[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
THE STATUS OF THE U.S. MARITIME SUPPLY CHAIN DURING THE COVID-19
PANDEMIC
=======================================================================
(116-60)
REMOTELY ATTENDED HEARING
BEFORE THE
SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
MAY 29, 2020
__________
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
42-965 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 DANIEL LIPINSKI, Illinois
SCOTT PERRY, Pennsylvania STEVE COHEN, Tennessee
RODNEY DAVIS, Illinois ALBIO SIRES, New Jersey
ROB WOODALL, Georgia 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
LLOYD SMUCKER, Pennsylvania DONALD M. PAYNE, Jr., New Jersey
PAUL MITCHELL, Michigan ALAN S. LOWENTHAL, California
BRIAN J. MAST, Florida MARK DeSAULNIER, California
MIKE GALLAGHER, Wisconsin STACEY E. PLASKETT, Virgin Islands
GARY J. PALMER, Alabama STEPHEN F. LYNCH, Massachusetts
BRIAN K. FITZPATRICK, Pennsylvania SALUD O. CARBAJAL, California,
JENNIFFER GONZALEZ-COLON, Vice Chair
Puerto Rico ANTHONY G. BROWN, Maryland
TROY BALDERSON, Ohio ADRIANO ESPAILLAT, New York
ROSS SPANO, Florida TOM MALINOWSKI, New Jersey
PETE STAUBER, Minnesota GREG STANTON, Arizona
CAROL D. MILLER, West Virginia DEBBIE MUCARSEL-POWELL, Florida
GREG PENCE, Indiana LIZZIE FLETCHER, Texas
Vacancy COLIN Z. ALLRED, Texas
SHARICE DAVIDS, Kansas
ABBY FINKENAUER, Iowa
JESUS G. ``CHUY'' GARCIA, Illinois
ANTONIO DELGADO, New York
CHRIS PAPPAS, New Hampshire
ANGIE CRAIG, Minnesota
HARLEY ROUDA, California
CONOR LAMB, Pennsylvania
------
Subcommittee on Coast Guard and Maritime Transportation
SEAN PATRICK MALONEY, New York,
Chair
BOB GIBBS, Ohio RICK LARSEN, Washington
DON YOUNG, Alaska STACEY E. PLASKETT, Virgin Islands
RANDY K. WEBER, Sr., Texas JOHN GARAMENDI, California
BRIAN J. MAST, Florida ALAN S. LOWENTHAL, California
MIKE GALLAGHER, Wisconsin ANTHONY G. BROWN, Maryland
CAROL D. MILLER, West Virginia CHRIS PAPPAS, New Hampshire, Vice
SAM GRAVES, Missouri (Ex Officio) Chair
CONOR LAMB, Pennsylvania
PETER A. DeFAZIO, Oregon (Ex
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ v
STATEMENTS OF MEMBERS OF THE COMMITTEE
Hon. Sean Patrick Maloney, a Representative in Congress from the
State of New York, and Chairman, 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............................................ 6
Prepared statement........................................... 7
Hon. Peter A. DeFazio, a Representative in Congress from the
State of Oregon, and Chairman, Committee on Transportation and
Infrastructure:
Opening statement............................................ 7
Prepared statement........................................... 8
Hon. Sam Graves, a Representative in Congress from the State of
Missouri, and Ranking Member, Committee on Transportation and
Infrastructure, prepared statement............................. 61
WITNESSES
Christopher J. Connor, President and Chief Executive Officer,
American Association of Port Authorities:
Oral statement............................................... 10
Prepared statement........................................... 11
Michael G. Roberts, Senior Vice President, Crowley Maritime,
testifying on behalf of American Maritime Partnership:
Oral statement............................................... 13
Prepared statement........................................... 15
Jennifer A. Carpenter, President and Chief Executive Officer, The
American Waterways Operators:
Oral statement............................................... 21
Prepared statement........................................... 23
Lauren K. Brand, President, National Association of Waterfront
Employers:
Oral statement............................................... 25
Prepared statement........................................... 27
Eric P. Ebeling, President and Chief Executive Officer, American
Roll-On Roll-Off Carrier Group, testifying on behalf of USA
Maritime:
Oral statement............................................... 31
Prepared statement........................................... 33
SUBMISSIONS FOR THE RECORD
Letter of May 28, 2020, from Marine Engineers' Beneficial
Association; American Maritime Officers; Marine Firemen,
Oilers, Watertenders and Wipers Association; Sailor's Union of
the Pacific; International Organization of Masters, Mates &
Pilots; and Seafarers International Union; Submitted for the
Record by Hon. Sean Patrick Maloney............................ 5
Letter of May 4, 2020, from Hon. Kurt Schrader of Oregon, Hon.
Alan S. Lowenthal of California, and Hon. Randy K. Weber, Sr.,
of Texas, et al., Submitted for the Record by Hon. Alan S.
Lowenthal...................................................... 56
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
May 28, 2020
SUMMARY OF SUBJECT MATTER
TO: Members, Subcommittee on Coast Guard and Maritime
Transportation
FROM: Staff, Subcommittee on Coast Guard and Maritime
Transportation
RE: Hearing on ``The Status of the U.S. Maritime
Supply Chain During the COVID-19 Pandemic''
_______________________________________________________________________
PURPOSE
The Subcommittee on Coast Guard and Maritime Transportation
will hold a hearing on Friday, May 29, 2020, at 1:00 p.m. EDT
to examine the state of the U.S. Maritime Supply Chain during
the COVID-19 Pandemic. The hearing will take place remotely for
members and witnesses via the Cisco WebEx virtual platform. The
Subcommittee will hear testimony from the American Association
of Port Authorities, American Maritime Partnership, the
American Waterways Operators, the National Association of
Waterfront Employers, and USA Maritime.
BACKGROUND
U.S. MARITIME INDUSTRY
U.S. MERCHANT MARINE AND FLEET
The U.S. Merchant Marine and 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 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 (46 U.S.C.
Subtitle V). 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,'' moving 115 million passengers and nearly
$300 billion worth of goods between ports in the United States
on an annual basis.\4\ 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.\5\
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\3\ MARAD, https://www.maritime.dot.gov/data-reports/data-
statistics/data-statistics
\4\ National Strategy for the Marine Transportation System:
Channeling the Maritime Advantage 2017-2022 (Oct. 2017), http://
www.cmts.gov/downloads/
National_Strategy_for_the_Marine_Transportation_System_October_2017.pdf;
Economic Contribution of the US Tugboat, Towboat, and Barge Industry
(June 22, 2017), https://www.marad.dot.gov/wp-content/uploads/pdf/Econ-
Impact-of-US-Tugboat-Towboat-and-Barge-Industry-lh-6-22-17.pdf.
\5\ The U.S. Waterway System Transportation Facts & Information,
https://usace.contentdm.oclc.org/digital/collection/p16021coll2/id/
1429/
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The U.S. Government-owned fleet consists of 15 vessels
operated by the Military Sealift Command and 46 vessels in the
Maritime Administration's (MARAD) Ready Reserve Force.
Together, these vessels provide the initial surge of military
capability while the commercial fleet is responsible for the
ongoing sustainment.
Of the 41,000 U.S. flagged vessels, approximately 87 are
operating in international commerce moving goods between U.S.
and foreign ports.\6\ 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.\7\ Over the last 35 years, the
number of U.S. flagged vessels sailing in the international
trade dropped from 850 to 87 vessels.\8\ 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.\9\ Since the DoD
relies on civilian mariners to crew the Government-owned fleet
through the Maritime Security Program (MSP) and the Voluntary
Intermodal Sealift Agreement (VISA), maintaining a pool of
highly trained mariners is imperative.
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\6\ U.S. Dep. of Transp. Maritime Administration United States Flag
Privately-Owned Merchant Fleet Report (March 2020).
\7\ MARAD Calculation using CBP, Census, and commercial data
sources.
\8\ U.S. Dep. Of Transp., ``Number and Size of the U.S. Flag
Merchant Fleet and Its Share of the World Fleet,'' U.S. Bureau of
Transportation Statistics, available at https://www.bts.gov/content/
number-and-size-us-flag-merchant-fleet-and-its-share-world-fleet,
accessed May 22, 2020.
\9\ 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.\10\ 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 2022, to provide military sealift for
the United States Transportation Command within the DoD.\11\
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\10\ MARAD, https://maritime.dot.gov/national-security/strategic-
sealift/maritime-security-program-msp
\11\ National Defense Authorization Act for Fiscal Year 2020.
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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.\12\
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.\13\ 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 passes.\14\ Ports are responsible for $4.6
trillion in economic activity--roughly 26 percent of the U.S.
economy.\15\ 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.\16\
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\12\ Global Trade Magazine, 2020 U.S. Ports Summary (last accessed
May 26, 2020) available at https://www.globaltrademag.com/us-ports/.
\13\ Id.
\14\ ASCE, 2019 Infrastructure Report Card, Ports (Jan. 2017)
available at https://www.infrastructurereportcard.org/wp-content/
uploads/2017/01/Ports-Final.pdf.
\15\ Id.
\16\ 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, 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.\17\ 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).\18\ 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.\19\
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\17\ Global Trade Magazine, https://www.globaltrademag.com/us-
ports/
\18\ MARAD, Maritime Transportation System Summary (2020) available
at https://www.maritime.dot.gov/outreach/maritime-transportation-
system-mts/maritime-transportation-system-mts.
\19\ Fed. Maritime Com. Marine Terminal Operators (2020) 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 are projected
to double between 2015 and 2045.\20\ 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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\20\ DOT Bureau of Transp. Statistics, Freight Facts and Figures
2017, Table 2-1.
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As required by 46 U.S.C. Sec. 50302, MARAD established a
Port Infrastructure Development Program to better support the
development of port facilities. The FY 2020 Consolidated
Appropriations Act, P.L. 116-93, provided $225 million for the
Port Infrastructure Development Program, with $200 million
reserved for grants to coastal seaports and Great Lakes ports.
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.\21\ In
addition, there are more than 200 shipyards engaged in ship
repairs or capable of building ships, but not actively engaged
in shipbuilding.\22\ 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.\23\
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\21\ 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).
\22\ Id.
\23\ MARAD, 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 under the Jones
Act, 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.\24\
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\24\ 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 new virus strain that causes mild
to fatal respiratory illness to those persons it infects. 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 mid-May 2020, COVID-19 had spread to more than 200
countries with almost 5 million reported cases and more than
300,000 deaths.\25\ In the United States, data released by the
Johns Hopkins Coronavirus Research Center on May 21, 2020,
totaled 1,562,714 reported cases and 93,863 deaths attributed
to COVID-19.\26\
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\25\ World Health Org., Coronavirus Disease Dashboard (last
accessed May 26, 2020) available at https://covid19.who.int/.
\26\ Johns Hopkins Univ., COVID-19 Dashboard (last accessed May 26,
2020) available at https://coronavirus.jhu.edu/map.html.
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According to CDC data and statistics, COVID-19 is the worst
pandemic since 2009 when the H1N1 (swine flu) pandemic broke
out and hit more than 214 countries while taking over 284,000
lives across the globe. Several nations have closed their
borders or instituted travel restrictions to prevent community
spread of COVID-19. Many cities, states, and internationally
entire countries remain on lockdown or are operating under
stay-at-home orders, while other affected countries such as New
Zealand, Australia, China and Italy have started to gradually
re-open commerce and modified operations and activities.
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.\27\ 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.\28\ According to recent reports, U.S. ports are
projecting a 20 to 30 percent drop in container volumes in the
first half of 2020 caused by general shutdowns across many key
markets in nations affected by the COVID-19 pandemic.\29\ Even
under the most optimistic projections, recovery isn't expected
until the second half of the year and into 2021 assuming there
is no second wave of the virus.\30\ International markets are
experiencing similar declines. For example, Norway's global car
and roll-on, roll-off (Ro-Ro) carrier Wallenius Wilhelmsen saw
more than a USD $300 million decline in the first quarter.\31\
Reduction in ocean volumes are expected to be in the 50 percent
range for second quarter 2020 compared to second quarter 2019,
the carrier estimates.\32\ The setback has caused the company
to take several mitigation measures including temporarily
dismissing 2,500 employees in the U.S. and Mexico, slimming its
active fleet by laying up vessels, and sending as many as four
vessels for recycling.\33\
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\27\ OECD, COVID-19 and International Trade: Issues and Actions
(2020).
\28\ 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.
\29\ Wall Street Journal, U.S. Ports Likely to See Slump in Cargo
Volume from Coronavirus (Mar. 3, 2020).
\30\ The LoadStar, https://theloadstar.com/no-bounce-back-in-
demand-for-container-shipping-this-year/
\31\ JOC, Wallenius Wilhelmsen Shrinks Fleet (March 23, 2020)
available at https://www.joc.com/breakbulk/breakbulk-carriers/
wallenius-wilhelmsen-shrinks-fleet-coronavirus-demand-
dip_20200323.html.
\32\ Id.
\33\ Id.
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Given the market lull, more than 250 scheduled liner
sailings are expected to be withdrawn in the 2nd quarter 2020,
as carriers react rapidly to fading demand.\34\ Blank sailings,
where a carrier cancels a particular sailing, have increased
rapidly in 2020 as a result of the COVID-19 pandemic, with some
carriers choosing to focus on the trans-shipment segment of
their business, which is experiencing a seasonal uptick in
volume in the Asia-North America trade.
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\34\ Lloyd's Loading List, Forwarders may see 20%-30% volume drop
in second quarter (April 20, 2020) available at https://
www.lloydsloadinglist.com/freight-directory/news/Forwarders-may-see-20-
30-volume-drop-in-second-quarter/76394.htm#.Xs7mBUBFw2y
Figure 1_JOC, Trans-Pac blank sailings a harbinger of soft summer
imports (May 2020) available at https://www.joc.com/maritime-news/
trade-lanes/trans-pacific/trans-pac-blank-sailings-harbinger-soft-
summer-imports_20200514.html
U.S. INDUSTRY REQUESTS FOR ASSISTANCE
Ports and MTOs are finding creative ways to keep workers
safe, considering the ability to obtain Personal Protective
Equipment (PPE) is dependent upon a well-functioning global
supply chain of critical medical supplies. U.S. ports, MTOs,
and stevedores are seeking federal help to shoulder additional
costs tied to COVID-19 and to weather the bigger impact from
the loss of containerized, breakbulk, bulk, and Ro-Ro cargoes,
as well as losses from the cruise industry which is completely
shut down in the U.S. through July.
The National Association of Waterfront Employers (NAWE) on
behalf of its MTO members requested a one-time grant program of
$400 million to go toward cleaning supplies and PPE, including
plexiglass shields between truck gate operators and drayage
drivers.\35\ AAPA asked Congress to consider a $1.5 billion
grant program for ports, allowing them to maintain their
workforces and weather financial shocks that could reportedly
trigger the direct loss of up to 130,000 jobs.\36\
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\35\ Letter from NAWE to House Committee on Transportation and
Infrastructure Subcommittee on Coast Guard and Maritime Transportation,
May 6, 2020, Assistance for Marine Terminal Operators, Operating Ports
and Related Companies.
\36\ Letter from AAPA to House Committee on Transportation and
Infrastructure Subcommittee on Coast Guard and Maritime Transportation,
April 16, 2020, COVID-19 Relief Package.
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WITNESS LIST
LMs. Lauren Brand, President, National Association
of Waterfront Employers
LMs. Jennifer Carpenter, President and Chief
Executive Officer, The American Waterways Operators
LMr. Christopher J. Connor, President and Chief
Executive Officer, The American Association of Port Authorities
LMr. Eric Ebeling, President and Chief Executive
Officer, American Roll-On Roll-Off Carrier, on behalf of USA
Maritime
LMr. Michael Roberts, President, American Maritime
Partnership
THE STATUS OF THE U.S. MARITIME SUPPLY CHAIN DURING THE COVID-19
PANDEMIC
----------
FRIDAY, MAY 29, 2020
House of Representatives,
Subcommittee on Coast Guard and Maritime
Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 1 p.m., via
Webex, Hon. Sean Patrick Maloney (Chairman of the subcommittee)
presiding.
Mr. Maloney. The committee will come to order. Good
afternoon, everyone.
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 further 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.
As this is a remote hearing, I would like to remind Members
of some key regulations from the House Committee on Rules to
ensure this hearing goes smoothly. I understand this is new to
many of us and so I ask your indulgence.
Before I do that, I would also like to just acknowledge
that we are conducting this hearing as leaders in our
communities at a time when our country is going through very
difficult, very difficult circumstances. We have lost 100,000
of our fellow citizens to a terrible pandemic and we are
watching violence erupt in a major American city.
And so I ask that we all take a moment to pray for our
country and for the people of Minnesota, and with that spirit
of prayerfulness and justice, that we conduct ourselves in a
way that lends credit to the House of Representatives. And I
know the ranking member joins me in those concerns.
So bear with me, everyone. Let's just go through some of
the new procedures and facets of this remote hearing, although
in most ways it will be very familiar and resemble the hearings
that we do all the time. So a few things from the House rules.
First, Members must be visible on screen for purposes of
identification when joining this hearing. Members must also
continue to use the video function of today's software
platform, that is Cisco WebEx, for the remainder of the time
they are attending the hearing; your video must be on, unless
experiencing connectivity issues, obviously, or other technical
problems.
If you are having such problems, please inform committee
staff as quickly as possible so you can receive assistance. A
chat function is available for the 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 at any time.
Members are also not to participate remotely in any other
proceedings that may be occurring simultaneously.
It is the responsibility of each Member seeking recognition
to unmute their microphone prior to speaking. To avoid any
inadvertent background noise, I request that all Members keep
their microphone muted when not seeking recognition to speak,
very similar to a committee hearing where you would not turn
your microphone on unless you were speaking.
So please, we all know the hazards of being unmuted when
you don't want to be. My advice is, make sure you are muted
right now. The default option, as I understand it, is that you
will all be unmuted. So mute yourselves until you wish to be
recognized. Should I hear any inadvertent background noise, I
will request you to do so, that is, mute your microphone.
Finally, despite being a remote hearing, I want to
emphasize that all standard rules of decorum apply. As the
chair of today's proceeding, I will make a good-faith effort to
provide every Member experiencing any connectivity issues an
opportunity to participate fully in the proceedings.
Members will have the standard 5 minutes to ask questions.
To insert a document into the record, please have your staff
email it to the committee's clerk, Mike Twinchek.
This hearing is also being livestreamed for the public to
view. Let me repeat that. It is being livestreamed for the
public to view. I know many of us have participated in informal
Zoom chats over the last few weeks. This is a public livestream
of the committee's proceeding.
Well, good morning, and welcome to the Transportation and
Infrastructure Committee's first ever video conference hearing
to examine the state of the U.S. maritime supply chain amid the
COVID-19 pandemic.
It is unfortunate that this pandemic prevents us from
conducting this hearing in person, but the Subcommittee on
Coast Guard and Maritime Transportation has been around in one
way or another throughout our country's history and I am
confident in the subcommittee's ability to address the unique
issues facing the maritime transportation system as well as the
U.S. Coast Guard.
As we all know and adjust to this new normal, I look
forward to working with Ranking Member Gibbs and other members
of the subcommittee to ensure this body rises to the challenge
that our country now faces. And I would like to thank the
ranking member, in particular, for his cooperation in our
informal communications up to now. It is not the first time we
have been in touch or working on the issues of concern to this
committee, even though this is our first public livestreamed
hearing. So I want to thank him for his generosity and his
accommodation at every turn.
One cannot overstate the importance of our Nation's
maritime industry. In a typical year, over $4.6 trillion worth
of commerce flows through a maritime transportation system that
is rapidly becoming more complex and interconnected.
Unprecedented safety measures and a recent decrease in cargo,
some of which began before the onset of the pandemic, will
challenge the industry for months and years to come.
My hope is that this hearing will help the committee better
understand the difficulties facing the maritime industry and
identify areas of support that may be needed to ensure the
seamless movement of cargo and protect the associated maritime
jobs.
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. Longstanding
durable maritime statutes, such as the Jones Act, cargo
preference, and the Maritime Loan Guarantee Program, have been
supplemented by more recent programs, such as the Maritime
Security Program, Small Shipyard Grant Program, and the Port
Infrastructure Development Program. But these programs may not
be enough to enable the industry to weather the current
pandemic and the associated economic downturn.
Unless you live near a port, the maritime industry
typically goes unnoticed, even though 90 percent of our goods
are at some point carried by water. While the industry has
managed to maintain an acceptable level of service by adapting
and instituting comprehensive safety measures, declining cargo
volumes threaten the viability of vessel owners and operators,
ports, shipyards, and the workers employed by those industries
who are vital to our economic and national security.
While our ports are projecting a 20- to 30-percent drop in
business, some shipping trades are experiencing a 50-percent
drop in cargo for the second quarter of 2020.
It is unclear what the U.S. maritime transportation system
will face in the coming months and years. What is clear is the
need to maintain capacity across all maritime sectors. What may
seem expensive now pales in comparison to the investment that
would be needed to rebuild those industries from scratch.
For instance, the Maritime Security Program, which supports
60 vessels and employs thousands of mariners, ensures that the
Department of Defense can project force internationally. While
the program currently costs $300 million per year, U.S.
Transportation Command has estimated that the cost to
organically replicate the program's capacity would exceed $65
billion.
While I recognize that the Maritime Administration has
recently released their long-awaited maritime strategy, the
lack of a comprehensive plan with concrete goals, action items,
and milestones remains a major hurdle for the maritime
industry. Without a whole-of-Government approach that addresses
the entire industry, our maritime supply chain is at risk. The
pandemic only amplifies that risk.
While I do not anticipate a positive message, I look
forward to hearing from our witnesses and thank them for their
participation.
[Mr. Maloney's prepared statement follows:]
Prepared Statement of Hon. Sean Patrick Maloney, a Representative in
Congress from the State of New York, and Chairman, Subcommittee on
Coast Guard and Maritime Transportation
Good morning, and welcome to the Transportation and Infrastructure
Committee's first ever videoconference hearing to examine the state of
the U.S. maritime supply chain amid the COVID-19 pandemic.
It is unfortunate that this pandemic prevents us from conducting
this hearing in person, but the Subcommittee on Coast Guard and
Maritime Transportation has been around in one form or another
throughout our country's history, and I am confident in the
Subcommittee's ability to address the unique issues facing the maritime
transportation system as well as the U.S. Coast Guard. As we all adjust
to the new normal, I look forward to working with Ranking Member Gibbs
and the other Members of the Subcommittee to ensure this body rises to
the challenges our country now faces.
One cannot overstate the importance of our nation's maritime
industry. In a typical year, over $4.6 trillion worth of commerce flows
through a maritime transportation system that is rapidly becoming more
complex and interconnected. Unprecedented safety measures and a recent
decrease in cargo, some of which began before the onset of the
pandemic, will challenge the industry for months and years to come.
My hope is that this hearing will help the Committee better
understand the difficulties facing the maritime industry and identify
areas of support that may be needed to ensure the seamless movement of
cargo and protect the associated maritime jobs.
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. Longstanding durable maritime
statutes such as the Jones Act, Cargo Preference, and the Maritime Loan
Guarantee Program, have been supplemented by more recent programs such
as the Maritime Security Program, Small Shipyard Grant Program and the
Port Infrastructure Development Program. But those programs may not be
enough to enable the industry to weather the current pandemic and the
associated economic downturn.
Unless you live near a port, the maritime industry typically goes
unnoticed even though 90 percent of goods are, at some point, carried
by water. While the industry has managed to maintain an acceptable
level of service by adapting and instituting comprehensive safety
measures, declining cargo volumes threaten the viability of vessel
owners and operators, ports, shipyards, and the workers employed by
those industries who are vital to our economic and national security.
While our ports are projecting a 20-30 percent drop in business, some
shipping trades are expecting a 50 percent drop in cargo for the second
quarter of 2020.
