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American merchant mariners. Today, the active fleet numbers 45 ships,
employing 2,600 mariners. Similarly, in 1980 there were 22 shipyards
engaged in the construction of oceangoing commercial and naval ships
employing 140,000 people. Today, there are just eight shipyards
Source: U.S. MARAD -- 6/4/02
Today, ninety-nine percent of the ships in the MSP fleet are
foreign-built, and 87 percent are foreign owned. It is just a matter of
time until there will be only two – and quite possibly - just one company
left in this fleet. These companies are Neptune Orient Lines of
Singapore and Maersk of Denmark.
The current MSP program has not achieved the intended
objectives. By all measurement, the U.S. merchant marine is worse off
today than 10-20 years ago.
If Congress reauthorizes the existing MSP program, the
Department of Defense will have no say in the types of ships these
companies enroll in the MSP program. They may have little or no
military utility, and there will be no assurance that when the going gets
tough that these ships will be available to the Department of Defense.
To address these serious deficiencies in the Maritime Security
Program, we propose that the Department of Defense pay for the design
and construction of ships over a multi-year construction period. The
general types, tonnage, and numbers of each ship type would be
identified by the Transportation Command, in consultation with the
Maritime Administration, to meet DOD sustainment lift requirements.
Under this program, DOD would request proposals annually from
U.S. citizen ship operators for commercial ships meeting the general
description and functionality required by DOD. The U.S. citizen
operator would enter into a contractual agreement with DOD, based on
the design selected by the operator, to lease the commercial vessel over a
twenty-year period. DOD would then pay for the construction of that
ship in a U.S. shipyard. Lease payments by the operator to DOD would
commence on the date of delivery of the vessel.
The lease payments to DOD would be based on the international
bareboat charter rate for a comparable vessel. Lease payments to DOD
could be made on a monthly basis. While the contractual length of the
lease would be for 20-years, the contract could either be at a fixed rate
for 20 years, or alternatively, provide for an annual adjustment of the
lease payment to reflect any increase or decrease in international charter
This program is a win-win-win for commercial U.S. ship operators,
DOD, U.S. crews, and U.S. shipbuilders. U.S. operators, which are
sinancially hard pressed to invest in new ships – no matter where they
are built -- would have access to ships at international prices, without
having to finance the up-front capital investment.
Under this program, the Department of Defense would own the
ships ensuring their utility and availability in times of emergency. This
program would strengthen the U.S. defense shipbuilding and repair
industrial base, and create thousands of long-term jobs for skilled
craftsmen essential to building both commercial and naval ships.
While DOD would have to finance the construction of the fleet, it
would realize savings in the costs of naval ships. Shipbuilding
generated by this program would enable us to achieve series production
in our shipyards and supplier base. Increased production would drive
down the unit cost of ships and ship systems under this program as our
workforce becomes more efficient with each ship of the same design we
produce. This building program would foster insertion of commercial
technologies and manufacturing processes in naval shipbuilding
programs. These commercial practices, combined with quantity
production would drive down the cost of naval ships.
The lease payments from U.S. operators would be deposited into
the National Defense Sealift Fund of DOD to defray the up-front
acquisition of MSP eligible ships. The contractual terms and conditions
of the voluntary intermodal sealift agreement of DOD would still apply
to U.S. operators participating in the program.
A renewal of the existing MSP, under its existing construct or MSP
shipowner proposed changes, would place the Department of Defense at
the mercy of foreign shipowners to take whatever ship types those
owners make available to DOD - regardless of their military utility.
This was the case when the MSP program was enacted in 1996,
and MSP owners have already indicated that they plan to bring 5,000
TEU containerships into a reauthorized program. While TRANSCOM
may question the military usefulness of such large containerships, they
will have no say in the matter.
DOD has normally needed ships that can enter a majority of the
world's ports, rather than just those few that can handle extra large