Congressman Davis, for the
introduction.
Chairman Carbajal, congratulations on being selected to
chair this subcommittee. We look forward to working with you to
achieve our mutual goal of ensuring the safe, efficient, and
environmentally responsible movement of freight on our maritime
transportation systems.
I also extend our thanks to the bipartisan leadership of
the full committee and subcommittee for your great work in the
116th Congress, in particular, the Coast Guard authorization
bill, MTSERA, and the Water Resources Development Act are all
greatly appreciated. And, as always, we are grateful for the
committee's stalwart support of the Jones Act, the statutory
foundation that undergirds every dollar that companies like
mine invest in American-built vessels, and every job we provide
to American women and men. And continuation of these good
efforts will position our industry to continue to meet the
country's transportation needs and support a national economic
recovery.
And that leads me to my main message for you today, which
is, that the domestic maritime industry remains resilient, but
needs your support to navigate the challenges of keeping
mariners healthy and vessels in service.
From the beginning of the pandemic, our industry's
overriding priority has been protecting mariners from COVID
while keeping vessels in service to protect the continuity of
the national supply chain. Industry best practices, based on
CDC and U.S. Coast Guard guidelines, were quickly put in place
and have served as a foundation of our resilience.
We are working hard to avoid disruption to regular vessel
operations. However, given the higher prevalence of COVID in
the general population, towing companies are seeing increased
incidence of exposure to infection off the job, which keeps
mariners and other frontline workers from reporting to work.
We have no question that the task is more challenging than
it has ever been during and throughout this whole pandemic. At
the same time, many companies are struggling with the
unforeseen cost associated with this pandemic, and in the
backdrop, is the ever-present need to maintain our Nation's
waterways infrastructure, so that vessels can move safely and
reliably. Taken together, these conditions pose real challenges
to the critical infrastructure sector at a time when a robust
supply chain is most needed.
The bottom line is that a healthy, fully, operational
domestic maritime industry is indispensable to our Nation's
ability to weather and recover from the twin public health and
economic crises.
With that in mind, I would like to highlight three
priorities that will help the hard-working men and women keep
tugboats, towboats, and barges operating on our waterways:
First, implement a national strategy for mariner
vaccination, at a minimum, and clear Federal guidance to States
to effectively immunize these essential workers against COVID,
and ensure safety and continuity. To be clear, we are not
asking to cut the line. We are asking to work with you and the
administration to ensure the timely immunization of a
relatively small segment of the country's frontline essential
workforce that has an outsize impact on our economy and
security.
Second, we ask that you please support full funding of the
MTSERA program. COVID-19 was an unforeseen crisis that required
sufficient resources and significant resources to adapt to a
radically altered operating condition. At the same time, many
companies saw steep declines in cargo volumes directly as a
result of the economic contraction. MTSERA will provide
companies with additional options to bolster financial
resources in preparation for a full economic recovery.
Finally, we are encouraged by President Biden's early
support for the large-scale infrastructure package, but we urge
that any such initiative contain three critical elements: One,
increased funding for locks, dams, ports and waterways; two,
accelerated construction of the Coast Guard buoy tenders, and
in the interim, support for the efficient use of existing buoy
tenders and other resources to promote safe and reliable
navigation; and third, improvements to the Army Corps of
Engineers contracting processes for dredges that keep our
rivers operating at congressionally authorized levels.
Such a package will both increase shipper confidence in
waterborne commerce, and as we recover from the pandemic, in
the long term, help secure a transformed waterway system that
supports robust domestic and international trade.
Furthermore, waterway transport is the most economical and
environmentally friendly mode of transport in the country,
which makes investing in maritime infrastructure a critical
component of environmental sustainability.
Chairman Carbajal and Ranking Member Gibbs, working
together, we can go forward to better our Nation. This
committee has a proven record of enacting policies beneficial
to the domestic maritime industry.
And let me assure you that we are suited up and ready to be
a full partner in the critical year ahead. We are ready to work
together, and eager to help as we know you are ready to get to
work. I thank you, and I am prepared to answer any questions
that you may have.
[Mr. Wilkins' prepared statement follows:]
Prepared Statement of Del Wilkins, President, Illinois Marine Towing,
on behalf of American Waterways Operators
Good morning, Chairman Carbajal, Ranking Member Gibbs, and Members
of the Subcommittee. My name is Del Wilkins, and I am president of
Illinois Marine Towing, Inc., based in Joliet, Illinois, which is a
subsidiary of Canal Barge Company in New Orleans, Louisiana. IMT
provides towing, fleeting and shipyard services along the Illinois
Waterway. For over 20 years, our highly experienced transportation
professionals have provided safe and reliable marine services to the
major barge transportation companies of our country. We are part of a
unique industry where a captain or pilot can earn a six-figure salary
with just a high school diploma, something that's just not possible in
most sectors of our economy today. Our robust employee base of over 900
employees is spread throughout the country, with the largest
concentrations in Louisiana (293), Illinois (169), Alabama (125),
Missouri (91), Arkansas (61), and Texas (54). In addition, we have
employees as far north as Minnesota, east to New Jersey, west to
Nevada, and south to Florida.
I currently serve as Vice Chairman of the Board of the American
Waterways Operators, the national trade association for the inland and
coastal tugboat, towboat and barge industry. On behalf of AWO's over
300 member companies, thank you for the opportunity to testify at this
important hearing on the impact of the COVID-19 pandemic on the U.S.
maritime industry. Chairman Carbajal, please accept AWO's
congratulations on being selected by your colleagues to lead the Coast
Guard and Maritime Transportation Subcommittee. Just as we worked in
the 116th Congress with the Subcommittee to advance policies that
increase safety and efficiency in our industry, we look forward to
rolling up our sleeves to help you achieve our mutual goal of ensuring
the safe, efficient and environmentally responsible movement of freight
via our marine transportation system.
My message for you today is that the domestic maritime industry
remains resilient, but needs your support to continue to navigate the
challenges of keeping mariners healthy and vessels in service. The
Transportation and Infrastructure Committee's bipartisan efforts to
assist the industry in the 116th Congress--in particular, the Coast
Guard authorization bill, the Maritime Transportation System Emergency
Relief Act (MTSERA) and the Water Resources Development Act--are
greatly appreciated, and we would extend our thanks to Chairman
DeFazio, Ranking Member Graves, former Chairman Maloney, and Ranking
Member Gibbs. And, as always, we are grateful for the Committee's
stalwart support for the Jones Act, the statutory foundation that
undergirds every dollar that companies like IMT invest in American-
built vessels and every job we provide to American men and women. A
continuation of these good efforts in the 117th Congress will better
position our industry to continue to meet the country's critical
transportation needs and support a national economic recovery.
Resilience and Challenges Ahead
From the beginning of the pandemic, the overriding priority of our
industry was taking the necessary steps to protect mariners from COVID-
19 while keeping vessels in service to protect the continuity of the
national supply chain that these mariners support. Industry best
practices, based on guidelines issued by the Centers for Disease
Control and Prevention (CDC) and the U.S. Coast Guard, were quickly put
in place and served as the foundation of our resilience. However, as a
result of the heightened prevalence of COVID in the general population,
towing companies are seeing increased incidences of exposure and
infection off the job, which keeps mariners and other front-line
maritime transportation workers from reporting to work. We are working
hard to avoid disruption to regular vessel operations that affect the
marine transportation system and the Americans that rely on it, but
there's no question that the task is more challenging than it has been
at any point since the pandemic began.
At the same time, many companies are still struggling with the
fallout from the unforeseen costs associated with the pandemic. And in
the backdrop is the ever-present need to maintain our nation's
waterways infrastructure so that vessel traffic can move safely and
reliably. Taken together, these conditions pose real challenges to a
critical infrastructure sector at a time when supply chain resilience
will be most needed.
Maritime Industry Resilience: Three Policy Proposals
The bottom line is that a healthy, fully operational domestic
maritime industry is indispensable to our nation's ability to weather
and recover from the current dual public health and economic crisis.
With that in mind, I would like to highlight three priorities for the
industry that are well within the Subcommittee's jurisdiction.
Addressing these issues will help the hard-working men and women who
keep tugboats, towboats and barges operating on America's waterways.
Working together with the Members of the Subcommittee and the full
Committee--which has an exemplary record of bipartisan achievement--we
can prepare to go forward to better.
Prioritized Vaccination for Mariners
America's commercial mariners are an essential workforce with a key
role in national security and the national supply chain, and they are
in a unique position: many of them live aboard the vessels on which
they work, in very close quarters where COVID-19 can spread quickly.
Many mariners do not live in the states where they report to work, and
are away from home for weeks or months at a time, complicating their
ability to secure COVID-19 vaccinations in their states of residence.
Although the Department of Homeland Security's Cybersecurity and
Infrastructure Security Agency and the Coast Guard have recognized the
criticality of the maritime transportation workforce in their guidance
on the identification of essential workers, mariners are not
categorized as ``frontline'' essential workers in the Centers for
Disease Control and Prevention's guidance on allocating COVID-19
vaccines and in many states' vaccine distribution plans. This is
despite the fact that the men and women who work onboard vessels and
onshore at ports and terminals play vital roles in the transportation
of critical commodities that enable other frontline essential workers
to do their jobs, including the food products and consumer goods that
stock store shelves, the pharmaceuticals and medical supplies that
hospitals and clinics rely on, the energy cargoes that power our
country, and the manufacturing inputs that keep our factories up and
running.
This suggests that a national strategy for mariner vaccination, or
at a minimum, clear federal guidance for states, is urgently needed to
efficiently immunize these essential workers against COVID-19 and
ensure the safety and continuity of waterborne transportation. On this
issue, AWO has partnered and is aligned with stakeholders from every
segment of the maritime industry, from labor to ports and terminals to
vessel owners and operators. We are also supported in this effort by
Federal Maritime Commissioners Carl Bentzel and Daniel Maffei, who have
sent letters to the Administration regarding ``the urgent issue of
vaccinating the Nation's maritime workforce as soon as possible'' and
urging the Administration ``to emphasize the need to keep the supply
chain transportation workforce in mind as each state deploys rapid
COVID-19 testing and implements the vaccination process.''
To be clear, we're not asking to cut the line; we're asking to work
with you and the Administration to ensure the timely and efficient
immunization of a relatively small segment of the country's frontline
essential workforce that has an outsize impact on our economy and
security. Our industry is eager to be part of the solution and work
with the federal and state governments to resolve any logistical
challenges to the vaccination process for America's mariners.
Full Funding for MTSERA
Thanks to Chairman DeFazio's leadership, and the pivotal roles
played by Ranking Member Graves, then-Chairman Maloney, and Ranking
Member Gibbs, the Maritime Transportation System Emergency Relief Act
was enacted as part of the National Defense Authorization Act (NDAA)
earlier this year. This much-needed assistance program, which will be
administered by the Maritime Administration, will help vessel owners
and other maritime stakeholders offset unforeseen costs arising from
the COVID-19 crisis, including the costs of purchasing of personal
protective equipment, sanitizing vessels, and testing mariners to
prevent the onboard transmission of the virus.
While our industry has long experience with contingency planning
and emergency preparedness, COVID-19 was an unforeseen crisis for us,
as it was for most American businesses. It required a significant
commitment of resources in order to successfully adapt to radically
altered operating conditions. At the same time, many companies across
our industry saw a decline in both dry and liquid cargo volumes as a
result of economic contraction. The resulting revenue decreases posed
real challenges for many companies at the same time as they faced
increased operating expenses. MTSERA provides companies with an
additional option to bolster financial resources in preparation for a
full economic recovery.
With MTSERA now authorized, our request to Congress is simple:
please follow through with a bipartisan effort to fully fund MTSERA in
the FY 22 appropriations process.
Maritime Infrastructure is Essential
WRDA 2020 makes enormous strides to accelerate the pace of
waterways infrastructure projects, thanks to the leadership of this
Committee. We applaud Chairman DeFazio for his consistent support of
comprehensive infrastructure legislation. In addition, we are
encouraged by President Biden's early support for moving forward with a
large-scale infrastructure package. We urge that any such effort
contain three critical elements: (1) increased funding for lock and dam
projects and port facilities; (2) accelerated construction of Coast
Guard waterways commerce cutters (buoy tenders) and, in the interim,
support for the efficient use of existing buoy tenders and other
resources to promote safe and reliable navigation; and (3) improvements
to the Army Corps of Engineers' contracting process for commercial
dredges to keep our inland rivers operating at Congressionally-
authorized levels.
Congress has a unique opportunity to build on its recent efforts by
thinking and acting big. An infrastructure package with a robust
maritime component will both increase shipper confidence in waterborne
commerce over the period of recovery from the pandemic, and, over the
long term, help secure a transformed waterway system that supports
robust domestic and international trade. Furthermore, waterborne
transport is the most environmentally friendly mode of freight
transportation, which makes investing in the improvement of maritime
infrastructure a critical component of environmental sustainability.
Failure to make these investments will ultimately force cargo to move
by less efficient and less environmentally sustainable modes.
A comprehensive infrastructure package also provides an opportunity
to explore other ways in which Congress can bolster critical maritime
industry infrastructure, including facilitating short sea shipping and
other innovative efforts to enhance the efficiency and sustainability
of maritime transportation, as well as providing support for maritime
industry initiatives to increase cybersecurity readiness and
resiliency. In addition, as you begin your work to develop the
framework for the next Coast Guard authorization bill, we look forward
to sharing our ideas about ways in which you can ease unnecessary
burdens on towing companies, such as suspending the collection of
inspection user fees that charge vessel owners twice for services
performed by Coast Guard-approved third parties.
Conclusion
Chairman Carbajal and Ranking Member Gibbs, let me conclude by
saying: Together, we can do this. Both the Subcommittee and the full
Committee have a proven record in enacting policies beneficial to the
domestic maritime industry. And let me assure you that we're suited up
and ready to be a full partner in the crucial year ahead. America's
maritime industry is the critical link to supply chain continuity and
economic recovery, and we're as eager to help as you are to get to
work.
Mr. Carbajal. Thank you, Mr. Wilkins.
We will now move on to Member questions. Each Member will
be recognized for 5 minutes.
Usually I would start and then go on to Ranking Member
Gibbs, but we will acquiesce today to Chair DeFazio, as he has
another commitment he has to get to. Mr. DeFazio.
Mr. DeFazio. I thank the gentleman for yielding the time.
I think it was Mr. Patti who said that you still can't
access testing. Is that correct? That ships are being
dispatched, and you can't get people tested before they go?
Mr. Patti. No, it is not that we can't access testing. It
is just that it is still a very disorganized and not quite as
coordinated as it should be processed in order to provide the
uniform testing for each vessel and for all the mariners.
But testing is available. It has taken a while to get to
this point. In the very early stages of the pandemic, it was
incredibly, incredibly difficult to secure the testing that we
needed. But testing is available. It is just not being handled
in as uniform and as organized a fashion as we would like.
Mr. DeFazio. OK. And then are we still seeing, Ms. Brand or
anyone else, a lack of PPE in our ports, for workers in the
ports loading/unloading cargo and that? Personal protective
equipment?
Ms. Brand. Chairman DeFazio, thank you so much for the
question. No, I am not hearing of a shortage of PPE. I hear
that it is flowing. I understand there are some counterfeit PPE
that we are watching for and making sure our members don't get
that.
Mr. DeFazio. OK, that is good.
Mr. Bordelon, when I was visiting your shipyard, you told
me something about the acquisition of the counter you are
working on. You started out with an order for so many, so,
therefore, you couldn't do forward purchasing for, I think it
was the engines, in particular, were an issue.
