Congress looks at ship capacity, U.S. fleet
The House Subcommittee on Coast Guard and Maritime will hold a hearing Wednesday on whether there is sufficient ship capacity to serve U.S. foreign trade.
The subcommittee is planning another hearing next week on the “state of United States' merchant fleet in foreign commerce.'
Wednesday’s hearing is because of anecdotal evidence and media reports that “suggest that the ability of the United States to expand export levels is threatened by the lack of vessel capacity and regional shortages within the United States of the containers in which many goods are now shipped,” the subcommittee said.
Capacity limitations could significantly impact President Obama's National Export Initiative that seeks to double exports over the next five years, it said.
U.S. export demand has rose, particularly towards the end of 2009, due to the weakened U.S. dollar and Asia's continued economic growth. An imbalance between increased exports and sharply lower imports created a container shortage in some U.S. markets. 'As global credit markets began to ease and the U.S. economy began to rebound, the issue of a container shortage became more pronounced in late 2009,” the subcommittee said.
Last month, Federal Maritime Commission Chairman Richard Lidinsky told the House subcommittee his agency has “stressed in our meetings with the carriers, with their talking agreements, that they must be able to serve our exports as well as imports. Beyond that, at this point we urge them to work as partners with shippers to identify where potential shipments might be coming from, so that the key will be the location of containers at the right points inland.”
On Monday the FMC set up a new Web page intended to “assist shippers, carriers and the export community.” It said the economic downturn “impacted both carriers and shippers, and 2009 was likely the worst year in modern ocean shipping history.
“Total global container trade contracted by 11 percent, with U.S. container exports shipped worldwide falling by 14 percent, in stark contrast to the preceding two years of double-digit U.S. cargo export growth.” Freight rates dropped and liner companies reduced and reconfigured their vessel service offerings to adjust to the reduced worldwide demand and consequent overcapacity of vessel space,” the FMC said.
Lidinsky has been asked to return to the subcommittee to testify Wednesday. Other witnesses scheduled to testify are Robert F. Sappio, senior vice president of APL; Chris Mullally, president of Mohawk Trading Co.; Hayden Swofford, executive director of the Pacific Northwest Asia Shippers Association; and Michael Berzon, president of the consulting firm Mar-Log Inc. and chairman of the National Industrial Transportation League's Ocean Transportation Committee.
A report prepared for the U.S. Maritime Administration last year by IHS Global Insight found about 78 percent by volume of all U.S. goods bought and sold with the rest of the world moves by water.
U.S.-flag oceangoing fleet has been in decline relative to fleets of other nations, and only carry’s 1.5 percent of U.S. foreign trade, HIS Global Insight said.
As of December 2007, the U.S. oceangoing fleet comprised 89 ships operating in the U.S. foreign trades and 100 ships in the oceangoing 'Jones Act' trade (U.S. origin to U.S. destination).
In 1975 the U.S.-flag fleet covered 857 oceangoing ships with a capacity of 17.7 million deadweight tons. ' Chris Dupin