It is unclear what the U.S. maritime transportation system will
face in the coming months and years. What is clear is the need to
maintain capacity across all maritime sectors. What may seem expensive
now, pales in comparison to the investment that would be needed to
rebuild these industries from scratch. For instance, the Maritime
Security Program, which supports 60 vessels and employs thousands of
mariners, ensures that the Department of Defense can project force
internationally. While the program currently costs $300 million per
year, the U.S. Transportation Command has estimated that the cost to
organically replicate the program's capacity would exceed $65 billion.
While I recognize that the Maritime Administration has recently
released their long-awaited Maritime Strategy, the lack of a
comprehensive plan with concrete goals, action items, and milestones
remains a major hurdle for the maritime industry. Without a whole-of-
government approach that addresses the entire industry, our maritime
supply chain is at risk. The pandemic only amplifies that risk.
Although I do not anticipate a positive message, I look forward to
hearing from our witnesses.
Mr. Maloney. And I would ask unanimous consent to insert a
joint letter signed by six U.S. maritime labor unions into the
hearing record. Without objection, so ordered.
[The information follows:]
Letter of May 28, 2020, from Marine Engineers' Beneficial Association;
American Maritime Officers; Marine Firemen, Oilers, Watertenders and
Wipers Association; Sailor's Union of the Pacific; International
Organization of Masters, Mates & Pilots; and Seafarers International
Union; Submitted for the Record by Hon. Sean Patrick Maloney
May 28, 2020.
Hon. Mike Pompeo,
U.S. Secretary of State,
2201 C St., NW, Washington, DC.
Hon. Mark T. Esper,
U.S. Secretary of Defense,
100 S Washington Blvd, Arlington, VA.
Dear Secretary Pompeo and Secretary Esper:
We are writing to request your immediate assistance on an urgent
matter. Scores of U.S. mariners are presently trapped aboard cargo
ships, unable to take leave or return home due to extreme COVID-19
lockdown measures imposed by foreign governments. This humanitarian
crisis, if not resolved as soon as possible, may threaten the essential
supply chain for some 200,000 active U.S. military personnel now
serving overseas.
The cargo carried on these U.S. flagged ships supports our troops,
our allies and the global economy.
Ship's captains, officers and crew members who sail under the
American flag and perform these essential functions for our country
have not been able to set foot on dry land in months. Their workplaces
have become floating prisons. Crewmembers are in danger of losing
access to life-sustaining medicines. In many cases, they cannot contact
their loved ones at home in the United States as some of these vessels
lack Internet access.
It is well documented that isolation and excessive time serving
aboard ship can create increased fatigue and psychological stress,
raising the risk of marine accidents. Thousands of mariners across the
globe who work on foreign-flagged vessels are in the same predicament.
U.S. mariners who are part of the U.S. Maritime Security Program
typically serve a four-month assignment on ship and then rotate home by
air to the United States for time off while awaiting their next
assignment. A fresh crew flies in to relieve them. Right now, foreign
governments are refusing to allow U.S. mariners to leave their ships,
to enter overseas airports, or to use hotels or any other form of
accommodation or transport which would allow them to return home.
These extreme lockdown conditions, imposed due to the COVID-19
pandemic, are not related to any meaningful health risks. Thanks to
rigorous and comprehensive safety measures jointly implemented by
employers and those aboard ship, in conjunction with our union, there
have been no reported cases--none--of the deadly virus on U.S. Maritime
Security Program vessels. These are not cruise ships suffering massive
outbreaks; these are cargo ships staffed by mariners who have kept out
an infectious disease by scrupulously following all required safety
measures.
These American men and women need to come home immediately. The
longer they are stuck at sea without relief, the greater the risk that
fatigue and stress will lead to accidents interrupting the delivery of
vital food, medicine, military supplies and other cargo to our troops
serving overseas.
It is inconceivable that the United States--the wealthiest and most
powerful nation on earth, with military bases, planes and facilities
all over the globe--cannot relieve its own mariners who are stranded at
sea. To date, however, our efforts to address this problem with members
of your respective departments have yielded no results. That's why we
are bringing this issue to your attention.
COVID-19 has been a sudden and intense storm. We know that you and
your staffs have a lot on your desks to contend with during this time
of peril. Please make this a priority. Help us bring these stranded
U.S. mariners home to safe harbor.
Sincerely,
Marshall Ainley,
President,
Marine Engineers' Beneficial Association.
Paul Doell,
President,
American Maritime Officers.
Anthony Poplawski,
President/Secretary-Treasurer,
Marine Firemen, Oilers, Watertenders and Wipers Association.
Dave Connolly,
President,
Sailor's Union of the Pacific.
Don Marcus,
President,
International Organization of Masters, Mates & Pilots.
Michael Sacco,
President,
Seafarers International Union.
Mr. Maloney. I would now like to call on the ranking member
of the subcommittee, my friend Mr. Gibbs, for any opening
remarks. And a reminder to unmute yourself, Bob.
Mr. Gibbs. Thanks. That was helpful. Thank you, Chairman
Maloney.
And also, I want to concur with your initial comments about
operating during this COVID-19 virus, unprecedented
circumstances. And hopefully, we are going to get out of this
sooner than later. And also the tragedy that happened in
Minnesota. Hopefully that gets resolved. And I certainly don't
condone any behavior that is going on out there with the riots
and all that. So hopefully our friends, our former colleague,
the Governor out there now, will be able to handle that.
Today we are looking at impacts of COVID-19 on the maritime
supply chain; however, the coronavirus is not the only large-
scale issue causing changes in the supply chain. Industry
consolidation, rapid technological change, and changing trade
relations with China have also had significant impacts. I hope
we learn today about the relevant importance of all those
issues.
After 9/11, the United States and much of our world updated
their port security infrastructure and the framework under
which port security infrastructure is regulated. Those updates
and initiatives were focused on responses to violent physical
terrorist acts.
Since that time, first cyber threats and now threats from
the coronavirus have posed new challenges to ports and to the
supply chain, which ports and vessels in the international and
domestic trade vessels are a part of. Like recent cyber
attacks, the coronavirus response will pressure test the post-
9/11 port security and determine whether post-9/11 upgrades
were sufficient to respond to a wide array of pressures ports
and vessel operators now face or if the upgrades were too
specific a response to potential terrorist threats.
In addition to those external threats, there have been
significant economic changes post-2008. Those changes are the
result of the consolidation of container shipping into
increasingly larger vessels owned and operated by ever fewer
and more interconnected carriers.
In addition, the increasing technological sophistication of
logistics operations has also led to tighter, more consolidated
schedules and, again, more interconnections within the
industry.
I look forward to hearing from our witnesses today about
the challenges they face in keeping up with the rapid changes
in the elements of the supply chain. Of course, we are
interested in which of those changes are new and related to the
coronavirus and which are the culmination of long-term trends
and industry changes.
I appreciate Chairman Maloney calling this hearing today. I
look forward to seeing what we have learned and what to learn.
And I concur with you, Chairman, that the news might not be
too good, but hopefully the news is going to show we are moving
forward in the right way and things are improving.
Finally, Chairman, I want to remind Members it is our
responsibility to mute and unmute ourselves as we seek
recognition and ask questions.
With that, I will yield back and mute myself.
[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
Today we are looking at the impacts of COVID-19 on the maritime
supply chain. However, the coronavirus is not the only large-scale
issue causing changes in the supply chain. Industry consolidation,
rapid technological change, and changing trade relations with China
also have significant impacts. I hope we learn about the relative
importance of all these issues today.
After 9/11, the United States and much of the world updated their
port security infrastructure and the framework under which port
security infrastructure is regulated. Those updates and initiatives
were focused on responses to violent physical terrorist acts. Since
that time, first cyber threats and now threats from the coronavirus
have posed new challenges to ports and the supply chain, which ports
and vessels in the international and domestic trades are a part of.
Like recent cyber incidents, the coronavirus response will pressure
test the post-9/11 port security system and determine whether post-9/11
upgrades were sufficient to respond to the wide array of pressures
ports and vessel operators now face or if those upgrades were too
specific a response to potential terrorist threats.
In addition to these external threats, there have been significant
economic changes post-2008. These changes are the result of the
consolidation of container shipping into increasingly larger vessels
owned and operated by ever fewer and more interconnected carriers.
In addition, the increasing technological sophistication of
logistics operations has also led to tighter, more coordinated
schedules, and, again, more interconnections within the industry.
I look forward to hearing from our witnesses today about the
challenges they face in keeping up with rapid changes in the elements
of the supply chain. Of course, we are interested in which of those
changes are new and related to coronavirus, and which are the
culmination of long-term trends and industry changes.
I appreciate Chair Maloney calling this hearing today and look
forward to seeing what we learn.
Mr. Maloney. Well, I thank the gentleman.
I would now like to recognize the chairman of the
Transportation and Infrastructure Committee, Mr. Peter DeFazio,
whose leadership during this crisis has been nothing short of
extraordinary, and I thank him for all he has done to respond
to this unprecedented situation.
Mr. Chairman.
Mr. DeFazio. Thanks, Sean Patrick. Thanks to you and Bob
Gibbs, ranking member, for being willing to conduct the first
ever virtual hearing for the Transportation and Infrastructure
Committee, a committee with more than 200 years of history.
It is a fairly extraordinary day, but these are
extraordinary times, and in order to get our work done, we have
to take extraordinary measures. And this is the first big step
toward fully actuating the committee so we can move forward not
only with hearings and oversight, but we can also move forward
in the very near future to marking up significant legislation
that the country needs.
We had a briefing, I think it was 2 weeks now, from the
MARAD Administrator, and he painted a pretty grim picture of
the conditions in the maritime industry, the loss of revenues
and movement of freight and supplies. It is everywhere. It is
not just in our major commercial ports. It is in many of our
smaller ports. And the crisis runs bicoastal. It starts in
small, mid-emerging ports like Coos Bay in my district, to the
Port of Miami, Seattle, obviously down to L.A.-Long Beach. I
see Alan there.
And we have to take action. As you pointed out, Mr.
Chairman, this is a critical part of America's supply chain. It
is the most important component. And, unfortunately, given the
definitions in the previous relief bills, we haven't done a lot
for ports.
They enjoy an odd sort of status, and they don't quite fit
into any of the programs that have been adopted so far for the
sorts of help they need. We need everything from personal
protective equipment [PPE] for port workers, and we have heard
a good deal about that, to assistance to deal with the marine
terminal operators.
Business is way down. They can't pay their rent. The ports
can't afford to not get the rent. I mean, it just hurts up and
down the whole chain: harbor pilots, assist tugs, drayage
operators, fuel bunkers.
We can't have them all go out of business, can't
reconstitute this easily or quickly. So we have to deal with
the totality of this industry, not a particular segment.
We are looking to develop legislation to provide the
Maritime Administration with specific emergency authority to
allow it to provide financial relief and assistance to each
link in the maritime supply chain that serves both foreign and
coastwise trades of the U.S.
And as you pointed out earlier, Mr. Chairman, at this
hearing we will be making the case of the need for those funds
so we can carry it forward to our appropriators and hopefully
maintain the integrity of the system which we are going to need
now more than ever.
With that, I yield back the balance of my time.
[Mr. DeFazio's prepared statement follows:]
Prepared Statement of Hon. Peter A. DeFazio, a Representative in
Congress from the State of Oregon, and Chairman, Committee on
Transportation and Infrastructure
Thank you, Chairman Maloney, I commend you for quickly organizing
this afternoon's hearing to examine the impacts on the U.S. maritime
supply chain caused by the COVID-19 pandemic.
I also want to extend my thanks to our witnesses for making
themselves available, not only on short notice, but also under this new
virtual format. I look forward to your participation this afternoon.
It is vitally important that this committee understand how the
pandemic has affected the reliability and efficiency of our maritime
industry.
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
future response and recovery actions.
And make no mistake about it; our Nation will recover from this
pandemic. The fundamental question is: how quickly?
No one can know for sure what the answer is to that question.
One thing I do know for sure, however, is that 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, and not facilitate, our efforts to re-float our economy as
quickly as possible.
I realize that the Congress has already committed trillions in
spending to address the fall-out from the pandemic. Some members may
feel that additional spending is unwarranted.
But at this point, it would be ``penny wise and pound foolish'' to
believe that we should not take aggressive action to shore up the
lifeline to our national economy--the maritime supply chain.
And that is why this afternoon's hearing is important. We need to
understand the needs to be able to best tailor the assistance. But in
doing so, we must first think holistically and recognize the
interconnectedness of the entire enterprise itself.
For it will do little good if we address the financial issues
affecting our marine terminal operators, but we 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 ports get through the steep drop in trade
volumes, but it will come to naught if all of the services that make
our ports function, such as harbor pilots, assist tugs, drayage
operators, fuel bunkers and others are allowed to go out of business.
We must treat the totality of the industry, not just one segment.
And we need to call upon the various segments of the industry to work
together for truly, you will all sink or swim together.
That is why I am looking to develop legislation to finally provide
the Maritime Administration with a specific emergency authority to
allow it to provide financial relief and assistance to each link in the
maritime supply chain that serves both the foreign and coastwise trades
of the United States.
Too much of our economic recovery and future prosperity rides on
what we do over the next couple of months to ensure that when our
economy re-starts, that we have a maritime industry and supply chain
able to reliably and efficiently move that commerce. I urge members to
join me in that effort.
Mr. Maloney. I thank the gentleman.
At this time I would like to recognize the ranking member,
Mr. Graves.
I don't see the gentleman. He may not be with us at the
moment.
Are you with us, Mr. Graves?
Well, we can certainly come back to him if he is having
connectivity issues.
So let's move forward with our witnesses for today's panel.
I thank them all for being here and welcome them to this remote
hearing.
Today we are joined by Mr. Christopher J. Connor, president
and CEO of the American Association of Port Authorities.
Mr. Michael Roberts, president of the American Maritime
Partnership.
Ms. Jennifer Carpenter, president and CEO, The American
Waterways Operators.
Ms. Lauren Brand, president, National Association of
Waterfront Employers.
And Mr. Eric Ebeling, president and CEO, American Roll-On
Roll-Off Carrier Group, on behalf of USA Maritime.
Thank you all for being here today. We look forward to your
testimony.
Without objection, our witnesses' full statements will be
included in the record. Since those written statements are part
of the record, the subcommittee requests that you limit your
oral testimony to 5 minutes.
With that, Mr. Connor, if you would please unmute yourself
and you may proceed.
TESTIMONY OF CHRISTOPHER J. CONNOR, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, AMERICAN ASSOCIATION OF PORT AUTHORITIES;
MICHAEL G. ROBERTS, SENIOR VICE PRESIDENT, CROWLEY MARITIME,
TESTIFYING ON BEHALF OF AMERICAN MARITIME PARTNERSHIP; JENNIFER
A. CARPENTER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, THE
AMERICAN WATERWAYS OPERATORS; LAUREN K. BRAND, PRESIDENT,
NATIONAL ASSOCIATION OF WATERFRONT EMPLOYERS; AND ERIC P.
EBELING, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMERICAN ROLL-
ON ROLL-OFF CARRIER GROUP, TESTIFYING ON BEHALF OF USA MARITIME
Mr. Connor. Well, thank you, Chairman Maloney and Ranking
Member Gibbs, for holding this important hearing on the impact
of the COVID-19 pandemic on the U.S. maritime supply chain.
My name is Chris Connor, president and CEO of the American
Association of Port Authorities. AAPA is the unified voice of
the seaport industry in the Americas, representing 78 public
port authorities in the United States. My testimony today is
given on behalf of State and local public agencies located
along the Atlantic, Pacific, and gulf coasts, the Great Lakes,
Alaska, Hawaii, Puerto Rico, Guam, and the U.S. Virgin Islands.
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 underscored by
the designation of 17 of our Nation's ports as ``strategic
seaports'' by DoD.
According to Martin Associates, an internationally
recognized economic and transportation consulting firm, 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 or 26 percent of GDP.
Over 650,000 Americans are directly employed in jobs generated
through the movement of marine cargo through vessel activity.
Let me now tell you what seaports in your respective
districts are currently experiencing.
Containerized cargo declined by 18 percent in the month of
March year on year. Furthermore, ports have seen a significant
increase in blank sailings or canceled vessel calls, resulting
in revenue losses for port authorities.
While the data are still incoming for the months of April
and May, initial indications show declines of 20 to 25 percent
year on year.
Following the shutdown of auto production facilities in the
Americas, Europe, and Asia, we have seen major reduction in
RORO cargoes. One major west coast auto port has experienced a
90-percent--9-0-percent--reduction in RORO cargo, with only 1
or 2 ship calls expected this month compared to a typical month
of 16.
At two of the largest bulk cargo ports in the United
States, movements have declined 15 to 25 percent year on year.
Bulk cargo movements, which includes agricultural products,
energy commodities such as oil and coal, as well as chemicals,
are down 27 percent year on year at one large gulf port.
Tourism at our Nation's ports has completely evaporated.
This has resulted in massive P&L impacts at ports that are
heavily weighted in this sector. Indications are that certain
South Atlantic seaports' overall business is down between 50 to
80 percent as a result.
Small ports around the country have been especially hard
hit. At these ports there are often only one or two types of
cargo being handled. If demand drops, port operations can
nearly cease. There are over 800 of these emerging harbors,
processing less than 1 million tons of cargo per year, around
the U.S.
We are beginning to see furloughs and layoffs in the port
industry, and we are also beginning to see that some ports are
looking to forego planning for and investment in capital
improvement projects.
The implications of deferring or canceling investment or
other capital improvement programs will be felt long after this
pandemic and won't bode well for American efficiency and
logistics, nor its competitiveness in global markets.
For ports, as for other industries, the future remains
uncertain. At this stage of the pandemic, hope for a quick V-
shaped recovery has been replaced by the realization of a
longer battle ahead.
Many members of this subcommittee and a total of 85 Members
of the House voiced support for port relief in a recent letter
to House leadership. You said it best in the letter when you
wrote, ``It is critical that all of our Nation's ports receive
much needed assistance to keep supply chains moving and keep
both employees and customers safe.''
We agree, and AAPA urges that Congress include $1.5 billion
in economic relief to our Nation's public ports in the next
coronavirus relief bill. This request is not about recovering
lost revenue.
It is about ensuring that ports are able to make bond and
other debt instrument payments, keep pace with the accelerating
cost of protecting workers, and ultimately ensuring that
America's seaports and port workers maintain a state of
readiness for the eventual economic recovery.
Thank you again for inviting AAPA to testify today on this
important topic, and I look forward to answering any questions
you may have.
[Mr. Connor's prepared statement follows:]
Prepared Statement of Christopher J. Connor, President and Chief
Executive Officer, American Association of Port Authorities
Thank you Chairman Maloney and Ranking Member Gibbs for holding
this important hearing on the impact of the COVID-19 pandemic on the US
Maritime supply chain and for inviting the American Association of Port
Authorities to testify.
My name is Chris Connor, and I am the President and Chief Executive
Officer of the American Association of Port Authorities (AAPA). AAPA is
the unified voice of the seaport industry in the Americas, representing
78 public port authorities in the United States. My testimony today 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.
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, an internationally recognized
economic and transportation consulting firm, 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, and over 650,000 Americans are directly
employed in jobs generated through the movement of marine cargo and
through vessel activity.
Since the beginning of the COVID-19 pandemic, AAPA has remained in
regular contact with our members in order to monitor the impact of the
pandemic, communicate with them on the potential of federal relief and
recovery efforts, and to give our member ports the opportunity to share
best practices with one another as they manage this crisis. On this
latter point I'd 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
battlegrounds, as well as to consumers like you and me.
AAPA membership comprises ports large, medium, and small, and to
that end there is a saying in the Port industry that ``if you have seen
one port, you have seen one port.'' Accordingly, each of our members
has been impacted in a myriad of different ways by COVID-19. But one
thing is clear--all have been affected by this crisis.
In an effort to detail the operating challenges and unmet needs
facing America's seaports and our nation's maritime supply chain as a
result of the COVID-19 pandemic, I offer the following comments:
Containerized Cargo
We have seen containerized cargo decline by eighteen percent in the
month of March over the same period in 2019. These declines are not
limited to any particular geographic region, and container cargo
volumes have declined across each and every region represented by our
Association. Ports have seen a significant increase in blank sailings,
or cancelled vessel calls, which can result in significant revenue
losses.
While data is still incoming for the months of April and May,
initial indications show containerized cargo declines of twenty to
twenty five percent in those months over the prior year.
Roll On/Roll Off Cargo
As automobiles have worked their way through the global supply
chain following the shuttering of auto production facilities in the
Americas, Europe, and Asia, we have seen major reductions in roll-on/
roll-off cargos. One west coast port has experienced a ninety percent
reduction in ro/ro cargos, with only one or two ship calls expected
this month compared to a typical average of four ship calls per week.
While the big three auto manufacturers have recently brought
production back on-line, it remains uncertain what demand may look like
and how consumer decisions may impact this market segment.
Bulk Cargo
At two of the largest bulk cargo ports in the United States
movements have declined fifteen to twenty five percent over the same
period in 2019; bulk cargo movements, which include agricultural
products, energy commodities such as oil and coal as well as chemicals,
are down twenty seven percent compared to 2019 at one Gulf coast port.
Other regions, including ports in the Great Lakes, have indicated that
bulk cargo movements remain level compared to last year--though they
expect significant declines in the near future.
Tourism
Tourism at our nation's ports has completely evaporated. This has
resulted in massive P&L impacts at ports heavily invested in this
business--Indications are that certain South Atlantic Seaports overall
business is down between 50 percent-80 percent.
Small Ports
Small ports around the country have been especially hard hit. At
these ports there are often only one or two types of cargo being
handled and if demand drops port operations can nearly cease. There are
over 800 of these `emerging harbors', processing less than 1 million
tons of cargo per year, around the US.
We are beginning to see furloughs and layoffs in the maritime
industry and supply chain, and it is estimated by Martin Associates
that a 20 percent annualized reduction in cargo throughput at our
nation's ports could result in the direct loss of 130,000 jobs.
We are also beginning to see that some ports are looking to forego
planning for and investment in capital improvement projects, putting
the readiness, capacity, and capability of our nation's trade
infrastructure at risk.
For ports and the maritime industry as for other industry sectors
the future remains uncertain. However, projections from our members
indicate that the impact of current market conditions on business for
the month of June are likely to result in declines, year over year,
that are equal to equal or greater than those seen in previous months.
In a recent letter to House leadership 85 Members of Congress
voiced support for port relief. I thank those that signed that letter,
including Members of this Committee. In the letter, signers noted that
``it is critical that all of our nation's ports receive much needed
assistance to keep supply chains moving and keep both employees and
customers safe.''
We agree, and AAPA requests that Congress include $1.5 billion in
economic relief to our nation's public ports in any future coronavirus
response or recovery proposal. This request is not about recovering
lost revenue; but rather about ensuring that Ports are able to make
bond and other debt instrument payments, keep pace with the
accelerating costs of protecting workers and keeping the workplace
sanitized, and ultimately ensuring that Americas Sea Ports and port
workers maintain a state of readiness for the eventual economic
recovery.
Thank you again for inviting the American Association of Port
Authorities to testify today on this important topic, and I look
forward to answering any questions you may have, on the impacts this
crisis has had on ports, on what the future may hold, and on what
infrastructure investments Congress could make to position the industry
for success moving forward.
Mr. Maloney. I thank the gentleman.
Now proceed to Mr. Roberts.
You may proceed. Please unmute. And the floor is yours.
Mr. Roberts. Good afternoon, Chairman Maloney. Thank you
and Ranking Member Gibbs, Chairman DeFazio, members of the
subcommittee. I am honored to appear before you on behalf of
the American Maritime Partnership, representing almost all
segments of the domestic maritime industry and producing
650,000 jobs across the Nation.
My message is simple. I have seen firsthand how American
maritime has responded to this crisis, and I must tell you, I
am so very proud to be associated with this community.
Nobody knew how this was going to unfold and there is still
a lot we don't know. There are gaps in the rulebook from this
black swan event. But decisions have to be made, and these are
the times when character and culture take over, when we make
the best choices we can in good faith.