Do you have any comments on the Coast Guard's contracting
process, without being too upsetting to them?
Mr. Bordelon. Sure. Yeah, that is just exercising of the
claims in the contracts. So we had some things on the Bollinger
side. We had some things come up on the Bollinger side that we
worked through Coast Guard with as far as getting the boats
appropriated and funded so we could continue the program.
And really, Chairman, that is a great point of some of the
things that the shipbuilding industry needs right now is
predictability, and some vision going forward on budgets and
awarding contracts that have longer lives, and short-term
opportunities for us to evaluate definitely help in a time,
like a COVID crisis, to have some stability and sustainability
in our workforce.
And that is really what our workers are looking for from a
central business standpoint, that we need some predictability
in front of us. And budgets and appropriations definitely help
fix that for shipbuilders and all of our suppliers.
Mr. DeFazio. OK. Thank you.
Just one other question. I think someone said we built
eight ships last year, eight large vessels, commercial vessels.
Did someone say that?
Mr. Roberts. I did say that. Mike Roberts here. Yes.
According to our Navy league----
Mr. DeFazio. How many did the Chinese build?
Mr. Roberts. 1,291, on the basis of $15 billion in support
from the Chinese Government.
Mr. DeFazio. Well, wait a minute. You know, wouldn't that
be unfair competition? The Chinese Government subsidizes the
building of the ships. They have cheap labor.
Mr. Roberts. There are a lot of advantages in Chinese
shipyards in addition to the financial support that they
receive from the Chinese Government, and the results are
telling.
Mr. DeFazio. OK. Yeah, I just remember Mr. Kudlow, a former
economic adviser to the former President, saying he really
believed in free markets, because he wanted to do away with the
Jones Act. And I said, well, how is it free when we have to
compete with the Communist government of China? That is not a
free market. Anyway, that is an extraordinary number, 8 versus
1,000. That is very worrisome. Thank you.
Mr. Carbajal. Thank you, Chairman DeFazio. We will now move
on with the alternating approach, so I will recognize Ranking
Member Gibbs.
Mr. Gibbs. Thank you, Chairman.
To Mr. Cordero and Mr. Wilkins, as we have seen in
testimony and see the backup, especially in the California
ports, and we see back-hauling of empty containers back to
China to fill quicker turnaround. Mr. Cordero, have you seen
containers not be available to ag exports? And then for Mr.
Wilkins, are you seeing an increased trade on the river system,
on the inland waterway system, a switch from container to bulk
shipping? I want to get an idea of what is going on with ag
exports.
Mr. Cordero. Ranking Member Gibbs, excellent question. I
think that, number one, your commentary regarding the
importance of American exports is key for us going forward. So,
with regard to what is happening here in southern California,
and if I may say, many of our container gateways in the United
States regarding the volume of imports that we are seeing,
number one, that has caused a shortage of empties. Now, I will
say that issue has been mitigated since the end of last year
with regard to extra loaders, that is vessels that are being
sent specifically with regard to the empty issue.
But how does that affect the American exporter? I think
what we need to get to is, as we referenced, the common ground
here that you see many of us testifying this morning,
Congressman, is the need to upgrade our infrastructure here in
the port community in the United States, and, more importantly,
to upgrade the connectivity. For example, inland ports, so that
the American exporter, particularly the American farmer, has a
competitive opportunity to the largest market in the world,
which is Asia.
So, I think in that regard, here in southern California
the--along with the Ports of Los Angeles and Long Beach, is the
largest container gateway in the United States. So to put this
into context, in 2020, together with the Ports of L.A. and Long
Beach, we moved in excess of 17 million TEUs. That is a
tremendous amount of volume.
Nevertheless, I think that, again, we are moving forward as
ports throughout the Nation. And as AAPA chairman of the board,
I can represent to you that is the single most important issue
that we are trying to address here in the port community.
Mr. Gibbs. Mr. Wilkins, what are you seeing on the
maritime, on the waterways? Mr. Wilkins is there?
Mr. Wilkins. Yes, I am here. I had it on mute. Sorry, Mr.
Gibbs.
Mr. Gibbs. Oh, OK.
Mr. Wilkins. Yes. On the inland waterway system, we see
containers that really move in the gulf region of the country.
There is not a lot of container traffic that moves on the
inland waterways as we know it per se. The Snake River is
probably the best example of great movements. And the
underscoring, we looked forward to moving containers in a more
robust way on the inland waterways, and there has been a
downturn in overall tonnage, per se. But the reliability of the
system is what is really key.
We saw the Coast Guard and the Corps of Engineers work
together with maintenance programs to be able to not have a 5-
year maintenance program, but of 90 to 120 days. We watched
them work together to take it to 2 years over 5 years, which
really enhances reliability by those two agencies working
together in partnership with industry to ensure that we have
the ability to move commerce, and say to shippers, bring
containers to the waterways and any other cargo, because the
system is reliable.
Mr. Gibbs. Let me interrupt you. Are you seeing an
increases in bulk trade?
Mr. Wilkins. Bulk trades? Bulk trades, I mean, it depends
on the commodity. We see grain that moves up and down, versus
cyclical.
Mr. Gibbs. Yeah, I know. I have just seen an increase
because I can't move my container out of L.A. and Long Beach.
Have you seen any increase or not?
Mr. Wilkins. Not for the inland waterways, no, sir.
Mr. Gibbs. OK. I just--so I have one more question quick,
because I could run out of time, to Mr. Wilkins. It is an issue
that is outside today's topic, but many towing vessels have
signed up as response vessels for Oil Pollution Act-required
response plans. Now that such vessels are subject to inspection
under subchapter M, the geographic restrictions included in the
towing vessel's certificate of inspection will not allow these
vessels to continue signing up as response vessels. Congress
recently enacted a short-term waiver to allow towing vessels to
continue this work for a short period. Do you expect any towing
vessels to make the needed upgrades to be able to expand the
geographic restrictions on their certificate of inspections to
continue to work as response vessels, Mr. Wilkins?
Mr. Wilkins. Well, unfortunately, you broke up, Mr. Gibbs.
I think you are asking about the inspections and the inspection
fees. I believe that is what you are asking?
Mr. Gibbs. Yeah. Subchapter M, geographic restrictions with
certificates of inspections, yeah, the vessels that were
granted a short-term waiver, I guess. But do you see them
continuing to work as response vessels?
Mr. Wilkins. Yes. On the moratorium, we thank the committee
for its leadership in drafting legislation that was able to
have a moratorium on these fees, because bottom line is, for
time, we see the fees that we are paying to the Coast Guard
plus TPOs, third-party operators, as being duplicative and
redundant. We pay between [inaudible] upwards of $33,000 a year
just for TPO, third-party inspections, and then the Coast
Guard.
So the bottom line for us is that we don't see--where the
Coast Guard is doing 20 percent of the work versus the TPOs
doing 100 percent of the work, the fees are relatively the
same, so we think that is duplicative and redundant. So there
is an opportunity to improve there.
Mr. Gibbs. Thank you. I am out of time. I yield back, Mr.
Chairman.
Mr. Wilkins. Thank you, Mr. Gibbs.
Mr. Carbajal. Thank you, Mr. Gibbs.
I will proceed to recognize myself. Mr. Patti, like other
agencies within the Department of Transportation, the Maritime
Administration is not tasked with regulating the commercial
maritime industry. Instead, and by statute, their job is to
promote the industry. In a couple months, the Maritime
Administration will testify before the committee on their
proposed budget. If you had a message for MARAD, what would it
be?
Mr. Patti. Thank you, Mr. Chairman. Let me preface my
answer by just thanking the incredibly hard-working, dedicated
people at the Maritime Administration, especially over these
past 4 years. They have worked tirelessly, in light of the
pandemic and before that, in support of our industry.
If I had a message for the Maritime Administration, really
it would be twofold: First, I would encourage the Maritime
Administration to be aggressive in its role as the promotional
agency for our industry. We now have a President who has lent
his name to a number of maritime policy objectives and has
reasonably issued an Executive order, including not only the
Jones Act, but maritime services within its scope.
I would encourage the Maritime Administration to use that
to make sure all Federal shipper agencies understand not only
what the law of the land is, but what the policy of the
administration is so that ``ship American'' is as strongly
enforced as ``buy American.''
And, secondly, I would encourage the Maritime
Administration in its role as the promotional agency, be
innovative, to work with the Congress with their colleagues in
the Department of Transportation and the administration and
with the industry. Look at new ways or rehash the old ways to
increase the amount of cargo on U.S.-flag ships.
They should start now looking at the tanker, the newly
enacted tanker security program. Figure out ways to ensure that
the vessels that we hope will come in under the United States
flag pursuant to this program will, in fact, have the cargo
they need to operate.
Look at the tax laws. Consider whether it is time to extend
the foreign-source income exclusion to American mariners the
way most other maritime nations do; to consider, as we approach
another tax bill, should there be incentives? Can there be
incentives that would encourage shippers to use U.S.-flag
vessels to a much greater extent than they are right now?
Look at trade policy, encourage the promotion and the
negotiation of bilateral cargo sharing agreements with our
trading partners, again, with an eye toward increasing the
amount of cargo carried on U.S.-flag vessels to increase the
number of ships under our flag and to increase maritime jobs.
In short, I would encourage MARAD to be aggressive and to
be innovative, and hopefully by working together, we can build
up our maritime industry.
Mr. Carbajal. Thank you, Mr. Patti.
Given the pandemic, have you had problems with recruitment
and retention, and what are the implications in the very near
future, 5 to 10 years?
Mr. Patti. Again, as we have said, there is absolutely no
question the pandemic has adversely affected American mariners
as it has affected all Americans, regardless of the industry in
which they work.
For the American mariner, the hardships that they have
endured, being stuck overseas months upon months after they
were supposed to return home to take care of their families,
being quarantined on vessels, not being able to have the
immediate access to vaccines they need for all of the reasons I
had mentioned previously, despite all of that, morale in the
maritime industry among the American mariners is still good.
We have not experienced a situation where people are
leaving the industry. We have not had a problem recruiting
members to the maritime industry through the maritime
academies, through Kings Point, through the unlicensed schools.
Individuals are still willing and ready and able to work
onboard U.S.-flag vessels.
Needless to say, we have to continue to address the
pandemic. We have to resolve these issues. And, most
importantly, if we are talking really recruitment and retention
for the maritime industry, we have to make sure we have the
ships under the U.S. flag that will provide these individuals
with jobs.
Mr. Carbajal. OK. Mr. Patti, finally, when a crewmember
aboard a ship is infected, and the vessel is in a foreign port,
what are the remedies or protocols currently in place to
provide medical care for the crewmembers and avoid community
spread on the vessel?
Mr. Patti. Mr. Chairman, that varies. It varies quite a bit
from where the vessel is located. In some jurisdictions, the
entire vessel and the entire crew will be placed into
quarantine. The vessel will have to be cleaned. There will be a
specified amount of time based on what the local authorities
say before the vessel can sail, before the crewmembers are
removed from the vessel, and either taken to a hospital or
brought home. Again, it is not a very, very consistent system.
Really, it begins and ends really where the vessel is located.
Mr. Carbajal. Thank you very much. My time is up, so we
will proceed to Representative Van Drew. You have to unmute
yours, Mr. Van Drew.
Mr. Van Drew. Hello. How are you? It is good to be with all
of you today, and I think this is an important hearing, and I
would like to congratulate everybody on their posts, obviously.
I would first like to say how important--and I think
everybody knows--that the Coast Guard is, in my community. We
are actually a Coast Guard community in Cape May itself, and we
also have the training center for the United States of America.
So this is all extremely important, and I am glad that we are
focusing on it.
You know, South Jersey, where I live, people think of New
Jersey, but South Jersey is a highly coastal district. And it
depends on maritime industries, including fishing,
shipbuilding, and maritime shipping. We need to keep the United
States extremely economically competitive, and maritime
commerce is essential to that mission.
And we must always, always support the Jones Act, which
ensures that all vessels transiting cargo between domestic
ports, as we all know here, are made in the United States. This
policy is important for economic and military security and has
broad bipartisan support, which is a good thing, and I hope we
have a lot of bipartisan support in this committee as we move
forward.
I have a question for President Del Wilkins. I would ask
him, as the president of a towboat and barge company in a major
market, you are in a unique position to help educate us as to
why investments in maritime infrastructure are urgently needed.
What actions should Congress take on maritime infrastructure to
improve the United States commercial maritime competitiveness?
Thank you, Mr. Del Wilkins.
Mr. Wilkins. Thank you, Representative Van Drew, for the
question. I appreciate it. And I think I have a very unique
life experience on my resume. I was blessed to serve 15 years
in South America--Venezuela, Brazil, and Argentina. I have done
exploratories in China on the Yangtze, and Africa on various
rivers, also in Europe.
And I would say to you that infrastructure is key. There is
no country on the planet that can move commerce like we do here
in the United States, especially with this network of barge,
rail, and truck, especially maritime. So therefore, it is
incumbent upon us, in my opinion to--I think it was Lee Iacocca
or General Patton who once said, ``Lead, follow, or get out of
the way.''
So we are leading, and I can assure you that those other
countries are trying to replicate what we have. So I think that
is how critical it is to maintain the infrastructure that we
have in place and enhance it, that others are trying to do what
we already have.
Mr. Van Drew. OK. Well, thank you for the answer. I look
forward to working with you, and I yield back my time.
Mr. Carbajal. Thank you, Mr. Van Drew. I will now recognize
Mr. Larsen.
Mr. Larsen. Thank you, Mr. Chair. I am going to do this
very slowly, because a lot of my questions have been asked, and
so, I wanted to yield to Mr. Lowenthal my 5 minutes, if he is
prepared. So I would yield to Representative Alan Lowenthal.
Mr. Carbajal. Mr. Lowenthal?
Mr. Lowenthal. I am prepared. Thank you. And, first, I want
to thank you, Mr. Chair, and congratulate you on your becoming
the chair. I think we are going to enjoy working with you, and
I think you are going to bring a certain amount of humor to
this subcommittee.
And I also want to thank the panel for their testimony, and
it has illustrated how important the maritime industry has
become through this pandemic crisis. Workers on the front line,
they are putting themselves at risk so that we can move vital
goods across our country. You have done your part, and now
Congress must do its part.
I also want to ask unanimous consent to introduce a letter
from the American Association of Port Authorities highlighting
the impact of the COVID pandemic on maritime operations. I ask
unanimous consent, Mr. Chair.
Mr. Carbajal. Without objection.
[The information follows:]
Letter of February 2, 2021, from the American Association of Port
Authorities et al., Submitted for the Record by Hon. Alan S. Lowenthal
February 2, 2021.
Hon. Charles E. Schumer,
Senate Majority Leader,
322 Hart Senate Office Building, Washington, DC.
Hon. Nancy Pelosi,
Speaker of the House,
H-232, The Capitol, Washington DC.
Hon. Mitch McConnell,
Senate Republican Leader,
317 Russell Senate Office Building, Washington, DC.
Hon. Kevin McCarthy,
House Republican Leader,
H-204, The Capitol, Washington, DC.
Dear Speaker Pelosi, Majority Leader Schumer, Senate Republican
Leader McConnell, and House Republican Leader McCarthy,
As Congress continues the process of developing the next COVID-19
relief package, it is critical that this package include emergency
relief for our Nation's maritime transportation system. In the year
since the virus was first detected in the United States the maritime
industry has endured significant hardships and has experienced
substantial impacts to business. Congress must take immediate steps to
ensure that the whole of the maritime transportation system has the
resources necessary to address the unique and unexpected challenges
posed by the COVID-19 pandemic.
