Cummings: U.S.-flag programs a failure

Cummings: U.S.-flag programs a failure    The chairman of the House of Representatives Subcommittee on Coast Guard and Maritime Transportation says government programs aimed at helping the U.S.-flag fleet ply foreign trades have been a failure.
   'We have frankly struggled to find the policy that would truly improve and strengthen the U.S. marine transportation system to meet the economic, environmental and security needs of the nation and that would ensure we continue to have a robust merchant marine,' said Rep. Elijah Cummings, D-Md.

Cummings

   Cummings made his comments as he spoke to the Federal Maritime Commission to kick off a series of events leading up to its 50th anniversary next year.
   Some cargo interests say the shipping act has also failed in its stated intent to expand exports and integrate maritime regulations with common global standards.

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   Until 1951, the Federal Maritime Board was responsible for regulating ocean commerce and promoting the U.S. Merchant Marine. When the FMC was created, U.S. shipping laws were separated into two categories: regulatory and promotional, with the FMC in charge of regulation and today the Department of Transportation and its Maritime Administration being in charge of promotion.
   Cummings remarked followed a somewhat similar split. He praised the FMC, and Chairman Richard A. Lidinsky Jr., saying he has 'reinvigorated the commission precisely at a time when critical oversight of the shipping lines carrying our trade is so essential to our continuing economic recovery.' But he said more needs to be done to make the U.S.-flag competitive.
   Cummings said the Ocean Shipping Reform Act (OSRA) 'introduced significant pro-market forces into U.S. shipping intended to expand competition and reduce the power of the conferences. The current state of affairs — in which the FMC has indicated that somewhere between 90 and 95 percent of the cargo coming to the United States moves under contract — is a testament to the success of the act in accomplishing its objectives.'
   But he added that while 'OSRA was meant to shake up the way business was conducted, it was not meant to completely eliminate the old ways of business. As a result, elements of antitrust immunity — even for rate setting — remain in place in the United States.
   'Now, others are taking the next steps down the road toward deregulation — and it remains to be seen what the ripple effect of their steps will be in our waters.'
   Last fall the FMC said it would undertake a comprehensive study of the impact on the U.S. trades as a result of the elimination of shipping conferences by the European Union in October 2008. More recently, Rep. James Oberstar, chairman of the House Transportation and Infrastructure Committee said he wanted to end the antitrust immunity included in OSRA.
   'In an effort to keep vessels under the U.S. flag and plying the foreign trade, we have at various times supported construction subsidies, operating subsidies, the Title XI program, cargo preference programs, and now the Maritime Security Program. Each was individually designed to pursue specific, narrow objectives,' Cummings said.
   'However, an honest assessment must conclude that they have utterly failed in their stated overall objective of maintaining a U.S.-flagged fleet capable of carrying U.S. trade,' he said.
   Oceangoing tonnage declined to 89 ships in 2007 from 857 in 1975, and the U.S.-flagged fleet is estimated to carry less than 2 percent of U.S. foreign trade and is highly dependent on government-impelled cargo, he noted.
   'Over the past century, as the U.S.-flagged carrying capacity has continued its steep decline, there have been many voices warning that this decline constituted both a security risk and an economic risk. These risks remain real today,' Cummings said. 'One of the key consequences of the decline of the U.S. flag is that U.S. exporters and importers are subject to the business decisions and practices of foreign-flagged carriers when they move their products.'
   Cummings noted that in March he convened a hearing to consider the shortage of shipping services — and regional shortages of shipping containers — available to carry U.S. trade, particularly exports. About the same time the FMC launched a fact-finding investigation.
   Cummings said his subcommittee will review the results of that work, and he has scheduled a follow-up hearing on June 30 to receive the findings. ' Chris Dupin