Our industry wouldn't say there is some risk in being
outside our home, so we will stay inside safe and COVID-free.
American maritime just wouldn't do that. We have to do that. We
choose to go outside our homes so that the grocery stores in
San Juan and Honolulu and Anchorage are stocked up, so that the
basic commodities--lumber, iron ore, grains, petroleum,
building blocks for almost everything--those commodities can
keep moving on our rivers and Great Lakes, so that our harbors
are kept clear, and so that we can keep building modern ships
to keep our supply chain working.
I am proud to be part of this community, and I am grateful
for the leadership that we have seen from our Government.
Admiral Buzby started industry calls in March and they have
been invaluable for sharing information, what is working, what
is not working, where we need help. I remember at the end of
the first call, Admiral Buzby saying these are the kinds of
times when leaders lead.
The leadership we have seen throughout the industry has
been extraordinary, from the top executives to the ship
captains to the line mariners, who lead by setting the right
example, by their behavior. We have seen other organizations
that have behaved differently. They throw up their hands and
say the Government hasn't told us what to do.
Maritime hasn't handled it that way. We have to figure it
out. And I will single out one specific team, among many, the
Ship Operators Cooperative Program, which put together a
thoughtful and detailed set of protocols for how to prevent
COVID infection from reaching vessel crews and how to deal with
it if it happens. Other groups have done similar work, and all
of it needs to be updated almost constantly because more
information keeps coming in.
So my key message is that the character and culture of the
American maritime industry is driving leaders at every level to
find solutions to keep people safe and keep supply chains
moving.
I want to emphasize a point made in my written testimony,
which is that a cargo ship should never be quarantined. A
mariner who is sick with COVID should be removed and given
treatment as safely and quickly as possible. The rest of the
crew should safely come off the vessel and go to quarantine.
The vessel should be thoroughly sanitized, a new crew brought
in, and then resume providing the essential services to the
communities they serve.
Leadership in times like this requires exercising judgment,
using a 360-view of everything impacted by a decision.
Quarantining a ship, sending it to anchor is less safe to the
local port community and everyone else involved than sending
the ship to a secure terminal where the best controls are in
place.
Finally, it is the 100-year anniversary of the Jones Act, a
perfect opportunity to celebrate the dedication of the men and
women of American maritime, those whose actions throughout this
crisis and many other crises over the years exemplify the
character that I have been talking about.
It is also disappointing that a few people have chosen to
use this crisis to attack American maritime because we are not
as cheap as the Chinese maritime industry. As this subcommittee
heard last October, the Chinese maritime industry serves
China's interests quite well, controlling ports at key
locations around the world using Government subsidies to
dominate shipbuilding and global shipping so that they can
dominate global trade.
And in this country, there are some who seem to think that
is OK. They will gladly sideline American mariners and destroy
this maritime industry that contributes so much to safety and
security so that they might get shipping services a little
cheaper.
It is unfortunate that they try to use this terrible crisis
and the 100-year anniversary of the Jones Act to pursue that
goal, and we appreciate this subcommittee's support in
rejecting those efforts.
With that, I want to thank you, again, Chairman Maloney,
Ranking Member Gibbs. Both of your leadership has been
exceptional. And we will welcome your questions.
Thank you.
[Mr. Roberts' prepared statement follows:]
Prepared Statement of Michael G. Roberts, Senior Vice President,
Crowley Maritime, testifying on behalf of 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 U.S. maritime supply chain 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.
Before addressing the impacts of the pandemic on the U.S. maritime
supply chain, I would be remiss if I failed to point out that today's
hearing comes in the midst of a series of important milestones for our
industry that highlight its vital strategic and commercial role in our
country's history. Last Friday was National Maritime Day, a day that
recognizes U.S. mariners and the importance of our strong maritime
heritage throughout our nation. Last Monday was Memorial Day, a day
particularly important to us because of the deep connection between
American maritime and national security. And finally, one week from
today is the 100th anniversary of the Jones Act. We are happy to mark
the centennial of the Jones Act with such overwhelming bipartisan
support from the Congress.
Nowhere is that support more clear than on the Coast Guard and
Maritime Transportation Subcommittee. As you know, the American
domestic maritime industry supports 650,000 jobs and provides an
economic impact of more than $150 billion annually. It provides
important national, economic and homeland security benefits throughout
our country. The national security and homeland security benefits have
been well-documented through writings and statements by countless
Members of Congress, the White House, U.S. Defense Department, U.S.
Transportation Command, U.S. Department of Transportation, U.S.
Maritime Administration, U.S. Coast Guard, and Customs and Border
Protection officials, as well as independent experts.
You may also know that the American domestic maritime industry
today is modern, innovative and leads the world in safety and
environmental stewardship. The world's first containerships powered by
clean natural gas now serve the domestic market between Florida and
Puerto Rico. America's tanker fleet is among the safest and most
environmentally responsible, combining data-driven safety management
systems with a relatively new fleet profile. These and other
innovations throughout the industry are deployed on ships operated by
well-trained American mariners who care about the safety and health of
America's maritime environment, and the citizens they serve.
In these challenging times in the face of a historic pandemic, our
nation's security can only benefit from an all-American industry like
ours.
II. Summary of Key Points
Today I would like to leave you with three main points:
First, despite the men and women of the domestic maritime industry
working tirelessly to deliver America's goods, there continues to be
opportunistic calls for Jones Act waivers during this time. No waivers
are required; there is ample capacity in the domestic fleet. Any waiver
would only outsource American jobs to foreign workers at a time of
record domestic unemployment while doing nothing to improve the already
efficient marine trade lanes we serve. Our primary request today is
that you continue to do what you have done consistently over time and
particularly throughout the pandemic--resist the efforts of
opportunists to use COVID-19 as an excuse to change the Jones Act. We
are deeply grateful for the broad, bipartisan support for the Jones Act
through this Congress.
Second, this subcommittee can be assured that the American domestic
maritime industry will continue to show up to work and deliver the
goods that make this nation strong and secure despite one of the most
challenging environments in a generation. We take our responsibility as
essential workers very seriously and understand our obligation to
ensure that America's critical supply chains remain moving.
Third, we very much appreciate the leadership and flexibility shown
thus far to ensure that the maritime industry can continue to do our
work, and hope that this subcommittee will encourage the adoption of
flexible guidelines for U.S. crew quarantine and other issues with the
relevant agencies.
III. COVID-19 Impacts on the Domestic Maritime Industry
The COVID-19 pandemic has challenged us as individuals, companies,
industries and as a nation. The entire domestic maritime industry has
been deemed ``essential'' by the Department of Homeland Security (DHS),
meaning that we continue operating throughout the pandemic. This has
produced extraordinary safety challenges as well as complex financial
implications. On the one hand, we have maintained a keen focus on
keeping as safe as possible the essential maritime workforce--our
mariners, dockworkers, drivers, warehouse workers, repairmen, and
others who could not do their work remotely, but have had to show up
for work for the past three months the same as they always have. We are
extremely grateful for the dedication of these men and women. On the
other hand are the customers--businesses, governments and consumers--
who have relied on the maritime industry to keep supplies moving, and
in some cases to survive. Simply shutting down operations to protect
our workforce has not been an option.
No playbook is available to direct how to operate safely in this
environment. Companies have had to improvise to develop special
operating protocols to protect employees based on the best information
available. These efforts to protect our workforce have been frustrated
by the scarcity of personal protective equipment (PPE) and other
materials. Our industry is also not immune from supply chain
disruptions. There are supply chain impacts in certain segments of the
industry, including difficulties with longer repair and maintenance
schedules and the potential for impacts to spare parts sourcing if the
pandemic continues.
It should be noted that regulatory authorities have faced
unprecedented challenges in providing guidance to the industry on how
best to operate safely. The challenges include limited pre-existing
guidance, shifting scientific advice, multiple stakeholders, scarce
resources, and the need to make real-time decisions affecting many
lives. U.S. government maritime authorities--the U.S. Coast Guard,
Maritime Administration, U.S. Transportation Command and others--are to
be commended for their leadership, and for reaching out to all aspects
of the maritime industry in working through 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.
The severity of the financial impacts of the COVID-19 pandemic on
the domestic maritime industry has yet to be determined. Two factors
contribute to the uncertainty. First is the skyrocketing cost of
operations resulting from implementing the protocols necessary to keep
our workforce safe. The magnitude of these incremental costs and the
availability of funds to help defray them has not been determined.
Second is the impact of COVID-19 and the economic shutdown on demand
for maritime services. While these impacts differ for different
segments of the industry, demand is almost universally much lower than
in normal times. The industry has made enormous investments in vessels,
terminals, equipment, and other assets to provide services to their
customers. Financing for these investments was based on economic models
that did not account for the black swan event we are now experiencing.
These services must nevertheless continue operating through this crisis
even though the revenues generated will not cover the costs of
providing them.
There is great uncertainty as to when the most serious economic
impacts will hit, how severe they will be and how long they will last.
The American maritime industry must prepare for the worst-case scenario
while working for better outcomes. This includes deferring capital and
other expenses wherever possible and taking other necessary measures.
Government programs designed to provide a financial backstop to mid-
sized companies facing severe economic damage should be available to
provide temporary support to the American maritime industry.
a. Scope of domestic maritime industry
Our American domestic maritime industry is engaged in transporting
goods through all sectors of the economy. U.S.-flag vessels carry
agricultural, coal, chemical, aggregate, petroleum, and other products
on the inland waterways of the United States. American vessels carry
essential goods in the non-contiguous trades of Alaska, Hawaii, and
Puerto Rico. U.S. tankers and tank vessels transport critical crude oil
and refined petroleum products along the West, Gulf, and East Coasts of
the nation. The American bulk fleet carries iron ore, and other
products, on the Great Lakes, including for America's major steel
manufacturers. American dredging companies ensure that U.S. harbors,
ports, and rivers are dredged and maintained.
Virtually every sector of the maritime industry has been negatively
impacted by the pandemic. AMP member companies have seen reduced cargo
volumes in the non-contiguous trades, as business closures and stay-at-
home orders reduce demand. Great Lakes carriers have experienced
declines in the carriage of commodities. The destruction of the airline
and auto sectors has led to declines in the need for vessels to
transport gasoline, diesel, and jet fuel. Overall demand for waterborne
transportation of agricultural and other commodities has declined,
amidst a nearly 5 percent decrease in freight transported on U.S.
navigational channels. Port activity around the top 10 U.S. ports has
seen declines of over 40 percent. Domestic shipyards have worked hard
to mitigate the impact of the pandemic with enhanced sanitation
practices and liberal leave policies.
The domestic maritime industry carries many of the building blocks
of our economy. From top to bottom, we have seen the total
interconnectivity of our economy, and no port is safe from the storm.
Stay-at-home orders and a nearly 20 percent drop in traffic on U.S.
roads has meant fewer American vessels transporting oil; a 42 percent
dip in auto sales has slowed the need for the ships that move American
steel; an 85 percent drop in weekly U.S. travel spending has shattered
tourism and hospitality for island economies like Hawaii; and a Defense
Department order pausing domestic transportation of military goods has
upended a system that moves 400,000 personal property shipments a year.
How long the impacts will last remains unknown. America's maritime
businesses are facing significant economic uncertainties as a result of
COVID-19. And while American businesses are starting to open up again,
it is very difficult to forecast demand for the remainder of this
quarter and for Q3 and Q4 of 2020.
As many as 25 million jobs worldwide could be wiped out by a
worldwide recession brought on by the pandemic, and the Bureau of Labor
Statistics industry estimates for water transportation workers in April
2020 are already showing an 11 percent decrease in employment.
However, despite the situation, America's maritime industry has
been getting the job done, keeping the U.S. supply chain running. Why?
Because we are Americans who support Americans, especially during times
of national emergencies.
b. Coordination with the U.S. Government for an Essential Workforce
As you have seen, the domestic maritime industry is diverse and
COVID-19 has tangible, but distinct, impacts on each of these segments.
A common uniting factor among all these diverse segments, however, is
the recognition that all of the men and women working in this industry,
no matter what segment of the industry they work for, are classified as
essential workers. These men and women have been on the front lines of
this pandemic since the very beginning, working every day to ensure
that our grocery stores are stocked, our fuel is delivered, and the
vital commerce that sustains this nation remains flowing.
Beyond that, the essential workers of the domestic maritime
industry have gone above and beyond during this time. For example, the
men and women of the domestic dredging industry went beyond the call of
duty when the USNS Comfort needed to dock in New York Harbor. The berth
at New York Harbor needed to be dredged an extra 40 feet to enable the
USNS Comfort to dock. The dredging was expected to take two weeks. An
American dredging company, using a crew of 60 and pulling double 12-
hour shifts a day, dredged the berth in eight days, allowing the USNS
Comfort to start treating patients earlier than expected.
While maritime workers are not as visible to the public as the
other vital transportation workers that keep our nation moving, such as
transit workers or truck drivers, they are an equally important part of
our supply chain. We were grateful that the Cybersecurity and
Infrastructure Security (CISA) 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.
Of course, we in the industry and the members of this Committee who
have supported our efforts throughout the years, have always understood
the essential value of the domestic maritime industry. We are
continually seeking ways to improve our connectivity, particularly in
times of emergency, to government entities with whom we do not
regularly interact. Our core partners, such as the Coast Guard, the
Department of Transportation, and the Maritime Administration
understand the operations of the industry, but as a whole we needed to
improve our communications. To that end, last summer AMP, our industry
and the federal government worked together to create the Maritime
Sector Coordinating Council (MSCC) to enhance our efforts on emergency
preparedness from a company and regional level to a federal level.
You may not have heard of Sector Coordinating Councils (SCC). All
16 critical infrastructure sectors recognized by the federal government
have a SCC. They serve as a single point of entry for the government to
communicate with an entire industry. SCC's work in concert with
Government Coordinating Councils (GCC's) to discuss emergency
preparedness and planning efforts for critical infrastructure. The
SCC's were established immediately after 9/11 because the government
realized that there was no streamlined way to communicate with
industries responsible for critical infrastructure in case of an
emergency.
While we set up the MSCC before there was any hint of a pandemic
like COVID-19 on the way, the MSCC has proven to be very helpful in
coordinating emergency response efforts over the past few months. As I
will explain later, there continues to be issues (such as availability
of test kits or PPE) but the MSCC provides a way for the industry to
express those concerns directly to agencies like CISA or FEMA. There
are also direct benefits from the MSCC engagement. For example, FEMA is
actively procuring and distributing cloth protective coverings to core
transportation sectors, including maritime. Through the MSCC's network,
we were able to coalesce hundreds of company, labor, and ports requests
for these face masks over a 72-hour period, working with our partners
at MARAD. While the ultimate task of distributing those masks remains
with the government, the MSCC's ability to quickly collate an industry
request and submit it for ultimate consideration speaks well to our
industry's ability to quickly coordinate for an emergency request.
c. Operational Resilience
Many organizations have undertaken to establish written protocols
to keep vessel crews safe as they continue providing essential services
to the American economy. These include trade associations (e.g.,
American Waterways Operators), class societies (e.g., ABS), and
collaborative efforts between industry and government authorities
(e.g., the Ship Operators Cooperative Program). These efforts have
helped provide guidance on a wide range of technical issues and have
made possible significant progress as the industry works through
challenging operational issues. The limitations of these protocols, of
course, is that they reflect the information available to certain
people at a point in time. As that information changes, the protocols
need to be updated, which can materially change what is believed best
practices for safe operations. Certain issues have raised particular
concerns that merit specific and continued attention.
1. Testing at crew changes
The U.S. maritime industry has worked to develop protocols to
minimize the risk of crew member infection on board American vessels.
Vessel crews usually number no more than 20-25 people, although
American vessels in the offshore fishing fleet may have up to 150 or
more workers on board. We note that the Jones Act fleet includes the
offshore fishing fleet which has its own set of challenges that might
present a unique set of problems. In general, vessel crews typically
sign on to a ship for several weeks at a time. The main risk of
infection comes during crew changes, when parts of the crew end their
assignments and are replaced by new mariners coming on board. Among
other tools to prevent an infected crew member from joining a vessel,
testing the arriving crew members for active infection is likely the
most effective way of screening. However, access to such testing was
denied for the first several weeks of the pandemic and has been
inconsistent since then. The primary reason is the shortage of test
kits, which has led to prioritizing access to tests.
In many cases mariners at crew rotations have been denied access to
testing based upon the assertion that such testing would be
inconsistent with CDC guidance. This does not appear to be an accurate
interpretation of CDC guidance (since at least mid-April), which allows
priority access for ``workers in congregate living settings'' with or
without symptoms when ``prioritized by health departments or
clinicians.'' The phrase ``congregate living setting'' certainly
describes the shipboard environment where crew members eat, sleep, work
and live, often for weeks at a time.
Consistent with this interpretation, state and local health
departments and clinicians including world-class health care
organizations have begun providing rapid testing for active infection
for mariners at crew changes. Test availability is extremely limited,
however, and still not available in most locations, in part based on
continued misinterpretation of CDC guidance. This Committee should
encourage the Coast Guard, CDC and other government agencies to clarify
that mariners at crew changes should have priority access to testing
for active infection.
2. Management of Suspected Shipboard Cases
Fortunately, the number of suspected COVID-19 cases involving
American mariners has been relatively low. When such cases do arise,
however, the question becomes how to effectively manage those cases
given the vital role of maritime transportation in America. We believe
there is a general understanding on this subject, but an urgent need to
clarify and reinforce the message.
A cargo ship with 20-25 mariners or a fishing vessel with 150
mariners is very different than a cruise ship with thousands of
passengers and crew. Both a cargo ship and a cruise ship may report a
suspected COVID-19 case prior to entering a port. Sending the cruise
ship to anchor may make sense to allow complex logistical arrangements
involving thousands of people to be worked out. However, the cargo ship
should be allowed to proceed to berth at a controlled-access secure
terminal rather than being sent to anchor. The crew member suspected of
having infection can be safely removed from the ship and tested, with
results immediately available. If they test positive for COVID-19, the
company would then implement plans for removing and testing /
quarantining the rest of the crew and disinfecting the ship so that it
can be safely and promptly returned to service with a new crew. This is
the safest and most efficient way of proceeding, ensuring that a crew
member with suspected COVID-19 quickly receives needed care, fellow
crew members are properly isolated and quarantined, and the ships
providing essential services to American consumers and businesses are
allowed safely and promptly to resume service.
This unfortunately has not been how some of the few instances of
suspected infection have been handled. One vessel with a suspected case
was sent to anchor, where a health care worker delivered by pilot boat
climbed on board and administered a COVID-19 test. The specimen was
rushed to the lab and was fortunately negative. Only then was the ship
allowed to proceed to berth. In the same vein, an order issued by a
county judge in Texas would have required any vessel with a suspected
case be sent to anchorage and kept there for a 14-day quarantine
period. One can only imagine the impacts on supply chains if that order
was enforced.
As a single vessel may account for a large portion of the weekly
commerce of the communities in the noncontiguous U.S. trades, any
delay, no matter how slight, may have a serious impact on those states
and territories being served. We would like to ask for your support in
urging the CDC and the USCG to review in advance industry response
plans to incidents of positive tests on inbound crew members.
IV. American Domestic Maritime Industry Post-COVID-19
The COVID-19 pandemic has reinforced recent policy trends that
emphasize the importance of American self-reliance and resilience. For
example, we cannot rely on foreign suppliers of pharmaceuticals and
medical supplies to keep American citizens safe, even if those
suppliers are cheaper. Indeed, we need to rebuild critical industries
in America that have been sent overseas, preserve those that have
remained, and fight back against efforts to outsource key American
manufacturing and service industries. These same lessons apply fully to
the domestic maritime industry.
a. Secure supply chains
If the COVID-19 response showed us nothing else, it showed how
dangerous it was for the United States to rely on globalization for
critically important resources and services. The U.S. defense maritime
industrial base, as the Center for Strategic and Budgetary Assessments
(``CSBA'') has labeled it, which includes our American domestic
maritime sector, as one of those critical industries.
During times of war or national emergency, it is important to have
the domestic capacity to transport goods within the United States. As
CSBA noted:
In an era of great power competition, a robust maritime
industry, and the policies that support it, are increasingly
important to U.S. national security. Private shipyards build
and repair U.S. warships, sometimes alongside civilian vessels.
U.S. shipping companies and their civilian mariners transport
military personnel, equipment, and supplies overseas. And
private dredging, salvage, towing, intermodal transport, and
harbor services companies ensure the operation of America's
military and commercial ports and waterways.
Furthermore, Section 50101 of title 46, United States Code, sets
for America's maritime policy and represents the critical need for a
robust American domestic maritime industry. It states:
(a) Objectives.--It 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--
(1) sufficient to carry the waterborne domestic
commerce and a substantial part of the waterborne
export and import foreign commerce of the United States
and to provide shipping service essential for
maintaining the flow of the waterborne domestic and
foreign commerce at all times;
(2) capable of serving as a naval and military
auxiliary in time of war or national emergency;
(3) owned and operated as vessels of the United States
by citizens of the United States;
(4) composed of the best-equipped, safest, and most
suitable types of vessels constructed in the United
States and manned with a trained and efficient citizen
personnel; and
(5) supplemented by efficient facilities for building
and repairing vessels.
This pandemic has only further solidified the need for such a
policy and for a U.S. defense maritime industrial base. We have
maintained supply lines as essential businesses and essential workers.
America's Jones Act fleet and shipbuilding and repair yards have stood
by our nation to ensure that goods and supplies are delivered,
including to those in need. Our industry over the past 100 years
operating under the Jones Act, and in fact since the nation's founding,
have been an important element of the nation's supply chain
capabilities.
At a time when China is investing in maritime businesses around the
globe--ships, ports, terminals, and other infrastructure--to support
its One Belt, One Road initiative, it is as important now as it ever
was for America to maintain one of the most fundamental laws that
ensures the nation can meet its maritime policy objective as stated
above--and that law is the Jones Act.
b. Legislative and Administrative Jones Act Waivers
AMP member companies, like Crowley, make significant investments to
build, grow, and sustain a domestic fleet. Those are investments in
U.S. shipyards; investments in American mariners; investments in
shoreside infrastructure and people; and investments in logistics
capabilities to meet the transportation needs of this country. We make
those investments in reliance on U.S. law.
Attacks on the law from opponents, seeking legislative or
administrative waivers of the Jones Act, erodes the confidence of
investors in the domestic maritime sector. We applaud the members of
this subcommittee for their support for the law. It is that support
that enables AMP member companies to invest with confidence.
But we do not take anything for granted. We have seen too many
times over the years where a small change in the law or an
administrative determination can have significant consequences on the
domestic industry. We saw that most recently when Customs and Border
Protection (CBP) issued a modification and revocation of certain Jones
Act private letter rulings. While some of the changes made by CBP were
good and long overdue, others, such as the determination that foreign
flag vessels can engage in certain transportation activities,
undermined the law.
Thankfully, this subcommittee has led the charge in correcting that
situation, passing legislation through the House as part of the Coast
Guard Authorization Act of 2019. The provision relating to installation
vessels is important to protecting small lift boat operators and to
preserving opportunities for larger Jones Act heavy lift operators in
those trades. We urge Congress to adopt this measure.
We also urge Congress to continue to reject proposals that would
fundamentally alter the landscape for our Jones Act fleet, and to adopt
measures that ensure the Jones Act remains strong.
Finally, it is worth noting that because of the strong support of
Congress, America's domestic maritime industry continues to invest in
the Jones Act fleet--dredges; containerships; offshore wind vessels;
Great Lakes bulkers; tugboats, towboats and barges; and passenger
vessels. We appreciate your support, and to demonstrate our support,
our industry continues to invest, innovate, and modernize.