Our maritime transportation system and the critical workers
employed throughout this system have kept vital goods moving to medical
professionals and first responders, have ensured that our Nation's
shelves remain stocked, and have enabled commerce to continue flowing
during these uncertain times. Ports that are located in rural areas
have propped up local economies, dispensing critical public services
while providing assistance to small businesses, oftentimes at the
ports' own expense. Prior to the COVID-19 outbreak, over 650,000
Americans were directly employed in jobs generated through the movement
of marine cargo and through vessel activity while 30.8 million total
jobs were supported by cargo moving through America's deep-draft ports.
Unfortunately, the COVID-19 crisis has had a significantly negative
impact on the maritime industry. Despite container surges at several
large ports, commercial cargo volumes have plummeted across the
industry--total waterborne trade volume is down 5.5% compared to last
year, while the value of this trade has crashed by 12.7% totaling $200
billion. Passenger movements remain virtually nonexistent with
operations not expected to resume for months. Expenses have greatly
increased due to COVID-19 protocols and precautions that have been put
in place to ensure the health and safety of staff, and these extra
costs borne by the industry to keep supply lines open are above and
beyond the normal costs of operations.
With an uncertain outlook, these trends are likely to continue and
intensify as the COVID-19 pandemic peaks over the coming months. To
date, no dedicated funding has been provided in any of the COVID-19
legislative packages to assist the maritime transportation system
despite emergency relief being provided to other modes of
transportation.
We urge you to include emergency relief for the maritime industry
in the next COVID-19 package through the Maritime Transportation System
Emergency Relief Program, which was created by the National Defense
Authorization Act of 2020 (P.L. 116-283). This new program, the only
one of its kind, authorizes the Maritime Administration to solicit
applications for aid from those across the maritime industry, both
inland and coastal, and provide grants to those most in need due to
emergencies or disasters. This includes aid to help mitigate the
impacts of the ongoing COVID-19 pandemic.
It is essential that the U.S. maritime industry maintain a state of
readiness and sustain our critical responsibility in the supply chains
that provide food, medical equipment, and other essential goods for the
citizens of this country. By providing this emergency relief Congress
will help ensure that maritime operations continue at the high level
that Americans have come to depend on. We hope that you can provide
this critical emergency relief to the maritime industry as additional
COVID-19 response measures are considered.
Sincerely,
American Association of Port Authorities.
American Great Lakes Ports Association.
Association of Ship Brokers and Agents.
Atlantic Intracoastal Waterway Association.
Big River Coalition.
California Association of Port Authorities.
Columbia River Steamship Operators Association.
Connecticut Maritime Association.
Dredging Contractors of America.
Florida Ports Council.
Gulf Ports Association.
Inland Rivers, Ports and Terminals, Inc.
International Freight Forwarders & Customs Brokers Association of New
Orleans.
International Longshoremen's Association, AFL-CIO, CLC.
International Longshore and Warehouse Union.
International Propeller Club of the United States.
Jacksonville Marine Transportation Exchange.
Marine Exchange of the Puget Sound.
Maritime Association of the Port of New York/New Jersey.
Maritime Exchange for the Delaware River and Bay.
National Association of Maritime Organizations.
National Association of Waterfront Employers.
National Maritime Safety Association.
National Waterways Conference.
North Atlantic Ports Association.
Louisiana Maritime Association.
Oregon Public Ports Association.
Pacific Northwest Waterways Association.
Passenger Vessel Association.
Ports Association of Louisiana.
The Propeller Club of New Orleans.
Transportation Trades Department, AFL-CIO.
Virginia Maritime Association.
Washington Public Ports Association.
Waterways Council, Inc.
West Gulf Maritime Association.
World Trade Center of New
Orleans.
Mr. Lowenthal. I will take that as giving me unanimous
consent to introduce the letter. Thank you, Mr. Chair.
Mr. Cordero, you know, I have known you for over two
decades, probably a lot longer, and I really want to say that
you have really become a leader, maybe the leader in the U.S.
maritime industry. I watched you first as a member of the Long
Beach Board of Harbor Commissioners where you championed the
fact that the Port of Long Beach could be both an economic
engine, could continue to grow, as you mention now in your talk
today, but also could grow greener.
Then you became a member appointed by President Obama to
the Federal Maritime Commission, where you demonstrated your
leadership, and actually were selected by the President to
become the Chair of the Federal Maritime Commission. And then
you came back to become the executive director of the Long
Beach Port and also now as the chair of the executive committee
of the American Association of Port Authorities. Quite a
career.
But I want to say, you have talked about how Federal funds
for the Maritime Transportation System Emergency Relief Program
could be used to help portworkers. Can you give us some idea
how could those Federal funds help such things right now? What
would you use those funds for?
And maybe, also, talk about, what are we going to do about
the backlog of goods? I look out my window sometimes here in
Long Beach, and I see all those ships waiting to unload their
cargo, and yet, they are sitting out in the port. What are we
going to do about the backlog, and how can the Federal Maritime
Transportation System Emergency Relief Program help on
something like that?
Mr. Cordero. Well, thank you, Congressman, for your
question. And let me answer the twofold question as follows:
With regard to the funds, I think, first of all, many of you
who I see here I met in my role as Chairman of the FMC. You
know, Congressman Weber, Congressman Graves, yourself,
Congressman Lowenthal, and a couple other familiar faces. So
the historic quest of the maritime industry is to be seen as an
important, vital sector of transportation as we see other modes
that are being funded.
And, you know, Chairman DeFazio said this morning, and I
will say, that the port industry here has yet to receive any
relief in funding with regard to this COVID crisis. So if I
could leave one thing here with this committee and the
subcommittee, again, we just want to have a percentile of
relief here that is so important for the vital reasons that,
again, you have heard the testimony this morning.
Now, with regard to the funding, I think I would direct
myself to the National Defense Authorization Act here that was
recently passed, and, more specifically, section 3505, which
established the Maritime Transportation System Emergency Relief
Program. And with that, if you look to section J, I think that
answers the question, everything with regard to operations in
how we have been impacted, PPEs, workforce retention,
infrastructure repair, and so forth and so forth. The list is
long.
So, I think, all I would reference to the answer is, if we
apply section 3505(j) by definition of what is an emergency
here, a health pandemic here, COVID-19, and how this has
impacted the port authorities. And I think, finally, again,
what we are asking for is a vital part of the transportation
sector here has yet to receive any funding with regard to this
emergency crisis that we have experienced.
So as to the part two, and the congestion, as I indicated,
I think it is fair to say that we are seeing that in many
gateways, but more particularly in southern California. I think
for the Port of Long Beach you have seen that investment of
over $4 billion over 10 years, and going forward, an additional
$1.7 billion. Our colleague, our neighbor Port of L.A., has
similar investments. So southern California is the gateway to
the most important trade route in the United States, the trans-
Pacific trade route.
And I will say, let's not just see this as an import
dynamic; we have to see this as an export dynamic going
forward. And that is the reason why, again, we are applying all
aspects to move efficiency here with containers. And in a way--
that's my last comment--in terms of funding, a large part of
what we need to do is to move to digital transformation, and I
think that is going to create the kind of efficiencies that we
need to have here at our port and gateways throughout the
country.
Mr. Lowenthal. Thank you, Chairman Cordero. I yield back,
and I thank Representative Larsen for giving me his time.
Mr. Larsen. I yield back.
Mr. Carbajal. Thank you, Mr. Lowenthal and Mr. Larsen.
I will now proceed to Representative Malliotakis. Did I say
that correctly?
Ms. Malliotakis. Good. For some reason, everyone is having
trouble with my first name. I have been called Nickel and
Nicolas, but everybody is getting Malliotakis right, which is
very nice. And I appreciate, Chairman and Ranking Member Gibbs,
this is my first time participating in a hearing as a Member,
and I am very excited to be here.
I really found the testimony to be very enlightening. And,
in particular, Mike Roberts touched on an issue that I also
have concerns with, the influence of China. And in addition to
investment China is making in maritime vessels and supplies, it
is also making significant investment in infrastructure, such
as in ports with our neighboring countries, in Latin America
and South America.
And I was wondering if Mike Roberts, or anyone else who
testified, would like to expand and maybe talk about the impact
that this is having on trade with those particular nations in
Latin and South America and the maritime industry as a whole.
Mr. Roberts. Thank you, Representative Malliotakis. I
appreciate the question. I would say a couple of things. First,
this subcommittee, 1\1/2\ years ago, held a hearing on this
subject, and it was certainly one of the first times that the
impact of China's ambitions was brought to light with respect
to the maritime industry.
And we have done a lot of work since then to explore that
further. We think it is serious. I think that the question is,
what do we do about it? We don't really have a response. We
have a seriously risky situation and a great vulnerability, and
we don't have a strong policy response. I think we need to
recognize that because of our trade and economic policies we
are a Nation of consumers, and that it may be fine in a world
where there is no threats, but that is not the world we live in
today, so we have to recognize that.
We have to also understand that there is an economic
component to this, that overwhelming military superiority, if
we can sustain it, doesn't prevent China from using economic
leverage against our interests.
So, I think to respond effectively, we need to really deny
China's success in terms of its maritime ambitions, we need an
industrial policy that balances the benefits of trade alongside
the need to preserve a strong and diversified American economy.
And key sectors like shipbuilding and strategic service sectors
like shipping need to be recognized and supported much more
than they are today.
Ms. Malliotakis. I appreciate that. And I think in addition
to the Jones Act, and our supply chain in terms of the maritime
and shipping industries, I think we could also look at the
supply chain of PPE. And I was wondering if anyone, perhaps,
could comment on some of the challenges that we as a Nation
have had obtaining PPE from overseas, from Asia during the
pandemic, and how it highlights the need to bring that supply
chain home as well.
Mr. Roberts. I will offer my 2 cents on it. My sense of it
is that early in the pandemic, the Chinese made a rational
decision to make sure they had enough PPE for their own
population. And as that became less of a threat, they were
willing at that point to go ahead with contracts that enabled
shipments to this country.
It is, I think, widely recognized the importance of near-
sourcing, in-sourcing critical supplies like PPE and many, many
other things that we are now dependent on China for
manufacturing, and then for the logistics to bring it here.
Ms. Malliotakis. Thank you.
Mr. Cordero. Congresswoman, if I may add to that question--
--
Ms. Malliotakis. Yes.
Mr. Cordero [continuing]. And that is a great question,
Congresswoman. Let me add this: You know, part of the question
in terms of this issue of congestion at our ports, let's keep
in mind there is a confluence of factors as to what has led to
the volume. One commodity, aspect that has been very, very key
here and important is the number of PPEs and medical supplies
that are coming in as imports. That is one of the reasons we
have had this surge in volume.
So, I think the question for us as a Nation that these
important medical supplies and PPEs have to be here, come back
to be manufactured in the United States.
Ms. Malliotakis. Absolutely.
Mr. Cordero. We have seen that in this crisis, if it
teaches us anything, that we need to have a quick pivot to make
sure we protect frontline workers. And, again, if we go back a
year, and for the first several months thereafter, that was
really problematic. And going forward, I don't see any
reduction in the use of PPEs in terms of what this pandemic has
now changed in terms of what Americans have to be accustomed to
for a few years.
Ms. Malliotakis. Thank you, Mr. Cordero. I absolutely agree
with you. And I would actually like to speak with you offline
on another issue related to high tolls at my port, because
while everyone else is crowded, we are not as crowded because
of this type of impact on my local terminal. So let's connect
offline. Thank you.
Mr. Cordero. Absolutely. Would love to do that.
Mr. Wilkins. Would there be time to weigh in on her first
question, Mr. Chairman?
Mr. Carbajal. Time is up. We are going to have a second
round in a few, so----
Mr. Wilkins. OK.
Mr. Carbajal [continuing]. Hold that answer.
Next, we will proceed to Representative Lowenthal, a second
bite at the apple.
Mr. Lowenthal. Thank you, and it tastes very good, Mr.
Chair, that apple.
I want to follow up on some things that Mr. Patti has said.
You know, Mr. Patti, you have really demonstrated that this
pandemic has exacerbated the current state of the U.S.-flag
international merchant fleet, which is already at risk, and
now, you have indicated how much more at risk it has become.
So I want to talk about what we can do. Can you--you know,
this past Congress, we passed and put into the National Defense
Authorization Act the 10-tanker security fleet that you
mentioned, to begin to fund that, but it hasn't been
appropriated. How important is it for us to fight to
appropriate that, the tanker security program?
Mr. Patti. Thank you, Mr. Congressman. I think it is
incredibly important that you fight to appropriate funds. The
$60 million is authorized for the new tanker security fleet
program. Not only will this help alleviate some of the manpower
shortage; if you are talking about 10 vessels coming into the
United States flag for the first time, you are talking about an
employment base for approximately 500 mariners, which is a nice
step in the right direction.
It doesn't obviously solve the entire shortage that is
estimated, as I said, for approximately 1,800 mariners, but it
is a step in the right direction.
But I would also suggest that not only do we have to fight
to secure the appropriation for that program but we also need
to begin now to look very, very carefully at the program, make
sure that when those vessels do come into the United States
flag that there is cargo for them to carry, that they are able
to operate as opposed to just bringing in more vessels to the
U.S. flag that are going to be laid up.
It is an incredibly important program. It was initiated
based on its statements that it made by the Department of
Defense warning of our almost total reliance on foreign vessels
that supply the military. And, again, the simple answer to your
question is, yes, absolutely, we should fight to get that
appropriation.
Mr. Lowenthal. Thank you.
I want to ask the following question to return to Mr.
Cordero, Chairman Cordero. I believe that this committee, and
certainly Chairman DeFazio, has indicated we will be supportive
of the need for vaccinations and testing for the maritime
industry. You are essential workers. You are not receiving
those. And it is critically important for the health of your
workers, who are essential workers and defending our Nation.
But I want to ask you about something. We have seen
throughout this country, we have seen the CDC, we have seen Dr.
Fauci, we have talked about public health recommendations, and
yet, we still see superspreader events, people not following
them. I guess the question that I am asking is, the AAPA has
made wonderful recommendations about public health, how we
should have best practices, social distancing, PPE.
The question to you is, as the chair of the AAPA, have you
found that these are really being followed in the ports? When
we just recommend, is that enough? And what practices in the
future, if we have other pandemics, are we going to need to
make sure that we do not have superspreader events anymore, and
apparently that we are beginning to see those in the ports?
Mr. Cordero. Thank you for your question, Congressman
Lowenthal. Let me just say this, as chairman of the board of
AAPA, I could represent to this committee that our major
container gateways are doing everything possible to put in
place these protocols, whether it is the Port of Virginia, and
my colleague at the Port of Houston, and, of course, here at
Long Beach in Los Angeles.
And I say here, locally in southern California, I have to
commend the ILWU and the Pacific Maritime Association, who came
together to address this issue. So the bottom line is, I think
both management and labor are implementing these protocols
because it is very key for the frontline workers.
And going forward, let me just say this: 9/11 changed the
whole dynamic in terms of how this country viewed our security.
I would suggest that COVID-19 now is changing the whole dynamic
in terms of how this country is now moving forward with how we
address health pandemics. Because, again, going forward, I
think that nothing is going to change in the future in terms of
how we need to be extremely cognizant of health and safety of
the frontline workers.
