• ITVI.USA
    16,350.840
    -55.350
    -0.3%
  • OTLT.USA
    2.731
    0.025
    0.9%
  • OTRI.USA
    21.660
    -0.160
    -0.7%
  • OTVI.USA
    16,343.200
    -45.660
    -0.3%
  • TSTOPVRPM.ATLPHL
    3.520
    0.380
    12.1%
  • TSTOPVRPM.CHIATL
    2.960
    -0.660
    -18.2%
  • TSTOPVRPM.DALLAX
    1.610
    0.250
    18.4%
  • TSTOPVRPM.LAXDAL
    3.340
    -0.130
    -3.7%
  • TSTOPVRPM.PHLCHI
    2.100
    -0.250
    -10.6%
  • TSTOPVRPM.LAXSEA
    3.860
    -0.220
    -5.4%
  • WAIT.USA
    126.000
    -2.000
    -1.6%
  • ITVI.USA
    16,350.840
    -55.350
    -0.3%
  • OTLT.USA
    2.731
    0.025
    0.9%
  • OTRI.USA
    21.660
    -0.160
    -0.7%
  • OTVI.USA
    16,343.200
    -45.660
    -0.3%
  • TSTOPVRPM.ATLPHL
    3.520
    0.380
    12.1%
  • TSTOPVRPM.CHIATL
    2.960
    -0.660
    -18.2%
  • TSTOPVRPM.DALLAX
    1.610
    0.250
    18.4%
  • TSTOPVRPM.LAXDAL
    3.340
    -0.130
    -3.7%
  • TSTOPVRPM.PHLCHI
    2.100
    -0.250
    -10.6%
  • TSTOPVRPM.LAXSEA
    3.860
    -0.220
    -5.4%
  • WAIT.USA
    126.000
    -2.000
    -1.6%
American ShipperShippingTrade and Compliance

GAO report details cost of food aid shipping requirements

The U.S. Government Accountability Office said in a report issued Friday CPFA requirements have increased the overall cost of shipping food aid by an average of 23 percent from April 2011 through fiscal year 2014.

   The U.S. Government Accountability Office (GAO) said in a report issued Friday that cargo preference for food aid (CPFA) requirements increased the overall cost of shipping food aid by an average of 23 percent between April 2011 through fiscal year 2014, or $107 million over what the cost would have been had had cargo preference for food aid requirements not been in place.
   “Cargo preference laws require that a percentage of U.S. government cargo, including international food aid, be transported on U.S.-flag vessels according to geographic area of destination and vessel type. One intention is to ensure a merchant marine — both vessels and mariners — capable of providing sealift capacity in times of war or national emergency, including a full, prolonged activation of the reserve fleet,” GAO said. But it added “the contribution of such requirements to sealift capacity is uncertain.” 
   The GAO report noted that different food aid requirements for the U.S. Agency for International Development (USAID) and U.S. Department of Agriculture (USDA) contributed to a higher shipping rate for USDA.
   In July 2012, the minimum percentage of food aid to be carried on U.S.-flag vessels was reduced for USAID so that the agency was “able to substantially increase the proportion of food aid awarded to foreign-flag vessels, which on average have lower rates, helping to reduce its average shipping rate,” noted GAO.
   USAID paid $281.5 million in shipping costs, $44.9 million or 16 percent more than the estimated $236.6 cost of shipping without preference requirements between April 2011 and and the end of Fiscal Year 2014.
   In contrast, USDA paid $174.8 million – $62.2 million or 36 percent more than the than the $112.6 cost of shipping without preference requirements between April 2011 and the end of Fiscal Year 2014.
   USDA was able to increase the proportion of food aid awarded to foreign-flag vessels by only a relatively small amount because it is compelled by a court order to meet the minimum percentage of food aid carried on U.S.-flag vessels by individual country, a more narrow interpretation of the geographic area requirement than what USAID applies, GAO explained.
   GAO said despite its past recommendations, “U.S. agencies have not fully updated guidance or agreed on a consistent method for agencies to implement CPFA, which would allow USDA to administer CPFA using a method other than country-by-country.”
   Requirements for the amount of food aid that must move on U.S.-flag ships “has varied over the years, and was reduced from 75 to 50 percent in 2012,” said GAO.
   The agency recommended that since cargo preference serves statutory policy goals, Congress should consider clarifying cargo preference for food aid legislation “to define ‘geographic area’ in a manner that ensures agencies can fully utilize the flexibility Congress granted to them when it lowered the CPFA requirement.”
   It also said the secretary of transportation should direct the administrator of MARAD “to study the potential availability of all qualified mariners needed to meet a full and prolonged activation of the reserve sealift fleet,” adding that the DOT agreed with this recommendation.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.

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