MAERSK LINE LTD. TO TAKE CONTROL OF 15 MSP SHIPS
The U.S. Maritime Administration has approved Maersk Line Ltd.’s request to take control of 15 vessels enrolled in the Maritime Security Program, currently operated by U.S. Ship Management.
“MarAd made the right call,” said Kenneth Gaulden, senior vice president for marketing and government relations for Maersk Line Ltd. “MLL looks forward to a smooth transfer process and to direct operation of these vessels.”
Maersk Line Ltd., a U.S.-flag vessel subsidiary of A.P. Moller/Maersk Sealand, made the request for the transfer with MarAd in November 2002. The company claimed that under its 1999 MarAd-approved time charters that U.S. Ship Management agreed to transfer direct operations of the vessels to Maersk should Maersk Line Ltd. elect to become the MSP contractor.
MarAd said in its opinion that “Maersk qualifies as an eligible transferee of the MSP agreements from USSM.”
The change in contractors will increase Maersk Line Ltd.’s MSP fleet from four to 19 ships. Maersk Line Ltd. said it will compensate U.S. Ship Management for the “current arrangement.”
MSP was created under the 1996 Maritime Security Act and is managed by MarAd. The program provides the federal government with immediate access to 47 military-useful commercial container and roll-on/roll-off vessels during times of war or national emergency. To help offset the higher vessel operations costs, the federal government pays the MSP vessel operators $2.1 million per ship annually.
U.S. Ship Management officials chastised MarAd for playing into Maersk Line Ltd.’s attempt to “hijack” MSP.
“MSP was designed first and foremost for U.S. citizens,” U.S. Ship Management said. “Except for a narrow exception limited to five vessels, the entire program was reserved to U.S. section 2 citizen companies.”
“Since 1997, MarAd has required every single transfer of an MSP agreement from a U.S. citizen company to be a U.S. citizen company,” U.S. Ship Management added. “Now, ignoring congressional intent, statutory and contractual requirements, and each of MarAd’s own precedents, MarAd’s acquiesence to Maersk’s request reads like something out of Alice in Wonderland.”
U.S. Ship Management said it would challenge MarAd’s decision. The company said it’s “confident that it will not withstand judicial scrutiny.”