And last, I will say this: I think, clearly, as you look
forward in terms of what our practices are going forward, I
think it is going to be paramount for us to have, as the
congressman mentioned, adequate PPEs and medical supplies
related to health pandemics, because, again, one thing I will
say for port authorities, aside from the fact that we have not
been the beneficiaries of port relief, is this operation has
never closed down, not 1 day. There is no one port across the
United States that its essential operation closed down.
Mr. Carbajal. Could you sum up, please.
Mr. Cordero. So with that, again, I appreciate the time and
the question, Congressman. And I appreciate the subcommittee,
again, listening to what you have seen here from our testimony
here regarding the vital need of the maritime industry.
Mr. Carbajal. Thank you.
Mr. Lowenthal. Thank you, and I yield back.
Mr. Carbajal. Thank you, Mr. Lowenthal.
Next, we will proceed to Representative Gallagher, who I
see is sporting a jersey in his background of a team that
almost made it into the Super Bowl.
Mr. Gallagher. That was a low blow, Salud. That was a very
low blow. And this jersey is officially cursed. Well, thank
you.
This is a question for Mr. Wilkins probably, at the risk of
repeating an area of questioning that Mr. Gibbs had raised
earlier, I believe. Mr. Wilkins, you mentioned inspection user
fees towards the end of your testimony. Last year, the House
passed a Coast Guard bill that included language placing a
moratorium on those fees for vessels that utilize safety
management systems which was removed when the bill was attached
to NDAA. Can you confirm that congressional action on a
moratorium is still needed? How are these fees affecting your
bottom line, and that of other companies in the industry?
Mr. Wilkins. Well, thank you, Mr. Gallagher, for the
question. Yes, I would like to thank the committee and the
leadership for drafting that legislation, and certainly it was
a big help to us. Respectfully, when we look at these fees, I
think I mentioned that the structure of the fees could be
duplicative and inequitable in the sense that companies like
myself, we use TPOs, third-party operators, to come in and do
the inspections.
The Coast Guard also has a fee structure for these
inspections for the vessels to be in compliance, and I have
mentioned the fact that when we pay the TPOs, our companies
will have annual costs of around $30,000-odd a year, just in
the TPO over and above paying the Coast Guard fees as well.
So certainly it helps to--I think the effort is to be able
to ensure that the annual fee structure is fair and to ensure
that if we are going to have the inspection protocols, which we
should under subchapter M, we have to ensure that the Coast
Guard does not have a fee, we are not doing the work, and
whereas we have the TPOs doing the work makes it, if you will,
best for us in the sense of fees.
You have to finish the job to ensure that the moratorium on
the fees for the Towing Safety Management System, TSMS, for the
vessels until the Coast Guard establishes a new user fee
structure that differentiates the two inspection options that
we have.
Mr. Gallagher. I appreciate that, Mr. Wilkins. Maybe as a
followup, in last week's hearing we heard that mariners living
in one State are not given reciprocity in another State for
their position in line for the vaccine. I have heard from
mariners in my district who are making port calls elsewhere in
the Great Lakes that this is a problem.
So I don't know who this would go to, but is the fix as
simple as Congress mandating that States honor the position in
line granted by another State, or would this cause impossible
logistical problems in States that honor such a reciprocity? Do
you think this is an important issue? I just throw that out to
the panel with the time I have remaining.
Mr. Wilkins. Well, if I could field that, I would say that
there are very few mariners right now who are getting and
qualify for vaccinations unless they meet the age requirements.
And we have some fourth-quarter players who are meeting those
age requirements. And currently, we are classified by DHS under
group 1c.
So if we were to move to 1b as a central workforce as
established, again, by DHS, we will handle the logistics
because in our organization, we have mariners who are living in
more than 25 States across the country traveling all the time,
so it might not be really advisable for them to be able to go
and get the vaccines they need in the States given their time
on board and time away from home, so there are logistics
challenges.
But I think we can manage that if, in fact, we can move the
statutes up and give guidance to have us moving, again, to 1b,
because we are critical, essential workers, and would certainly
prioritize our being able to keep vessels running, keep
operations moving, and meet the needs of having our mariners
vaccinated, because they live--I think it was mentioned by one
of the panelists, we live in tight quarters. And we bear a lot
of cost trying to ensure the viability of operations and
maintaining production by keeping our mariners safe, and added
expense of cleaning, disinfecting, I mean, go on and on, but it
certainly would be advantageous to have guidance.
Mr. Gallagher. All right. Well, thank you, Mr. Wilkins, and
I like the term ``fourth-quarter players.'' As the
Representative from Green Bay, that metaphor takes on added
significance, so I appreciate that. And I yield back my
remainder of my time.
Mr. Carbajal. Thank you, Mr. Gallagher.
We will proceed with Representative Pappas.
Mr. Pappas. Well, thank you, Mr. Chairman. I know everyone
on this committee is a first-quarter player right now, so I am
glad we are fresh and ready for the new term.
But I really appreciate the panel here today. I think you
gave a good overview of the challenges that we face in the
maritime industry, how Congress can play a role moving forward.
And I think what is critically important for us to all
understand is the central nature that the maritime industry
plays in the health and well-being of this country, in its
economic future, and, certainly, as it pertains to our national
security as well.
I am glad a number of you have asked questions and our
panelists have commented on the vaccination issue. I think this
is clearly a place where the Federal Government needs to play
an increasing role, as Mr. Wilkins just said, with increased
guidance. I would recommend as well on support of Federal
testing sites to make sure that we are dealing with our
frontline essential workers who are putting themselves on the
line each and every day.
I think Ms. Brand in her comments said pretty clearly that
infections are at crisis levels at some of our ports. And what
we can't afford to have happen is any disruption in our supply
chains, and in the supplies that we are all relying on to get
through this pandemic.
A lot of it has been said as well about the Jones Act, and
I think, most of this committee understands the essential
nature of the Jones Act and protecting our national security
and ensuring that the industry is strong moving forward. I am
wondering if anyone here can speak directly to how having
American workers trained to serve on American ships as the
Jones Act requires has helped us, especially as it pertains to
this pandemic to keep goods moving.
Mr. Roberts. Well, I will take a crack at that,
Congressman. Mike Roberts with the American Maritime
Partnership. There was a recent study, I guess, maybe a year
ago, that showed that out of the maritime workforce needed to
crew ships in response to an incident, a military contingency.
The minimum number needed--we would be 30-plus percent short of
meeting that minimum needed if we didn't have the mariners from
the domestic maritime industry. The Jones Act would supply
those mariners, and they do supply those mariners in
activations and war-game-type scenarios, turbo activations.
So it is critical that we have American mariners available
from the domestic maritime industry for our national security
purposes generally. And certainly, I think how they performed
in the context of this pandemic and bringing supplies in places
where they are not--as Jim Patti said, whether or not their
conditions of employment have gone downhill dramatically over
the past year as a result of the pandemic, but they persevere,
they've come through, they show up as merchant mariners do
throughout history.
So it is--I am proud to be associated with this community,
and I think they really are a critical asset to our national
security.
Mr. Patti. If I can, Congressman, just to pick up a little
bit on what Mr. Roberts said, I would echo essentially
everything he said as it pertains to the mariners working
aboard our U.S.-flag vessels in the foreign trades. From the
very early stages of the pandemic, when nobody really knew the
degree to which it was going to affect maritime transportation,
whether it was going to get worse much quicker and much more
severe than it did, but the mariners did show up. The mariners
continued to perform. They continued to go to work. They
complied with the guidelines that were put in place ranging
from having to wear masks and social distancing when they are
in the union hall trying to get their next job to ship out, to
the shipping companies themselves, putting out the expense,
absorbing the expense of flying mariners home when their
rotation was done because there was no other way to do it.
But as I said earlier, despite all of this and throughout
all of that, the mariners have taken their responsibilities
very, very seriously. When our mariners go to sea, they do so
knowing that their first and most important objective is to
support our country, to support the military, to support
American troops, and it is to do whatever they can to make sure
the sea lanes remain open for our trade.
So, again, as Mike said, it is very, very humbling to be
associated with this industry and especially to have the
privilege, as I do, to represent maritime labor.
Mr. Pappas. Well, terrific. I appreciate those comments.
I would like to get one more quick question in if I can.
And switching gears a little bit, as some of you have alluded
to workforce challenges, and I think the COVID epidemic has
highlighted a lot of the problems that have always been present
in this country around diversity and inclusion.
And so, my question, for anyone on the panel that would
like to take it up is, is the maritime industry doing a good
job of promoting diversity and inclusion? Are there any
impediments or challenges in the way of making the industry
more inclusive? Because I am trying to figure out what we can
do potentially in Congress to help support a growing, diverse
workforce, make sure the incentives are in the right place, and
help build the right culture for the industry as we move
forward.
Mr. Carbajal. Mr. Pappas, I am going to ask that those
answers be provided for the record to be consistent with our
previous colleague, who didn't get one of their questions
answered when they ran out of time.
Mr. Pappas. Terrific. Thanks, Mr. Chair.
Mr. Carbajal. Thank you. So with that, we will now go to
Representative Weber.
Mr. Weber. OK. There I am. Thank you, Mr. Chairman.
Congratulations on your new post. Can you hear me?
Mr. Carbajal. Yes. Thank you.
Mr. Weber. OK. Good. Lots of questions. Let me start with--
Ranking Member Gibbs said that he understood there were 300,000
mariners stranded. And I didn't really ever hear, was there an
answer to that, stranded around the country, around the globe?
How do we get that answer?
Mr. Patti. Congressman, if I can, Jim Patti, most of those
mariners, almost all of those mariners now are foreign
nationals working aboard foreign vessels, many of which we
would define as flag of convenience ships where there is
virtually no legal relationship to the flag of the vessel and
the vessel's owner.
And most of these mariners have literally been abandoned by
their shipowner, by the charterer, by their flag nation and are
desperately trying to just, in some way, shape, or form, get
home. They are on these ships with virtually no food. They are
on these ships, they have not been paid. Some of them have been
on these ships for well over a year. So it is a very, very
serious humanitarian issue. You know, good news is, it is not
affecting the American mariner, but as, you know, mariners and
brotherhood of the sea it is an incredibly terrible
humanitarian issue.
Mr. Weber. Right. Thank you for that.
And I want to jump on over to Mr. Bordelon now, if I may.
Glad to hear that his grandfather started a business building
ships, but so much of our manufacturing has gone overseas,
especially heavy manufacturing, whether it is Japan, South
Korea, wherever. And we have talked about China building, what
was it, 1,800 vessels, whatever it was.
Mr. Bordelon, how do we compete? From the business
standpoint, how do we get manufacturing of those vessels back
here?
Mr. Bordelon. Thank you, sir, for the question and
opportunity. A lot was said over the last 1\1/2\ hours that we
have been talking about it, and China's name comes up and
foreign competitors come up, but we continue as a Nation to
further develop ourselves and be competitive. I think we have
responded really well in leading technology on different fronts
and different facilities and different manufacturing, not just
in shipbuilding, but, specifically, in shipbuilding, and we
need to continue to do that.
Some of the shipbuilding grants that have been done through
MARAD have helped the shipbuilders do that. That is one
opportunity. But really, the biggest thing for us to remain
competitive and be a leader, because that is, I think, often
overlooked is that, you know, you talk about free trade or fair
trade, and we care about fair trade. We care about national
defense and security. All of those things are important for us.
We pay taxes. We keep our people safe. We follow OSHA. We don't
pollute the world like other places do.
So giving us the opportunity to continue to be a leading
edge, some of the biggest things we need, I am going to say it
again, we need some visibility and consistency in budgets that
can keep our manufacturing in a position where we would have a
great, competitive workforce that you are offering careers to
people that you can effectively train.
And then the obvious reinvestment comes with that. My
grandfather was a machinist by trade, uneducated, and he bought
an old lathe and a drill press, and that is how he got started.
And his philosophy was he was going to keep improving and keep
investing in his business.
And with some kind of sustainability and vision with U.S.
shipbuilding as far as the U.S. Navy goes, the Army has
projects, obviously the Coast Guard, and the commerciality, all
of those things help keep us competitive and reinvesting.
So I think those are the key things, Congressman, that
could help us continue to push forward and be more competitive
in the world that we are living in today in shipbuilding.
Mr. Weber. All right. Thank you, for that.
I am going to move on to Mr. Cordero now. Mr. Cordero, you
cited, I think it was 1,497 COVID cases, and you may or may not
have this percentage. What percentage of the workforce, of the
mariner workforce would you say that is?
Mr. Cordero. Well, it varies, Congressman, from port to
port, region to region. But let me just--let me answer the
question generally. It is a high percentage, and let me just
give you some data. We talked about testing, which is a very
important component to this. So, for the Port of Long Beach, we
put in place the only COVID testing site in the port complex.
Our commission supported us in authorizing $1 million to
set up that test site back in August of 2020. And in December,
November, our commission authorized another $3 million so that
we can have that test site open through July of 2021. So that
right there is a $4 million investment by the Port of Long
Beach.
What has that resulted in? From August to the present date,
I can represent to this subcommittee we have tested over 20,000
people at that site. So obviously, we have to be proactive with
testing, but the other aspect in terms of, going back to the
funding question, is rapid testing. That is what we need.
And, last, I will say this: What I have here is a KN95 mask
[holding up a mask]. To the question of PPEs, let me just say
that in this industry, when this pandemic hit, many of our
frontline workers were wearing basically cloth masks. I mean,
it was really unfortunate that we were in that situation. But
what we need in this country is for every frontline worker to
have an N95 mask made in the United States. That is what is
needed. It is not a question of just ordinary PPE; it is the
quality of PPE.
Mr. Carbajal. If you could summarize, please.
Mr. Cordero. I hope that answers your question,
Congressman, and thank you so much for your question.
Mr. Weber. Well, thank you for that. Mr. Chairman, I yield
back.
Mr. Carbajal. Thank you very much, Mr. Weber.
Next, we will go to Representative Auchincloss.
Mr. Auchincloss. Thank you, Mr. Chair, and to the panel. I
wanted to pivot to something that was mentioned in your written
testimony, Mr. Roberts, about offshore wind as an important
emerging market for the maritime industry. Offshore wind has
the potential to produce tens of thousands of jobs nationwide,
including many in southeastern Massachusetts, in my district,
and could play a significant role in decarbonizing electricity
production in the United States.
In your written testimony, Mr. Roberts, you specifically
called out, as ways to encourage offshore wind, ``regulatory
measures needing attention include a more predictable
permitting process, a possible regional approach to local
content requirements, prompt Coast Guard regulatory actions
related to the vessels required to install and service offshore
wind turbines, and support and planning for the necessary port
infrastructure.'' I want to invite you to take 2 minutes and
talk about which of those might be the highest impact and how
the Federal Government might assist?
Mr. Roberts. Great. Thank you for your question. As you may
have gathered, we are very excited about the prospect of
offshore wind development and being part of that, and the
economic benefits and job benefits that it will provide.
We are, frankly, very early in this industry's development.
When I talk about the permitting process, I think the change in
administrations will see--I am fairly confident we will see a
more predictable and responsive permitting system put in place
that will help a lot with respect to Coast Guard and other
regulatory areas. And I think that really is the starting
place, having the licenses in place and having all of that kind
of going is great, but having the authority to go ahead with
the development is really critical.
Obviously, it needs to be done safely with full
accommodation for all of the stakeholders, fishing and other
stakeholders that could be affected by it. But I think that
getting that done quickly and getting it right is very
important.
