U.S. Merchant Marine: Battling the Charlatans and Barons

By MarEx 2015-05-21 18:21:13

MarEx spoke to Don Marcus, President of the International Organization of Masters, Mates and Pilots (IOMM&P) as he reflects on U.S. National Maritime Day:

As president of the IOMM&P what does National Maritime Day mean to the organization?

In my mind, National Maritime Day is meant to recognize the U.S. Merchant Marine for its support of military endeavors throughout the world and for its contributions to our economy.

Today, at the national celebration in Washington D.C., the gravity of the tasks ahead and the need to rally in support of keeping the traditions alive for the next generation affected me particularly, as it did other labors leaders. We are quickly approaching the point of no return on the relevancy of U.S. flag presence on the high seas, which seems to be less certain with each passing year.

Is there a next generation?

I think there is. The merchant marine seems to limp from crisis to crisis, but it is almost a certainty that the U.S. will be engaged in a conflict someplace, somewhere in the future. We need to continue to have the support of the decision makers in congress and the military. They need to realize there has to be a baseline logistical capability for times of conflict in the world, so there needs to be a way to sustain our capabilities in times of peace as well.

It’s exceedingly distressing to see us at this point. We can’t seem to get on the radar of the national consciousness. We get a blip such as the Captain Phillips movie and the occasional recognition when there’s a crisis. But, when you consider that the American Merchant Marine veterans were still trying 70 years after the war to get their recognition, the likelihood of the significance of the merchant marine economically and militarily coming to the forefront is not high.

I still have hope because there are people in congress like Senator Barbara Mikulski – who is unfortunately retiring, Congressman John Garamendi, Congressman Elijah Cummings and Duncan Hunter. There are enough of our advocates who understand the importance of the merchant marine, but that list is not getting any longer. It’s a constant battle, and it’s a battle that if we lose once we could go under. So it’s a struggle, but it’s a struggle all of us are committed to. It’s life or death for us.

In the current political climate with fewer opportunities for transport cargo preference, what can the union do to build national awareness of the importance of our deepwater fleet and licensed STCW mariners?

We have been focusing on the decision makers as opposed to public opinion because of the daunting task of trying to affect public opinion with the resources we have available.

When you look at the current fight over the fast-tracking of the Transpacific Trade Agreement, this is a classic example of the immense power of neoliberal globalism that paints everything in the national interest as somehow protectionist and it puts us in unfavorable light. And, this is an argument used against national industries, when really what’s in the national interest is protecting the citizens, the taxpayers, your industrial base and your middle class.

We’re fighting for life and death to preserve what is almost our sovereignty in trade issues. We’re dealing with a global plutocracy that wants to put national interest second to corporate profits. I think our industry is just one symbol of that in the case of Bob Corker and his statements.

Here we pretty much have a classic charlatan. He’s a man that thinks Social Security and Medicare are generational theft, that they’re against financial regulation of the financial sector, but he wants to put working people under, not only in the merchant marine. He doesn’t want people at the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) to organize workers in Chattanooga. He’s a classic robber baron in the 21 century and that’s what we’re up against.

How do we influence that? How do we get public opinion to swing, to recognize the importance of protecting your own citizens, your own job base and your own industrial capacity? That’s a difficult task. And, we’re doing what we can, but our focus has been, by necessity, on the decision makers and the administrators in congress who can with one stroke cut the legs out from under us.

We have to prevent that from happening before we can get to the bigger picture. We’ve been forced to focus on day to day survival.

How do we connect with local politicians local media? How do we get people in our industry to reach out?

What we’ve done and what we continue to do is we have developed maritime advisory committees where we engage with labor and management at a local level. We have the blessing that in this industry management and labor are together fighting for the industry.

So, we reach out at the local level to congressmen and educate them where we can. The Jones Act is a constant barrage. We were pleased when the Government Accountability Office report about Puerto Rico came out a year or two ago. It actually supported the necessity of the Jones Act in our view. I think the best parallel we can show with regards to the Jones Act is to take a look at the U.K. or Canada or Australia.

Canada cannot build their naval vessels, and the U.K. can’t build their ships either. In the U.K. there is only one or two shipyards left that can build warships. Most of their vessels are being built overseas. They’re dependent. In Australia and Canada particularly, they’re dependent on foreign shipping for their foreign trade.

We’re no longer the first trading nation in the world we’re the second. We’re behind China. If we lose the domestic industry, we’ll be finished. We’re hanging on by our fingernails to international trade. If we lose the domestic trade it’s all over.

What can we do? That’s a difficult question except to point to other countries that have lost these industries and are now paying foreign carriers. They’re dependent on foreign shipping not only for their domestic trade, but also for their military security, and at the end of the day they’re paying more and the consumers haven’t seen any reductions in costs.

Have these countries you mentioned benefitted at all from the loss of their flagships?

It would be hard to see how they’ve benefitted, because they don’t have the industrial job base they did in shipbuilding or in the actual merchant marines or merchant navies. Their consumer prices are based on whatever the traffic may bear, and certainly the traffic is going to bear whatever cost they can levy on shippers that are dependent on one or two sources for transportation. I don’t think you can make an argument that the consumers have prospered. I think you can make an argument that the national commonwealth of the people in terms of jobs, middle classes jobs, skilled trade, has diminished.

