Back to ideas to fix the USMM/MSP


#1

So, maybe we can try this again…we seem to have some people in positions of power who at least are mentioning the USMM and its importance, so let’s throw out our collective ideas on what needs to happen to get our merchant marine going in the right direction. I’ll start with @c.captain 's post from the previous thread which faced the Norweigan necktie:

I agree with this sentiment and feel the ball could get rolling by (for instance) going on the open market and purchasing 6 x 7,000TEU foreign built container ships. Once they are brought up to speed, go to APL (who operates a 6 ship liner service under MSP [ http://aplinfo.apl.com/services/documents/sells_mkt_tp_ex1.pdf ]) and say those MSP slots are going away and work a deal with them to operate those 6 US Govt. owned ships instead of APL’s own ships. If they aren’t interested, then put it out to bid.

Once that’s going, get reps from the USN, MSC, Aker, and NASSCO together in one room and come up with a standard design of X TEU’s (TBD by the reps listed above) and give Aker and NASSCO a contract to build 3 each of these new MARAD C(X) ships. As they are launched, replace the foreign tonnage on APL’s liner service. Towards the end, go to Maersk Lines Limited and tell them the same thing. They currently operate 17 (http://www.maersklinelimited.com/about/about-maersk/us-flag-fleet/ ) of these vessels (plus 3 smaller feeder type ships). Contracts for those could be doled out on an incentive basis based on which yard performed the best on the previous ships. Additionally, perhaps some other yard would come online and be able to bid as well. The end goal being the get a production rate that is steady such that when the last ship of the desired fleet size is delivered, the first ship is at the end of life, (30 to 35 years) and ready for replacement. This setup would give the yards a steady constant workload so they could survive any dry spells in the commercial side of their business.

Eventually expand this same model to a standard MARAD PCTC design and CONRO design (if the aforementioned team deemed these or other design to be desirable).

Ideas? Thoughts? Points? Counter points?


#2

thanks for starting this thread…was planning to do it myself but been pretty damned busy everyday…

anyway, I like your ideas and I will toss in mine for consideration

  1. increase the MSP program from the current 60 ships to 90 (a 50% increase in annual funding by Congress)

pros: 30 more ships so something like 1500 more mariners employed in deepsea trades…more ships and more mariners available to the DoD!
cons: a cost to the taxpayer of approx. $90M/yr (what KP costs per year btw)

  1. close loopholes allowing foreign flagged ship operators to bid on DoD voyage or time charter contracts thus increasing the need for more US flagged ships (which can be foreign built)

pros: I estimate full time work for something like 25 militarily useful ships of various types with their American crews
cons: obviously higher than what the DoD spends today on its global shipping bill but I have no numbers available to me. Figure a 33-40% increase in costs so maybe $500M to $1B more per year to the DoD)

  1. start a US 2nd register for foreign trading ships which would employ at least US citizen senior officers

pros: some jobs to senior officers and potentially nice tax benefits to the shipowners. ships may be militarily useful
cons: tax benefits to shipowners likely going to be pretty high just to provide a very few US senior officers positions at sea they would otherwise not be offered. ships might not be militarily useful and foreign national crews might bail if the ships are requisitioned by the DoD for war service leaving the ships useless until enough American seamen are scraped up thus not providing any real assistance to sealift readiness

  1. give accelerated depreciation and tax benefits on profits earned to US owners of FoC ships to bring their vessels under full US flag (maybe to the point where there would be no corporate tax on income earned with a US flag ship)

pros: quite a good number of ship owners would take advantage of this if they could depreciate a ship quickly and potentially keep the profits their ships make in the USA with a low tax burden on them
cons: the US Treasury will take a hit on tax revenues from these companies for sure but how much of a hit is anyone’s guess. would the lost taxes collected by offset by the larger fleet and manpower pool? maybe not

  1. build ships with features valuable to the military to the government’s account in US shipyards and then charter those ships at attractive terms to operators who will run them in commercial commerce in peacetime if they pledge to make the ships and their crews available in a national emergency

pros: militarily useful ships and work for American shipyards and American seamen/ Potentially modern ships for cheap to American ship operators as well
cons: very costly to the taxpayer ($1B/yr?) although some money would come back on the charters of these ships after they were built and delivered.