V. Recognizing American Maritime Workers/Conclusion
I would like to conclude my testimony with a word about American
maritime workers. This year, in honor of the Jones Act's centennial,
AMP and many others have honored what we have called ``American
Maritime Heroes.'' And while some of the heroes are very high
visibility individuals--like Malcolm McLean, the Jones Act innovator
who invented containerization and changed the world--most of our heroes
are everyday heroes. These are the men and women who deliver the goods
across our nations--in the inland waterways, on the Great Lakes, along
the coasts, in the Gulf and to the non-contiguous areas. These are the
crews of the dredges, containerships, tugs, barges, bulkers and other
vessels that serve as the grease for the American economy. These
individuals, and the national maritime infrastructure that supports
them, truly are heroes, delivering needed merchandise and the building
blocks of the American economy without complaint as essential front
line workers.
When we think of American mariners, we can't help but think about
the World War II merchant mariners, the group of individuals to whom
Congress has recently awarded the Congressional Gold Medal. They
delivered cargo under the most desperate conditions in World War II and
their success in ensuring a supply chain of goods and supplies to the
war zone is legendary. They paid the price with the highest casualties
of any service in World War II, often sailing defenseless again German
U-Boats. Their courage and valor was summed up in a description from a
coming major motion picture: ``The only thing more dangerous than the
front lines was the fight to get there.''
That was then and now is now. Today, our war is the pandemic and we
are proud to be doing everything in our power to keep America moving. I
will be pleased to answer any questions you might have.
Mr. Maloney. Thank you, Mr. Roberts.
Ms. Carpenter, you may proceed.
Ms. Carpenter. Thank you very much, Mr. Chairman, for the
opportunity to testify on behalf of America's tugboat, towboat,
and barge industry.
The first thing I want to tell you today is that the
domestic maritime supply chain has proven resilient in the face
of COVID-19. While cargo volumes are down in many sectors due
to depressed demand, mariners have continued to report to work,
vessels have continued to operate, and the industry has adapted
to maintain operational continuity and readiness.
As our Nation takes the first steps toward reopening, the
domestic maritime supply chain is capable of accommodating
increased demand and well positioned to support the long road
to recovery.
Our industry has been able to maintain business continuity
because employers recognized early on that protecting
crewmember health and safety is the key to keeping commerce
flowing. A tow on the river or an articulated tug barge unit at
sea is effectively self-quarantined and companies quickly put
in place procedures that keep the virus off their vessels.
These include prescreening crewmembers prior to boarding,
modifying crew change procedures, minimizing nonessential
contact between crewmembers and noncrewmembers, and more
stringent vessel cleaning and decontamination procedures.
Crewmembers have taken seriously their status as essential
workers and taken steps to safeguard their health while off
duty. And the U.S. Coast Guard has been proactive and
cooperative in working with industry to meet regulatory
objectives while reducing health and safety risks.
The result of these efforts has been to keep COVID-19
infections among the mariner workforce to a minimum.
Your leadership in holding this hearing tees up the
question, what can Congress do to support the continued
resilience of the maritime supply chain?
In testimony before this subcommittee last spring, I
highlighted four pillars that enable our industry to do its
essential work: the Jones Act; modern, well-maintained ports
and waterways infrastructure; a nationally consistent system of
law and regulations governing vessels and interstate commerce;
and maritime safety.
Congress' support for these pillars is especially important
today. The Jones Act is more relevant than ever as both the
pandemic and the prevailing geopolitical situation underscore
what a bad idea it would be to relinquish control of our
domestic maritime supply chain to foreign companies and foreign
mariners.
Thank you for your leadership in opposing opportunistic
calls to waive the Jones Act and break faith with the American
companies and American mariners on the front lines of keeping
our economy afloat.
Investment in ports and waterways infrastructure is an
investment in American jobs and competitiveness that will help
our economy get back on its feet. We thank you for your past
leadership and ask for your continued support to pass the Water
Resources Development Act, increase investment in locks, dams,
harbor maintenance, and dredging, build the next generation of
Coast Guard buoy tenders, and ensure the funding to keep them
operating.
As we recover from the economic shocks of the pandemic, we
need to ensure that our waterways are open for business and in
condition to accommodate increased demand.
Our industry's experience during COVID-19 has also
underscored the importance of uniform Federal laws and
regulations governing vessels and interstate commerce.
As State and local stay-at-home orders proliferated this
spring, we could have experienced catastrophic disruption in
the maritime supply chain. We didn't, largely because the
Federal Government acted quickly to codify the status of
maritime businesses and workers as essential critical
infrastructure that needed to continue unfettered operations.
The lessons of this experience are clear. Just as a
patchwork of stay-at-home orders is incompatible with the
effective functioning of the maritime supply chain, so is a
patchwork of State and local regulations established for other
purposes.
Finally, maritime safety. Our industry's experience with
COVID-19 demonstrates that good safety is good business. As we
manage the health and safety challenges posed by the pandemic,
we urge Congress to support our efforts by supporting
prioritized access to testing for COVID-19 for crewmembers,
enacting targeted temporary liability protections for maritime
employers who make good-faith efforts to abide by applicable
public health guidelines to protect their employees from COVID-
19 while preserving legal remedies against employers who engage
in reckless or willful misconduct, and enacting the Coast Guard
authorization bill, which includes a number of provisions to
promote marine safety.
Thank you very much. We look forward to working with you to
apply the lessons of this pandemic and strengthen the
resilience of the maritime supply chain.
[Ms. Carpenter's prepared statement follows:]
Prepared Statement of Jennifer A. Carpenter, President and Chief
Executive Officer, The American Waterways Operators
Good afternoon, Chairman Maloney, Ranking Member Gibbs, and Members
of the Subcommittee. I am Jennifer Carpenter, President & CEO of The
American Waterways Operators. AWO is 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 status of the U.S. maritime
supply chain during the COVID-19 pandemic.
I come before you today with three overarching messages: 1) the
U.S. domestic maritime supply chain is resilient; 2) business
continuity does not--and cannot--mean business as usual, especially
where health and safety are concerned; and, 3) Congress, and this
Subcommittee, have a vital role to play in ensuring the stability of
the public policy pillars that create the foundation for the supply
chain's resilience and our nation's recovery. Allow me to elaborate on
each of these points.
The Domestic Maritime Supply Chain is Resilient
While our industry, like all Americans, has been challenged by this
global health crisis in profound ways, the domestic maritime supply
chain has proven resilient in the face of COVID-19. The men and women
of the tugboat, towboat and barge industry have played a key role in
keeping our nation's economy afloat, remaining open for business and
continuing to move essential cargoes such as agricultural products,
fertilizer, coal, petroleum and petrochemicals, wood and paper
products, steel and construction materials. Tugboats continue to guide
ships, from containerships and tankers to the hospital ships USNS
Comfort and USNS Mercy, safely into port. Tugboats and barges have
begun a busy summer season of supplying native Alaskan villagers with
everything they need to subsist in an unforgiving environment. While
cargo volumes in many sectors have declined due to depressed demand,
mariners have continued to report to work, vessels have continued to
operate, and the industry has adapted to maintain operational
continuity and readiness. As our nation takes the first steps toward
reopening shuttered segments of the economy, the domestic maritime
supply chain is flowing, capable of accommodating increased demand, and
well positioned to support the long road to recovery.
Business Continuity, Not Business as Usual
Tugboat, towboat and barge companies have been able to maintain
business continuity in large part because employers recognized early on
that mariners are the lynchpin of their operations and protecting
crewmember health and safety is key to keeping vessels moving and
commerce flowing. The industry's extensive experience with contingency
planning, safety management systems and incident command structures has
served it well in managing the health, safety and operational
challenges posed by the pandemic. A tow on the river or an articulated
tug-barge unit at sea for two to four weeks at a time is effectively a
self-quarantined environment, and companies quickly put in place--and
have continued to refine--procedures aimed at keeping the virus off
their vessels. These include, but are not limited to, pre-screening
crewmembers prior to leaving home and again prior to boarding a vessel,
often in conjunction with telehealth providers; modifying crew change
procedures to keep crews together as a unit, minimize exposure during
travel to vessels, and avoid large groups congregating on crew change
days; minimizing non-essential contact between crewmembers and non-
crewmembers, including increased reliance on objective evidence of
regulatory compliance and remote audit and inspection techniques; and
developing more stringent vessel cleaning and decontamination
procedures.
Crewmembers, for their part, have taken seriously their status as
essential critical infrastructure workers and taken steps to safeguard
their health and safety while off duty. And, regulatory authorities,
including the U.S. Coast Guard, have been proactive and cooperative in
working with industry to employ flexibility to meet regulatory
objectives while reducing unnecessary health and safety risks. Policies
extending the validity of merchant mariner credentials, mariner medical
certificates and Transportation Worker Identification Credentials;
encouraging the use of remote audit and inspection techniques; and
allowing deferrals of inspections and regulatory deadlines when
necessary have been very helpful in reducing unnecessary interactions
that could place the safety of vessel crewmembers and/or Coast Guard
personnel at risk.
The result of these concerted and cooperative efforts has been to
keep COVID-19 infections among the mariner workforce to a minimum--a
win-win for health and safety and for the resilience of the maritime
supply chain. To maintain this situation, it will be extremely
important for employers, mariners, and regulators to remain vigilant
and not relax prematurely the prevention policies and social distancing
procedures that have proven successful in keeping vessels largely
virus-free.
Congress's Role in Supporting the Maritime Supply Chain
Chairman Maloney, Ranking Member Gibbs, your leadership in holding
this hearing today to examine the state of the maritime supply chain as
our nation battles the COVID-19 pandemic is an important expression of
Congress's recognition of the criticality of maritime transportation,
and we thank you for that. It also tees up the question, ``How can the
Congress--and this Subcommittee--support the continued resilience of
the maritime supply chain and the health and safety of mariners who
make that possible?''
To answer that question, I'd like to hark back to the testimony I
provided to the Subcommittee last spring, highlighting four pillars
that enable the tugboat, towboat and barge industry to do the essential
work it does for American shippers and the American economy. Those
pillars--the Jones Act; modern, well-maintained ports and waterways
infrastructure; a nationally consistent system of laws and regulations
governing vessels in interstate commerce; and maritime safety--are more
important than ever amid the circumstances of the COVID-19 pandemic,
and I want to thank the bipartisan leadership of this Subcommittee and
the full Transportation and Infrastructure Committee for your
longstanding support for them. Let me address each briefly.
The Jones Act
The Jones Act, which celebrates its 100th anniversary on June 5,
but whose antecedents date back to the earliest days of our country,
has served our nation's economic, homeland and national security well.
It is more relevant than ever today, as both the pandemic and the
prevailing geopolitical situation underscore the inadvisability of
relinquishing control of our domestic maritime supply chain to foreign
companies (perhaps state owned) and foreign mariners. I want to thank
Chairmen DeFazio and Maloney, and Ranking Members Graves and Gibbs, for
your leadership in opposing opportunistic calls to waive the Jones Act
and break faith with the American companies and American mariners on
the front lines of keeping our economy afloat. Thank you, as well, for
including in the Coast Guard authorization bill language to prevent the
emergence of a Jones Act loophole related to the operation of heavy
lift vessels servicing offshore energy installations.
Ports and Waterways Infrastructure
Investment in our ports and waterways infrastructure is an
investment in American jobs, in American competitiveness, and, given
that maritime transportation is the greenest mode of transportation,
with the smallest carbon footprint, in the health of our natural
environment as well. Now more than ever, investing in infrastructure
will help our nation's economy get back on its feet. This means passing
a Water Resources and Development Act; increasing investment in locks,
dams, harbor maintenance and dredging; and building the next generation
of Coast Guard buoy tenders and ensuring the funding to keep them
operating. As demand for waterborne commerce increases as we recover
from the economic shocks of the pandemic, we need to ensure that our
waterways are open for business and in condition to accommodate this
demand. Again, this Subcommittee and full Committee have been leaders
on these issues; we thank you for that and respectfully ask for your
continued support.
Federal Preemption
Our industry's experience during the COVID-19 pandemic has
underscored the importance of a uniform national system of laws and
regulations governing interstate maritime transportation. As state and
local shelter-in-place and stay-at-home orders began to proliferate in
March and early April, we could have experienced catastrophic
disruption in the maritime supply chain. We did not, largely because
the federal government recognized and took timely action to codify the
status of maritime transportation businesses and workers as ``essential
critical infrastructure'' that needed to continue unfettered
operations. Guidance from the Department of Homeland Security's
Cybersecurity and Infrastructure Security Agency, amplified by the U.S.
Coast Guard, was vital to enabling marine transportation businesses to
keep operating and vessel crewmembers and other maritime employees to
travel to their jobs and report to work. The lessons of this experience
are worth remembering as we move from the acute, to the chronic, and
eventually to the recovery phase of the pandemic: just as a patchwork
of state and local stay-at-home orders is incompatible with the
efficient and effective operation of the maritime supply chain, so too
is a patchwork of state and local laws and regulations established for
other purposes. Uniform, nationally consistent regulations are
essential to effective functioning of the maritime supply chain.
Maritime Safety
Maritime safety is our industry's franchise to operate, and our
experience during the COVID-19 pandemic to date reinforces the fact
that good safety is good business. As our industry manages the unique
health and safety challenges posed by the pandemic, we urge Congress to
support our efforts by:
1) Supporting prioritized access to COVID-19 testing for mariners
as essential critical infrastructure employees. While access to
diagnostic testing has improved in many parts of the country, the
paramount importance of keeping the virus off the boats to crewmember
health and safety and the resilience of the maritime supply chain--
especially as opportunities for exposure off the job magnify with the
relaxation of stay-at-home orders--underscores the need to increase
access to testing as an optional part of the pre-screening process.
2) Enacting temporary, targeted liability protections for maritime
employers who make good faith efforts to abide by applicable public
health guidelines in working to protect their employees from exposure
to COVID-19, while preserving the availability of legal remedies
against employers who engage in reckless or willful misconduct. We are
hopeful that a bipartisan consensus on time-limited and carefully
crafted liability protections can be included in a forthcoming
legislative package to support our national recovery from the many
harmful effects of the COVID-19 pandemic.
3) Enacting the Coast Guard authorization bill, which includes a
number of provisions that promote marine safety, including suspension
of the towing vessel inspection user fee requirement until the Coast
Guard promulgates regulations to establish specific fees based on
whether a vessel uses the Towing Safety Management System or the Coast
Guard option under Subchapter M. As the Subcommittee recognized in
drafting that provision, the current fee structure provides a perverse
disincentive to use of the TSMS option and imposes duplicative costs on
vessel owners who are already paying many thousands of dollars more for
the services of Coast Guard-approved third-party organizations.
Conclusion
Chairman Maloney, Ranking Member Gibbs, thank you for the
opportunity to testify today. The U.S. domestic maritime supply chain
is resilient, and the tugboat, towboat and barge industry is well
equipped to continue to serve our nation as we begin the long road to
recovery from the economic disruption caused by this global public
health crisis. We look forward to working with you to learn and apply
the lessons of this experience to strengthen our resiliency as an
essential critical infrastructure sector and a vital contributor to our
nation's economy, security, environment and quality of life.
I would be happy to answer any questions you may have.
Mr. Maloney. Thank you, Ms. Carpenter.
Ms. Brand, you may proceed.
Ms. Brand. Good afternoon, Chairman Maloney, Ranking Member
Gibbs, Chairman DeFazio, and members of the subcommittee. My
name is Lauren Brand, and I am president of the National
Association of Waterfront Employers.
The members of NAWE and I thank you for keeping our
Nation's ports open during this global pandemic. Your
designation of waterfront workers as essential and your
recognition of the entire port ecosystem as being critical has
strengthened all of our work commitment to work.
NAWE is the voice for the U.S. marine terminal operators,
stevedores, and operating port authorities. We represent
interests in U.S. coastal ports and U.S. Territories. Members
also include the associations responsible for labor relations
and contract negotiations with the ILA and the ILWU, from Maine
to Texas, then from Washington to California.
Port operators are responsible for safely and effectively
transporting cargoes between vessels, trucks, and rail. NAWE's
members lease waterfront land from public port authorities and
they build their own facilities. Within their terminal area,
they hire labor, they fund the purchase of cargo-moving
equipment, construct intermodal infrastructure, and design
systems that track each shipment.
We are experiencing four significant COVID-19-related
challenges: taking care of waterfront workers, adjusting safety
protocols while continuing terminal operations, rearranging
terminal facilities to accommodate new needs, and maintaining
liquidity.
Taking care of waterfront workers has been our first
priority. Commercial supply chains for PPE and cleaning
supplies are now in place. The rapid price increases
experienced for PPE these past 3 months, frankly, was
crippling.
Next, in an effort to increase safety while continuing to
work, terminal operations and protocols have been adjusted.
Every aspect of each operating terminal has been taken into
consideration. It is important to note that labor and
management are working together to implement the best decisions
and provide protections.
Also, terminal facilities have been rearranged to
accommodate new needs. The storage of abandoned cargoes, while
only 1.5 percent, is expected to grow. Envision 40,000
chocolate bunnies within just one container that should have
been delivered for the Easter holiday.
Storage of stranded cargoes is increasing, requiring
regular monitoring of units to ensure they are handled
correctly. Examples of stranded cargoes include parts for
manufacturing facilities, summer fashions, and automobiles.
Exports are being impacted. The reduction in vessel calls
to ports has resulted in higher value cargoes--that pay the
vessel operator more to ship--being loaded first, delaying the
exported lower valued items.
Quarantines and the additional screening of workers under
newly implemented safety protocols are having a direct impact
on security duties, and costs.
Maintaining liquidity in the face of reduced revenues and
increased costs is our fourth challenge. Examples of stresses
on liquidity include the management of empty containers that
are stacking up in terminals on the gulf coast. NAWE member
container yards have units in them that have not moved for
months, generating a 100-percent decline in revenues.
Another example are lease payments. Marine terminal
agreements include a lease rate and a minimum annual guarantee
based on volumes. As throughputs decline below normal levels,
these guarantees result in increased operating costs for
terminal operators.
Certain COVID-related needs do remain unmet. The cost of
ensuring that equipment and machinery are safe to use exceeds
that of the cost of disinfectant. Added to this are
safeguarding costs such as conducting regular temperature
checks for several thousand employees and visitors as they
enter each terminal facility daily.
No sector or freight is immune to the impact of COVID-19.
Beyond freight, our members also support the provisioning of
cruise ships and assist cruise passengers. Cruise ships are now
accepting bookings for cruises beginning late July and the
public is responding. Marine terminal operators are
strategically planning to protect employees, waterfront
workers, and the guests who will transit through terminals on
their way to vacation.
It is the cost of all of these actions necessary to keep
marine terminals open, people safe, and essential freight
moving that is our problem.
In conclusion, marine terminal operators, stevedoring
firms, and operating port authorities remain committed to
ensuring the transportation needs of the United States are met.
We urge you to enact a bridge program that will assist
waterfront employers and port authorities defray COVID-19-
related expenses, including lease and all other expenses
necessary to keep the ports open, terminals operating, and
workers employed.
Thank you for this opportunity. We appreciate the
dedication of this subcommittee and their continued support for
U.S. port operators.
[Ms. Brand's prepared statement follows:]
Prepared Statement of Lauren K. Brand, President, National Association
of Waterfront Employers
Good afternoon, Chairman Maloney, Ranking Member Gibbs, and members
of the Subcommittees. My name is Lauren Brand, and I am the President
of the National Association of Waterfront Employers, otherwise known as
NAWE. Thank you for this opportunity to discuss the impact of the
COVID-19 pandemic on the U.S. marine terminal operating and stevedoring
industries. Even more importantly, the members of NAWE and I thank you
for keeping our nation's ports open during this global pandemic. Your
designation of waterfront workers as essential and your recognition of
the entire port ecosystem as being critical has strengthened our
commitment to work.
NAWE is the voice in Washington for U.S. marine terminal operators,
stevedores, and operating port authorities. The Association represents
interests based at U.S. coastal ports and those based in U.S.
territories. Members also include the associations responsible for
labor relations and contract negotiations with the ILA and the ILWU
from Maine to Texas and from Seattle to San Diego. Formed initially
around common interests in providing compensation to injured
longshoremen, NAWE was active in supporting maritime security
regulation at our ports' facilities following 9/11. Today, NAWE's
portfolio represents the full spectrum of port operators' interaction
with the Federal Government, including informing the development of
national freight policies, infrastructure funding, port safety,
security protocols, the environment, and workforce policies. NAWE is
honored to serve as a subject matter expert to Federal Agencies and
Departments on issues related to intermodal transportation. It is
important to note that 44 Federal Agencies within 14 Federal
Departments oversee marine terminal operators, stevedoring firms and
operating port authorities.\1\ NAWE's members remain committed to
moving the freight needed and wanted by the people of the United
States. We are here to ask for your consideration to help us remain on
the job.
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\1\ Source: https://www.cmts.gov/resources/compendium
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Who Are Port Operators?
Port operators, while based in the United States and employing U.S.
citizens, work with global markets. They receive goods sourced from
around the world and ensure these are safely moved onto other domestic
modes that will complete the delivery process. More importantly, they
receive U.S. exports and ensure these are loaded onto the right vessel
for delivery overseas. What happens in North, Central and South
America, Europe, Asia, Africa, and other far flung regions impact the
business of terminal operators. We are a critical part of the U.S.
maritime transportation industry, responsible for safely, securely and
efficiently transporting cargoes between vessels, trucks and rail. To
do so, NAWE's members lease waterfront land from public port
authorities and build their own facilities. Within their terminal area,
they hire labor, fund the purchase of cargo moving equipment, construct
intermodal infrastructure and design systems that track each shipment
and communicate with their customers: vessel operators, truckers,
railroads and, of course, cargo owners.
What is our ask?
We are seeking a bridge for FY20 and FY21 that will help marine
terminal operators, stevedores and port authorities through this
difficult time as freight continues to react to the global pandemic. We
ask that a bridge program be enacted that will assist these maritime
partners defray COVID-19 related expenses including lease and other
contractual expenses necessary to keep the ports open, terminals
operating and workers employed.
What are our most significant COVID-19 related challenges?
Taking care of waterfront workers has been our first priority.
While personal protective equipment (PPE) and cleaning supplies were
difficult to obtain during February, March and April, the majority of
NAWE's members are now able to procure supplies through commercial
sources. None of our members approached regional Emergency Relief
Agencies for supplies in an effort to help the medical profession who
were also on the front lines of this crisis. Some terminal operators
were assisted by public port authorities and have appreciated their
efforts. The vast majority of items \2\ were purchased from regular
commercial sources, but when those could not be delivered in time,
alternate sources were found locally at Ace Hardware, Home Depot,
Lowes, Walmart, and Dollar Stores. Commercial supply chains for these
items are now in place. The rapid price increase experienced by all was
crippling as these expenses were not expected by anyone. Continuous
price increases for items was daunting; masks and gloves rose an
audacious 25% in one week during April. One NAWE member obtained PPE by
working with a local tequila producer who made tequila-based sanitizer
in drums. The drums were distributed to terminals where they were
bottled for individual use. (yes, warning labels were added to bottles;
``do not drink the sanitizer'').
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\2\ This list was compiled through the National Maritime Safety
Association (http://nmsa.us/). It includes: Digital non-contact
infrared thermometers; disinfecting soap and bottles / dispensers /
sprayers; sanitizing wipes; masks (N95 preferred); non-permeable
gloves/Nitrile preferred 6 mil or 8 mil; toilet paper; paper towels;
tissues; disinfectant spray to sanitize equipment (Hospital grade);
individual hand sanitizers to be distributed; hand sanitizers stations
and refills; goggles; heavy rubber gloves for cleaning; foggers;
coveralls; 2 gallon garden pump & spray. Note: disinfectant must be on
the EPA list of approved COVID-19 fighting products at: https://
www.americanchemistry.com/Novel-Coronavirus-Fighting-Products-List.pdf
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In an effort to increase safety while continuing to work, terminal
operations and protocols have been adjusted to care for workers and
personnel. Every aspect of the design of each terminal was taken into
consideration. Where do people normally congregate? Which surfaces are
frequently touched? How many? When? How often? The questions are never
ending. It is important to note that labor and management are working
together to implement the best decisions and provide protections. All
have been selflessly dedicated to the commitment to keep terminals open
and freight moving. Examples of changes made include:
Formerly two machines would be rotated among three people
during a shift. Now one machine is shared between two people on a
shift. This increases cost as more machines are needed online during a
shift while it decreases exposure to personnel.
