Introduction of U.S.A Shipping Policy

National Kaohsiung Marine UniversityDepartment of Shipping and Transportation Management

Associate Professor ：Yi-Chih Yang

OutlineConcept of U.S.A shipping policy

Current development of U.S.A shipping economic

Alternatives of U.S.A shipping policy

Performance of U.S.A shipping policy

1. Concept of U.S.A shipping policy1. Support the growing importance of international

trade to the continued prosperity of the United States by easing congestion throughout the intermodal transportation network from door to door.

2. Enhance America’s leadership and prominence in the international marine transportation community while continuing to promote a strong domestic merchant marine, a highly skilled workforce and making better use of the Nation’s marine highways.

3. Promote U.S. shipbuilding and repair facilities.

4. Stimulate competitions, innovation and efficiency and involve the private sector more fully in the financing, development and management of transportation infrastructure.

5. Meet national security transportation needs no matter where in the world a conflict may arise.

6. Help overcome impediments to maritime system growth while addressing the concerns over safety security and the environment.

US maritime policy, which has evolved over 200 years, directly affects the ability of the US distribution system to function effectively. US maritime policy comprises 7 facets:

1. defense considerations,2. cabotage or reservations of particular trades,3. duality of approach, completely linking

shipbuilding to ship operation,4. direct subsidies,5. freight preferences, 6. reliance on private ownership, 7. a competitive philosophy.

2. Current development of U.S.A shipping economic

Since 2000, the total value of international trade has risen by over 40 percent and it is becoming a larger part of our national economy.The combined value of foreign trade imports and exports) represented 13 percent of GDP in 1990.rising to nearly 22 percent in 2006.It is projected that the value of U.S. foreign trade will be equivalent to 35 percent of the Nation＇s GDP in 2020 and 60 percent in 2030.

Marine transportation will become even more important to our economy as 95 percent of America's foreign trade is moved by ship.

Marine transportation will become even more important to our economy as 95 percent of America＇s foreign trade is moved by ship.

U.S. Container Shipping factsUnited States ranks second in world maritime container traffic after China with one in nine maritime containers in the world either bound for or coming from the United States.Container traffic in the United States is becoming more concentrated as larger, faster and more specialized vessels call at the limited number of ports capable of handling them.The top 10 U.S. container ports accounted for 85 percent of U.S. containerized traffic in 2006 up from 78 percent in 1995.Near55 percent of U.S. Containerized merchandise trade passed through West Coast ports in 2006, up from 42 percent in 1980.

3.Alternatives of U.S. Shipping Policy

Finance Aid PolicyTax Aid PolicyOperating Aid PolicyCargo ReservationNational Defense Reserve Fleet

(1) Finance PolicyFederal Ship Finance Plan is government’s credit guarantee, encouraging growth and modernization U.S. Merchant ship and shipbuilding company according to Loan Guarantee Scheme stipulated in Chapter 11 of 1936 Merchant Shipping Act. The objective of Loan Guarantee is that Government provide private sector loan guarantee in the need of capital for ship construction, re-equipped, maintenance and repair, extend of Loan Guarantee can’t exceed 87% of practical expenses, and guarantee period is restricted to 25 years after ship delivery.

(2) Tax Aid PolicyCapital Construction Fund:According to Merchant Shipping Act 1970 revised , its purpose is to assist ownership and operator of U.S. flag ship to accumulate a large quantity of capital in comply with the need of modernization andexpansion. This project is to encourage ship owner raise capital for ship construction, acquisition, re-equip, etc by way of tax incentive for deferred federal income tax.

Construction Reserve Fund:CRF was enacted by article 551 of Merchant Shipping Act 1936, providing U.S. flag operator tax deferred payment incentive. In other words, ship sale or other handling produce capital profit , enjoying 3 years incentives for ship construction, re-equiped, maintenance and repair aspect, and to meet the need of national defense and commercial development.

