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U.S. maritime industry just barely treading water.

U.S. Maritime Industry Just Barely Treating Water American shipbuilding capabilities and the U.S. maritime industry are in a state of "tragic decline," according to Rep. Jack Fields (R--TX), and the only way to reverse the trend is through legislative and administrative action.

Speaking to a crowd of between 900 and 1,000 attendess--the largest ever--at the 24 Annual Houston Marine Insurance Seminar, Rep. Fields said that our merchant fleet, once the largest in the world, has declined from more than 1,300 ships to fewer than 450 today. By contrast, the Soviet Union's merchant marine totals more than 2,500 vessels. "In addition, despite the fact that the United States is the largest trading nation in the world, our market share of international trade transported by U.S.-flag vessels has declined dramatically, from over 50 percent in 1945 to less than 5 percent today," he said.

Rep. Fields said the decline is borne out by the fact that the Soviet Union carries more U.S. cargo overseas than American ships. "In fact," Rep. Fields exclaimed, "Soviet ships carry nearly 50 percent of all mail postmarked in the United States, while our domestic carriers transport a mere 12 percent of it. I think that is a national disgrace!"

Two other areas that Rep. Fields discussed as indicative of America's maritime decline include the decreased number of active American Shipyards and shipping companies. "In 1982, 110 privately-owned shipyards operated in the country, and they employed 112,000 people. By the end of 1988, the number of active yards had fallen to 69 and employment had dropped by more than 28 percent to 80,000 workers," he said. "Likewise, in 1970, There were 18 major U.S. shipping companies. Now there are four." In addition, Rep. Fields said that the number of shipboard jobs in the U.S. fleet has droped from over 99,000 at the end of World War II to fewer than 13,000 today. "Without trained seafarers," he said, "this nation is in serious peril for the future."

Maritime Measures

In the search for plausible remedies to America's maritime decline, Rep. Fields cited the Shipping Act of 1984 and the Cargo Preference Compromise of 1985 as the type of relief measures and incentives that the indusry must have in the future. In addition, Congress spent a considerable amount of time last year discussing H.R. 1841, the so-called Commercial Fishing Industry Vessel Safety and Compensation Act of 1988.

"While we were unable to complete work on the liability insurance reform provisions of that legislation, we did require that a number of new safety features be onboard most fishing, fish tender and fish processing vessels," Rep. Fields said.

Such ships must now be equipped with lifeboats, emergency-position indicating radio beacons, exposure suits and certain radio, navigation and first-aid equipment. "It is my sincere hope that these new requirements will greatly reduce the number of fatalities that have faced our nation's most dangerous industry--commercial fishing," he said.

Other needed maritime measures cited by Rep. Fields include full enforcement of U.S. cargo preference laws. "Instead of working to find ways to avoid putting cargo on U.S.-flag vessels, our Military Sealift Command and all other federal agencies must work to find ways to make our cargo preference laws work," he said. "We are a nation of laws. What the U.S. maritime industry is asking for is not special consideration or favors but simply a fair and accurate interpretation of laws which have been on the books for over 80 years."

A 'Shifting Sea of Sand'

In view of the fact that every $1 billion of exports creates an estimated 35,000 maritime jobs, Rep. Fields believes that the future health of the U.S. maritime industry depends on increasing the amount of cargo carried on the U.S.-flagged vessels. "Cargo is the lifeblood of the maritime industry, and we must do everything we can to ensure that U.S.-flagged vessels receive an increasing share of that cargo," he said.

Rep. Fields believes that one way to increase cargo levels on U.S. ships is through safeguarding the sanctity of the Jones Act, which impacts at least half of the cargo carried on U.S.-flagged vessels. "The act must be preserved, enforced and strengthened," he said. "If Congress or the administration start to waive its requirements, then the bedrock underlying the Jones Act will become a shifting sea of sand."

A Forceful Reminder

"We must remind the Bush administration that the vast majority of the maritime industry strongly supports the prohibition on the sale and export of Alaskan North Slope crude oil," Rep. Fields said. He added that people who argued that this stance violates America's free-trade policy ignore the fact that North Slope crude oil is vital to national security. "Millions of dollars have been spent building a fleet of U.S. tankers to transport this oil. Those vessels provide jobs to thousands of U.S. maritime workers," he said. "Those same tankers provide a livelihood for thousands of workers at ports and refineries throughout the Gulf Coast." Rep. Fields believes that without ready access to this oil, the United States would be highly vulnerable to future disruptions in energy supplies. He said exporting this oil would cause the loss of dozens of U.S.-flagged vessels, destroy thousands of U.S. maritime jobs and adversely affect ports and refineries throughout the country. "We must not allow this oil to be exported, either refined or unrefined, to Japan or anyone else," he warned. "I'll continue working in Congress to ensure that this prohibition remains in law."

New Maritime Legislation

Other maritime measures Rep. Fields advocated include legislation that would:

* Create a new self-sustaining "build and charter" program to be patterned after the highly successful mariner program of the 1950s. Under that program, 35 militarily-useful vessels were built by the government and were subsequently sold to U.S. operating companies. "There is absolutely no reason why we can't duplicate that success in the next decade and beyond," he said.

* Provide for the negotiation of bilateral shipping agreements, thereby guaranteeing cargo for U.S.-flagged vessels.

* Reform our government's procurement, service and contract policies so that U.S.-flagged operators are treated fairly and are not placed at a competitive disadvantage with foreign traders.

* Authorize the secretary of transportation to transfer title to obsolete vessels from the National Defense Reserve Fleet to nonprofit groups for merchant marine memorials.

* Modify the Title XI financing program to restore its effectiveness as an incentive to build vessels in U.S. shipyards.

Right to Limit Liability Follows

In the Wake of the Valdez Crisis

The repeated occurrence of marine casualties around the world should convince even the most die-hard skeptics that the term "sea peril" is not just an empty euphemism anymore, said Richard Palmer, of the Philadelphia law firm Palmer Biezup and Henderson, during a session at the Houston Marine Insurance Seminar.

According to a list of 165 casualties investigated by the U.S. Coast Guard from 1980 thorugh 1988, 114, or 69 percent, occurred in United States waters, including the Gulf of Mexico, ocean coastal waters, inland rivers and the Great Lakes. "The grounding of the Exxon Valdez on Bligh Reef in Prince William Sound on March 24, 1989, and the trio of spills which occurred in Galveston Bay, Narragansett Bay and the Delaware River during a 12-hour period on June 23 and 24, 1989, are recent and startling reminders of the far reaching impact which a major marine casualty can have on various segments of both industry and society," Mr. Palmer said.

Mr. Palmer believes that the number and magnitude of major marine casualties occurring in U.S. waters or involving U.S.-owned ships, as well as countless additional casualties of a less serious nature, requires that the United States must have equitable and predictable laws governing a shipowner's right to limit its liability.

Mr. Palmer cited three causes for denying a vessel owner's right to limit liability, including inadequate training procedures, charts and guiding systems and maintenance and repair. "It's getting to the point in the courts where there is almost no excuse for deficiencies," he said. "The grounding of the Valdez has produced an avalanche of legislation for cleanup, prevention and compensation. There is also a considerable consensus to enact federal legislation as opposed to any piecemeal approach."

Mr. Palmer added that almost everyone agrees more oil spills will occur in the future, but any new legislation must balance the nation's interest of moving petroleum products with environmental concerns. "The Exxon Valdez has made coming up with just the right kind of balancing act a major priority," he said.
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Author:Johnson, Tom
Publication:Risk Management
Date:Nov 1, 1989
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