Coast Guard regulation of vessels--some of them are very
new vessels that are not in the fleet today, and so making sure
that we have clarity and a good collaborative ability to work
through regulatory issues is critically important also. So
those are two I would just mention.
Mr. Auchincloss. One way that has been--and, Mr. Roberts,
this is still, I think, in your wheelhouse--one way that has
been promoted by some advocates in my district has been
offshore wind opportunity zones that could receive accelerated
permitting and priority consideration for Federal
infrastructure investments. Would you support that designation,
and if so, are there components of it that you would advocate
for?
Mr. Roberts. Well, I am not familiar with that specific
program. I would say that certainly another area of attention
is with respect to the ports themselves and the need to develop
logistics capabilities at the ports, and that sounds like it
probably is something that would fit well within the
opportunity zones that you are talking about there.
Mr. Auchincloss. Thank you.
And a final question, and this is for anybody on the panel,
although, Mr. Roberts, perhaps you can have first pass: Bristol
Community College serves my constituents, building a state-of-
the-art national offshore wind institute to ensure a workforce
that is ready for this new industry. Can you describe the
nature of the jobs and the sort of--directionally the volume of
the jobs that can be created for this industry?
Mr. Roberts. I will mention that from a maritime
perspective, there are so many different elements to doing
offshore development, and some of this is certainly learning
from the offshore oil and gas development industry. But you
need to be able to install the facility, put foundations in,
and you need vessels and you need mariners who know how to
operate those ships and do that very heavy engineering work.
You will need to be able to link those installations back
to shore using cables instead of pipelines. We will need
service vessels to maintain them over many, many years, and
mariners and technicians to be able to operate those vessels.
Just sort of from a maritime perspective, that is a snapshot.
Ms. Brand. Sir, this is Lauren Brand. May I also respond to
this quickly?
Mr. Auchincloss. Please.
Ms. Brand. So this will also create terminal opportunities
and opportunities for logisticians. The offshore wind is high,
wide, and heavy cargo. I know of one case where we should have
seen some products go from the gulf area to the Northeast area
by marine highway, by vessel, and instead, it went by truck and
it took over 6 months to move that way. And they actually went
through intersections where they had to take down the signal
lights, because the equipment was too high to fit under the
over-road obstacles. So it is a great logistics thing, great
terminal thing. If there is any way I can help, let me know.
Mr. Auchincloss. I appreciate that. And I will yield back
my time, Mr. Chair.
Mr. Carbajal. Thank you.
Next, we will proceed to Representative Brown.
Mr. Brown. Thank you, Mr. Chairman. Let me start by saying
it is a pleasure to be able to serve with you under your
leadership on this subcommittee. You and I served together on
both the House Armed Services Committee and Transportation and
Infrastructure Committee. The only frustrating part about that
is that I am sitting behind you in seniority on both of those
committees.
But in all seriousness, it is a pleasure, it is an honor to
be able to serve with you, and I think really appropriate
because I think the work that we do on the Transportation and
Infrastructure Committee, the policy, the authorities, the
investments in infrastructure perhaps are just as important to
national security as the work that we do together on the House
Armed Services Committee.
As we have been hearing throughout the testimony today,
obviously public ports in the United States play an
indispensable role in local and regional economies throughout
the Nation, and the COVID-19 pandemic has had a tremendous
impact on the industry in 2020.
I have a particular interest in the Port of Baltimore,
which is arguably the most diverse port on the east coast. It
has a portfolio of containers, automobiles, farm equipment,
roll-on/roll-off cargo, and forest products, and it is ranked
first among all U.S. ports in the volume of vehicle cargo for 9
consecutive years.
Key cargo commodities at the Port of Baltimore's public
terminals were down for the year compared to 2019, but the
port's strong recovery in the second half of the year helped
dramatically narrow those declines. The port's strong finish in
2020, I think, reflects highly on Maryland's economy and the
dedication of our port workforce.
However, if we are going to continue to ensure that our
Nation's ports are functioning, meaning that we are supporting
frontline portworkers who are really key to what we are doing,
we have to prioritize testing and vaccination. And at the end
of last year, or during last year, Congress passed the CARES
Act, the NDAA. Both of them included important provisions to
help mitigate the virus and the effects it has had on this
industry.
Both Mr. Cordero and Mr. Patti, and perhaps some of the
other panelists, I apologize, but I know that you specifically
addressed in your testimony the Maritime Transportation System
Emergency Relief Program. And while it was passed in the NDAA,
it was the brainchild of this committee.
So if Mr. Cordero and Mr. Patti, I mean, look--we
authorized it; now we have got to fund it. And could you talk
about the need to fund it in 2022, and what happens if we
underfund it? What happens if we don't step up and do what we
need to do as a Congress to support the Maritime Transportation
System Emergency Relief Program? Mr. Cordero? Mr. Patti?
Mr. Cordero. Well, thank you, Congressman. And I think a
very good question, because you have already heard this morning
the impact that COVID-19 has had already to our ports
throughout the Nation.
And I will say that my good friend, Bill Doyle, over there
at the Port of Baltimore is doing a great job, and, again,
former Commissioner of the FMC. But I think as AAPA
chairperson, I will say this: That we have a great opportunity,
Congressman and subcommittee, to not only fund this program,
but earlier there was a question posed as to whether we see the
merits going forward in terms of what an important aspect that
needs to be addressed.
MARAD has a great opportunity right now to advocate on this
issue, because they have been identified as the lead Federal
agency to move forward and identify emergency relief and issue
grants to the port authorities across the Nation. So that is
going to be very key, for MARAD to move forward with 3505(j) of
the program or of the act, which, again, is going to be very
important with all the issues that we have addressed this
morning. And failure to do that is going to create a real
problematic question in the supply chain, a vital
transportation sector.
And, again, we talk about imports, exports. Ninety-five
percent of international trade moves by water. Trade begins at
the ports.
Mr. Brown. Mr. Patti.
Mr. Patti. Yes, sir. Thank you, Congressman. I would just
pick up a little bit on what was said and, again, strongly
encourage Congress to fund this program.
There are a number of entities in the maritime industry,
ranging from training institutions that the unions and the
shipping companies run and operate in order to continue to
provide the best trained mariners that we possibly can that
have effectively been shut down for most of this past year,
because ships were not sailing. They were not able to travel to
and from the schools. And they desperately need help in order
to remain open.
There are small passenger vessel operations, there are
other shipping companies, all of whom have taken significant
hits throughout this pandemic. And I think just to emphasize,
this legislation does not dictate that money go to anybody.
They still have to apply. They still have to apply for the
grant. They have to prove that it is worthwhile and necessary,
but none of that happens until the money is made available.
So on behalf of all of those types of entities, most of
whom don't belong to our organization, but, nevertheless, I
would encourage Congress to provide funding for that program.
Mr. Brown. Thank you, Mr. Patti. Thank you, panelists.
Mr. Chairman, thank you very much. I yield back.
Mr. Carbajal. Thank you, Mr. Brown.
That concludes the first round of questions. I am going to
proceed with the second round for anybody interested in asking
a second question. And with that, I will recognize myself for 5
minutes and then proceed to other Members who may have
additional questions.
Ms. Brand, in your statement, you said that there are
currently 37 containerships sitting outside of the Port of Los
Angeles and Long Beach. What would happen if congestion were to
continue to rise? What does that mean for ports and the U.S.
economy?
Ms. Brand. So thank you very much for that question.
Because of the vessels that are offshore--right now there
are containers that are holding parts for manufacturing and
assembly sites in the United States, and we are going to start
to see some of those start to falter in their schedules, the
longer this goes on.
I believe yesterday, I checked the number and the number
now is down to 32 ships that were offshore. We estimate that
that is about 380,000 TEU, or 190,000 truckloads of goods. I
actually went shopping at one of my favorite local retail
stores. It is called Chico's. And I asked them if they had
certain spring colors. And they said, no, those are stuck in
the port.
So we are seeing a decline in the fashion market. We will
see some commodities not come in. Maybe some Valentine's Day
things are stuck. We will see Easter things being stuck. And we
will see things that are actually arriving too late to go to
market. So there will be an economic impact for a number of
different things, from consumer goods all the way to
manufacturing.
Mr. Carbajal. Thank you, Ms. Brand.
Mr. Wilkins, in your written testimony, you stated that
waterborne transportation is the most environmentally friendly
mode of transportation. What can Congress do to encourage more
shipping by water? What policies would spur development of
coastwide shipping?
Mr. Wilkins. Thank you, Mr. Chairman, for the question. I
don't know if I am prepared to answer the question directly,
especially on the coastal side.
What I would say is that I think I answered in the sense
that having the programs of ensuring reliable locks, dams, and
ports that is maintained and allowing the Corps to do what it
does in operating and maintenance of those systems promotes
reliability, and reliability promotes confidence, and
confidence promotes investment from the shipping world and
cargo holders to realize they have a viable means of transport,
and reliable means of transport. I would answer that question
that way, sir.
Mr. Carbajal. Thank you.
Mr. Patti.
Mr. Patti. Thank you, Mr. Chairman.
One of the things I would suggest that Congress look at--
and it is something that this committee had been advocating for
quite a while in the past--is to look at the application of the
harbor maintenance tax on coastwide shipping.
The way things work now under the harbor maintenance tax,
there is a very unfair, we consider discriminatory, double
taxation on ships operating in the coastal trade. If you have a
large containership coming in from overseas and your container
is the value of that cargo, it is subject to the HMT. When it
is reloaded onto these smaller vessels that travel up and down
the coast, when it reaches its second destination, it is taxed
again.
At a minimum, this serves as a tremendous disincentive to
use U.S.-flag vessel operations. So it is just another thing to
look at as we go forward in this Congress. And I think part of
the objective would be to try to eliminate as many of these
disincentives as possible that impede the operation of American
ships.
Mr. Carbajal. Thank you.
Ranking Member Gibbs, do you have any additional questions?
Mr. Gibbs. Yes, just a couple. Thank you, Chair.
First of all, Mr. Wilkins, in 2020, the Corps of Engineers
moved forward with a large-scale rehabilitation project on the
Illinois River, which necessitated periods of closure on the
river.
In your opinion, did the Coast Guard and the Army Corps of
Engineers manage the process? Were there any lessons learned
that we should know about, Mr. Wilkins?
Mr. Wilkins. Thank you, Mr. Gibbs.
No, I would say that I think that the Coast Guard and the
U.S. Army Corps of Engineers worked in harmony and worked
perfectly together as a partner. I applaud that they listened
to industry to reduce having disruptions over a 5-year plan, to
mitigate that and bring it down to a 2-year plan.
So I think the lesson learned is a shining example that
industry and the Coast Guard and the Corps of Engineers can
work together to accomplish maintaining our infrastructure. So
we were very pleased in the way that they came together at a
solution.
Mr. Gibbs. Good. I am glad to hear that.
Ms. Brand, in your testimony you talked a lot about the
vaccines. And since you represent the National Association of
Waterfront Employers, are you seeing differences between States
where you operate, the vaccine accessibility, or is it just
they are not getting it because they haven't been declared
essential workers, or what are you seeing within the different
areas geographically around the country?
Ms. Brand. Thank you very much. We wrote to 35 different
States, including Puerto Rico, and we received responses from
less than half of those. Basically, sir, what is happening is
that the waterfront workers are not getting any priority
whatsoever. It is age priority right now.
Each State has its own regulations and rules. For example,
in Florida, if you are 65 and over, you can be eligible for a
vaccine. In Virginia, if you are 75 and older, you can be
eligible for a vaccine. So even the age priority has a
difference between States. It is very difficult to track.
Mr. Gibbs. Thank you.
Mr. Chairman, I believe Representative Malliotakis asked a
question and didn't have a chance for the panelist to answer,
and I don't know which panelist that was. I will yield my time
if that person wants to answer Representative Malliotakis'
question.
Mr. Wilkins. Thank you, sir. That was myself. And I was
only going to point out to the Representative that--her
question was around the competitive advantage of lack of moving
commerce, given other nations around the world.
And I was going to point out in our last project that Canal
Barge did in Colombia, to move a container from Bogota to
Cartagena, 660 miles, costs four times the amount of money to
take that same container 9,000 miles from Cartagena all the way
to China.
So, as they were developing their Magdalena River and other
countries look to develop river systems, we measure
productivity on a cost per ton-mile basis. So that is our
competitive advantage. And underscoring infrastructure was the
final point I wanted to make to her.
Mr. Gibbs. Thank you.
Mr. Chairman, I yield back.
Mr. Carbajal. Thank you, Representative Gibbs. Are there
any other questions?
Seeing none, I would like to thank each of the witnesses
for your testimony today. Your comments have been very
informative and helpful. I ask unanimous consent that the
record of today's hearing remain open until such time as our
witnesses have provided answers to any questions that may be
submitted to them in writing.
I also ask unanimous consent that the record remain open
for 15 days for any additional comments and information
submitted by Members or witnesses to be included in the record
of today's hearing. Without objection, so ordered.
The subcommittee stands adjourned. Thank you very much.
[Whereupon, at 1:12 p.m., the subcommittee was adjourned.]
Submissions for the Record
----------
Prepared Statement of Hon. Sam Graves, a Representative in Congress
from the State of Missouri, and Ranking Member, Committee on
Transportation and Infrastructure
Thank you, Chair Carbajal, and congratulations on your first
hearing as Chair of the Subcommittee on Coast Guard and Maritime
Transportation. Also, thank you to our witnesses for being here today.
As you know, the Full Committee conducted a broad-ranging hearing
last Thursday on the COVID-19 pandemic's impacts on transportation
workers and businesses. I commend the Chair for holding this hearing on
the pandemic's specific impacts on the Maritime Transportation System.
I represent an agricultural district, and I'm also a farmer. So I
am concerned about persistent press reports about the shortage of
containers to carry U.S. agriculture exports to our customers around
the world.
I look forward to hearing the witnesses' experiences with any
recent changes in the carriage of U.S. ag exports, and whether such
changes are having an impact on the competitiveness of those exports.
I also look forward to hearing about the COVID-19 related impacts
on the U.S. Maritime Transportation System. I understand the import
driven part of the System is currently operating at record levels.
However, I would like to know the impacts of the pandemic on U.S.
shipbuilders, vessel owners and operators, mariners, and other maritime
workers, and whether Federal action is needed to relieve any of these
impacts.
Thank you, Chair Carbajal. I yield back.
Letter of February 2, 2021, from the American Association of Port
Authorities et al., Submitted for the Record by Lauren K. Brand,
President, National Association of Waterfront Employers
[This letter was also submitted for the record by Hon. Alan S.
Lowenthal on page 51. To avoid redundancy, this letter is not reprinted
here.]
Letter of February 2, 2021, from David F. Adam, Chairman and CEO,
United States Maritime Alliance, Ltd. et al., Submitted for the Record
by Lauren K. Brand, President, National Association of Waterfront
Employers
February 2, 2021.
Hon. Peter A. DeFazio,
Chairman,
House Committee on Transportation and Infrastructure, U.S. House of
Representatives, Washington, DC 20510.
Dear Mr. Chairman:
We write as the leading representatives of America's frontline
longshore workers and maritime employers to seek your assistance on a
matter of urgent national importance: protecting our nation's economy
and supply chain by prioritizing COVID-19 vaccinations for port
workers. While our organizations represent a diversity of maritime
interests in varying regions of the nation, we have come together to
speak with one voice on this pressing and immediate priority.