(3) Operating aid policy

Operating Differential Subsidy Capital Differential Subsidy

Operating Differential Subsidy and Capital Differential Subsidy

The Operating Differential Subsidy (ODS) and Capital Differential Subsidy (CDS) were extended to non-liners, with the CDS being paid directly to shipyards with a specified ceiling of 55%. ODS designed to make up the disparity between U.S. and foreign costs. ODS pays an amount equal to about one-half of crew costs. Whereas, ODS abolished in 1998 was substituted by Maritime Security Program.

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(4) cargo preferenceThe specific ratio of commodities controlled by Government agency or financial aid are need to guarantee U.S. flag Merchant ship to transport. Cargo preference related to some laws and regulations including the cargo preference Act 1904 and 1954, Public Resolution 1997. Cargo preference is a good examples of who these programs can succeed, for example, in 2006, 118 U.S. flag vessels carried preference cargoes which in turn, provided more than 5,500 mariner jobs and a larger number of shore side maritime and transportation related jobs.

(5) National Defense Reserve FleetInterlocking Maritime Security Program and voluntary intermodal sealift Agreement Program provide the Department of Defense assured access to U.S. commercial ships and crews as well as their intermodal equipment and facilities. The 60 vessel Maritime Security Program also provides employment and training opportunities to U.S. sea fears in order to ensure their availability in times of national crisis.NDRF comprised of government owned militarily useful cargo vessels that can be used in time of national emergency.The graduates of U.S. maritime academies with service obligation who are essential to ensuring that sufficient officers are available to meet both commercial and national defense requirement.

Since 1976 the Ready Reserve Force (RRF) fleet has been an important component of the Maritime Administrations’ sealift capability that supports Department of Defense sealift requirement.RRF includes RO/RO, specialized offshore petroleum discharge ships, Auxiliary carne ships, three special mission and two aviation logistic support ship.In the 2007, Total 52 vessels of RRF proved approximately half of DOD’s early surge requirement for 10 million square feet of sealift.

The domestic “ Jones Act” component, a fleet of over 38,000 vessels, is “make in America’ and represents an aggregate $48 billion investment. Building and maintaining the Jones Act fleet sustains roughly 150,000 jobs throughout the U.S. economy. This fleet is being continuously upgraded and renewed, with domestic maritime carriers moving almost one billion tons of cargo annually along American coasts, river and lakes, the Great lakes, and to and from Alaska, Hawaii, Puerto Rico and Guam.

Maritime Security Program fleet in 2003 2003 年美國海運安全計劃船舶

船公司 艘數 Americna Ship Management 19

Central Gulf Lines 4 First American Bulk Carrier 2

First Ocean Bulk carrier 3 OSCG Car Carrier 1

1990-1999 年國家防衛保留船隊 年度 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999艘數 329 316 306 302 286 296 303 307 307 312

資料來源：U.S. Department of Transportation, MARAD’ 99, 2000.5.

Statistics of NDRF

美國海運業就業人數

Transport and port service sector in 2002 created 16,300 jobs,

Job opportunities of 2007 had increased to 36% compared with 2002.

5.Performance of U.S.A shipping policy

As of year-end 2007, about 40,000 U.S. privately-owned vessels were available for operation in U.S. foreign and domestic traders.Over the last five years, the largest offshore supply vessel (serving offshore oil exploration) and double-hull tank vessel fleets.

In 2007, U.S. flag ocean-going vessels accounted for 12 percent of the calls at U.S. ports。Jones Act vessels accounted 78 percent of U.S.-flag calls and 9 percent of overall calls.Maritime Security Program (MSP) vessels accounted for 2 percent of overall calls.U.S. flag vessels averaged 36 calls per vessel while foreign-flag vessels only 8 calls per vessel, Jones Act vessels call primarily at U.S. port, while foreign-flag and non-Jones ACT U.S.-flag vessels spend significant time in foreign ports.

A great deal of the responsibility for the poor performance of the US maritime industry seems to lie with the lack of a policy that reflects current conditions in international business. The current policy needs complete revision, including a separation of military needs from national defense and foreign policy needs