  1. use RRF ships to carry DoD and other government cargo instead of commercial vessels using contracted vessel operators and civilian crews

pros: work for American mariners and profits for the ship operators
cons: more costly to keep these older ships operating vs. newer ones


#3

No No No, no F’ing way, ever! A “second register” is nothing but a government FoC and is as lousy as the lowliest flag on the water.

Providing a few jobs to a pair of senior officers might be nice for them but where are junior officers going to go to become senior enough to get a FoC job? Where are unlicensed supposed to get seagoing time and experience?

Just say NO to any form of FoC!

Hooray on demanding that every ton of US government cargo must be shipped on RRF ships after filling all available US flagged commercial vessels.


#4

My vision is a combination of the MSP as we know it and this:

For ships that are directly commercially useful to civilian operators (like container ships and PCTCs), the govt. should purchase used suitable foreign built ships and charter their operation out to people like APL, Maersk, etc. that have the network and infrastructure to create and run viable liner service (as they currently do). Then, build US built replacements over time and transfer the foreign built ships to the RRF so they are available for immediate breakout. As they age, replace them with used foreign built tonnage. I’m all about US build but not for ships that will just sit in an anchorage waiting for the next war. Come up with a long term steady, predictable build schedule that the shipyards can depend on and plan around so they can stay in business.

For ships like CONROs, it might be tough to find an operator who has a viable business plan to operate these. For that scenario, a MSP/subsidy program would probably have to be in place to entice someone to put these into service.

As far as this:

Fuck their pledge. In my model, the ship’s are US owned and crewed by US citizens. If APL or Maersk or whoever runs for the hills when the shooting starts, that’s fine. We still have the ship and the trained crew that’s necessary to put the ship into immediate military service.

Agree with this as well. In my model, the RRF would be full of recently operating ships that wouldn’t be a big deal to fire up and put into service.


#5

never said I liked the idea but only included it to show how its supporters how it stacked against the others. You do notice that I made sure to highlight the negatives to it.


#6

really would like to see this thread stay alive…the subject is simply too important to ignore

as far as the concept of the government buying 2nd hand militarily useful tonnage on the world market and then chartering those ships to US operators, doesn’t that already pretty much occur with the MSP? US operators bring foreign built militarily useful vessels into the US registry and get a subsidy for doing so? so in the end, it basically does the same thing as the MSP does now only with the government owning the ships. not sure where the advantage is to this idea? the operators would still likely want some form of wage differential subsidy as well which they get with the MSP.


#7

I’ve been reading the thread and the main tenet sounds a lot like the old school Operational Differential Subsidy that went away in the 90’s. I don’t see this coming back anytime soon when the industry lobbyists have to go back to congress, hat in hand, every year to get the MSP fully funded. Y’all are talking about a whole lot more money than $300 million a year.

I am onboard with the fact that I shake my head every time I pass a Ready Reserve ship rotting at the dock doing nothing but sitting still with no hope of doing anything productive besides being broken out once a year. On that subject I would also like to posit the fact that there are a subset of mariners who enjoy the “day job” nature of working a vessel perpetually tied to a pier that doesn’t go anywhere. Like never actually want to go to sea enjoy that job. If this option wasn’t available, would these people even be working on a ship at all? Some of the stories of the RRF fleet I’ve heard from those who have been there really make me question this.

I don’t necessarily want to see the industry nationalized in some sort of government takeover but I would certainly like to see someone in the government take an actual interest on the industry.

BTW on the subject of Roosevelts (or presidents for that matter) interested in the maritime sector, let’s not forget Teddy. A little more interest in the Navy but the Panama Canal wasn’t exactly a ‘make it to the next election cycle’ kind of power move so popular these days.


#8

What I’m suggesting is different in that the US Government (USG) would own the ships and lease them out to operators. Ie, the operator would pay the USG to lease the ship. Why would they do that you ask? Because on a 8k TEU ship, the govt would only reserve a fraction of the slots for USG cargo and the operator would be free to pursue commercial cargo with the remaining (majority) of the slots.

This income plus the 300M per year going to fund MSP plus any money we could get that currently funds MSC shipbuilding is what would fund this massive long term building program I described.


#9

The inital purchase of foreign built boxboats and PCTCs is temporary only until the US built replacements can be put into service. Once that happens, the foreign ships are moved to RRF to replace the ancient hulls we currently have there.

Advantage: This allows for having fairly new, recently running ships available in the RRF if the need arises without the need to spend $250M to obtain a ship which sits at anchor 99% of the time.