A realignment of space within terminal facilities to
accommodate storage of abandoned cargoes, stranded cargoes and empty
containers.
Separating essential cargoes from non-essential cargoes
to allow for more efficient delivery of medical items and PPE. This
requires closer coordination with cargo owners, as terminal operators
do not normally know exactly what is in each container. They do however
know which contain hazardous materials, which need temperature
monitoring, etc. to facilitate proper handling of those units.
An entire terminal management team was quarantined for 14
days when they were exposed to a security guard who tested positive for
COVID-19.
Additional labor was brought in some regions to allow
contingent teams to be organized if one was forced into quarantine. In
other regions, fewer personnel were hired due to the reduction in
vessel arrivals (blank sailings \3\).
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\3\ A `blank sailing' is a cancelled sailing. A blank sailing could
mean a vessel skipping one port along the route, or the entire journey
being cancelled.
Terminal facilities are being rearranged to accommodate new needs.
The storage of abandoned cargoes, while currently only at 1.5%, is
expected to grow on the West Coast. Cargoes are considered abandoned
once notification has been received from the consignee \4\ that they do
not want to receive the shipment. The terminal then moves that
container to a separate location within the terminal, securing it and
ensuring its safety until a claim for the contents is settled. Examples
of cargoes that have been abandoned at terminals include those for
holidays that occurred during the COVID-19 pandemic: Valentine's Day,
St. Patrick's Day, and Mother's Day. Also included are shipments of
Spring and Summer fashions and other seasonal items that would normally
have been delivered and sold in the months of February through May. To
paint a picture, 40,000 chocolate bunnies are within just one container
that should have been delivered in time to sell before the Easter
holiday.
---------------------------------------------------------------------------
\4\ The difference between a shipper and a consignee is that the
consignee is the receiver of the shipment.
---------------------------------------------------------------------------
Likewise, storage of stranded cargoes is increasing, requiring
monitoring of these units to ensure they are handled according to the
protocols set for each type of cargo. Is the cargo temperature
sensitive? Is it hazardous? What are the special needs? Stranded
cargoes are those that have arrived, are cleared for pick up, yet the
consignee is not able to accept these at this time and asks the
terminal operator to store it for them. So many stores and related off
port storage facilities have been closed with new inventories wanted
but not yet needed. Examples of stranded cargoes include parts for
manufacturing facilities, Summer fashions and automobiles.
What happens to an import container after it's been emptied?
Hopefully, it has been filled with U.S. produced export cargo and it is
returned to a marine terminal to be shipped overseas. Unfortunately,
the United States has an imbalance of trade, with imports outpacing
exports more than 2 to 1. Exports from the U.S. include a number of
commodities made by industries that have been heavily impacted by the
pandemic: commercial aircraft, fuel oil, automobiles, meat and poultry,
autos and auto parts \5\. To date, exports in 2020 have declined to the
lowest levels in over three years \6\, with the highest drop in higher
value commodities. The reduction in vessel calls to ports has resulted
in the remaining higher value exports--that pay the vessel operator
more to ship--being loaded first, and lower value cargoes being left at
the terminals. More unexpected freight for the port operator to
securely store and safely monitor. Security oversight, as mandated by
law, require resources that are not recoverable when cargo volumes are
declining. Quarantines on passengers and crews and the additional
screening of workers under newly implemented safely protocols are
having a direct impact on security duties and costs.
---------------------------------------------------------------------------
\5\ https://www.thebalance.com/u-s-imports-and-exports-components-
and-statistics-3306270
\6\ https://tradingeconomics.com/united-states/exports
---------------------------------------------------------------------------
Managing the fiscal impact of reduced revenues and increased costs
while challenged by the overt uncertainty of what the future holds. We
are aware that every link in the supply chain has lost revenue, and
that the entire industry has been fiscally impacted. We are also very
aware of the vital role of each partner in the supply chain. We want
all to remain liquid and fulfill their role in our national
transportation system. And we have a responsibility to ensure we are
ready, open for business, with healthy teams ready to do our job
safely, securely and as efficiently as possible. A prime example of
stressors on liquidity include management of empty containers that are
stacking up in terminals. Our transportation system usually cycles
empties for exports or they are picked up by passing vessels to return
them overseas to be refilled and brought back again. A normal business
practice is to not charge for storage, but to assess a handling fee
when containers arrive and depart. NAWE member container yards have
units in them that have not moved for months, thereby generating a 100%
decline in revenues. Another example are lease payments for marine
terminals. Marine terminal agreements with their landlord port
authorities include a 'minimum annual revenue guarantee' clause that is
based on volumes. When expected volumes do not materialize, port
authorities are not able to collect dockage, wharfage and other fees
related to supporting the needs of vessels while they are in port.
Moody's Investor Service issued a report May 13, 2020 that states
``However, most US ports are organized as landlords and receive 40%-70%
of revenues in the form of guaranteed payments under long-term leases
from tenants.'' It also states, ``Port operators and customers will
face significant pressure as throughput materially declines in the
months ahead.'' They predict this decline will approach or exceed the
decline of the 2008-2009 global financial crisis. The report continues
with ``Tenants have expenditure flexibility to adapt to lower volumes,
but a severe downturn would pressure stability.'' And ``Lower volume
can be partially managed by operators' expenditure flexibility, but the
impact of such an unprecedented shock is ultimately uncertain.'' We are
seeing a severe downturn that will continue into the remainder of the
year, impacting a port operator's ability to ensure continued
liquidity.
Landlord ports include this minimum annual revenue guarantee clause
to help them recover potentially lost fees if volumes should decline.
This is normally considered an incentive clause to encourage the
terminal operator (tenant) to maximize volume throughput by working
hard to attract new business to the port, and thereby their terminal.
It has not been envisioned to become a punitive charge during a global
pandemic, that increases lease payments at the same time volumes spiral
downwards, operating costs increase, and revenues take a nosedive.
What COVID-19 related unmet needs remain?
Taking care of personnel: The on-going cost of PPE and cleaning
supplies has been exceeded by the cost of having to sanitize equipment
and machinery before and after each work shift. The application cost of
ensuring equipment and machinery are safe to use exceeds that of the
cost of disinfectant. NAWE members are spending between $75,000 and
$335,000 per week on these new expenses. Documented costs for one
coastal region alone exceed $1 million per week. Compounding this new
financial burden is the cost of safeguarding the workplace such as
conducting regular temperature checks for several thousand employees
and visitors as they enter each terminal facility. No one is talking
about ending cleaning protocols. A bridge is needed to allow waterfront
employers time to engage with customers and adapt these new expenses
into operations.
Adjusting terminal operations: As volumes drop, terminal and gate
hours must be adjusted to allow the existing business to support
operations as much as possible. Reduced gate hours require truckers to
be diligent in collecting containers. As each terminal supports a
different profile of customers, we are seeing a range in business
declines from a low of 17% to a high of 32%. The year 2020 will be one
of the worst on record, with Q1 and Q2 an average of 20% below
projections, Q3 generating uncertainty and another drop expected in Q4.
Shipping is seasonal, with one more peak season ahead of us. The
National Retail Federation issued a report May 11, 2020 \7\, confirming
the forecast by Global Port Tracker, a firm that provides historical
data and forecasts for 13 of the top U.S. coastal ports. They do not
show a smart recovery in Q3. Included in Q3 shipments are back to
school supplies, Fall fashions and fall/winter holiday goods. Rather,
they are predicting a slow recovery beginning in Q4 or early 2021 (see
chart).
---------------------------------------------------------------------------
\7\ https://www.lloydsloadinglist.com/freight-directory/news/US-
box-import-declines-forecast-to-continue/76566.htm#.XsqYHy-z2L9
------------------------------------------------------------------------
Decline
Estimate of TEU from same
Month in 2020 (number of containers time last
handled) year, YTD
------------------------------------------------------------------------
April.............................. 1.51 million.......... -13.4%
May................................ 1.47 million.......... -20.4%
June............................... 1.46 million.......... -18.6%
July............................... 1.58 million.......... -19.3%
August............................. 1.73 million.......... -12%
September.......................... 1.7 million........... -9.3%
------------------------------------------------------------------------
While the majority of this paper has referenced container terminal
concerns, NAWE's members also operate roll on/roll off terminals for
vehicle and heavy equipment movement, breakbulk terminals that move
steel and lumber products, and bulk terminals that focus on
construction materials. Imagine the cars that are sitting on terminal
land, rows upon rows of new vehicles waiting to be moved to dealers
across the nation. With Hertz, Avis and others cancelling their orders
for new vehicles, how long will some of these autos continue to
encumber limited space on terminals? Steel waits for manufacturing
plants to reopen. No sector of freight is immune to the impact of
COVID-19. And each stress the resources of the terminal operators.
Beyond freight, our members also support the provisioning of cruise
ships and the embarkation and disembarkation of cruise passengers--
matching each with their baggage both on and off the ship. Marine/
cruise terminal operators have a special duty of care to passengers.
They are strategically planning to protect their employees, waterfront
workers and the guests who will transit terminals on way to their
vacation. Cruise ships have announced they will now accept bookings for
cruises scheduled to sail late July and early August--and the public is
responding. The costs to protect workers and guests will be a major
issue. Security costs will be dramatically increased in these instances
. . . even more expenses needed to be funded.
NAWE's members are scouring Federal regulations seeking support for
what COVID-19 can be considered. It defies definition of any prior
crisis of our time. Port operators are moving forward with strategic
planning, logical implementation of those plans, and making nimble
adjustments when needed. It is the cost of these actions, necessary to
keep marine terminal open and freight moving, that is our problem.
In conclusion
We would like to take a moment to recognize the many Federal teams
who have worked with us during this unprecedented time: the U.S. Coast
Guard (USCG), Federal Maritime Commission (FMC), and the Maritime
Administration (MARAD). While many Federal partners are working with
us, these have gone above and beyond in their efforts to be of
assistance. The USCG have maintained oversight as required under 33 CFR
part 126 while balancing new protocols put into place to address the
threat of COVID-19. The FMC has reached out to NAWE to see what they
can do to be of assistance. Sometimes a call or a letter makes a big
difference. MARAD has stepped up by hosting industry calls that include
our members, allowing us to share information and concerns with our
maritime transportation partners. MARAD heard our request for PPE and
are working with FEMA to supply masks for the maritime industry. NAWE's
members requested 240,250 masks and believe these will provide a 90-day
supply for our workers.
Marine terminal operators, stevedoring firms and operating port
authorities are each experiencing reduced volumes in the face of
dramatically increasing costs. They are committed to remaining open and
ensuring the freight needs of the United States are met but cannot
continue to do so without assistance. We ask that a bridge program be
enacted that will assist waterfront employers and port authorities
defray COVID-19 related expenses including lease and other contractual
expenses necessary to keep the ports open, terminals operating, and
workers employed.
Again, thank you for this opportunity. We appreciate the selfless
dedication of this Subcommittee and their continued support for U.S.
port operators. We look forward to working with you to ensure the
supply chain of the United States remains strong.
Mr. Maloney. Thank you, Ms. Brand.
I think that image was meant to alarm us, but I have to say
you had me at 40,000 chocolate bunnies. It is about the best
image I think I have had in days.
So we have one more witness.
Mr. Ebeling, you may proceed.
Mr. Ebeling. Thank you, Mr. Chairman.
My name is Eric Ebeling and I am testifying today on behalf
of USA Maritime, a coalition consisting of American-flag vessel
operators and owners, trade associations, and maritime labor
committed to ensuring that the U.S. merchant marine will always
be available to support our warfighters, enhance our economy
through trade, and provide great jobs to thousands of Americans
across the country.
As president and CEO of American Roll-On Roll-Off Carrier
Group [ARC], a USA Maritime company, it is my honor to lead an
incredibly talented team of men and women at the largest U.S.-
flagged RORO operator. ARC has reflagged five new vessels in
the U.S. registry since 2016, including three vessels in 2019,
and all of our vessels are crewed by American mariners and fly
the American flag.
The U.S.-flag fleet operating in international trade
primarily consists of the militarily useful and commercially
viable Maritime Security Program, or MSP, fleet of 60 ships,
the attendant global networks, and a mariner base of over 2,400
highly trained and loyal U.S. citizen merchant mariners that
support U.S. Transportation Command and the Joint Deployment
and Distribution Enterprise. It would cost the Government tens
of billions of dollars to attempt to try to replicate the
capabilities provided.
The success of a commercially viable U.S.-flag
international fleet is predicated on several factors, all of
which must be present together. The MSP readiness retainer
stipend, which provides a strong base; U.S. Government
generated preference cargoes that must move on U.S.-flag ships;
and commercial cargo, which is not required to move on U.S.-
flag vessels but fills the remainder of the vessel.
The COVID-19 crisis has devastated the cargo segments
thereby undermining the central tenet of the U.S.-flag
international fleet. The latest statistics compiled by MARAD
for April 2020 show Government-impelled revenue declined by at
least 47 percent across the MSP fleet versus April 2019.
Globally, there are currently 524 containerships in lay-up,
equivalent to 2.65 million TEU capacity, and on the RORO side,
global light vehicle sales in April dropped 45 percent year on
year.
A particularly telling statistic is that the United States-
Mexico-Canada Agreement produced only 4,840 light vehicles in
April, which would not even fill one pure car/truck carrier
RORO vessel.
Smart and effective maritime policy, whether legislative or
executive action, has always underpinned the success or failure
of the U.S.-flag fleet international trade, and the COVID-19
crisis is no exception. Some have not unreasonably queried
whether U.S.-flag carriers operating under MSP can access $17
billion set aside for defense contractors under the CARES Act.
Due to the DX-priority or valid top secret requirements, they
cannot.
The fundamental question is what level of readiness is
being sought for the U.S.-flag MSP fleet in international
trade. The stipend by itself is not enough to maintain any
approximation of normal service.
Congress and the administration should consider three
actions to ensure that the MSP fleet and the thousands of
mariner jobs that go with it remain at the ready to support
national defense and economic security missions.
First, Congress should consider an emergency stipend
through the remainder of fiscal year 2020, and, if necessary,
beyond, aimed at addressing the extraordinary costs of
readiness that are being borne by MSP carriers.
Put another way, carriers would be compensated for their
maintenance of service and readiness as opposed to putting
ships in cold lay-up or scrapping or recycling or flagging out
as carriers might otherwise do if not dedicated to supporting
DoD and the JDDE.
As per its previously submitted detailed proposal, USA
Maritime urges Congress to authorize and appropriate $109.8
million or $1.83 million per MSP vessel for the current fiscal
year, as well as to authorize $109 million for the first half
of fiscal year 2021 to be appropriated, if needed. This is what
is necessary to maintain full service levels, full employment,
and minimize impacts to national security.
Second, 100 percent of all Government-owned or financed
cargoes should be required to move on U.S.-flag ships. It is a
rather simple equation: Without cargo, carriers will not invest
in ships, and without ships there will not be jobs for merchant
mariners. And without those merchant mariners, the Government-
owned reserve fleet cannot be crewed.
In a letter addressed to this committee dated May 15th,
2020, signed by TRANSCOM Commander General Stephen Lyons, he
called for requiring, quote, ``100 percent of all Government-
compelled cargoes to be transported on U.S.-flagged vessels,''
close quote. USA Maritime strongly endorses the recommendation.
Third, consider accelerating the recapitalization of the
Government-owned sealift fleet, specifically the Ready Reserve
Force fleet, in the most cost-effective manner, which is to buy
used foreign-built ships with a first priority for used MSP or
VISA ships. Eighty-six percent of the thirty-five ROROs in the
RRF today were foreign built, so this would hardly be treading
new ground. RRF ships today average 45 years old and RRF
sealift readiness rates are only 59 percent. But as a result of
the COVID crisis, there are now more readily available used
foreign-built ships. DoD should act on the seven authorizations
already in place and Congress should authorize and appropriate
for additional purchases in the near term.
This subcommittee and the members of it have been stalwart
supporters of our U.S. maritime industry. You understand well
the many sacrifices that American mariners have endured to
service this Nation, including during this pandemic as these
essential workers continue to deliver the goods.
I close by highlighting another excerpt from the
aforementioned TRANSCOM letter to this committee dated May 15th
in which General Lyons stated, quote, ``Given the economic
downturn as a result of COVID-19, I urge you to favorably
consider the relief request from VISA and MSP carriers.''
Thank you for the opportunity to be here today. I look
forward to any questions you may have.
[Mr. Ebeling's prepared statement follows:]
Prepared Statement of Eric P. Ebeling, President and Chief Executive
Officer, American Roll-On Roll-Off Carrier Group, testifying on behalf
of USA Maritime
Introduction
Good afternoon Chairman Maloney, Ranking Member Gibbs, and members
of the Committee. Thank you for the opportunity to appear before you
today to discuss the state of the U.S.-flag international fleet and the
impact of the COVID-19 pandemic on the U.S. maritime supply chain.
My name is Eric Ebeling and I am testifying today on behalf of USA
Maritime, a coalition consisting of American-flag vessel owners and
operators, trade associations, and maritime labor. USA Maritime is
committed to ensuring the U.S. Merchant Marine will always be available
to support our warfighters, enhance our economy through trade, and
provide great jobs to thousands of Americans across the country.
As we just celebrated Memorial Day earlier this week, and National
Maritime Day last Friday, May 22nd, I take the opportunity to reflect
on all those men and women who died while serving in the U.S. military
to defend our freedoms, and all those serving in the maritime industry
past, present and future. At the confluence of these holidays, and on
the 75th anniversary of the end of World War II, it is right and proper
that we remember World War II merchant mariners, who were recently
recognized through the ``Merchant Mariners of World War II
Congressional Gold Medal Act of 2020'', sponsored by Congressman John
Garamendi (D-CA) and Senator Lisa Murkowski (R-AK), and signed into law
by President Trump on March 14, 2020. Thank you to all of you who
supported this long overdue recognition.
As President and CEO of American Roll-On Roll-Off Carrier Group
(ARC), it is my honor to lead an incredibly talented team of men and
women at the largest U.S.-flag Ro-Ro operator. We own and operate ten
roll-on roll-off (Ro-Ro) vessels in international trade, all of which
are enrolled in the Voluntary Intermodal Sealift Agreement (VISA \1\),
and eight of which are enrolled in the Maritime Security Program (MSP
\2\). ARC Group is committed to investing in the U.S.-flag fleet and
U.S. Merchant Marine \3\ to support our armed forces around the world.
We have re-flagged five new vessels into U.S. registry since 2016,
including three vessels in 2019. All our vessels are crewed by American
mariners and fly the American flag. These Ro-Ro \4\ ships have unique
capabilities to handle rolling stock--trucks, tanks, helicopters, heavy
equipment--and breakbulk that is crucial to supporting military
sealift. In addition, we provide stevedoring and related terminal
services, multimodal, 3PL, and personal property support services to
the Department of Defense (DoD), other federal departments and
agencies, and commercial customers.
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\1\ Voluntary Intermodal Sealift Agreement (VISA): jointly
sponsored program by the U.S. Maritime Administration and TRANSCOM.
VISA provides TRANSCOM with assured access to U.S.-flag assets,
specifically the staged, time-phased availability of U.S.-flag
commercial carriers' shipping services and intermodal systems. Through
pre-negotiated contracts, TRANSCOM is able to meet DOD contingency
requirements in the most demanding defense-oriented situations. The
MSP/VISA fleet is always active in commercial trade but can be
activated for defense purposes by the Commander of TRANSCOM with the
approval of the Secretary of Defense. Throughout any stages of this
agreement, DOD may utilize voluntary commitment of sealift capacity or
systems.
\2\ Maritime Security Program (MSP): a federal maritime financial
sustainment program that provides for a fleet of modern U.S.-flagged
and U.S.-crewed militarily useful sealift assets operating in
international trade. The MSP fleet enables the U.S. Government to
provide sealift for U.S. armed forces utilizing the resources of the
U.S.-flag commercial fleet, and the presence of a U.S.-flagged
commercial fleet operating in international trade enables the
government to pursue generous overseas economic and agricultural
assistance programs. The MSP fleet provides a U.S. national security
asset at a substantially lower cost than the government owning and
maintaining an equivalent capability. An amendment to the Merchant
Marine Act of 1936, it was first passed in 1996, and originally
comprised a fleet of 47 U.S.-flag militarily useful vessels. When MSP
was reauthorized in 2003, the fleet was expanded to 60 ships. The
program is currently authorized through 2035. MSP provides its U.S.-
flag ship-operating participants with a stipend that helps to offset
the relatively higher costs of flagging, crewing, and operating a U.S.-
flag vessel.
\3\ U.S. Merchant Marine: often referred to as ``The Fourth Arm of
Defense'', the United States Merchant Marine has its origins in 1775
and the Revolutionary War and throughout its existence, as exemplified
by its flag motto of ``In Peace and War'', has had a dual nature to
support the nation's trade during times of peace but to switch into a
supporting role in time of war. The term can refer to either U.S.
civilian mariners or to U.S. civilian and federally owned merchant
vessels. Merchant Mariner officers may also be commissioned as military
officers by DoD.
\4\ Roll-on Roll-off (Ro-Ro): self-sustaining cargo ships designed
with ramps primarily to carry wheeled cargo such as cars, trucks,
buses, semi-trailer trucks, trailers, locomotives, railcars,
helicopters and other vehicles driven on and off the ship on their own
wheels or using an assisting platform vehicle. Common Ro-Ro vessel
types include pure car carriers (PCCs), pure car/truck carriers
(PCTCs), large car/truck carriers (LCTCs), Ro-Ros (focused on high and
heavy equipment), container/Ro-Ros (Con-Ros), and Ro-Ro passenger (Ro-
Pax) vessels. The MSP Ro-Ro fleet is comprised of primarily PCTCs.
---------------------------------------------------------------------------
The U.S.-flag fleet operating in international trade primarily
consists of the militarily useful and commercially viable MSP fleet of
60 ships and attendant global networks. There are also a handful of
vessels operating in international trade outside the MSP fleet. The MSP
fleet provides crucial readiness, capacity, and a core mariner base of
over 2,400 highly trained and loyal U.S. citizen merchant mariners to
U.S. Transportation Command (TRANSCOM \5\), its components, and the
Joint Deployment & Distribution Enterprise (JDDE \6\). Without the
ships, networks and mariners provided by the MSP fleet, it would cost
the government tens of billions of dollars to attempt to try to
replicate the capabilities provided.
---------------------------------------------------------------------------
\5\ U.S. Transportation Command (TRANSCOM): one of eleven unified
combatant commands of the United States Department of Defense. The
command is located at Scott Air Force Base, Illinois, was established
in 1987 and coordinates missions worldwide using both military and
commercial transportation resources. Its components include Air
Mobility Command (AMC), Military Sealift Command (MSC), and Surface
Deployment & Distribution Command (SDDC). Commercial industry is often
referred to as the ``fourth component'' of TRANSCOM.
\6\ Joint Deployment & Distribution Enterprise (JDDE): an
integrated DoD system consisting of assets, materiel, personnel,
leaders, organizations, tools, training, facilities, and doctrine
capable of providing prospective joint force commanders with the
ability to rapidly and effectively move and sustain joint forces in
support of major combat operations or other joint operations.
---------------------------------------------------------------------------
U.S.-Flag Fleet & COVID-19 Impacts
The success of a commercially viable U.S.-flag international fleet
is predicated on several factors, all of which must be present
together: (1) the MSP readiness retainer stipend, which provides a
strong base; (2) U.S. government generated preference cargoes that must
move on U.S.-flag ships; and (3) commercial cargo, which is not
required to move on U.S.-flag vessels but fills the remainder of the
vessel. The cargo groupings vary in terms of relative importance by
vessel type and by relative volume over time, but ultimately function
together with the stipend to partially offset the higher costs of
operating and crewing U.S.-flag vessels vs. foreign flag ships, which
is directly attributable to compliance with U.S. laws. The COVID-19
crisis has devastated the cargo segments, thereby undermining the
central tenet of the U.S.-flag international fleet.