America's ports are the primary gateways for the goods and supplies
Americans depend on, including food, medical supplies, personal
protective equipment (PPE), sanitizer, and other items sustaining the
country during this historic pandemic. Millions of jobs and a
significant portion of America's GDP are directly tied to the health of
our ports, which are vital to national industries including retail,
manufacturing, agriculture, and more. But the reliable operation of
port terminals could soon be in jeopardy due to the alarming increase
in COVID-19 among frontline longshore workers nationwide. Prioritizing
frontline port workers' eligibility for vaccination and ensuring
adequate vaccine supply is the only sure way to safeguard the supply
chain that drives our economy and connects America to the rest of the
world.
Since the start of the pandemic last year, America's maritime
workforce has answered the call of duty to keep our ports open for
business, and our warehouses and store shelves fully stocked. From
Maine to California, their dedication and resilience has been nothing
short of heroic. In recent weeks, however, COVID infections among
frontline port workers have reached crisis levels in many locations.
From March 2020 through January 25, 2021, the International
Longshore and Warehouse Union (ILWU) and Pacific Maritime Association
(PMA) reported 1,034 coronavirus infections among frontline port
workers along the West Coast. Over the same period, the International
Longshoremen's Association (ILA) reported 784 positive tests along the
East Coast and Gulf Coast. And infection rates are rising rapidly. For
example, at the Ports of Los Angeles and Long Beach, America's largest
port complex, almost as many longshore workers tested positive in the
first three weeks of 2021 as in the first 10 months of the pandemic,
from March through December of 2020. Other port regions report similar,
troubling increases.
This wave of virus infections comes as ports nationwide contend
with record-breaking tide of imports from Asia that shows no sign of
relenting. Our ports require as many workers as possible to accommodate
this unprecedented surge. Exacerbating the challenge, the virus poses
the greatest threat to older workers, who often possess the specialized
skills and experience that are most needed to keep port terminals
operating smoothly.
We recognize that state and local governments play a key role in
administering the COVID-19 vaccination process. However, given the
clear national interest in keeping our ports functioning smoothly--
protecting our economy, healthcare infrastructure, and national
security--we respectfully ask your assistance in taking all possible
steps to help speed the vaccination process for the men and women of
our maritime workforce.
Sincerely,
David F. Adam,
Chairman and CEO, United States Maritime Alliance, Ltd.
William E. Adams,
International President, International Longshore and Warehouse
Union.
Harold J. Daggett,
President, International Longshoremen's Association.
James C. McKenna,
President and CEO, Pacific Maritime Association.
Appendix
----------
Questions from Hon. Rick Larsen to Lauren K. Brand, President, National
Association of Waterfront Employers
Question 1. The COVID-19 pandemic has devastated Washington state's
maritime economy, particularly the cruise industry. Last week, Canada
extended suspension of cruise sailings in its waters through February
2022. According to Port of Seattle data, the cancellation of the 2020
cruise season cost an estimated 5,000 local jobs and more than $900M in
economic activity.
a. With the ongoing cruise sailing suspensions, how can the
federal government help impacted ports, waterfront operators and
employees?
Answer. We agree that the COVID-19 pandemic has devastated
Washington state's maritime economy, particularly the cruise industry.
When Canada extended suspension of cruise sailings in its waters
through February 2022 a huge blow was struck to cruises as the Jones
Act prohibits those firms who did provide cruise vacations from the
U.S. Pacific Northwest from sailing to Alaska. The impact from the way
the cruise industry is not being allowed to return to work has become a
national issue. The decline in Alaska's economy has been even greater
than that of Seattle \1\. Moreover, the Miami Herald published an
article that mentions the impact of the cruise operations at Port Miami
on the ILA. The drop in cruise related work is now endangering their
members' health care coverage. Health coverage will drop early next
year if they cannot reach 700 hours--the minimum number of hours
required to be worked to have coverage. From the maritime terminal
operator and stevedore perspective, we respectfully suggest
establishing a working dialogue between the industry and the CDC. To
date, there has been little to no interaction between the groups to
solidify working procedures for the industry to get back up on its feet
in a manner that is safe and agreeable.
---------------------------------------------------------------------------
\1\ Fact Finding report by the Federal Maritime Commission on the
impact of COVID-19 to the States of Alaska, Oregon and Washington.
https://www2.fmc.gov/readingroom/docs/FFno30/20-
20_AK_WA_OR_FF30_Final_Interim_Report.pdf/
---------------------------------------------------------------------------
The federal government's clearest form of help would come from
lifting the conditional sailing order given advancements in science and
public health since it was issued six months ago in a pre-vaccine
environment. There is plenty of data from the Cruise Line International
Association (CLIA) as to the success of the cruise industry operating
in markets outside of the U.S., even without vaccines \2\. Waterfront
operators, organized labor, and all who depend on the cruise industry
have felt the hardship of the pandemic; indeed, the opportunity to
return to work in the same manner as all other travel and hospitality
sectors have been allowed to do is a minimal ``ask''. The vast majority
of companies supporting cruise lines in the PNW and Alaska will have
generated zero revenue since the pandemic occurred.
---------------------------------------------------------------------------
\2\ (see https://cruising.org/en/news-and-research/press-room/2021/
march/cruise-lines-ready-to-sail-again-in-the-united-states)
---------------------------------------------------------------------------
The Maritime Transportation System Emergency Relief Program
(MTSERP) has been signed into law and is waiting for appropriations.
This law allows relief for maritime firms who support the cruise
industry and have been struck by the inability to work due to the
suspension of cruising to/from U.S. ports. We urge appropriations for
MTSERP be passed as soon as possible.
b. What should the cruise industry do to ensure the safety of
homeport workforce and its passengers?
Answer. The marine terminal and stevedoring industries are ready to
go back to work and have implemented many protocols to address
concerns. Almost immediately upon COVID-19's declaration as a pandemic,
the industry had already committed to advanced health and safety
measures including but not limited to testing of all crew and
passengers as a condition to board a vessel and during sailing. This
remains so today, with terminal operators going above and beyond in
this past year. For example, measures have been implemented to stagger
arrival times and reduce occupancy in all areas to minimize crowding;
hospital-grade HVAC systems and/or filters are being installed; and
pre-arranged sites shoreside are being designated with transportation
to these sites for workers.
We believe the cruise industry is taking the most thorough approach
in the interest of public safety than any other travel or vacation
segment, and we want to work with them. Many homeports have been at the
front of the line in terms of asking for vaccine prioritization of
their workforce as essential workers, with some taking a step further
and using the terminal site as a vaccination clinic for the community.
Royal Caribbean Group has already planned resumption of sailings that
will not include ports in the U.S., followed by NCL announcing their
non-U.S. sailings this week. It is frustrating to see the lines ready
to set sail and we not have the option to provide services to them in
the United States. It is also frustrating to see significant sized
crowds gather at sporting events to watch people play while we are
waiting for the Federal government to permit us to get back to work.
Question 2. As you know firsthand, the loss of port revenue during
the pandemic has consequences on local economies and communities. For
instance, last year the Port of Everett in my district experienced a
total revenue loss of $6.65M, stemming from aerospace shipping
declines, lost tourism/hospitality and delayed construction. How would
full funding for the Maritime Transportation System Emergency Relief
Program help local ports and employees during these difficult times?
Answer. Note that the Maritime Transportation System Emergency
Relief Program (MTSERP) is the first and, to date, only, relief program
available to the maritime industry. MTSERP is significant for at least
three reasons:
1. It permits emergency relief to both public and private eligible
entities.
2. It covers all declared disasters that may occur, including
tornados, earthquakes, fire, tsunamis, hurricanes, volcanic eruptions
and the global pandemic COVID-19; and
3. It thoughtfully names over 40 different types of eligible
public and privately owned entities. These categories include over
10,000 individual eligible applicants in the NAICS codes that are
listed in the law.
The maritime industry has come together to present a conservative
request for $3.5B--which we expect to be oversubscribed. Applicants for
funding will include more than the expected public port authorities and
privately owned marine terminal operators and stevedores. Based upon
numerous conversations held in the past six months, harbor pilots; US
flag vessel owner/operators, including tugboat, towboat and barge
operators, small passenger vessels, and others; firms providing reefer
equipment; utility companies serving port needs such as cold ironing;
and more will be submitting applications for emergency relief. Attached
to this document is a letter jointly signed by 31 maritime entities,
representing thousands of public and private firms who are eligible for
MTSERP grants.
Questions from Hon. Rick Larsen to Ben Bordelon, Chairman, Shipbuilders
Council of America
Question 1. Shipyards, like Dakota Creek Industries and Nichols
Brothers Boat Builders in my district, are the backbone of the Pacific
Northwest's maritime economy. Of the 117 shipyards in the U.S., 26 are
in Washington State. The Jones Act, which celebrated its centennial
last year, helps sustains a strong domestic shipbuilding industry. Can
you please discuss the importance of Jones Act protections to the U.S.
shipbuilding industry during the pandemic?
Answer. The Jones Act, which is provided at no cost to the U.S.
government, helps to maintain a merchant marine that is sufficient to
carry our domestic water-borne commerce and also ensures that there is
sufficient U.S. capacity to serve as a naval and military auxiliary in
time of war or national emergency. The Jones Act also ensures that the
U.S. maintains critical shipyard infrastructure and an associated
skilled workforce that can build, repair, modernize and maintain the
more than 40,000 vessels of the domestic Jones Act fleet. This
industrial base also ensures there is a sufficient workforce to support
the construction and repair of our critical national security fleets.
The 40,000 Jones Act vessels operating in the domestic trades
support nearly 650,000 American jobs and $150 billion in annual
economic impact. In addition, an impressive five indirect jobs are
created for every one direct maritime job, which results in more than
$41 billion in labor compensation. Supporting the Jones Act is critical
to ensuring that those 650,000 U.S. citizens keep their jobs during the
pandemic.
Question 2. Your written testimony discusses some of the
``loopholes'' in the Jones Act and concerning federal agency action in
recent years that undermine the U.S. maritime industry. Can you please
elaborate on the impact of those issues during the ongoing pandemic?
How can Congress address them to support U.S.-flagged vessels?
Answer. The Jones Act combined with the OCSLA makes the subsoil and
seabed of the OCS, as well as installations permanently or temporarily
attached to the seabed, coastwise points under the Jones Act. As such,
foreign vessels are legally prohibited from picking up cargo at U.S.
ports and transporting that cargo to topside or underwater points on
the OCS.
U.S. Customs and Border Protection (CBP) confused and degraded that
clear standard via their issuing of letter rulings that are directly
contrary to the Jones Act's text, structure, and purpose. Specifically,
between 1976 and 2009, CBP issued 160 letter rulings which allowed
foreign flag vessels to transport offshore energy cargos (called
``merchandise'' under the Jones Act) from U.S. ports to locations on
the OCS. These letter rulings have green lit proposals by foreign
vessel operators to transport merchandise to and from U.S. points on
the OCS, using foreign labor on foreign ships in clear contradiction of
the Jones Act. Congress can preserve and strengthen the Jones Act by
encouraging the revocation of these letter rulings.
Questions from Hon. Garret Graves of Louisiana to Ben Bordelon,
Chairman, Shipbuilders Council of America
Question 1. The domestic shipyard industry was declared essential
from the start of the COVID-19 pandemic. How has the industry adapted
to the new climate under a pandemic to ensure workers stay safe and
healthy, and shipyards stay open and operational?
Answer. The domestic shipyard industry has a long culture of
promoting employee safety and health in the workplace. When the
pandemic crisis began, our industry was prepared to meet unique demands
and adjusted to protect our workers by shifting our operations,
providing additional PPE, and issuing safety guidance as we learned
more about the virus. Almost a year into the pandemic, facilities are
continuing to adjust to this new normal and implementing innovative
policies to limit workplace spread of COVID-19. Like any industry on
the frontlines, we continue to focus on the health and wellness of our
employees and adjust our work environments to make sure our teams come
to work and leave safely.
Question 2. President Biden has made a commitment to renewable and
clean energy. Do you see the pandemic having any impact on the domestic
shipbuilding industry's ability to support the budding offshore wind
market? What other threats exist outside the pandemic?
Answer. The domestic shipyard industry has adapted well to
conditions under the pandemic and is ready and able to build for, and
support the emerging offshore wind market. Currently, the biggest
threat to the shipyard industry's ability to support the offshore wind
market is lack of Jones Act enforcement on the Outer Continental Shelf
(OCS).
In the FY21 National Defense Authorization Act (NDAA), Congress
took the important step of inserting language to clarify that the Jones
Act applies to all offshore energy development on the OCS. Prior to
this clarification, there was a high degree of market uncertainty for
the industry due to the potential for foreign vessels to exploit Jones
Act loopholes and perform the work. As a result of the language in the
NDAA several U.S. shipyards have already confirmed orders to construct
new vessels to serve the burgeoning offshore wind market. SCA asks that
Congress continue to strictly enforce the Jones Act on the OCS.
Question 3. Do you anticipate any long-term negative impacts from
the pandemic on the domestic shipyard industrial base?
Answer. Workforce development and retention is an important part of
maintaining a robust domestic shipyard industry. Throughout the
pandemic, absenteeism has been a common occurrence. This has led
workforce shortages throughout the industry which has the potential to
slow down the production process. As we eventually move past the
pandemic and get back to normal, there is concern that a skills gap
could form and that returning shipyard employees will need to be re-
certified and re-trained for their jobs.
Question 4. What can Congress do in terms of support for the
domestic shipyard industrial base?
Answer. SCA is appreciative of Congress extending Section 3610 of
the CARES Act through March 31, 2021, which authorized government
contractors to be reimbursed for employees who could not work because
of COVID-related closures. However, as the industry continues to work
in the ``new normal'' of the pandemic, we see more clearly that
additional relief is needed to support the domestic shipyard industry.
There are a number of things Congress can do to support the industry
during this time such as, extend the application of Section 3610
through September 30, 2021, authorize federal agencies to reimburse
contractors for COVID-related costs, provide supplemental FY21
appropriations to reimburse COVID-related costs, and provide additional
support for small businesses in the shipyard industrial base.
Additionally, government shutdowns and Continuing Resolutions (CR)
are detrimental to the shipyard industrial base's ability to support
the nation's Navy, Coast Guard, and other agencies. Without stable and
predictable funding, we fear the Nation is putting at risk the
industrial base that services the critical national security vessels on
which our sailors depend. We hope that Congress will continue to
support the industry by consistently passing appropriations bill and
keeping the government open.
Questions from Hon. Bob Gibbs to Mario Cordero, Executive Director,
Port of Long Beach, on behalf of the American Association of Port
Authorities
Question 1. What measures are in place to match workforce capacity
with port workload? Is there an integrated, comprehensive, resource
management system?
Answer. The Port of Long Beach (the Port) and other ports and
Marine Terminal Operators (MTOs) across the country are constantly
rebalancing workforce capacity to appropriately meet port workload
demands. We seek to support our operations with labor that is trained
and qualified while working to ensure that this workforce does not go
underutilized. This effort takes a strategic, integrated, and
comprehensive resource management approach. Of course, the ongoing
COVID-19 pandemic has presented challenges, particularly at ports like
ours that have seen surges in cargo recently after significant slowing
of supply chains in quarters one and two of 2020. This has required a
tactical response to registration and training.
Question 2. Have you conducted any level of what-if analysis to
understand how COVID may impact port capacity and the resultant impact
on addressing the port workload?