The Transpacific Trade Bill will definitely impact shipping. The push here is that we’re going to benefit on exports and that American products will be more competitive in the marketplace. That means U.S. flagged shipping is not part of the equation.

We don’t really know what that all means because we haven’t been able to see it. I heard someone saying today that there was an amendment put in by one of the partners in this trade agreement to be able to decertify longshore unions if they perform slowdowns. Who knows?

If you look at the Canadian Trade Agreement, the CTA, they want to gut what’s remaining of the Canadian cabotage laws. We don’t know what protocols there are. They’re directed against labor, they’re directed against national flagged shipping and the fact that this debate can even be going on behind closed doors is outrageous.

The fact is that our political system has been taken over by muddied interests when you look at recent Supreme Court cases. Our democratic values have been lost in a sea of political contribution money – anything can happen. When you’ve got closed-door negotiations that are privy only to a few privileged partners, it doesn’t build confidence.

Do you have any final thoughts for our readers?

I’ve mentioned this to the American merchant marine veterans and several young cadets at Fort Skyler: This is 2015, 100 years ago the Seaman’s Act of 1915 was passed, which was the lifelong project and work of Andrew Furaset from the Sailors’ Union of the Pacific. He was advocating for American mariners to have decent working conditions. There was a provision that there must be 75 percent American English-speaking seamen on U.S. ships. The whole idea was to have a safer better workplace and to protect jobs.

Here we are 100 years on from the time, almost immediately after the act, that flags of convenience started. We’re now at the point where we’re bring in less than 2 percent of our foreign trade on U.S. ships and the circle has gone completely around. We’re back at square one trying to preserve our industry, back to the point where we were in the Spanish American War where we had to charter vessels to supply our troops and we had to charter vessels to carry coal to supply the Great White Fleet.

We’re at the point we were at before WWI when we didn’t have enough ships to ship armaments and goods to Europe before we were engaged in the war. We had a massive shipbuilding program, but ship weren’t built until the war was over. And, here we are we’re going to be repeating ourselves, getting down to the point of no return.

So, it’s disturbing, but it also seems to be the pattern of the merchant marine over the last 150 years. So, there you have it.

I’m personally proud to be part of this industry. I think it’s a wonderful industry. It’s one of the foundational industries of our nation – a trading nation. It’s an industry we want to pass on to the next generation. Why shouldn’t women and men have the same opportunities we have to make an honorable living at sea? And, to see it go away, to see it neglected and to see a bunch of charlatan, robber barons try to put us under is distressing to say the least.

Thank you Don.

The opinions expressed herein are the author’s and not necessarily those of The Maritime Executive.


U.S. Celebrates Over 200 Years of Merchant Mariners

By MarEx 2015-05-21 15:28:39

On May 22 the United States will honor the men and women of the merchant marine who toil at sea to boost the U.S. economy and who have been instrumental throughout history in upholding American liberties.

National Maritime Day traces its history back to 1933 when President Franklin Roosevelt, with Congressional support, set aside May 22 as National Maritime Day. The date was chosen to coincide with the departure of the steamship SS Savannah from its homeport in Savannah, Georgia to Liverpool, England. According to MARAD, “[The ship] was an impressive achievement, one that signaled the beginning of the era of steam, and American technological leadership.”

In the later part of the 20 century, the day has overwhelmingly become a celebration of the Merchant Marines. Following WWII, merchant mariners coming back from the war were not given veteran’s benefits and were excluded from veteran memorial celebrations.

However, the accomplishments of the merchant marines in the war were tremendous. MARAD has commented that, “the merchant marine and American shipyards were crucial to victory in World War II. Then, as now, the United States Armed Forces could not fight a war overseas without the merchant marine and commercial ships to carry the tanks and torpedoes, the bullets and the beans.”

Over the course of the war, the U.S. Merchant Marines carried over 270-billion tons of cargo, which in 1945 averaged out to 17-million pounds of cargo per hour. The Merchant Marines were the first to go to war, with merchant ships sunk even before the U.S. officially entered combat. They also were the last to leave the war effort, transporting the final troops back home after the war. Around one in 30 Merchant Mariners died serving his country, with a higher casualty rate than any of the Armed Forces save the Marines. MARAD has termed National Maritime Day as Merchant Marine Memorial Day because of the unsung sacrifice of so many in the Merchant Marines.

Commercial Maritime Now

Currently, there is much on the horizon for the U.S. commercial maritime industry. Around ninety percent of global commerce take place by sea. Additionally, the United States is the largest importer and exporter of goods and is set to become an even larger maritime power with the opening of the expanded Panama Canal in 2016. A recent study of transportation methods has found that marine freight carriers greatly outpaces both truck and rail transportation in efficiency.