International Monetary Fund (IMF) forecasts for 2020 indicate that
the U.S. economy is expected to shrink by 4.6% for the year, the Euro
area is expected to shrink by 7.0%, and China is expected to grow by
1.2%. The idle global container fleet has reached record levels,
greater than even during the Global Financial Crisis, with 524 ships
idle, equivalent to 2.65M twenty-foot equivalent unit (TEU \7\)
containers. The global container fleet, which consists of three primary
alliances, 7 major carriers and several smaller carriers, is
experiencing hundreds of blanked or voided sailings. According to one
recent industry report, global container liner providers could lose
upwards of $23.4 billion in 2020. In the heavy lift or multipurpose
(MPP \8\) sector, which is focused on project cargos and infrastructure
development in remote locations year-on-year MPP vessel utilization is
down by 75-90%, and ``handysize \9\'' freight rates are down 50-70% in
Atlantic trades and over 70% in Pacific trades.
---------------------------------------------------------------------------
\7\ Twenty-foot Equivalent Unit (TEU): a container shipping
industry standard used to describe the capacity of container ships and
container terminals based on the volume of a 20-foot-long (6.1 m)
intermodal container, a standard-sized metal box which can be easily
transferred between different modes of transportation, such as ships,
trains and trucks. There is also a standard container with the same
width but double length called a 40-foot (12.2 m) container known as a
forty-foot equivalent unit (FEU).
\8\ Multi-Purpose Vessel (MPP): sometimes also referred to as MPV
or heavy lift vessels, encompasses ships built for the carriage of a
wide range of cargoes including but not limited to large dimension
projects, wood, steel, building materials, rolls of paper and bulk
cargo.
\9\ Handysize: naval architecture term for smaller bulk carriers
generally with deadweight of up to 50,000 tons.
---------------------------------------------------------------------------
Turning to the global Ro-Ro fleet, a recent trade press article
noted that some major car carrier routes are showing a 50% drop in
demand. Global light vehicle sales in April showed a 45% drop year-on-
year, with the U.S. down 45.6%, and some regional year-on-year drops
approaching 80%. Production rates vary by region but have often fallen
below 50% of normal levels due to supply chain disruptions, weak
demand, and the operational constraints of social distancing. The
European Commission is considering an economic stimulus package that
could include a 20 billion Euro offer to consumers in the EU; details
are not finalized but it is expected to incent environmentally friendly
passenger cars. In the U.S., some automotive plants have resumed
production, and GM, Ford and Fiat-Chrysler are in the process of
reopening. However parts shortages forced Mercedes to suspend
production at its Alabama plant following reopening in earlier May. The
USMCA \10\ area produced only 4,840 light vehicles in April, which
would not fill even one pure car truck carrier (PCTC) Ro-Ro vessel.
Year to date, global PCTC calls are down nearly 17%, with most of the
declines in April and May.
---------------------------------------------------------------------------
\10\ USMCA: United States-Mexico-Canada Agreement, a free trade
agreement that is a successor to the North American Free Trade
Agreement (NAFTA).
---------------------------------------------------------------------------
For the U.S.-flag fleet generally, the DoD ``stop move'' policy,
which is in effect through June 30th, is the major issue, although we
have seen slowly increasing cargoes moving by exception to policy,
whether for military unit cargo, sustainment, or personal property over
the past several weeks. There has been a concerted effort by TRANSCOM
and its Army component, Surface Deployment & Distribution Command
(SDDC), to improve forecasting, which is very helpful to carriers as
they plan and adjust their networks. However, cargo volumes, whether
commercial or preference cargo, are simply not there, and it is unclear
whether, when and to what extent underlying demand may return. Further
details by U.S.-flag shipping segment:
The internationally trading U.S.-flag container fleet,
consisting of 120,000 TEUs of container capacity, is comprised of the
three largest international container lines and operates in four main
strings (1 trans-Pacific, 2 trans-Atlantic, and 1 Mideast); U.S.-flag
impelled cargo generally fills about 10-15% of the total vessel. While
these container liner strings continue to carry DoD sustainment and
certain commercial cargoes, it is expected that total combined volumes
will decrease by 30% in Q2.
The MSP Ro-Ro fleet provides over 3.1 million square feet
of capacity and exists almost exclusively to carry defense rolling
stock and breakbulk cargoes. There are select cargoes moving by
exception to the ``stop move'' policy but U.S.-flag Ro-Ro cargoes in Q2
may be down by as much as 75-90%.
The DoD ``stop move'' order is also impacting the MPP
heavy lift sector, and U.S. Export-Import Bank \11\ and other civilian
agency project cargoes are being delayed into 2021; several such
vessels have entered into warm layup and others may be left with no
choice but to join.
---------------------------------------------------------------------------
\11\ U.S. Export-Import (EXIM) Bank: established in 1934 as the
official export credit agency (ECA) of the United States. Operating as
a wholly owned federal government corporation, the Bank assists in
financing and facilitating U.S. exports of goods and services. EXIM
promotes U.S. goods and services at no cost to U.S. taxpayers,
protecting ``Made in America'' products against foreign competition in
overseas markets and encouraging the creation of American jobs. There
are strict U.S. content rules associated with EXIM financing, and
certain project cargoes financed by EXIM must move on U.S.-flag
vessels.
---------------------------------------------------------------------------
In the tanker space, while there is a lag in impact due
to the nature of the market space, the U.S.-flag market cargo
expectation is a reduction of at least 25-30% in liquid preference
cargoes for the year.
The continued availability of the MSP fleet's capabilities to
TRANSCOM and the JDDE is critical to DoD's ability to meet the sealift
requirements of the Mobility Capability Requirements Study (MCRS \12\)
and in the national interest from an economic and national security
standpoint. DoD's commercial partners and the mariner base must remain
viable to support DoD needs regardless of the global economic
environment. TRANSCOM is currently conducting an update to the MCRS,
which will help identify long term organic and commercial sealift
capacity requirements to meet operational needs. In an address last
week on National Maritime Day (May 22, 2020), TRANSCOM Commander
General Stephen Lyons noted ``the United States' ability to project
across trans-oceanic distances remains a strategic comparative
advantage and is admired by both friends and adversaries. TRANSCOM,
working with the Maritime Administration (MARAD) and key industry
partners, provides an essential element of deterrence and if necessary,
the unquestionable ability to respond with overwhelming decisive force,
most of which will be moved by sealift. The resultant combined effort
is a world order that encourages peace and opportunities for freedom,
while deterring great power war for over 75 years and counting.'' There
remains an enduring need to think long term, beyond the current crisis,
on how commercial partners must remain viable to support DOD needs
despite the global economic environment. This is why, notwithstanding
the impacts of COVID-19, MSP carriers have been continuing to deliver
the goods when and where needed.
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\12\ Mobility Capability Requirements Study (MCRS): a series of
mobility studies undertaken by TRANSCOM and the Cost Assessment and
Program Evaluation (CAPE) organization within the Office of the
Secretary of Defense (OSD), the most recently completed of which is
designated MCRS-18. The studies asses the number of tanker aircraft,
airlift aircraft and sealift ships needed to meet future combatant
commander requirements and are generally undertaken pursuant to
Congressional National Defense Authorization Acts (NDAAs).
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In Peace and War
The historical highpoints for the U.S.-flag international shipping
industry have occurred in the years following World War II, during and
immediately after both the Korean War and the Vietnam War, and most
recently during Operation Iraqi Freedom (OIF) and Operation Enduring
Freedom (OEF) in Afghanistan. Over 90% of all military equipment is
shipped overseas by sea because of the scale and scope of the cargo,
and the cost efficiency of moving it by sea versus air, with the
preponderance of it generally shipped via the U.S.-flag international
fleet. There is a direct correlation between declining defense spending
and the decline of the U.S.-flag fleet and merchant marine. More to the
point, when DoD is most active, and defense spending is higher, the
cargo base is larger and therefore the fleet sizes up accordingly. In
the 1960s, national defense spending averaged 8-9% of GDP but by the
end of 1970s, it was 5%. In the 1980s, it recovered to 6%, before
declining again with the end of the Cold War, and by the end of the
1990s, it was under 3%. Defense spending reached a recent peak of 4.5%
in 2009 before resuming a decline.
Not coincidentally, the U.S.-flag fleet has fallen from a recent
high of 107 ships in international trade in 2010-2011 to a recent low
of 77 ships in 2016 due to major decreases in defense and other
preference cargoes, as well as the failure of the MSP stipend to keep
pace adequately with rising costs generally and in particular a
widening discrepancy between U.S.-flag operating and foreign-flag
costs. The MSP fleet has stabilized over the past several years due to
an increase in the MSP stipend that took effect in FY17. In December
2019, Congress wisely reauthorized MSP through 2035, which provides
much needed longer-term stability as carriers invest in new assets and
their networks for the long term. Having only just stabilized over the
past several years, the U.S.-flag fleet now faces the twin catastrophes
of imploding government and commercial cargo markets, impacting
carriers' ability to maintain service, and in turn negatively impacting
fleet, network and mariner readiness and by extension TRANSCOM/JDDE
readiness.
All container operators and most Ro-Ro carriers in MSP operate in
liner service, which is a standard industry term for regularly
scheduled service with a fixed port range. U.S.-flag container carriers
operate on a fixed weekly service schedule, with round trips ranging
from 35 days to 77 days. Ro-Ro liner service follows the same general
principle although it is usually more flexible on port range but less
frequent. Liner services generally fulfill the schedule unless the
vessel is unduly delayed due to natural or man-made causes. When any
liner service sailing is blanked, the vessel in question will be idle
until the next opening in the string to resume trading. To maintain
service (and by extension, readiness for DoD), carriers may decide to
operate higher cost U.S.-flag service when cheaper non-flag options may
exist in a given carrier network. The remainder of MSP vessels operate
on a contract of carriage or fixture basis, providing worldwide
transport without a fixed trade lane, often to remote locations; such
vessels are reliant on a base cargo that is often accompanied by
smaller lot cargos for different customers. COVID-19 has dramatically
impacted base cargoes resulting in idling of vessels.
Thus, while there are major differences in the reductions by market
segment, due in part to the underlying service profiles, all U.S.-flag
services are being dramatically impacted by the changing cargo
dynamics. The extra costs of dealing with the crisis combined with lost
revenues total hundreds of millions of dollars in total impacts. MARAD
has compiled statistics showing a decline of $58.8M in government-
impelled cargo revenues to MSP carriers in just the first quarter of
2020 vs. Q1-2019, and due to the lag effect on supply chains and cargo,
most of the impacts, which only started in mid-March 2020, will be much
harder felt in the second quarter and beyond. The latest statistics
compiled by MARAD for April 2020 show government-impelled revenue
declined by at least 47% across the MSP fleet vs. April 2019.
U.S.-flag carriers have taken various steps to manage costs, stay
competitive, and maintain service. These include slow steaming;
omission of port calls where there is insufficient volume to justify
the cost of a port call; and eliminating holiday, weekend, and other
overtime work where possible. Verifying cargo availability and accurate
forecasting are critical, as is optimizing vessel utilization given the
impacts to overall cargo volumes. Absent any national security and DoD-
related readiness-driven considerations, U.S.-flag carriers would be
even more aggressively adjusting to the dramatic decreases in cargo and
revenue and taking assets and crews out of service.
Carriers are working closely with maritime labor, the U.S. Coast
Guard, state and local authorities, agents, ports, and other parties as
appropriate on COVID-protection measures. Social distancing, cleaning,
and personal protective equipment (PPE) protocols are important to
maintaining the health and safety of our people. Access to testing
kits, certain overseas crew changes for select MSP vessels that do not
call U.S. ports, and PPE remain challenges. However, the result of our
joint efforts to date is that there have been no known outbreaks of
COVID-19 on U.S.-flag MSP ships. It is probably unrealistic to believe
that this trend will continue indefinitely, but it is a testament to
the collective efforts of labor and management, balancing safety and
health while continuing to meet the mission, that it endures today.
Challenges & Opportunities
Smart and effective maritime policy, whether legislative or
executive action, has always underpinned the success or failure of the
U.S.-flag fleet in international trade, and the COVID-19 crisis is no
exception. In a theoretical free enterprise economic model, and absent
DoD cargoes, other preference cargoes, and MSP, there would be no
American citizen crews and no U.S.-flag international carriers. Today,
as a result of the commitment of the Department of Defense to the
utilization of the U.S.-flag commercial fleet and the support of the
Maritime Security Program, the U.S.-flag fleet in international trade
is largely stable, but the COVID crisis threatens that stability, and
the thousands of mariner jobs that go with it.
It should be noted that the CARES Act and other legislative and
Administration actions have helped to stabilize certain aspects of the
situation for parts of the industry, including payroll protection and
access to loans. While USA Maritime appreciates the actions taken so
far, the work is incomplete. Some have not unreasonably queried whether
U.S.-flag carriers operating under MSP can access the $17 billion set
aside for defense contractors under the CARES Act. Fundamentally, the
$17 billion is for loans to businesses critical to maintaining national
security. One might think that U.S.-flag carriers supporting DoD
sealift might reasonably qualify, but due to the DX-priority \13\ or
valid top-secret requirements, they do not. The fundamental question is
what level of readiness is being sought for the U.S.-flag MSP fleet in
international trade. Today's MSP rules allow operators a substantial
degree of freedom provided they meet 180 minimum operating days per
fiscal year, and under normal circumstances, when both government and
commercial cargoes are moving in reasonable volumes, most carriers can
not only meet that threshold but also the 320 minimum operating days
necessary to receive the full MSP stipend for the fiscal year. But with
both cargo sets decimated, the stipend by itself is not enough to
maintain any approximation of normal service.
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\13\ DX priority: a priority rating under the Defense Priorities &
Allocations Systems (DPAS). DPAS ratings assure the timely availability
of industrial resources to meet current national defense and emergency
preparedness program requirements and to provide an operating system to
support rapid industrial response in a national emergency. The Defense
Production Act of 1950 authorized the President to require preferential
treatment of national defense programs. All prime contracts,
subcontracts or purchase orders in support of an authorized program are
given a priority rating. A DX rating is assigned to those programs of
the highest national priority. Per DoD 4400.1-M, OSD AT&L approves DO
rated orders and nominates to the Secretary of Defense for approval of
DX rated orders. An unrated order is a commercial order or a DoD order
that is not ratable. A DX rating takes priority over a DO rating which
takes priority over an unrated order. Rated programs are also given a
program identifier symbol. DPAS issues are supposed to be resolved at
the lowest level possible.
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Congress and the Administration should consider three actions to
ensure that the militarily useful and commercially viable MSP fleet,
and the thousands of merchant mariner jobs that go with it, remain at
the ready to support national defense and economic security missions:
First, in recognition of the close partnership between
DoD/TRANSCOM and commercial carriers, specifically DoD's reliance on
commercial sealift to deploy and sustain the force, Congress should
consider an emergency stipend through the remainder of FY20, and if
necessary beyond, aimed at addressing the extraordinary costs for
readiness that are being borne by MSP carriers. Put another way,
carriers should be compensated for their maintenance of service (and
readiness), as opposed to putting ships in cold layup, or scrapping/
recycling, or flagging out, as carriers might otherwise do if not
dedicated to supporting DoD. As per its previously submitted detailed
proposal, in order to ensure continued readiness as well as maximum
mariner employment feasible, USA Maritime urges Congress to authorize
and appropriate $109.8 million ($1.83 million per MSP vessel) for the
period April 1, 2020 to the end of the current fiscal year, as well as
to authorize $1.82 million per vessel with a total authorization of
$109 million for the period October 1, 2020 to March 31, 2021 to be
appropriated as needed. This is what is necessary to maintain full-
service levels and full employment and minimize impacts to national
security levels.
Second, under America's cargo preference laws \14\, 100%
of all military cargoes and at least half of all civilian agency
cargoes must be shipped on U.S.-flag vessels. This has been the
official policy of the Federal Government since at least 1904, and it
has long been a cornerstone of American national defense. Whether by
legislation or executive order, 100% of all government-owned or
financed cargoes should be required to move on U.S.-flag ships. It is a
rather simple equation: without cargo, carriers will not invest in
ships, and without ships, there will not be jobs for merchant mariners.
Without those merchant mariners, the Government-owned reserve fleet
cannot be crewed. In a letter addressed to this Committee dated May 15,
2020 signed by TRANSCOM Commander General Stephen Lyons, he called for
requiring ``100 percent of all government-impelled cargoes to be
transported on U.S. flagged vessels''; USA Maritime strongly endorses
the recommendation.
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\14\ Cargo preference laws: the reservation by law for
transportation on U.S.-flag vessels of all, or a portion of all, ocean-
borne cargo which moves in international trade either as a direct
result of the Federal Government's involvement, or indirectly because
of the financial sponsorship of a Federal program or guarantee provided
by the Federal Government. The U.S. cargo preference laws are part of
the overall statutory program to support the privately-owned and
operated U.S.-flag fleet and merchant marine. Cargo preference requires
that U.S. Government-financed cargoes be shipped on U.S.-flag vessels,
provided that such vessels are available at fair and reasonable rates.
Preference cargoes are the key incentive for U.S.-flag operators
operating in international trade to remain under U.S. registry and
provide a vital cargo base to help offset foreign flag cost advantages.
The primary U.S. cargo preference laws are set forth in the Cargo
Preference Act of 1904, Public Resolution 17 (1934), and the Cargo
Preference Act of 1954. The 1904 Act requires that 100% of all military
cargoes--purchased for or owned by U.S. military departments--be
shipped exclusively on vessels of the United States or belonging to the
United States. PR 17 requires that all cargoes generated by the U.S.
Export-Import (Ex-Im) Bank be shipped on U.S.-flag vessels unless a
waiver is granted by the Maritime Administration. The Cargo Preference
Act of 1954 requires that at least 50% of civilian agency cargoes be
transported on U.S.-flag vessels.
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Third, consider accelerating the recapitalization of the
government-owned sealift fleet, specifically the Ready Reserve Force
(RRF \15\) fleet, in the most cost-effective manner, which is to buy
used foreign-built ships, with a first priority for buying used ships
through U.S.-flag carriers. Some may raise the notion that such ships
should be built in U.S. shipyards, and that is a laudable goal,
although it is a relatively little-known fact that 86% of the 35 Ro-Ros
in the RRF today were foreign built, so this would hardly be treading
new ground. But the state of the RRF is woeful now (average ship age 45
years old), the U.S. Navy has many other competing budgetary
shipbuilding priorities, and as a result of the COVID crisis there are
more readily available used foreign built ships available now. TRANSCOM
Commander General Stephen Lyons noted in testimony earlier this year
that RRF ``sealift readiness rates have declined to 59% compared
against a goal of 85%, with vessel material condition and age as the
primary factors''. As we consider sealift that the nation needs,
specifically whether to continue to pursue service life extensions,
build new, or buy used, let us not let perfect be the enemy of good.
DoD should act on the seven authorizations already in place for buy
used, and Congress should authorize and appropriate for additional
purchases in the near term. Including a first priority for used U.S.-
flag foreign built MSP/VISA ships over foreign-flag foreign built ships
would be a ``win/win'', as carriers could sell or charter assets to the
government that are much younger than today's RRF ships, and in turn
use the proceeds to reinvest in newer tonnage for the MSP/VISA fleet.
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\15\ Ready Reserve Force (RRF): a subset of the National Defense
Reserve Fleet (NDRF), the RRF component was established in 1976 to
provide rapid deployment of military equipment and currently consists
of 46 vessels (35 of which are Ro-Ros) that are crewed with a reduced
crew but kept available in reduced operating status (ROS) for
activation within a set timeframe (usually 5 days). Upon activation,
RRF vessel control transfers to Military Sealift Command (MSC), the
naval component of TRANSCOM [MSC also has reporting lines to Navy Fleet
Forces Command for Navy-unique matters and to the Assistant Secretary
of the Navy (Research, Development and Acquisition) for procurement
policy and oversight matters]. The RRF fleet budget for FY19 was
$310,805,000 (average of $6.76 million per ship) and for FY20 was
$352,044,000 (average of $7.65 million per ship).
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Conclusion
The National Defense Strategy (NDS) focuses on the return of Great
Power competition and all that it entails. In furtherance of NDS
readiness mission assurance, the Defender Europe 2020 exercises
comprised the largest NATO exercises in 25 years. There was a concerted
sealift component to the exercises, and although Defender 20 was
eventually significantly curtailed due to COVID-19, it is still
ongoing, and indeed ARC recently carried redeploying unit cargo from
Germany and Poland back to the United States. With assets and networks
valued in the tens of billions of dollars, the active U.S.-flag
commercial fleet operating in international trade continues to be a
``best buy''--significantly more cost-effective to the Government than
acquisition, operation, and maintenance of Government-owned/operated
assets or attempting to build such networks.
I started this testimony by emphasizing remembering our World War
II mariners, but let us also bear in mind the need to ensure we
maintain a strong U.S.-flag fleet today so that we ensure we have the
necessary assets and hard-working U.S. merchant mariner crews that are
essential to the pursuit of national and economic security objectives
today and tomorrow. I close by highlighting another excerpt from
TRANSCOM Commander General Stephen Lyons in the aforementioned letter
to this Committee dated May 15th in which he stated ``given the
economic downturn as a result of COVID-19, I urge you to favorably
consider the relief requests from VISA and MSP carriers''. Thank you
for the consideration and thank you for the opportunity to be here
today. I look forward to your questions.
Mr. Maloney. I thank the gentlemen.
We will now proceed to Members' questions.
Just a word to those who may be new to the technology. If
you participate using the grid view, you will also see one of
the grids is occupied by the 5-minute clock. For purposes of
monitoring your own time it may be useful.
Also a reminder, your fourth or fifth today, you are
presumptively unmuted. So you all have yourselves muted. Please
continue to do so unless you are recognized.
Now proceed to the 5-minute rounds of questioning, and I
would like to yield to the chairman.
Mr. Chairman.
Mr. DeFazio. Thank you, Sean Patrick. I appreciate the
opportunity to go first.
To Michael Roberts on the issue of quarantining. Is this an
ongoing problem where crews are being quarantined on freighters
or have we gotten past that?
Mr. Roberts. Thank you for the question.
It is an issue of grave concern in most markets. There was
an article today about a tanker in Brazil that had been
quarantined for over a month and is continuing under
quarantine.
That has not happened in the United States. We, with great
cooperation from the maritime labor, we have had very few
incidents of infection onboard ships, and we have had good
indications that if and when that happens, that there will be
an appropriate response at the local level, that the ship will
not be sent to anchor, that it will be sent to a secure
terminal facility where the infected person can be taken off
safely and taken to treatment quickly, the crew can be
quarantined, the ship can be sanitized, and it can be returned
to service.
That is extremely important in certain markets where these
ships provide just-in-time cargo to consumers. The concern is
that that is not a nationally recognized standard at this
point, that there have been incidents where there was a
suspected case where the ship was sent to anchor. And then you
have to have the medical staff climb the ladder to get on the
ship to administer this test. And it is very, very unsafe and
it is not the best place to respond to that sort of incident.
So we really hope that the Coast Guard and CDC will work
together with the industry to recognize what the right response
plans are in each port.
Mr. DeFazio. Great. I think that would be something for the
committee to follow up on. That is an excellent point. Thank
you on that.
Thanks also for bringing up the 100th anniversary of the
Jones Act. Yeah, I have been jumping on those who are looking
at this as an opportunity to undermine the Jones Act and thus
far we have been pretty successful in pushing back on them.
To Eric Ebeling. You mentioned for ROROs, they weren't
eligible for--I have run into this before. How much money did
you say was in that fund that they weren't eligible for because
they aren't doing highly classified work?
Mr. Ebeling. Yes, sir. That is the CARES Act, and there is
$17 billion in the fund that is available to national defense.