Answer. The Port has not officially estimated the impact on our
volume. Volumes will not change unless ships get diverted. As
throughput capacity is impacted, i.e., 2 gangs per ship per shift
instead of 5, the result is that it takes longer to work the ship, but
we still see the same volume--unless it goes on long enough for
carriers to begin diverting ships. In a regular year, container
turnaround times are 3 to 5 days. During this unprecedented time,
average turnarounds are 7 to 10 days. We haven't seen much of
diversion; however, if we continue to experience delays, diversions of
as little as 1% is the equivalent of about $1.7 billion worth of cargo.
The workforce has been challenged with a theoretical reduction, but
there are no alternatives, so our throughput hasn't changed. Delays are
causing problems for exports. Due to lack of storage space, some
containers are being used as temporary storage, holding up the return
of empty containers for exporters. With warehouse and distribution
center capacity fully subscribed, containers sit on chassis, impacting
fluidity of the system-wide chassis supply. It is more economical for
shippers to ship back empty containers than wait to send empties
inland, further away, to be filled with less expensive commodities.
Question 3. How does your organization track and manage
certifications and competencies so if/when there is a COVID impact, you
can effectively react to and formulate updated workforce plans?
Answer. For the Port's business continuity plan includes
contingencies for the loss of key personnel. Each position in the Port
has a position description that includes core competencies which can be
cross-referenced with those of key function personnel so that
replacements can be made and essential functions continued after a
disruption event such as COVID-19. As a landlord port, we do not have a
direct impact on terminal manpower options.
Operating ports put in place similar plans to manage their
workforce. At the Port of Virginia, for example, a COVID Planning and
Response Task Force was established to address all issues related to
COVID and how it impacted the organization. This Task Force focused on
the entire workforce, not just tracking and managing certifications and
competencies, and a colleague tracking system was developed for all of
the Port of Virginia and International Longshoreman's Association
members to determine colleague exposure and positive cases, to
determine quarantine time frames per Centers for Disease Control
Guidelines (CDC), and to determine if case spikes or outbreak clusters
appeared in one area. If an outbreak impacted the effectiveness of a
particular team, Port of Virginia made adjustments to ensure adequate
staffing and reported all clusters per CDC and local department of
health guidelines.
Questions from Hon. Rick Larsen to Mario Cordero, Executive Director,
Port of Long Beach, on behalf of the American Association of Port
Authorities
Question 1. The COVID-19 pandemic has devastated Washington state's
maritime economy, particularly the cruise industry. Last week, Canada
extended suspension of cruise sailings in its waters through February
2022. According to Port of Seattle data, the cancellation of the 2020
cruise season cost an estimated 5,000 local jobs and more than $900M in
economic activity. With the ongoing cruise sailing suspensions, how can
the federal government help impacted ports, waterfront operators and
employees? What should the cruise industry do to ensure the safety of
homeport workforce and its passengers?
Answer. Cruising makes significant economic contributions to
communities that include both home ports and ports of call. The federal
government can help communities that have been economically impacted by
the halt in cruising by creating a safe, clear path for resumption.
Right now, cruise ports and the cruise industry are awaiting promised
technical guidance from the Centers for Disease Control (CDC) regarding
health and safety protocols. Other industries and other sectors within
transportation have clear criteria to abide by, but this guidance for
cruising has yet to be released. The American Association of Port
Authorities and its members look forward to working with the CDC on
implementing health and safety protocols to ensure that cruises can
resume in a safe manner.
Question 2. In Northwest Washington, ports like the Port of Everett
in my district, specialize in oversized and breakbulk cargo which are
crucial to regional manufacturers. Due to the pandemic, the Port of
Everett's seaport operations are down 20% this year and they expect the
same through 2021. Can you comment on the impact of the pandemic on the
global cargo supply chain? How do you anticipate this will impact the
United States' future economy recovery?
Answer. Revenue decreases associated with drops in business, like
those seen at the Port of Everett, put a strain on every manner of port
operations. From the difficult decision made by some ports to furlough
or lay off employees, to making decisions on delaying maintenance of
infrastructure, to even delaying investing in new infrastructure
improvements, significant and sustained reductions in revenue may
impact the ability of ports to build and maintain capacity for a
continued economic recovery. Particularly at smaller or medium sized
ports, even a slight decline in revenue can impact financing for
planned port improvements.
While the impacts of these decisions may not be felt immediately,
these infrastructure investments pay dividends for years and without
investment now that return can be jeopardized. And staff capacity, once
lost, is difficult to replace.
The Federal Government can play a role here. By investing in our
nation's port infrastructure, through maintenance of existing
infrastructure and construction of new infrastructure through the
Maritime Transportation System Emergency Relief Program and the Port
Infrastructure Development Program, respectively, some of the impacts
that ports and our supply chains may face as a result of sustained
declines in business can be ameliorated.
Question 3. A recent Mercator report found that the Port of
Vancouver and Port of Prince Rupert in Canada have route cost
advantages of up to $500 per container over U.S. West Coast ports on
Asian imports. It also found that once infrastructure projects are
completed by 2022, these Canadian ports could divert nearly 15% of
intermodal import volumes now moving through the West Coast. Can you
comment on the impact of cargo diversion on U.S. ports' ability to
recover from the COVID-19 pandemic?
Answer. I conferred with other AAPA member ports, and the Northwest
Seaport Alliance (NWSA), a partnership between the ports of Seattle and
Tacoma that jointly manages the two ports' marine cargo facilities, is
one of the ports that is most susceptible to cargo diversion to Canada
because of its proximity to major ports in British Columbia (BC). The
NWSA has lost 19% of its market share to the BC ports since Prince
Rupert opened its container terminal in 2007. The Canadian government
continues to invest in infrastructure and capacity improvements at
Canadian West Coast ports.
In 2020, BC ports experienced flat container volumes while the NWSA
experienced a 12%decline in volumes compared to the prior year.
Importantly, a significant portion of cargo handled at West Coast ports
is discretionary, meaning it could be shipped through any number of
ports.
When our ports lose cargo to other nations, we lose jobs associated
with movement of this cargo. As ports lose cargo to other nations and
the revenue generated by these flows it makes it more difficult to make
the investments necessary to remain competitive. If the growth in cargo
volumes at Canadian ports comes at the expense of cargo traveling
through American ports, it will likely be more difficult for those who
saw cargo declines throughout 2020 to recover.
Question 4. As you know firsthand, the loss of port revenue during
the pandemic has consequences on local economies and communities. For
instance, last year the Port of Everett in my district experienced a
total revenue loss of $6.65M, stemming from aerospace shipping
declines, lost tourism/hospitality and delayed construction. How would
full funding for the Maritime Transportation System Emergency Relief
Program help local ports and employees during these difficult times?
Answer. This new program, the Maritime Transportation System
Emergency Relief Program (MTSERP), is designed to provide ports relief
to be able to withstand emergencies and disasters that may arise. While
the MTSERP is not designed to replace lost revenue, these grants, which
are to be made available for emergency response; cleaning;
sanitization; janitorial services; staffing; workforce retention; paid
leave; procurement and use of protective health equipment, testing, and
training for employees and contractors; debt service payments;
infrastructure repair projects; fuel; and other maritime transportation
system operations as determined by the Secretary of Transportation,
give the Maritime Administration and the Department of Transportation
the flexibility to provide grants to ailing ports and other impacted
maritime entities to ensure that the impacts of the COVID-19 pandemic
did not hamper their ability to continue essential business operations
once the pandemic, or whatever future disaster may result in this
Program being used, were to subside.
While many ports have been able to apply for and receive
reimbursement for eligible emergency protective measures from the
Federal Emergency Management Agency, no other relief has been provided
by Congress to help weather the effects of the ongoing pandemic. This
program would help fill existing aid gaps and put ports on a level
playing field with other industries and modes of transportation. This
program could be used to reimburse ports for sick time taken due to the
pandemic, to retain staff and critical institutional knowledge that may
otherwise be furloughed or laid off, to perform infrastructure repair
projects otherwise financially unfeasible to undertake, and even make
debt service payments for impacted ports. By providing these grants,
the MTSERP would give ports the ability to ensure that they are able to
implement health and safety protocols to keep port workers safe, while
giving ports the flexibility and relief necessary to weather the
financial effects of the pandemic and emerge strong and capable of
helping facilitate continued economic recovery.
Question 5. As the administration and state/local governments work
to improve COVID-19 vaccine distribution, I am curious about the role
U.S. ports can play. Particularly whether port cold storage facilities
can be used as potential vaccine refrigeration and/or storage spaces.
Would this be feasible? If not, why?
Answer. Ports play a key role, and, as I noted in my written
testimony, many ports have sought to have unused port space provided to
state governments as a point of distribution vaccination site. To date
though, no port has been successful in partnering with state or local
governments in this effort.
A useful example of how ports may be effective in vaccine
distribution can be found at the Port of Long Beach. In partnership
with our local Health Department and the Pacific Maritime Association,
we opened a COVID-19 testing site with walk up availability for port
workers and appointments available for the general public. To date,
this site has conducted 22,413 tests, serving both port workers and our
community. A vaccination site could operate in a similar fashion.
Many ports also offer access to cold storage facilities, whether
cold storage buildings or refrigerated containers, known as
``reefers.'' The capacity for vaccine storage at ports are likely to
vary, depending on what capabilities are available, what partnerships
are able to be forged with cold storage facility owners, and what
storage requirements exist for the vaccine set to be distributed at a
port location.
As vaccination efforts continue and as federal aid for these
facilities expand AAPA members will continue to look at ways to ensure
the health and safety of port workers, including exploration of using
port facilities as vaccine distribution points.
Questions from Hon. Rick Larsen to C. James Patti, President, Maritime
Institute for Research and Industrial Development, on behalf of USA
Maritime
Question 1. In Northwest Washington, ports like the Port of Everett
in my district, specialize in oversized and breakbulk cargo which are
crucial to regional manufacturers. Due to the pandemic, the Port of
Everett's seaport operations are down 20% this year and they expect the
same through 2021. Can you comment on the impact of the pandemic on the
global cargo supply chain? How do you anticipate this will impact the
United States' future economy recovery?
Answer. During the early stages of the worldwide coronavirus
pandemic, ocean shipping was significantly affected as manufacturing
and other businesses throughout the world ceased production and ports
in numerous countries were shut to traffic, causing ocean carriers to
take vessels out of service and to otherwise curtail their operations.
This adverse impact on the global supply chain was due to the broader
economic issues affected by the pandemic and not caused by problems
with or shortages in maritime capacity. Today, one year later, the
situation in the maritime trades has improved although not to the same
degree in all sectors and in all ports. As for our economic recovery
looking forward, we would anticipate that as imports and exports
continue to increase; as entities such as the Export-Import Bank
further resume their activities to finance the export of oversized
equipment and products, and as more mariners and longshoremen receive
the vaccine, activities in all ports should continue move upwards to
their pre-pandemic levels.
Questions from Hon. Mike Gallagher to Michael G. Roberts, Senior Vice
President, Crowley Maritime, on behalf of the American Maritime
Partnership
Question 1. How has the lack of sufficient icebreaking on the Great
Lakes impacted the use of U.S.-flag vessels in Great Lakes commerce?
Answer. Two of American Maritime Partnership's members, American
Waterways Operators and Lake Carriers' Association (LCA) operate Jones
Act-qualified vessels on the Great Lakes. Commodities moved include
iron ore, limestone, grain, road salt, petroleum products, cement, and
other bulk cargoes. For years they have suffered from inadequate Great
Lakes icebreaking services and the 2020-2021 pandemic has further
complicated the situation. COVID-19 impacts on the Great Lakes were
somewhat delayed because stockpiles of critical raw manufacturing
materials were resupplied at the beginning of the 2020 post-Soo Lock
closure sailing season from March to April. As manufacturing slowed, so
did Great Lakes shipping. The reopening of the economy toward the end
of 2020 sparked increased Great Lakes commerce and shipping rebounded
significantly as demand rose, just as ice was beginning to appear.
The pandemic made it very clear that Great Lakes icebreaking has no
resiliency. U.S. and Canadian Coast Guard icebreakers were sidelined by
COVID-19 outbreaks and engineering casualties which, in addition to an
existing lack of icebreaker capacity, strained the navigation system.
Fortunately, COVID-19 outbreaks have not occurred aboard LCA-enrolled
vessels. If any commercial cargo vessels cannot sail this year because
of COVID-19, the need for greater icebreaking capability and resiliency
would become even more critical.
Billions of dollars and over 10,000 jobs have been lost during the
past eight years as a result of insufficient Great Lakes icebreaking.
During three of those years, the U.S. Coast Guard (USCG) has been
unable to keep Great Lakes waterways consistently open to commercial
navigation when ice challenges commercial vessel traffic. The ice
season typically runs from December through April when 15 percent of
domestic Great Lakes waterborne tonnage is moved, including
replenishing stockpiles of important materials for the U.S. economy.
From January 15th to March 25th each year, the Soo Locks, which connect
Lake Superior to the other Great Lakes, and most U.S. vessels enter a
winter maintenance period. LCA needs to ensure that its customers' raw
material stockpiles can last through the Soo Lock closure period and
replenish them when the Soo Locks reopens. The above figures are based
on economic analyses developed by Martin Associates, which calculated
that during the winters of 2013-2014 and 2014-2015 the U.S. economy
suffered losses of over $1 billion and 5,800 jobs because of this lack
of effective Great Lakes icebreaking. According to the same source,
during the winter of 2018-2019, an additional $1 billion and 5,000 jobs
were lost due to inadequate icebreaking on the Great Lakes.
Lives have been unnecessarily risked due to inadequate Great Lakes
icebreaking. Commercial vessels have been forced aground when
icebreaking was lacking. Other vessels, due to inadequate icebreaking,
have been sliced open when squeezed between ice fields. One example
occurred in the winter of 2013-2014: In the Straits of Mackinac, a
USCG-designated ``tier 1 waterway,'' there was no icebreaker assistance
available. The commercial vessel CASON J. CALLAWAY attempted to pass
close to the vessel AMERICAN REPUBLIC, which was beset in the ice. Due
to a lack of icebreaker assistance, it is not unusual for one laker to
try and free another in this manner, even if it is operated by another
company. As the experienced master aboard the CALLAWAY attempted to
alter course, an ice shear forced the two vessels to collide. In the
attachment, on slide 2, is a picture of the CALLAWAY being repaired in
the drydock. The attachment also notes that Jones Act vessels on the
Great Lakes experienced $6 million damages as a result of inadequate
icebreaking that winter. Slide 3 of the attachment shows an established
ice track in the Straits of Mackinac and its location.
Flood control is another purpose of USCG icebreaking on the Great
Lakes. Most recently, an ice jam on the St. Clair River north of
Detroit caused significant damage to area residences. Several USCG
icebreakers, including the sole heavy Great Lakes icebreaker (USCGC
MACKINAW), were not available to assist. The smaller USCG icebreakers
did the best they could, but the conditions exceeded their capability
and the flooding continued for weeks. This ice-induced flooding not
only occurs along the Great Lakes connecting rivers, but also where
other rivers meet the Great Lakes. The impacts of inadequate
icebreaking were clearly felt by the home and business owners whose
lives were disrupted and property was damaged. In the attachment, slide
4 shows a geographical reference for the Detroit and St. Clair Rivers
and vessels operating there in the ice.
The USCG simply does not have enough icebreaking resources on the
Great Lakes to be able to maintain the 1,600 miles of open lake
commercial vessel routes, connecting waterways, and rivers, in addition
to the sixty federally-maintained commercial ports. In 1979, the USCG
operated fourteen icebreakers on the Great Lakes, including two heavy
icebreakers. Now, that fleet has dwindled to nine total, including only
one heavy icebreaker. Both the quantity and capability of the USCG's
Great Lakes icebreaking fleet has diminished over that period, as
several larger, more capable ships were replaced with smaller, less
capable.