In President Barrack Obama’s 2015 National Maritime Proclamation he praised over 200 years of merchant mariners by saying,

“Our Nation is forever indebted to the brave privateers who helped secure our independence, fearlessly supplying our Revolutionary forces with muskets and ammunition. Throughout history, their legacy has been carried forward by courageous seafarers who have faithfully served our Nation as part of the United States Merchant Marine — bold individuals who emerged triumphant in the face of attacks from the British fleet in the War of 1812, and who empowered the Allied forces as they navigated perilous waters during World War II. Today, patriots who share their spirit continue to stand ready to protect our seas and the livelihoods they support.”

National Maritime Day will be observed across the country in a variety of ways. Many ports host open houses and special celebrations and Propeller Clubs all over the United States hold special luncheons. At Merchant Marine Memorials, such as the one in New York City, and the one in San Pedro, California, memorial observances are held.

The president has also called upon people in the United States to display the U.S. flag at their homes and communities and has requested that all ships sailing under the American flag dress ship on that day.


Maersk to Slash Carbon Emissions by 2020

By MarEx 2015-05-21 15:00:38

Maersk Line, the world’s largest container ship operator, has set a ‘bold target’ to reduce CO2 emissions 60% per container moved by 2020.

The company has stated that the five year-emission reduction plan will save the climate around 200,000,000 tons of CO2, roughly the amount of emissions of all passenger cars in France over the period of a year.

The announcement comes after Chief Commercial Officer Stephen Schueler launched the company’s 2014 Sustainability Update at a session dedicated to sustainable supply chains last week in Rhode Island.

Signe Bruun Jensen, Global Head of Sustainability at Maersk Line stated. “We lead the way in ‘doing more with less. We constantly seek out innovative and commercially viable ways to reduce our environmental impacts, be it CO2 and other air emissions, ballast water, or the materials we use to build our vessels. Therefore, we have set a bold target.”

Maersk claims to have reduced relative emissions of its fleet by 40% already, putting it around 10% higher than the rest of the shipping industry in terms of global benchmarks. The company has been reaching emission goals both by building larger more fuel efficient vessels, such as the Triple-E class ships, and by upgrading its existing fleet. In September of last year the company committed 1 billion dollars to upgrading around 100 vessels with optimized propellers, upgraded engines and bulbous bows that will greatly increase fuel efficiency.

Also in 2014, Maersk Line launched the Carbon Pact challenge. The Carbon Pact is a long-term partnership wherein Maersk Line commits to a CO2 target specifically tailored to the business of the individual customer. As part of the agreement, both companies also pledge to jointly drive transparency and promote more sustainable procurement – raising the bar for the entire industry.

“Maersk Line shares aspirations for sustainable, profitable growth with many of our customers. By committing to reducing supply-chain emissions, we’re demonstrating our commitment to delivering tangible carbon savings” says Stephen Schueler, Chief Commercial Officer at Maersk Line.


New Canadian LNG Project on the Horizon

By Reuters 2015-05-21 14:13:10

Petronas has reached a deal with British Columbia related to its proposed liquefied natural gas export terminal in Canada, putting the Malaysian energy company a step closer to a final investment decision, the province said on Wednesday.

The project development agreement (PDA), which must still be ratified by both the company and the province, provides assurances on issues like infrastructure and aboriginal consultation, along with measures to ensure the project will not face onerous tax or fee increases through the contract term.

A separate royalty agreement, also announced on Wednesday, sets out minimum output targets and the long-term royalty rate for the company’s natural gas production in the province’s northeast.

“These agreements set the stage for a new era of economic activity and a new industry for British Columbia,” Premier Christy Clark told reporters, adding that the province is continuing to build partnerships with aboriginal communities.

At roughly $36 billion, the total investment by Petronas and its partners includes the construction of the Pacific NorthWest LNG export terminal near the northern city of Prince Rupert, a natural gas pipeline and ongoing gas development.

The government deal comes a week after an aboriginal group rejected an offer of C$1 billion ($820.9 million) in return for supporting the export terminal, saying the development would harm a fish habitat next to the project site.

The company, which has made major changes to project design to address aboriginal concerns, said it is not considering alternative locations for the terminal.

A federal environmental review of the Petronas-led project is underway, with a regulatory decision expected later this fall. It is one of the most advanced of 19 LNG export plants proposed for the Pacific Coast province.

Michael Culbert, president of Petronas’ Canadian subsidiary, told reporters the company is working with its partners to clear all internal hurdles so they are ready to move as soon as the PDA is ratified and the environmental certificate is in hand.

“What we’re trying to do is look at all the aspects of the final investment decision and get to the point where a commercial investment decision can be made,” he said. “Then we can move on once the conditions are met.”

The company had previously said it hoped to make a final investment decision by the end of June.

Petronas, officially known as Petroliam Nasional Bhd, has partnered with Sinopec, JAPEX, Indian Oil Corporation and PetroleumBRUNEI on the export project.


Diana prices bond offering

Diana Shipping has raised USD55 million through a bond offering, although industry bonds issuances remain sharply lower so far this year.
NYSE-listed Diana will pay an 8.5% annual interest rate on the senior unsecured notes, which will mature in 2020. Underwriters have the option to purchase an