The U.S. Flag Merchant Marine

By O'Neil, David A. | Review of Business, Fall 2004 | Go to article overview

The U.S. Flag Merchant Marine


O'Neil, David A., Review of Business


Abstract

Addressing this special issue's theme of Maritime Business, the issue editor has selected this widely read 1996 article to present a topic of great importance. As a maritime nation, the United States has effectively used its ships and seafarers to maintain its global supremacy. This article addresses the "fourth arm of defense," the U.S. flag fleet, which faces a significant decline in its share of international shipping. This decline has disturbing long-term implications for America's national security and economic well-being. The author makes a case for a subsidy as a strategic measure to access new markets and satisfy rapidly changing customer expectations.

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Introduction

Sea History's readers know, perhaps all too well, that America's peacetime merchant fleet always begins to dwindle shortly after every war. It seems that when a strong case for having an ongoing, vibrant U.S. flag merchant marine is made to one generation, the lesson goes untaught to the next. Priorities, incentives and opportunities naturally shift as the wartime emergency recedes. Thus, what President Eisenhower termed the "fourth arm of defense" remains out of the news, and the strategic and economic value of a home flag merchant marine becomes a cause only for a dwindling constituency.

Lack of public interest in the merchant marine is paradoxical when you consider that the U.S. is the largest single national market for trade the world has ever known. U.S. foreign trade is worth over one trillion dollars annually, which equates to nearly one billion tons of cargo. But the U.S. is currently carrying less than 4% of its entire trade. Despite our leadership in world trade--and leadership in shipping technology--we are not primary participants in carrying this trade to and from our shores.

Fewer Ships, Fewer Jobs

In order to understand what contributes to the decline in American shipping, let's start with the fact that some decline in the numbers of ships needed to carry a given amount of trade is inevitable. This is due to the use of the larger, faster, more efficiently loaded and crewed merchant ships of today. This means considerably fewer ships are required to do the same job as a few decades ago.

If we consider a 15-knot ship of the 1950s as our baseline, it would have a capacity of approximately 10,000 tons and spend about two more days in port than today's more efficiently loaded 20-knot ship carrying at least twice the cargo on each of its more frequent trips. Using these figures, we can estimate that one of today's vessels might do the work of three post-WWII vessels. A check on this relative ship productivity is easily performed by comparing yearly cargo delivery rates. Fifty million tons were carried by 1400 U.S. flag ships in 1950 and that rate (of tons carried per ship in a year) can be compared to the current productivity of 313 ships carrying 35 million tons. Today's average cargo delivery rate-per-ship of about 112,000 tons-per-year is just about 3.1 times our 1950s average of 35,000 tons per year.

It must be remembered, moreover, that the reduction in the number of ships also reflects on shoreside jobs, not just in the shipping companies, but also in the shipyards and many interfacing businesses that are a part of a larger maritime infrastructure. In looking at the current demand for seafarers, we must consider that today's U.S. flag ships each carry nearly half as many crew members as ships of the 1950s, although today's ships have twice the capacity or more. We employed nearly 60,000 mariners in foreign commerce then, compared to about 7,500 today (these numbers exclude seafarers in our domestic trades or working for the U.S. Government). Just as important as the reduction in number of seafarers themselves is the difficult-to-regain loss of their skills and know-how. Also significant is the attendant abandonment of shoreside facilities and the shutdown of organzations that took decades to build. …

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