But U.S.-flag carriers are not eligible for it because we are
not under those classifications.
Mr. DeFazio. Yeah. I think we should--I have run into that
with a trucking company that does a lot of DoD work, too. And I
think staff will need to follow up with Treasury and see how
much of that money has been committed. Maybe we need to look at
modifying the rules for who is eligible and who isn't eligible
if the money is just sitting there unallocated. So thanks for
bringing that up.
Then the last question to Lauren Brand. I am obviously
still a bit dubious about cruise lines at the end of July, but
I understand they are selling tickets and some of them do
intend to sail, and hopefully they won't be populated by the
people who were at the pool party and the bar in Lake of the
Ozarks.
So can you tell us what measures are going to be taken,
particularly landside? I guess once these people sail, it is up
to them. And oh, by the way, if they are flagged in Malta and
they have a problem, they should call for the Maltese Navy, or
if they are flagged in Liberia, they should call for the
Liberians to send medical assistance.
But if you would comment on what we are going to do on the
landside that would be helpful. If you can do that quickly, my
time is about up.
Ms. Brand. Thank you for that question.
Sir, I am not prepared to answer it in completeness. And
what I would like to do is get the information and submit it on
Monday. Is that acceptable?
Mr. DeFazio. Absolutely. That is fine. Thank you.
Ms. Brand. Thank you.
Mr. DeFazio. Thanks, Sean Patrick. Appreciate it. Thank
you.
Mr. Maloney. Thank you. Reclaiming my time.
I am at this time going to recognize Mr. Gibbs.
Mr. Gibbs. Thank you, Mr. Chairman.
First of all, I would like to say to all the witnesses,
thank you for [inaudible]. I hear optimism [inaudible] In your
leadership [inaudible] Tough times ahead, and I just want to
recognize [inaudible] Challenges. And hopefully Congress will
be able to enact some of your proposals' assistance.
After 9/11, the United States and much of the world, we
updated our port security infrastructure framework, mostly to
focus on responses from violent physical terrorist attacks.
Then, of course, we had cyber challenges.
And now with the recent coronavirus response, I think that
is going to pressure test our systems designed to keep U.S.
ports safe and secure; that added pressure will determine if
existing regulatory systems are sufficient to provide ports
with the broad resilience they need, or if the schemes are
focused too narrowly on the response to terrorist attacks.
And my first question is to any of the panelists, I guess.
Do current port safety and security regimes in the United
States provide the level of resiliency necessary to protect our
ports and our supply chains that rely on the ports against the
spread of the coronavirus from vessels to land, cyber threats,
and also national disasters? If not, what actions do you
recommend that we take domestically to improve our port
infrastructure and supply chain resiliency against all of the
threats the industry now faces? I will open it up to any of the
panelists.
Mr. Connor. Yeah. I can take a first shot at that. This is
Chris Connor. And thank you for that question, Congressman.
I think cyber attacks are always a threat and it would be a
very risky response from me to be cavalier and say that we have
got that mastered because I don't think anyone ever will and we
need to stay resilient. And it is also fair to say that the
distractions brought on by the current pandemic certainly may
leave us compromised in some ways.
Saying that, I will say that the port industry, in
particular, spends a lot of time on that. We have a technical
committee within our association that focuses on security. Some
of our members are quite sophisticated and are willing to share
some of their expertise with other members to better prepare
them. And we also work with DHS and through CISA to make sure
that we are on top of all the risks.
But there is no doubt there are increased threats at the
particular time. I think it is hitting people on many levels,
not just on the business level, but also on the individual
consumer level with actors out in the theater. So this is an
area that gets a lot of attention from the port industry.
Thank you.
Ms. Brand. If I may supplement what Mr. Connor just said.
The National Association of Waterfront Employers also has a
security committee and we talk about everything Mr. Connor just
mentioned, and we also address drones.
There is technology that is changing that, frankly, is
frightening and I am not sure that we have enough protocols in
place to address everything. We work very closely with DHS and
the other agencies that impact this issue.
Mr. Gibbs. Thank you. I want to get another question in. In
addition to short-term COVID-19-related needs, U.S. ports,
vessel operators, and marine terminals still face long-term
capital and operating needs. What are the long-term, unfunded
needs of ports, marine terminals, and U.S.-flag vessels due to
longer structural changes in international shipping? What kind
of money are we looking at? What are you looking at long term?
Any idea?
I guess I might go to Ms. Brand maybe.
Ms. Brand. Thank you very much for the question, sir.
Unfortunately, you cut out a little bit. I just wanted to
make sure that the question is: what is the projection of what
would be needed to assist with the COVID-related expenses that
we are enduring right now?
Mr. Gibbs. Yes.
Ms. Brand. Our association believes that about $400 million
should help ports and terminal operators with just PPE; PPE,
cleaning supplies, and incidental changes made to facilities
separating people, social distancing, the things recommended by
the CDC. As I said before, cleaning of equipment costs more
than the actual cost of the disinfectant itself. So about $400
million, which is that one expense, sir. And $1.5 billion might
cover everything else.
Mr. Gibbs. OK. Does anyone else want to respond?
OK. Well, I am just about out of time. I will yield back,
Mr. Chairman.
Mr. Maloney. I thank the gentleman.
I would now like to proceed to Mr. Larsen, although I
understand Mr. Larsen may be having connectivity issues.
Rick, are you with us?
Mr. Larsen. Yeah. Yes, I am with you.
Mr. Maloney. Oh, hello. We can see you.
Go ahead. You may proceed.
Mr. Larsen. Thanks. I think I have it figured out, but I
will pass on later what I think happened.
So thanks so much.
First question is for Ms. Brand. Let me just bring it up
here. It has to do with maybe challenges--it is probably all
ports, but a lot of temperature-sensitive cargo goes to the
Pacific Northwest in egg products, seafood, and so on.
With the pandemic impacts on supply chains, are you seeing
any issues with the export of these temperature-sensitive
products? And what are your members doing to resolve that?
Ms. Brand. Naturally, the members know when the product
hits the terminal what kind of special care that that commodity
needs or that container would need. I have not had any
complaints from anyone about things being left behind that are
temperature-controlled and sensitive like food products. So I
will look into it and I will give you a report back early next
week if that is acceptable.
Mr. Larsen. That is fine.
Ms. Brand. I would also like to say the only product I have
heard that is being left at the dock are the real low-value
items, waste paper, items like that.
Mr. Larsen. OK. Also in terms of the supply chain, have any
of you--maybe I will start with Mr. Roberts. What we are doing
in our office, just as a matter of course, we are looking at
what we need to keep doing after we get through the pandemic
and what we are going to stop doing and get rid of and never do
again because of the pandemic.
Are you learning any lessons about the supply chain that
you are going to incorporate moving forward that would be
helpful for us to understand and know about in terms of our
future legislative planning? For Mike Roberts.
Mr. Roberts. Yes. Thank you. That is a very good question.
We are certainly paying a lot of attention to and seeing
extraordinary changes in how we do work in the office and on
the docks and on the ships. And I am certain there will be
lessons applied going forward. Certainly technology, use of
technology, as we see today, is an eye opener in terms of how
we function.
But as far as the supply chains themselves, I need to think
about that and get back to you. I don't have a great answer for
you right now.
Mr. Larsen. Mr. Connor.
Mr. Connor. Yeah. I will say that the industry, in general,
has experienced remarkably low incidence of COVID outbreaks on
the port footprints. And I think that speaks to the amount of
emphasis that both labor and port authorities and marine
terminal operators have put into keeping port workers safe.
I think it would be a sad outcome to this terrible pandemic
we have gone through not to have some profound changes in the
way we all work. I have no doubt we will see very interesting
developments into terms of especially where people are touching
equipment and things like that, seeing significant
improvements. It has already happened. And not to mention the
more obvious one where administrative employees found out that
we, in many cases, can be pretty darn productive working in a
noncongregated environment.
So I think there are lots of lessons and that story will be
told for years to come.
Mr. Larsen. I find my staff is a lot more productive, too,
when I am not going by their desks and asking them to do all
sorts of things as well.
Mr. Connor. 10-4 on that.
Mr. Larsen. Ms. Carpenter, do you have an answer to that
question? Any changes you see coming?
Ms. Carpenter. Highlight, in particular, the use of remote
audit and inspection techniques.
So our segment of the industry, the tugboat, towboat, and
barge industry, is halfway through the phasing in of a very
significant regulatory change, towing vessel inspection or
subchapter M. By July 20th of this year, 50 percent of the U.S.
towing vessel fleet needs to have certificates of inspection.
And then COVID-19 hit. And so we had to work creatively
with the Coast Guard to figure out how we are going to keep
getting audits and inspections done while keeping mariners
safe, recognizing sometimes you need to defer. This is going to
be with us for a long time, and we need to figure out how to do
business safely.
So we have had very good success working with the Coast
Guard, working with Coast Guard-approved third-party
organizations, to use remote audit and inspection techniques to
supplement what takes place face-to-face. And I think that is
something we are going to continue to refine and improve going
forward.
Mr. Larsen. OK. Thank you.
Thank you, Mr. Chairman.
Mr. Maloney. I thank the gentleman.
Mr. Weber.
Mr. Weber. Well, thank you, Mr. Chairman.
I appreciate you all holding this and appreciate you making
the recommendation that when you go to grid view--can you all
hear me OK?
Mr. Maloney. We can hear you fine.
Mr. Weber. Thank you.
When I finally got to grid view, I got to see Alan
Lowenthal, and I thought, man, he is wearing a mask, one of
those COVID masks. But it actually turns out he has a beard. I
don't know how many of you all thought that.
But anyway, it is great to be on with all of you. I
appreciate the opportunity.
Some questions I want to start with probably for Chris
Connor.
You said in your remarks, Mr. Connor, that the supply
chains were changing and there is autos and others and you
named a whole bunch of stuff. How long--I know this is
speculation, pure speculation, and we will go to Jennifer maybe
and Ms. Brand later--how long do you think supply chains are
going to be interrupted to the point that, from a strategic
planning point, you all are going to begin to outline new
supply chain processes, and hoping we can keep as much in the
United States? Have you all looked at that? Any projections,
Mr. Connor?
Mr. Connor. Well, as I mentioned, I think initially, like
most of us, you know, everybody back in March thought, or
hoped, really--it was more hope than thought--we would have a
quick, V-shaped recovery.
I think time and the reality of the complexities of this
pandemic have been a reality check for all of us, and we now
project this is going to be with us, I think, reasonably, at
least through the end of this calendar year, 2020. So that is
the volume downturn that we are going to experience.
I think supply-chain disruptions is probably a different
discussion and maybe a more complex one, as we try and
repatriate certain essential products and certain goods back to
the U.S. so that we don't put ourselves in this exposed
position ever again in the future.
Mr. Weber. Well, that is our hope, of course. Have you
identified certain other countries--and, of course, I know
China is the main one in the discussion right now--but other
areas where we might be thinking of maybe drawing back and
trying to do a little bit more business at home? Have you
identified those potential interruptions?
Mr. Connor. Not as yet. I think we have been kind of
fighting through the crisis. But I think that is a conversation
that I think not only the seaports industry but the entire
logistics industry would like to be a part of, because I think
it is an important one we should have as a Nation.
Mr. Weber. All right. Thank you.
Mr. Ebeling, you made some comments that there was an
emergency stipend needed for MSP carriers or they might wind up
flagging out. Explain that.
Mr. Ebeling. Yes, sir. So this is more of a maintenance of
readiness issue.
So, as I think the committee is well aware, the MSP stipend
today is $5 million per ship per year, and there are 60
enrolled vessels, for a total programmatic cost of $300 million
per ship per year.
Usually that works in concert with the carriage of U.S.-
flag preference cargoes and U.S.-flag commercial cargoes. This
is more of a but-for issue here. So, normally, carriers would
probably be taking actions in terms of laying ships up or
reducing or changing service profiles. And what is happening
with the MSP fleet is they are all maintaining service.
But, in order to maintain that service and, therefore,
readiness for the Department of Defense, we believe that it is
appropriate to have an additional stipend of $1.83 million per
MSP vessel in order for those ships to remain in service and
the crews fully employed onboard those ships.
So I apologize if I made a misleading statement there,
but----
Mr. Weber. So that would include PPE, sanitization, and all
of those kinds of things? Is that what you are driving at?
Mr. Ebeling. Some of it is the additional costs that are
being borne by carriers, and some of it is the lost revenues.
Those total in the hundreds of millions of dollars, and this is
not necessarily to make up for that. It is more just the
maintenance of service and the maintenance of readiness in
support of our partners at DoD.
Mr. Weber. Thank you for that.
And, finally, I go to Ms. Brand.
We are glad you are here. You talked in your remarks about
tequila being made into hand sanitizer. Was that done in
Galveston, Texas, do you know?
Ms. Brand. Yes, sir, it was.
Mr. Weber. My district, just wanted to say.
Mr. Chairman, I yield back.
Mr. Maloney. Well, I thank the gentleman, and I thank him
for his comments on Members' appearance.
Might be a good time to reference House Resolution 965,
Regulation (d)(2), which requires Members to conform to the
standards of proper attire as required to participate in the
committees' in-person proceedings. I think that one probably
speaks for itself.
With that, Mr. Garamendi.
Mr. Garamendi, you may need to unmute.
You need to unmute, John.
I think we may have lost Mr. Garamendi.
Mr. Garamendi. I am muted.
Mr. Maloney. I think you are having also a connectivity
issue, but I can hear you now.
Mr. Garamendi. Good. I am ashamed that you should start my
session with my dress code.
Mr. Maloney. The Chair's remarks were directed to the
gentleman from the South, but----
Mr. Garamendi. If the shoe fits, wear it. I got it.
Mr. Maloney. We are used to Californians being
appropriately casual.
You may proceed, sir.
Mr. Garamendi. I want to cover a couple of different issues
here. First of all, this one is for Mr. Connor.
I just introduced this week the Special Districts Provide
Essential Services Act. We have about 20 co-authors on it. It
is specifically designed to address the issue that you spoke
to, about ports not being able to participate in the CARES Act
and presently not able to participate in the Heroes Act either.
I represent 237 special districts, ranging from fire to a port
district.
So I want to really ask you, Mr. Connor, if the American
Association of Port Authorities would consider supporting this
effort so that we might provide the necessary support that you
described in your testimony.
Mr. Connor. Congressman, the answer is a resounding
``yes.'' But my staff has made me aware of that proposed
legislation, and we see that as, you know, one channel to bring
necessary funding into the industry. So thank you for your
leadership on that.
Mr. Garamendi. And I notice that there are about 15 of my
colleagues on here, so this is my opportunity to give you a
heads-up to get onboard.
Mr. Lowenthal, specifically, I don't think you are onboard
yet, but you do represent a couple of ports, special districts,
keeping that in mind.
My next question goes to Mr. Ebeling.
You reference three different things that need to be done.
All of those are now in play, specifically some of it in the
NDAA. And I suspect Chairman Maloney will also speak to the
Coast Guard bill, which is moving along.
Specifically with regard to cargo preference, we are now
working on the NDAA to put in a very comprehensive, all-of-
Government cargo being on American ships. I think you are aware
of this, and I would hope that you are supporting that effort
to require that all--I mean every mask, every swab, and every
other thing from the military on be on American-flagged
vessels.
Are you familiar with that, and are you in support of that
effort?
Mr. Ebeling. Yes, USA Maritime is familiar with that, and
we are supportive of a 100-percent cargo preference for all
Government-impelled cargo.
Mr. Garamendi. The other issue you spoke to, you just
handled that. Hopefully we will be able to put that into the
NDAA, possibly into the Coast Guard bill also. And that is,
dealing with the additional stipend necessary to keep the ships
on the present program. So we will be working on that.
Again, this is more to my colleagues that are not yet
onboard with these issues or familiar with these issues. Those
are the two things that I have in mind.
The other thing I want to just bring to all of our
attention--and I know that all of the witnesses have been
engaged in this--and that is the national fleet strategy,
essentially using and repurposing the Jones Act ships so that
they can be made militarily useful to address the shortfall
that occurs in the sea surge potential that we do not yet have
but should going forward.
So that national fleet strategy is basically using the
Jones Act, repurposing some of the ships to make them
militarily useful, and then new ships that would go into the
Jones Act be made in a way that is militarily useful, and
supporting that with Federal money out of the Department of
Defense.
So I will let it go at that. Thank you for the opportunity.
Mr. Maloney, thank you very much for being the first-ever real
hearing. And I will watch my dress code henceforth.
I yield back.
Mr. Maloney. I thank the gentleman. More than accustomed to
being the first ever.
Mr. Gallagher, you may proceed.
Mr. Gallagher. Thank you, Mr. Chairman. I put a tie on as
soon as you mentioned that, because I didn't want to shame you.
I will not pan the camera down, however, to apprise you as to
whether I am wearing shorts or slacks. But I appreciate that.
Mr. Maloney. As usual, we appreciate the gentleman bringing
credit to the House of Representatives. You may proceed. Your--
--
Mr. Gallagher. Thank you.
Mr. Maloney [continuing]. Time is running.
Mr. Gallagher. Thank you, sir.
When I spoke to the Port of Green Bay, in my district,
about their coronavirus needs, the first thing they mentioned,
actually, was constructing a new Great Lakes icebreaker.
And I know that may seem like a bit of a non sequitur, but
the Great Lakes are dependent on icebreaking from the Coast
Guard during the winter season, which was still ongoing when
coronavirus hit. We are expecting a second wave of coronavirus
to hit during the winter season.
So my question for the whole panel, but perhaps Ms.
Carpenter could start, is: What would happen if the Mackinaw
icebreaker was suddenly out of service for maintenance? How
might that affect the region both economically and in response
to the virus during the months we have ice?
Ms. Carpenter. Thanks very much, Congressman. You know, it
is a great question, and the answer is, we would be in a world
of hurt, which I think really gets to a key need that we have
here.
While we have talked about coronavirus-specific needs, like
priority access to testing for mariners, there are a host of
things that fall under the regular jurisdiction of the
Transportation and Infrastructure Committee that are critically
important to keeping the supply chain moving.
So icebreaking, buoy tending, dredging by the Corps of
Engineers, passage of Coast Guard authorization bills--those
are the things that need to happen now more than ever in order
to ensure that we don't have something mess up a recovery as it
is getting going.
So I really want to thank you for your leadership as a
subcommittee in helping us attend to those important needs.
Mr. Gallagher. And I would ask any other panelists who
would like to comment on our icebreaker needs, please.
And if not, I will move on to my second and final question,
which is: Another, sort of, key connection point or single
point of failure for the Great Lakes, which runs through the
Soo locks, which close during icy winters, they reopened on
March 25--again, just as coronavirus was really hitting the
United States.
So I guess my question is: Hypothetically, what would have
happened had the Soo locks malfunctioned at the beginning of
this crisis? How might this have impaired the Midwest's ability
to respond to the outbreak, including transporting basic PPE to
combat coronavirus?
And I don't know--who wants to take that? I will pick on
Ms. Carpenter again if no one else does.
Ms. Carpenter. Sure. Thanks, Congressman.
I think that goes directly to the conversation we were just
having, which is: It would have been terrible. You know, we
have had enough disruption because of coronavirus. Layering on
top of that waterways infrastructure failures, inability to
break ice, inability to do the kinds of waterways management
functions that enable the supply chain to function, pandemic or
not, is just--those are problems that we can ill-afford anytime
and especially not now.
Mr. Gallagher. I appreciate that.
And I guess, you know, my only point with this line of
questioning is, I think, as we learn a big lesson with
coronavirus beyond the subject we are talking today about
various single points of failure in our supply chain and our
economy, we had preexisting single points of failure when it
comes to icebreakers and Soo locks and a lot of things that
directly affect the Midwest every single year, and we can't
take our eye off that ball.
And, with that, I yield the remainder of my time, Mr.
Chairman.
Mr. Maloney. I thank the gentleman.
Mr. Lowenthal.
Mr. Lowenthal, you may be having connectivity issues. You
are cutting in and out, Alan. You may also need to unmute.
Mr. Lowenthal. Can you hear me now?
Mr. Maloney. I believe you can proceed. Go ahead, Alan.
Give it a try.
It appears you are still muted, though, Alan. You may want
to check your mute as well.
Very well. I think we will return to Mr. Lowenthal in the
order--I think that brings up--the next Democrat in the order
would be Mr. Brown.
Alan, if you rejoin, I am sure we can restart.
Why don't you go ahead, Anthony.
Mr. Brown, are you available? Would you like to proceed?
Mr. Brown. Thank you, Mr. Chairman. With all these
different platforms, I always lose track of where the unmute
button is. But thank you for hosting this subcommittee hearing.
Important topic. And, certainly, first out of the gate in the
Transportation and Infrastructure Committee in holding a
virtual or online remote hearing.
The Port of Baltimore 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 the ninth consecutive year.
And while the Port of Baltimore saw a record-breaking year
in 2019, the COVID-19 pandemic has had a severe impact on its
business, as we have seen in ports across not only the country
but the world. In April of this year, total cargo tonnage fell
11.8 percent from the same time the previous year--the steepest
decline since the coronavirus pandemic began.
For the most part, the Port of Baltimore has remained open
and operational. However, Ports America Chesapeake, the private
operator in the port's public-private partnership, continues to
adjust their operating hours at the Seagirt Marine Terminal.
They have closed Seagirt six times in the last 2 months due to
lower international container volumes.
Mr. Connor, a question for you--a fairly general, broad
question. The automobile industry is key to the Port of
Baltimore's success. In your written testimony, you mentioned
that, while the big three automakers have recently brought
production online, it remains uncertain what demand may look
like and how consumer decisions may impact this market segment.
So how can Congress better support the port--all ports, but
certainly the Port of Baltimore--if the automobile roll-on/
roll-off cargo volumes do not bounce back?
Mr. Connor. Yes, thank you, Congressman, for that question.
And, simply stated, I would say, you know, the relief that is
being asked for here today would go a long way to bridging the
gap to normal volumes.
And what Baltimore is experiencing, as you referenced, in
April, I would say that what they are going to experience in
May and June will be much worse. And the reason I say that is
because, in April, they had residual volumes that were still
going through the supply chain. In May and June, they are going
to have very little, if any, volumes, because production is
only now starting to resume from European plants, from Asian
plants, as well as U.S. plants exporting overseas.
So I think what Congress could do is accord us with the aid
that is being requested here today.
Thank you.
Mr. Brown. All right. Thank you.
One more question, with my time remaining, for Ms.
Carpenter.
In your written testimony, you mentioned the need for
nationally consistent regulations to help make the maritime
supply chain more effective. Are there any specific examples of
conflicting State or local regulations that threaten disruption
of vessel traffic during the outbreak of the pandemic? And what
takeaways can you give us?
Ms. Carpenter. Thanks, Congressman.
I think what we actually see from the pandemic is a really
good example of how things can work in terms of cooperative
action between Federal and State government.
So the Federal Government, the Cybersecurity and
Infrastructure Security Agency, very quickly designated
maritime transportation as an essential critical infrastructure
sector. So when States and localities began to issue stay-at-
home orders, many of them incorporated that guidance by
reference.
In a couple of cases, they didn't, and we have the
potential for some bottlenecks when, for example, mariners
going from Louisiana to Texas were potentially going to have to
seek permission on a case-by-case basis to enter the State.
What we saw there was very good cooperation in recognizing the
criticality of maritime transportation and working through the
issue so that we didn't have a bottleneck. We would love to see
that replicated going forward.
Mr. Brown. All right. So the takeaway seems to be that
things are working well, coordination is happening. That is
your takeaway?
Ms. Carpenter. I think my key takeaway would be it starts
with Federal leadership, as it did in this case, and then the
States and the Feds can work together. But we would have had a
real problem if the Federal Government hadn't acted first and
said maritime transportation is essential.
Mr. Brown. Excellent.
Thank you, Mr. Chairman. I yield back.
Mr. Maloney. I thank the gentleman.
Mrs. Miller.
