Sailors assigned to Naval Mobile Construction Battalion
11 offload cargo from the U.S.-flag Roll-on/Roll-off ship
M/V Alliance New York in June 2009. The equipment was
being staged for transport to Camp Mitchell, Spain, and
equipment was being delivered to help re-establish Camp
Mitchell as a main body site for forward-deployed Seabee
units. M/V Alliance New York has since been renamed M/V
Prestige New York.
Maersk Line Limited, a division of A.P. Moller-Maersk Group, is the world’s largest ocean carrier. The
company has more than 600 vessels — 56 of which are
U.S.-flag ships — and two headquarters — one in
Norfolk, Va., and another in Copenhagen, Denmark.
Kevin Speers, the company’s senior director of marketing, said Maersk Line has tried to show the U.S.
government it can be a trusted shipper by playing a
large role in shipping military cargo to the Middle East
over the last four years.
“We know these volumes will decline,” Speers said.
President Barack Obama has said he wants all the
U.S. troops home from Afghanistan by 2014.
The shipping industry also confronted another
international shipping setback in early July when
Obama signed a $105 billion transportation bill into
law. It dropped the amount of American food aid that
is shipped by U.S.-flag vessels from 75 percent to 50
percent over the next two years. Under U.S. law, the
majority of American food aid must be shipped by
“That will definitely hurt the business of U.S.-flag
carriers,” Speers said.
To find U.S.-flag shipping opportunities, Maersk
Line is looking at new business created by increases in
U.S. Export-Import Bank financing as U.S. cargo preference rules apply to that financing.
According to MARAD, the cargo preference program
works to promote and facilitate U.S. maritime transportation. It oversees the administration of, and compliance with, U.S. cargo preference laws and regulations.
Those laws require shippers to use U.S.-flag vessels to
transport any government-impelled ocean-borne cargo.
U.S-flag carriers benefit from companies that get
financing breaks because they use U.S.-flag shipping.
There are more opportunities for shipments as more
companies get the lower rates.
“I don’t think it can offset the military cargo that
was moving during the height of those [war] operations, but it’s certainly a bright spot,” Speers said.
The bank has given out a record number of these
loans over the past three years, although it does not
have specific statistics, said Phil Cogan, senior vice
president of communications.
A condition for financing one of these loans is that
the vessel be a U.S.-flag ship.
“There has been what you would say is a logical
increase in the number of U.S.-flag vessels that are carrying cargo from the U.S. because of that,” Cogan said.
Maersk Line also is diversifying its asset base by
continuing to improve its container line and adding
multipurpose, heavy-lift ships and tankers.
“Continuing to find new ways to build our revenue
base, from a marketing standpoint, will be an important asset,” Speers said.
Some U.S.-flag shipping companies, particularly the
smaller ones, however, have not been able to maintain
enough business to stay afloat.
The family owned Seaboats Tugboat and Barge
Marine Transportation Co. had to sell out to rival
Kirby Inland Marine, Channelview, Texas, in
December because it could not turn a profit.
“There’s a tremendous incentive to get out [of the busi-ness],” Don Church, the former Seaboats owner, said.
The former Fall River, Ma., carrier was getting,
“taxed and regulated to death” and could not sustain a
consistent business model, he said.
Those same sentiments were echoed by Yonges,
S.C.-based Stevens Towing Co. Inc., which has 100
employees and 30 vessels.
“The experience we are having is demand is going up,
but the concern is the regulatory side of the business,
where regulations are getting more and more difficult to
comply with and it’s driving up the cost of American-flag
shipping,” said Bos Smith, Stevens’ operations manager.
He described the future of the U.S.-flag shipping
industry as, “cloudy and hard to see,” but said he’s trying
to stay in business by providing specialized capabilities
— super heavyweight lift support — and focusing on a
concentrated area — the Atlantic Intercoastal Waterway
between Norfolk, Va., and Jacksonville, Fla. ■