Question 2. Would an additional icebreaker capacity on the Great
Lakes benefit Great Lakes commerce? How so? What is needed?
Answer. At a minimum, the Great Lakes region needs one more
icebreaker that is at least as capable as USCGC MACKINAW. It is crucial
to the region's economy that the USCG is sufficiently resourced to
perform the icebreaking mission on the Great Lakes. The USCG needs
additional icebreaking assets, including a heavy Great Lakes
icebreaker, to ensure Great Lakes waterways remain open to meet the
reasonable demands of commerce. This is a system resiliency issue.
USCGC MACKINAW can't be in two places at once and it needs both
scheduled maintenance and casualty repair time during the winter
icebreaking months.
The reliability of the other USCG Great Lakes icebreakers also
needs to be improved. The USCG recently completed a service life
extension program (SLEP) on its fleet of 140-foot icebreaking tugs.
However, a last-minute budget cut inexplicably eliminated the
repowering of the vessels from the SLEP. These icebreakers continue to
operate with 30-40-year-old power plants. Since the vessels are diesel-
electric, the main engines, propulsion generators and main motor, which
constitute the power plant, should have been replaced to extend the
life of the vessels. Although the post-SLEP vessels are more habitable,
they are often immobilized at the dock by power plant problems. It is
not too late to repower that fleet. It would complete the life
extension program and is a better use of taxpayer funds than vessel
replacements. The two Great Lakes 225-foot buoy tenders, which were not
designed to break heavy ice, have been less than reliable as
icebreakers and less capable at that mission than their predecessors.
In the winter of 2017-2018, the USCG lost 246 cutter days from the
Great Lakes ice-capable fleet due to engineering casualties. This is
the equivalent of all nine ice-capable cutters each losing almost one
month of operations during the ice season.
Additional Great Lakes icebreaking capability is even more
important now as our nation's economy starts to recover from the
pandemic. There is currently significant ice cover from Buffalo, New
York to Duluth, Minnesota and multiple areas of the Great Lakes region
will require a heavy icebreaker to assist commerce. In March of 2020,
the first vessel into Lake Superior became beset in the ice overnight
because USCGC MACKINAW, the only icebreaker assigned to Whitefish Bay,
couldn't escort the vessel to the ice edge. It was needed elsewhere.
With only one heavy icebreaker in the USCG's Great Lakes inventory, it
would be devastating if critical raw materials could not be delivered
this spring or become delayed because a single heavy icebreaker is
unable to cover the vast expanse of the Great Lakes trade routes. The
Great Lakes domestic commercial fleet and its customers desperately
call out for adequate icebreaking.
Question 3. Does Congress need to update the Coast Guard's mission
on the Great Lakes in regards to icebreaking in order to promote more
efficient use of U.S.-flag vessel on the Great Lakes? What type of
performance standard should the Coast Guard be using?
Answer. Yes, Congress needs to update the USCG's icebreaking
mission on the Great Lakes. The authority for the USCG's domestic
icebreaking mission comes from a 1936 executive order issued by
President Franklin D. Roosevelt, but the USCG interprets it as giving
themselves too much flexibility to inadequately perform that mission.
Congressional direction and clarification are badly needed. Currently,
the USCG measures its Great Lakes icebreaking mission performance based
on less than what its limited resources can do and not on the
``reasonable demands of commerce'' as is called for in the executive
order. With 25 USCG icebreakers and ice capable cutters between North
Carolina and Maine (a distance equal to about half of the Lake Michigan
shoreline), the USCG takes a different approach on the East Coast,
where they consider maintaining winter access to almost all commercial
ports as vital. On the Great Lakes, the USCG has manipulated its
icebreaking performance metrics to show success regardless of whether
commercial traffic moves in the winter months or not. The USCG Great
Lakes icebreaking performance standard is considered not met only after
two commercial vessels are simultaneously stuck in the ice, the second
as a direct result of the first, in one of four small connecting ``tier
1 waterways'' for greater than 24-hours. That is what the USCG requires
for a tier 1 waterway to be considered as restricted or closed. That
means a commercial vessel loaded with vital winter road salt for one of
America's metropolitan areas (around Chicago), can be stuck in southern
Lake Michigan (as recently occurred) without affecting the USCG's
icebreaking performance. The USCG has not designated any tier 1
waterways on Lake Michigan. The Straits of Mackinac, connecting Lake
Michigan to Lake Huron, is the only tier 1 waterway adjacent to either
of those two lakes. In the attachment, slide 5 shows the track of a
laker trying to deliver salt to Gary, IN and where it spent the night
beset in ice on February 18 and 19, 2021.
A headline from The Maritime Executive dated Wednesday, April 8,
2015 notes ``18 Ships Stuck in Lake Superior Ice.'' The article points
out that they had been beset since Monday and likely would remain so
until Thursday. Since there are no tier 1 waterways on Lake Superior,
the above incident had no impact on the USCG's performance metrics. In
the attachment, slides 6 and 7 show different versions of automatic
identification system screen shots with the commercial fleet beset in
Whitefish Bay. Slide 8 shows its location, pictures of vessels
operating in the ice and a satellite photo of ice in Whitefish Bay.
When the laker ARTHUR M. ANDERSON was beset in the ice off
Conneaut, OH for five days in February of 2015, it did not affect the
USCG's icebreaking mission performance. The only tier 1 water way in
Lake Erie is in Canadian waters in the west near where the Detroit
River enters Lake Erie. In this instance the USCG 140-foot icebreaker
BRISTOL BAY also became beset in the ice. It eventually ran out of food
and the USCG had to airdrop supplies to the icebreaker. It took two
other icebreakers to free both vessels from the icy grip of Lake Erie.
The ARTHUR M. ANDERSON abandoned its attempt to deliver a cargo from
Conneaut, OH to the Chicago area. Instead, it went to an early winter
maintenance berth. If a second icebreaker as capable as USCG MACKINAW
had been available in the lower lakes, it would have resulted in a
better outcome. In the attachment, on slide 9 shows a laker being
loaded in the winter and a satellite picture of icy Lake Erie.
In the absence of Congressional direction, the USCG established
performance metrics for Great Lakes icebreaking that set the bar so low
that success is guaranteed, despite costing the economy billions of
dollars, tens of thousands of jobs and unnecessarily risking the lives
of mariners. It is time to tie mission performance to the economy's
needs. This requires the Congress to define the ``reasonable demands of
commerce'' and the USCG to resource its Great Lakes icebreaking mission
to meet those demands. The Great Lakes Winter Commerce Act defines the
``reasonable demands of commerce'' as ``the safe movement of commercial
vessels transiting ice covered waterways in the Great Lakes at a speed
consistent with the design capability of Coast Guard icebreakers
operating in the Great Lakes.''
The Great Lakes Winter Commerce Act is a critical step in the right
direction to ensure the USCG assists commercial mariners, who have
braved the ongoing pandemic, don't have to also battle ice and the
damage that it inflicts on their vessels without USCG assistance. Great
Lakes raw material transportation protects our national and economic
security. We need adequate Great Lakes icebreaking metrics and
icebreaking assets to provide for navigation system resiliency. The
Great Lakes Winter Commerce Act would for the first time authorize the
Coast Guard's domestic icebreaking mission by statute. It also would
increase the amount of appropriations currently authorized for
acquiring a new Great Lakes icebreaker at least as capable as USCGC
MACKINAW. Both are critical to ensuring that the pilot light of North
American manufacturing, the Great Lakes Navigation System, continues to
burn brightly.
Question from Hon. Rick Larsen to Michael G. Roberts, Senior Vice
President, Crowley Maritime, on behalf of the American Maritime
Partnership
Question 1. Shipyards, like Dakota Creek Industries and Nichols
Brothers Boat Builders in my district, are the backbone of the Pacific
Northwest's maritime economy. Of the 117 shipyards in the U.S., 26 are
in Washington State. The Jones Act, which celebrated its centennial
last year, helps sustains a strong domestic shipbuilding industry. Can
you please discuss the importance of Jones Act protections to the U.S.
shipbuilding industry during the pandemic?
Answer. The United States simply would not have a commercial
shipbuilding industry without the Jones Act and related laws. The top
shipbuilding countries are China, South Korea and Japan, which combined
account for about 90% of total global shipbuilding according to various
sources. Shipbuilders in those countries have enormous advantages over
U.S. shipbuilders due primarily to policy choices made by those
governments to support their shipping and shipbuilding industries. For
example, the Center for Strategic and International Studies has
estimated that the government of People's Republic of China has
provided an average of almost $15 billion annually to support the
Chinese commercial shipping and shipbuilding industries. Hidden
Harbors: China's State-Backed Shipping Industry (June 2020).
In comparison, U.S. Government financial support for the American
commercial shipping and shipbuilding industries is virtually non-
existent. Direct shipbuilding subsidies were ended forty years ago, and
small grants and financial guarantees for U.S. shipyards that are
sometimes available amount to a tiny fraction of the support provided
by China to its shipyards. Instead of competing on subsidies, the U.S.
policy approach has been to reserve the very sizable American domestic
maritime market for American ships. This approach has succeeded in
achieving the objective of preserving a critical mass of facilities and
skilled workers capable of building a variety of ship types, including
many with very advanced designs. This includes the 117 U.S. shipyards
(including 26 in Washington) noted in your question. By meeting the
needs of U.S. domestic maritime commerce, America has the resources
that may be needed to scale up its shipbuilding capabilities if
required in a military contingency.
The pandemic dramatically illustrates the importance of the Jones
Act to American shipbuilding specifically and the U.S. defense maritime
industrial base more generally. America's dependence on the Chinese to
produce nearly 100% of the shipping containers, personal protective
equipment and other materials Americans have needed in abundance was
not as well-known before the pandemic. Alarming allegations have been
made that certain global shipping companies (including Chinese shipping
companies) have refused to allow U.S. exporters to fill empty
containers for the backhaul to China--so that the containers can be
turned around as fast as possible and reloaded with Chinese exports to
the U.S. Whether or not these allegations are accurate, ceding control
over both the production of essential goods and the maritime logistics
services needed to deliver them suggest a type and degree of American
economic vulnerability that was not previously understood and is very
much of concern.
Question from Hon. Garret Graves of Louisiana to Michael G. Roberts,
Senior Vice President, Crowley Maritime, on behalf of the American
Maritime Partnership
Question 1. Congress passed a clarification of the Outer
Continental Shelf Lands Act to clarify the application of U.S. laws to
the offshore wind and other non-oil and gas energy sources. Recently,
CBP issued its first letter ruling following enactment of that law. We
were pleased to see CBP determined that the Jones Act applies to these
offshore activities. What is AMP's view of the recent CBP ruling?
Answer. AMP is very supportive of the recent CBP letter ruling. As
you noted, that ruling expressly confirms that the plain language of
the Outer Continental Shelf Lands Act extends all U.S. law, including
the Jones Act, to offshore wind activities on the Outer Continental
Shelf. Offshore wind is an extremely important emerging market for the
American maritime industry. Our industry is a highly capital-intensive
business and our investments in vessels and other infrastructure are
long-term. This ruling provides us the certainty needed to invest in
long-term offshore wind assets. This investment has already begun and
we expect it to only grow in the future.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Questions from Hon. Rick Larsen to Del Wilkins, President, Illinois
Marine Towing, on behalf of American Waterways Operators
Question 1. The COVID-19 pandemic has devastated Washington state's
maritime economy, particularly the cruise industry. Last week, Canada
extended suspension of cruise sailings in its waters through February
2022. According to Port of Seattle data, the cancellation of the 2020
cruise season cost an estimated 5,000 local jobs and more than $900M in
economic activity. With the ongoing cruise sailing suspensions, how can
the federal government help impacted ports, waterfront operators and
employees? What should the cruise industry do to ensure the safety of
homeport workforce and its passengers?
Answer. It is difficult to overstate the economic impacts to the
Pacific Northwest and Alaskan maritime economy from the cancellation of
the cruise season in 2020. To the extent that the cruise industry can
resume sailings, AWO did not oppose the grant of limited and
conditional waiver of the Passenger Vessel Services Act to ensure that
Washington ports can resume serving the cruise industry as soon as it
is safe to do so. The federal government can further help impacted
ports in Washington by helping to ensure a diverse business portfolio
for marine businesses. Washington supports marine freight
transportation, commercial fishing, non-cruise passenger service,
shipbuilding and vessel maintenance, recreational boating, and a vast
array of maritime support industries. This economic ecosystem must be
sustained with strong policy and deliberate investment. Offshore energy
generation, innovative vessel construction, short-sea shipping, and
aquaculture opportunities all offer promising new maritime revenue
streams that could help to offset the economic downturn imposed by the
pandemic.
Question 2. As you know firsthand, the loss of port revenue during
the pandemic has consequences on local economies and communities. For
instance, last year the Port of Everett in my district experienced a
total revenue loss of $6.65M, stemming from aerospace shipping
declines, lost tourism/hospitality and delayed construction. How would
full funding for the Maritime Transportation System Emergency Relief
Program help local ports and employees during these difficult times?
Answer. While it's unlikely that any federal relief program could
have fully mitigated the impacts experienced by the Port of Everett
over the last year, the Maritime Transportation System Emergency Relief
Program is a sound investment in American resilience. Congressional
investment in this program is like any investment in necessary
infrastructure, it proves invaluable when the need arises and deferred
maintenance can be catastrophic. In the PNW, which is both heavily
reliant on domestic and international maritime trade and where the
threat from natural disasters is very real, this investment could be
the difference between recovery and failure. This program would build
additional resilience and redundancy for the state marine
transportation system. Small ports like Everett serve critical needs in
Washington State and could in the future gain market share from larger
ports like Tacoma and Seattle. Going forward, this program is likely to
become more important for Everett and will help mitigate against
disasters, downturns, and unforeseeable events.
Questions from Hon. Garret Graves of Louisiana to Del Wilkins,
President, Illinois Marine Towing, on behalf of American Waterways
Operators
Question 1. Would you consider the Coast Guard's Waterways Commerce
Cutter program a high priority for the industry? Are you satisfied with
the agency's Q2 2025 target for placing the first new cutters into
service?
Answer. The current fleet of Coast Guard waterways commerce cutters
is comprised of superannuated vessels that are frequently out of
service because they require a disproportionate amount of maintenance.
Furthermore, there are only two WCCs that can accommodate co-ed
personnel. We are aware--and fully appreciative--of the funding
Congress has thus far provided to help the Coast Guard meet the
projected goal of placing the first WCCs in service in Q2 of 2025.
However, in the context of upcoming infrastructure legislation and
other possible vehicles, we would encourage Committee Members to look
for opportunities to accelerate the program so that the new fleet is
ready to serve the Western Rivers.
Secondly, we believe several Coast Guard policies and procedures
severely decrease WCC mission-capable hours of service. To address
this, we would encourage the Committee to consider the following policy
changes:
Improve drydocking procedures to commercial vessel
standards;
Do not tie crew positions to one vessel. Captains and
engineers should be able to function on several vessels, and should
also be certified for all cutters;
Captains should be licensed mariners for safety purposes;
Retain two pilots and engineers on board to allow vessels
to run at night; and
Initiate repair standards that reflect the needs of
Western Rivers, rather than ocean-going vessels.
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