With regard to the advantage of the US Govt. ownership and lease to operators model, the advantages are as follows:

  1. There’s no need to worry if the operator will pull their ship if they don’t approve of the conflict that occurs which requires their ship for sealift. They’re free to walk away from the management of the vessel, but the vessel is ours.

  2. The model I propose results in US yards having
    a steady, predictable stream of work building ships unlike the current setup. Basically, trying to avoid this:

http://www.philly.com/philly/business/aker-philly-shipyard-layoffs-new-orders-disappear-20180510.html?amphtml=y&mobi=true

  1. The operator is leasing the ship from the government thus providing income into this program.

As far as the offset, it would be in the dayrate. For example, if the going rate in the FOC world for a 8k TEU ship is 30kUSD/day, the winning bid to lease these ships might be 20kUSD/day to offset the higher wages of the US crew as well as not all of the 8k TEU being available for commercial cargo (ie, some are reserved for DOD cargo). So 20k/day/ship x 365 days/year x 23* ships = $167.9M/year of income going towards the newbuild program.

(*Note: 23 ships comes from replacing the 6 APL and 17 MLL boxboats currently operating liner services utilizing ships of approximately the size discussed. Many more ships would be included in the same business model.)


#10

It’s would be as “lousy” as the regular US flag since it would also be USCG run.

The already existing US flag ships, just like they do now. The road block is in advancement from Junior to senior officer (2M to CM) so if all senior officers (4 not 2) are required to be US citizens this allows upward mobility that currently doesn’t exist which will make job openings at the 3M and 3AE level.


#11

The argument for a 2nd registry is economic, countries that are in the process of losing their merchant fleet are trying to not lose all the shore side infrastructure and expertise associated with supporting a merchant marine as well.

The 2nd register with cheap, compliant, non-union unlicensed labor from poor, formerly colonized countries with a couple of officers from rich countries at the top is a big step in a long retreat.

The reason for the U.S. approach on the other hand is not economic, it’s security. Why do public officials have to be U.S. citizens? In some cases being born in the U.S. is a requirement. Agree or disagree, the argument is foreign citizens may not be loyal to the U.S. in a crises.

Arguing economics when the issue is security is missing the point.


#12

I appreciate your point of view and the direction from which it is coming.

However, there is the saying, that Generals always fight the last war. This is very much what is going on and nobody knows what to do about it.

In the UK the MoD has a small (about 4 people) who look at ships suitable to charter in times of emergency regardless of flag.

This was very much shown that what ever the flag sea staff would be prepared to take the risk if the reward was there, the complete opposite of WWii.


#14

The UK could save money by outsourcing that work to India or the like. Once it’s acknowledged that loyalty is the reason for keeping the work at home, or the reason for keeping the top officers on the ships then it’s just matter of degree.

Spend more money get more, spend less, get less.


#15

Hear hear!


#16

The military and national security thing is just jingoism in my opinion, it is a hook on which to hang a more reasonable (and therefore less appealing) means of protecting an important American industry and the people who support it.

That comment about “the last war” is as outdated as WW2. We haven’t stopped fighting a war in so long there really isn’t any such thing as the last one. The military excuse for everything we do is driving the US to ruin. Let’s stop linking the merchant marine to “national security” in any sense other than healthy industry and labor.


#17

Agree. Much sentiment appears to link a healthy USMM to a healthy US Shipbuilding industry. What if the situation was reversed? Henry J Kaiser taught the world how to build ships. The yards need to relearn those skills and productionize vessels at a global price. Other countries do it, the US does it in cars, bikes, planes, what is the problem with the yards?


#18

I disagree because the national defense need is what gets action in Washington. “a healthy industry” by and for itself is a meaningless palliative nobody is going to pay any attention to.


#19

I just getting started, SIU crews have US MMC and most have U.S. passports but they come from all over. Even most of the ones born in the U.S. are minorities.

What combination of ignorance and arrogance would result in a lecture to U.S. mariners on views of nationalities, from countries that retain the top two positions for native-born officers? White ones at that.

What does a captain getting ready to retire tell the Filipino chief officer? I trust you 100% and am not the least bit biased against other nationalities which is why the office is sending out another white guy from my country to replace me.

Then the new captain can strut around without doing a lick of work thinking how enlightened he is.


#20

“Master under God”


#21

Let’s get back on topic pleeeze