And if we have Mr. Lowenthal back for this, we will proceed
to Mr. Lowenthal after Mrs. Miller.
Mrs. Miller, you may proceed.
Mrs. Miller. Thank you, Chairman Maloney and Ranking Member
Gibbs.
And thank you to you all witnesses for taking the time to
meet with us today, considering the difficult circumstances we
have all getting together and punching all the right buttons.
Shipping is so essential to our economy, even in inland
southern West Virginia. The Huntington Tri-State Port, in my
district, is one of the largest in the country and plays an
essential role in connecting the vast resources and products of
Appalachia to the rest of the world. The COVID-19 pandemic has
threatened this connection, and Congress must do what it can to
make sure that it can be repaired now and made stronger once we
are safe from this invisible challenge.
While many Americans have the ability to work from home
during this pandemic, the maritime industry has been hard at
work ensuring that the United States has all the goods it needs
to weather the crisis. I personally want to thank you all and
the workers in the maritime industry who have put themselves at
risk to make sure that we have PPE, foods, material, and have
been able to continue to stock our shelves and get the
inventory into our homes that most of the Americans do need.
And I want to say thank you for that.
Ms. Carpenter, what deregulatory actions can Congress take
to alleviate burdens on vessel operators and help them focus on
maintaining their operations?
Ms. Carpenter. Thanks very much, Congresswoman.
I will give you a specific example in a bill that has
already passed the House that was authored by this
subcommittee. There was a provision in the Coast Guard
authorization bill that would suspend the imposition of towing
vessel inspection user fees until the Coast Guard promulgates a
fee structure that is fair and reasonable.
Right now, we have a situation where a company that is
operating 100 towing vessels could be paying $500,000 over 5
years in fees that are duplicative of moneys that they are
already spending on Coast Guard-approved third parties who are
performing the same services.
And those fees also serve to disincentivize the Towing
Safety Management System option, which the Coast Guard has said
is its preferred option because of its safety benefit.
So suspending those fees will promote safety, will
eliminate costs, and will not have any deleterious effects. It
is a no-brainer. And we really thank this subcommittee for its
leadership and look forward to a bill passing as soon as
possible.
Mrs. Miller. Well, good. Thank you.
In your testimony, you mentioned the need for nationally
consistent regulations to help make the maritime supply chain
more effective.
Are there any specific examples of conflicting State or
local regulations that continue to threaten disruption of
vessel traffic during the outbreak of the pandemic?
Ms. Carpenter. Thanks very much.
And, you know, as I mentioned in response to Congressman
Brown's question, we really saw a very good example during the
pandemic of how we can keep the maritime supply chain moving.
The Federal Government exercised leadership, and then the
States were able to work with them to address specific needs,
as in the Texas example that I gave.
I think that is a model that we really need to look to
elsewhere, because, just as a patchwork of stay-at-home orders
could completely bollocks up the functioning of the maritime
supply chain, so could a patchwork of State and local
regulations established for environmental or safety reasons.
So the Federal Government taking assertive action to ensure
that we have nationwide standards that are high, that protect
the environment, that protect workers, and that gives States
confidence that we have an effective regulatory floor I think
is a critical first step.
And then where there are State-specific needs, we have the
opportunity to work together to ensure that those are met. But,
again, Federal leadership, it needs to start there.
Mrs. Miller. You sound positive, and that makes me feel
good. Thank you.
Mr. Roberts, in your testimony, you mentioned serious
concerns for the domestic shipping industry. Can you explain
further some of the challenges that domestic, particularly
inland, maritime shipping face during this crisis?
Mr. Roberts. Yes. Thank you for that question.
The industry generally has risen to the challenge to keep
the supply chains open and cargo moving and stores stocked and
so on. The biggest challenge? It is hard to put your finger on
it, but certainly the focus has been on keeping our crews safe.
They can't work remotely. They have to get on the ship. They
have to do their jobs. And when we ask them to do that, we have
to do everything we can to try and make sure that they are
safe.
So access to testing has been a top priority, and we are
making progress there. There has been misunderstanding about
how it is prioritized through the CDC, but I think we are
making progress there. Certainly the technology of producing
more test kits will get us out of this sooner or later. But I
will say that is the largest issue that we have been dealing
with.
Mrs. Miller. Is the testing?
Mr. Roberts. Yes.
Mrs. Miller. OK.
Thank you so much. I yield back.
Mr. Maloney. I thank the gentlewoman.
I am going to give Mr. Lowenthal an opportunity, although I
am afraid he may still be experiencing connectivity issues.
Alan, I think you also need to unmute.
Mr. Lowenthal?
Right. In that case, we will move directly to Mr. Lamb.
Mr. Lamb, you are recognized for 5 minutes.
Mr. Lamb. Thank you, Mr. Chairman. And I actually only
really have one question, so if Dr. Lowenthal comes back, we
can certainly give him the time.
I have a question for Ms. Carpenter about infrastructure
for the inland waterways.
One thing we have really been advocating and pushing for is
a change in the Federal cost share to allow the Federal
Government to pick up a greater share of the tab for some of
these new projects.
Like, in my area of western Pennsylvania, we have some
projects that have been going on for a really long time and
some that have been getting delayed for a really long time just
a few spots down the list of priorities.
So would you able to address whether, if we went to, like,
a 75/25 type of cost share, or 80/20 or whatever, the impact
that that could make on some of these problems and how it might
be able to speed up the work that we are doing and, kind of,
put a lot of people back to work?
Ms. Carpenter. Absolutely, Congressman. And I want to thank
you personally for your leadership and support on inland
waterways infrastructure issues. It is so important to our
industry, and, as I said in my testimony, it really is an
investment in the competitiveness of the Nation.
So the example that you have mentioned, increasing the cost
share for construction and major rehabilitation projects on the
inland waterways system from its current 50 percent Treasury,
50 percent Inland Waterways Trust Fund, an industry-paid user
fee, to, say, 75 percent Treasury, 25 percent--I hadn't even
thought of 80/20, but I like that better. So if we can work
together to get that done, that would be fantastic.
What this will do is it will expedite the completion of
projects that are so important to getting goods to market, to
increasing the competitiveness not just of vessel owners and
operators but of the American shippers who depend on those.
So it is going to be putting a little more money into the
system now, which enables us to get the job done more quickly,
saves us money over time. And, again, it is an investment in
American jobs just throughout the system, from the workers who
are constructing these infrastructure structures to the
mariners on the vessels, to the shippers at the plants and
mines and factories and farms whose goods move to market by
water.
So thanks so much for everything this subcommittee, this
committee has done. Really look forward to working with you to
make some positive change there.
Mr. Lamb. Thank you very much.
I don't think people really make the connection to the
workforce benefits, but I had a chance to be on a call with a
lot of our local contractors and trade unions here in
Pennsylvania. Lock and dam work is a huge source of work for
the same groups of workers that do things like road and bridge
work.
And I also don't think people really make the connection
with the environmental benefits, but you save a lot of fossil
fuels by sending goods on the river. You know, in parts of the
country like mine, the ability to construct the locks and dams
really has made a lot of the water drinkable and navigable,
obviously makes the roads less crowded.
So there is just a whole cascading series of benefits that
I am trying to make sure people realize could be a good
investment to make right now. So thank you very much for your
input on that.
Thank you, Mr. Chairman, for having me, and I yield back.
Mr. Maloney. I thank the gentleman.
I would like to confirm, I don't believe there are any
further Republican Members with questions?
And hearing none, I would like to give Mr. Lowenthal an
opportunity if he has joined us by telephone.
Are you there, Alan?
Still no?
I think we all can sympathize with the technology issues.
If you haven't experienced them over the last few weeks, I
would be surprised. We have all been in these forums.
So, with apologies to Mr. Lowenthal, who is, I believe,
attempting to join by telephone, which is provided, given the
connectivity issues he is having with the video, we will
proceed to Mr. Pappas.
Mr. Pappas, you have 5 minutes.
Mr. Pappas. Well, thank you very much, Mr. Chairman, and to
the ranking member as well. We are all getting better with this
technology, and in a couple more weeks I think we will all be
at 100 percent with it.
But I appreciate the panelists for their thoughts and
answering the questions today and for what your organizations
do to keep maritime transportation strong and resilient,
especially during this crisis.
Most of my questions have been answered, but one issue I
just wanted to delve a little bit more into is the testing
issue that a few of you have brought up.
I know, Ms. Carpenter, you mentioned this is a priority, to
ensure that we have a national strategy on how to ensure that
we can get priority for workers in the industry. And I
absolutely agree with that. We know that other screening
measures have their limitations--you know, taking temperatures,
for instance.
Where up to half of the individuals who have COVID-19
aren't going to exhibit symptoms and where you can transmit the
virus when you are presymptomatic, it is critically important
that all of our essential workers, especially in this
particular industry where you are working in close quarters,
have access to this testing capability.
So I am just wondering what the experience has been of
members to date and what Congress can do to help support
increased testing for our maritime industry.
Ms. Carpenter. Thanks very much, Congressman. Really
appreciate that.
You know, we have seen some improvement, thankfully, in
access to diagnostic testing, but we think that, you know, as
we are now in what I am going to call the chronic phase of this
pandemic--we have a long way to go before we are out of it--
being able to optionally incorporate testing into the
prescreening process for crewmembers is just going to be
critical, especially as stay-at-home orders are lifted
nationwide and there is just going to be a lot more opportunity
for exposure off the job.
So, while I mentioned that we feel like it is a positive
thing that we have been able to keep infections onboard vessels
to a minimum, we take nothing for granted. Anything that
Congress can do to encourage the prioritization of access to
testing for critical infrastructure workers, especially those
like mariners who work in close proximity, would be most, most
appreciated, whether that happens legislatively, whether that
happens via encouragement to FEMA and other authorities.
As a positive example, we were just able, as an industry,
to work with FEMA and the maritime industry to secure a very
large shipment, more than 2 million, of cloth facial coverings
to help protect workers as they are working closely together.
Those were being distributed free of charge, or are being
distributed now free of charge, to ports, to maritime entities,
and it is a real positive step.
So, if we can do something similar with respect to testing,
we would take a massive step forward in securing the maritime
supply chain so we don't see mariners getting sick and vessels
having to be idle just as we are getting the economy moving
again.
Mr. Pappas. Any of the other panelists, do you have
comments on that?
Mr. Ebeling. Yeah, I would be happy to comment on that.
So I think it is important, as we look at this, to
consider, when you look at the Jones Act, domestic fleets, it
is really about domestic supply-chain security, which is, of
course, very essential. And then on the international U.S.-flag
fleet, I think it is also very important to bear in mind the
national security, defense supply chain aspects.
So, between the two U.S.-flag fleets, domestic and
international, we really have some massive benefits that are
important contributions to the economy and national security.
So I would just echo everything Jennifer said in terms of any
prioritization of access to testing kits would be hugely
helpful.
Thank you.
Mr. Connor. Congressman, if I could jump in with one last
comment.
So, within the port industry, there has been a lot of
collaboration between ports who are typically fierce
competitors. But everybody has been collaborating to kind of
show the best ways to get the right protocols and processes in
place.
And the physical layout of no two ports are exactly the
same. So, to kind of smooth that out, one area of contention
that we could use some assistance is, we have had difficulties
in getting treatment from CBP. In some ports, CBP staff who
come into the same facility as does Labor and Port Authority
have not agreed to subject themselves to the testing. And that
kind of creates an A-team-versus-B-team kind of scenario, which
is a little bit uncomfortable. So we have been trying to work
that through the system, but we probably could use a little
shove in that direction.
Mr. Pappas. OK. Well, I appreciate your comments.
And I yield back my time.
Mr. Maloney. I thank the gentleman.
We have been rejoined by Mr. Lowenthal again. In the
absence of a Republican Member, unless, Mr. Gibbs, I am
mistaken, I would like to recognize Mr. Lowenthal for 5
minutes.
Alan?
Mr. Lowenthal. Thank you, Mr. Chairman. You can hear me
now?
Mr. Maloney. Perfectly clear.
Mr. Lowenthal. That is wonderful.
And, first, I want to thank everyone--all the Members; the
witnesses; you, the chair; vice chair; ranking member; and also
Chairman DeFazio--for holding this very important hearing.
I would like to first ask, Chairman Maloney, if I could
have unanimous consent to insert into the record a letter that
the Congressional PORTS Caucus developed and sent to leadership
urging Congress to provide relief to ports in future
coronavirus legislation.
Mr. Maloney. Without objection.
Mr. Lowenthal. Thank you.
[The information follows:]
Letter of May 4, 2020, from Hon. Kurt Schrader of Oregon, Hon. Alan S.
Lowenthal of California, and Hon. Randy K. Weber, Sr., of Texas, et
al., Submitted for the Record by Hon. Alan S. Lowenthal
May 4, 2020.
The Honorable Nancy Pelosi,
Speaker of the House,
U.S. House of Representatives, Washington, DC.
The Honorable Steny Hoyer,
Majority Leader,
U.S. House of Representatives, Washington, DC.
The Honorable Kevin McCarthy,
Minority Leader,
U.S. House of Representatives, Washington, DC.
Dear Speaker Pelosi, Majority Leader Hoyer, and Minority Leader
McCarthy:
We start this letter by offering our sincere thanks to you and your
staff for all the work that you have done to help the American people
during this emergency. The bipartisan work being done here in Congress
is unprecedented and shows what we can do together to overcome
extraordinary events.
Our nation continues to suffer from the effects of the COVID-19
crisis. Congress has done tremendous work advancing multiple pieces of
legislation to mitigate the impact, but it is increasingly obvious that
more must be done. We are advocating here that our nation's ports must
be included in any future packages. This is a sector of our economy
that has so far been left out of proposals but needs assistance to
carry on their essential work. Ports remain vitally important to the
well-being of our communities during this time and will be critical for
recovery efforts once this crisis is over. However, due to their unique
governing structures, these entities have not been eligible for many of
the recently enacted relief programs. Our ask here is simple: we must
include relief specifically set aside for our ports in the next COVID-
19 package.
Funding sources vary for ports, but all have seen their budgets hit
hard by the ongoing business closures and stay-at-home orders. Yet,
port staff are not able to just lock up their facilities and go home.
Their vital work must continue to move the goods the American people
need and to maintain safety and security for these essential workers.
Congress should recognize the enormous impact this is having by
including them in the next package.
Most important is that the next package disperses aid to ports of
all sizes, both large and small alike. Our solution must make sure that
all our ports receive the resources they need. Small ports are often
the lifeblood of communities and are the hardest hit by these events.
We must not forget them when crafting these policies. Any effort
enacted here must be able to flow down to the smallest port to help
them weather this emergency.
Ports come in all sizes, provide gainful employment, and serve a
wide variety of industry sectors--import/export, energy/chemical,
manufacturing, commercial fishing, agriculture, and so forth. Our
nation's ports serve as the vital link between our people and the goods
they buy for their families as well as ensuring American made products
can be purchased in foreign markets. Previous aid has served other
sectors of the transportation industry deemed essential and now it is
critical that all of our nation's ports receive much needed assistance
to keep supply chains moving and keep both employees and customers
safe.
We stand ready to work with you to address these problems and make
sure that all Americans receive assistance during these challenging
times. Without this aid, industries served by ports will not be able to
offer essential services to get our communities back into shape once we
start to recover from this crisis.
Sincerely,
Kurt Schrader,
Member of Congress.
Alan Lowenthal,
Member of Congress.
Randy Weber,
Member of Congress.
Jerry McNerney (CA-09).
Peter A. DeFazio (OR-04).
Derek Kilmer (WA-06).
Donald Payne, Jr. (NJ-10).
Anthony Brindisi (NY-22).
Julia Brownley (CA-24).
Robert Wittman (VA-01).
Adam Smith (WA-09).
Tim Walberg (MI-07).
John Katko (NY-24).
Val Demings (FL-10).
Lizzie Fletcher (TX-7).
Steven M. Palazzo (MS-4).
Stacey E. Plaskett (VI-AL).
Tony Cardenas (CA-29).
Stephen Lynch (MA-08).
Donna E. Shalala (FL-27).
Suzanne Bonamici (OR-01).
J. Luis Correa (CA-46).
Henry Cuellar (TX-28).
Marcia L. Fudge (OH-11).
Barbara Lee (CA-13).
Brenda Lawrence (MI-14).
Rick Larsen (WA-02).
Frederica Wilson (FL-24).
Juan Vargas (CA-51).
Stephanie Murphy (FL-07).
Suzan DelBene (WA-01).
Tom Graves (GA-14).
Filemon Vela (TX-34).
Joe Cunningham (SC-01).
Mike Kelly (PA-16).
Cedric Richmond (LA-02).
Pramila Jayapal (WA-07).
Earl Blumenauer (OR-03).
Denny Heck (WA-10).
Bradley Byrne (AL-01).
Scott Peters (CA-52).
Albio Sires (NJ-08).
Judy Chu (CA-27).
Bill Huizenga (MI-02).
Vicente Gonzalez (TX-15).
David Rouzer (NC-07).
Kathy Castor (FL-14).
Brian Fitzpatrick (PA-01).
Charlie Crist (FL-13).
Ed Case (HI-01).
Brian Mast (FL-18).
Mike Gallagher (WI-08).
Peter Visclosky (IN-01).
Chris Pappas (NH-01).
Gus M. Bilirakis (FL-12).
Tom Rice (SC-07).
Chellie Pingree (ME-01).
William R. Keating (MA-09).
Joe Wilson (SC-02).
Pete Stauber (MN-08).
Don Young (AK-AL).
A. Donald McEachin (VA-04).
Mike Rogers (AL-03).
John Rutherford (FL-04).
Al Lawson, Jr. (FL-05).
Alcee L. Hastings (FL-20).
Jaime Herrera Beutler (WA-03).
Elaine G. Luria (VA-02).
Steve Cohen (TN-09).
Salud Carbajal (CA-24).
David N. Cicilline (RI-01).
Lucille Roybal-Allard (CA-40).
Earl L. ``Buddy'' Carter (GA-01).
Nanette Diaz Barragan (CA-44).
Susan A. Davis (CA-53).
Adriano Espaillat (NY-13).
John P. Sarbanes (MD-03).
Anthony Gonzalez (OH-16).
Jenniffer Gonzalez-Colon (PR-AL).
C.A. Dutch Ruppersberger (MD-02).
Robert C. ``Bobby'' Scott (VA-03).
Brendan F. Boyle (PA-02).
Henry C. ``Hank'' Johnson, Jr. (GA-04).
David P. Joyce (OH-14).
Conor Lamb (PA-17).
Mr. Lowenthal. You know, I have been talking to many of the
terminal operators in my district and other districts, and it
is the same issues--issues of cleaning supplies and issues of
PPE and work hours to adjust to safety issues.
And I would like to respond to, I think it was, earlier,
Representative Larsen's--in my district, the Port of Long Beach
and, in my adjacent, the Port of L.A., they have adjusted the
gate hours portwide to allow cleaning between crews that come
in. And so, you know, our ports are open 16 hours a day, and,
typically, they backed up one to another, but now they have
adjusted those port hours to separate them. And I think that is
one of the kinds of protective measures that will continue in
the future, along with others, about how people congregate and
separate people.
We have known that--my questions have to do with the
financial strains that are on terminals and port authorities.
And I have pressed Congress and the administration to take
steps to aid ports like opening up municipal lending facilities
to port authorities.
So my first question is to Mr. Connor. What kind of impact
would that have for ports across the country if they had access
to zero- or low-interest Federal loans to help them make bond
payments, maintain their payrolls? What issues are port
authorities seeing with Federal loan facilities?
Mr. Connor. Thank you, Congressman Lowenthal.
So I think as Chairman DeFazio mentioned in his opening
remarks, you know, the ports, the way that the CARES Act was
written, have found themselves in a place where, unfortunately,
they have nowhere to turn. That is partly due to the unique
governing natures of ports, whether it is city-, county-, or
State-based, and the various governing structures that exist
and partly based on the interpretation by the Fed of what the
eligibility was for the MLF fund.
If that would be a desirable outcome, sir, if those funds
could be made available to port authorities, I think our
preference is very much in line with what I requested in both
my written testimony and our oral testimony, which is the
grant-in-aid, but, certainly, to have that access to MLF would
also be a good outcome.
Thank you.
Mr. Lowenthal. Ms. Brand, can you elaborate--I was
interested in your comments about abandoned cargo piling up at
port terminals. Do you see that affecting the congestion that
is taking place and also revenues of terminal operators?
Ms. Brand. Thank you for that question.
I did state it is 1.5 percent right now of volumes. And it
is on the west coast; it is a phenomenon on the west coast. So,
no, it is not impacting space as yet, but we are watching and
we are monitoring.
It does require its own area, and it does become a claim
issue when the container is abandoned by the company. The
marine terminal operator contacts the ship line that delivered
it, and it becomes something that the ship line has to resolve
with who owns that cargo and who gets access to it.
So we are monitoring it. It is something that is a sign,
and we are watching the signs.
Mr. Lowenthal. Thank you.
I also would like to respond to Representative Garamendi.
Thank you for reminding me about your legislation. We will see
about getting on that right away.
Thank you, and I yield back.
Mr. Maloney. I thank the gentleman. And we thank him for
his patience with the technology issues.
That concludes, I believe, the first round of questioning.
We do not plan to do a second round of questioning, but, at
this time, I would allow Mr. Gibbs to request a second round.
Or, if you have other Members, Bob, who I am not seeing.
Mr. Gibbs. I am fine. I think we are good. I don't think
there are any other Members on, are there? I can't tell.
Mr. Maloney. I don't believe so.
And if there are any Democratic Members who wish to ask a
second question, we could certainly permit that at this time.
But seeing none, for purposes--and I am pretty sure I know
the answer, but for purposes of a clean record, and despite--
let me just take 30 seconds to ask each of our witnesses for a
short answer on the record.
Despite the leadership of Chairman DeFazio and some of us
who feel very strongly about a direct assistance, maritime-
specific assistance to address COVID-19 needs, it is pretty
clear, though, to a lot of us that the CARES Act, despite the
many critical things it did, fell short in this area.
So, for each of the witnesses--and a simple ``yes'' or
``no'' would do--would you confirm that you support dedicated
maritime-specific assistance to address the COVID-19 pandemic?
Mr. Connor. Chris Connor, AAPA. Absolutely.
Ms. Brand. Lauren Brand, National Association of Waterfront
Employers. Yes, sir.
Mr. Ebeling. Eric Ebeling for USA Maritime. Yes. Thank you.
Ms. Carpenter. Jennifer Carpenter----
Mr. Roberts. Mike Roberts--oh, Jennifer, you go.
Ms. Carpenter. Sorry, Mike.
Jennifer Carpenter, American Waterways Operators. Yes, sir.
Mr. Maloney. Mike?
Mr. Roberts. Mike Roberts, American Maritime Partnership.
Yes, sir.
Mr. Maloney. Well, I appreciate that and the crispness of
those responses.
And seeing no further questions from the Members, just a
short bit of housekeeping, and I will release you to your
weekends.
I would 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 have been submitted
to them in writing, particularly those that may have been lost
due to technical issues.
I would 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.
If no other Members have anything to add, with thanks to
all of our witnesses, this subcommittee is adjourned.
[Whereupon, at 2:41 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, Chairman Maloney.
The U.S. economy is heavily dependent on international trade, and
our agricultural exports are a foundation of the economy in the
Midwest.
Most of the public discussion about the impacts of the COVID-19
pandemic on ports and the supply chain has been about container
shipping and large coastal ports. That's important of course, but I'm
also concerned about the associated restrictions and market impacts on
agricultural commodities shipped either by container or by bulk.
I look forward to hearing from the witnesses today about whether
COVID-19 has caused restrictions which have either reduced consumer
demand for U.S. agriculture products or made it more difficult to ship
these products domestically or internationally.
If problems do exist, I'm interested in hearing the witnesses'
suggested solutions.
Chairman Maloney, thank you for having this important hearing
today, and for leading our Committee's first virtual hearing.
[all]