On June 12, the House Subcommittee on Coast Guard and Maritime Transportation held a hearing on U.S. Cabotage laws. LCA President George J. Ryan was one of many industry and government officials who spoke in support of the Jones Act. In all, there were five panels (26 witnesses.) Over the course of the 5-hour hearing, several truths became self-evident. The Jones Act does play a major role in the nation's defense capabilities. The high standards to which Jones Act vessels are built, maintained and operated are important environmental considerations. The requirement that ships be owned by American companies and crewed by American citizens mirrors the basic groundrules applied to any enterprise in this country. Lastly, and most importantly, the hearing illustrated the efficiency of U.S.-Flag carriers and the high level of competition, both among waterborne transportation companies, and all modes of transportation in this country.
Jones Act critics should have sharpened their needle before the hearing, for their worn-out record did not play well. Rob Quartel, President of the Jones Act Reform Coalition, was unable to produce anyone with credentials to back the JARC's claim that the Jones Act has no impact on National Defense. The representative of Murphy Farms continued to complain about the lack of U.S.-Flag service from the Lakes to North Carolina, but was unable to explain why his company refuses to respond to inquiries about the move from Jones Act-qualified carriers. A Great Lakes salt mining concern likewise complained about a lack of Jones Act vessels, but used incomplete data to attempt to minimize U.S.-Flag participation in the Lakes salt trade.
LCA's testimony follows:
Productivity And Service To Customers
Railroads as Competitors And Partners In Intermodal Transportation
Efficient And Safe Transportation
Grain Shipments From Great Lakes Ports To South Atlantic Ports
Cabotage Not Unique To Maritime
Lake Carriers' Association represents 14 American-owned corporations operating 59 U.S.-Flag vessels exclusively on the Great Lakes. The Association members and other U.S.-Flag carriers on the Lakes have carried more than 230 million tons of cargo during the past two navigation seasons. The vast majority of these cargos move between U.S. ports, the so-called Jones Act trade.
The preamble to the Merchant Marine Act of 1920, of which Section 27 is considered the Jones Act, states that the United States must have a Merchant Marine for national defense and other purposes. Without the Jones Act fleet, the United States would not have the ships, skilled mariners and shipyards so needed to supply our troops in times of conflict.
The Lakes Jones Act fleet offers its customers outstanding service and the lowest freight rates possible while complying with U.S. safety and environmental regulations, paying taxes to Federal, State and local treasuries... To give an example of how efficiency has increased since enactment of the Jones Act, consider this - during the 1920 Great Lakes shipping season, the most cargo hauled by a laker in the Head-of-the-Lakes trade was 462,498 net tons. During the 1995 shipping season, a 1,000-foot-long self-unloader carried 3,183,120 tons of cargo. In other words, just one ship today does the work of seven 1920-vintage vessels!
To keep freight rates as low as possible, Lake Jones Act carriers have maintained and modernized their existing vessels and thus spared their customers the cost of new tonnage. The length of the Lakes shipping season has been extended to 300 days (more in selected trades) so that customers can reduce inventory costs such as land, capital and taxes. To take advantage of the economies of scale offered by larger vessels, cargos are now carried to and from ports previously not served by 1,000-foot-long ships. When receiving docks cannot accommodate these behemoths, cargos are transferred to smaller ships for final delivery. These transshipments provide a long haul rate advantage.
There is no greater inducement for continued improvements in productivity and efficiency than competition. Lakes Jones Act carriers compete fiercely on several levels ... among themselves ... with the emerging tug/barge industry ... and in certain trades, with trucks. It is, however, the railroads that represent the greatest competitive challenge. Once the railroads get a long term contract for the carriage of a cargo, it is very difficult to get it back to water. However, the railroads competed fairly for the business, adhering to U.S. laws, paid U.S. taxes, hired U.S. citizens -- that is fair competition on a level playing field.
In the Great Lakes Basin there are an even greater number of examples of intermodal coordination for the carriage of vital raw materials by a combination of vessel and rail. The Great Lakes Basin is the steel making center of the United States. More than 70% of the steel produced in our nation is produced in the Basin and the vast majority of the iron ore for the steel industry is carried by rail/ship and rail/ship/rail. Western coal from Montana and Wyoming travels by rail and ship to power plants in Michigan and other states. Eastern coal from Pennsylvania, West Virginia, Kentucky, and Illinois travels in rail/ship movements to Canadian and other Great Lake states utilities on waterside.
The Great Lakes shipping industry recognizes that the American rail industry is an important competitor and at times a partner. We would consider it unthinkable for Congress to change the law of the land to allow foreign ships, with foreign crews, to come into head-to-head competition with the railroads. That is precisely what the currently considered changes to the Jones Act would do.
One of the key elements of the Jones Act is the requirement that the vessel be documented under the laws of the United States. That requirement means that the ship is built, maintained and operated according to the world's highest safety standards. While a commitment to safety is important on all U.S. waters, the need is perhaps even greater on the Great Lakes. The Great Lakes are the world's largest body of fresh water and are the source of drinking water for 25 million North Americans.
The exemplary safety record of Great Lakes shipping will be imperiled if the Jones Act is repealed. We would soon see the "Ships of Shame" inundate the system in hot pursuit of the 120-plus million tons currently carried by Jones Act fleets. Even at its current staffing level, the United States Coast Guard could never adequately inspect all these foreign ships tramping about the Lakes. The problem would only get worse as the Coast Guard continues to downsize.
There is no regular movement of grains from the Great Lakes port range to the South Atlantic or North Atlantic port ranges. Should such a movement become viable there are a number of U.S. flag carriers interested in the business.
The reasons this movement is problematic or questionable are many. First, shippers need a reliable year round regularly scheduled delivery of grains unless they have no other option. Since the St. Lawrence Seaway closes to commercial traffic from approximately December 20 to April 1, shippers would have to find an alternative mode, such as rail or truck, to deliver the grains for 13-14 weeks each year. This requirement usually leads to a year round commitment to rail delivery since the cost of arranging for rail delivery for 14 weeks would be astronomical considering the possibility that the railcars and locomotives and rail system might be underutilized for the other 38 weeks. If there are no rail options the shipper might consider the expense of stockpiling grains for 14 weeks plus another 4 weeks of security in case of late deliveries in the spring.
While the hog and turkey farmers in North Carolina are apparently experiencing problems with the cost and supply availability of railcar delivery of grain, the search for an outlet from the Great Lakes is illusory at best in that the Seaway was closed when the recently published reports of grain delivery shortages occurred in December and January.
Whenever Lake Carriers' Association argues in support of the Jones Act, we are confronted with the notion that the principles of the Jones Act are somehow unique to maritime. Once again, we must state that there is only one aspect of the Jones Act that is truly particular to the marine mode, and that is the requirement that the ship be built and maintained in the United States. This U.S.-build requirement is necessary, if only for national defense. We are still an island nation and must have a domestic shipbuilding capability if we are to protect our interests worldwide.
Save for the build requirement, maritime plays by basically the same groundrules as do railroads, trucks, airlines, buslines.... For certain, the percentage of foreign ownership allowed varies from mode to mode, but in essence, American railroads, trucklines... must be operated by an American entity and employ American citizens (or legal aliens). A British airline can't embark passengers in Cleveland and disembark them in Washington. A Canadian railroad with Canadian crews can't load iron ore on Minnesota's Mesabi Range to deliver to a steel mill in Indiana.
Lake Carriers' Association represents 14 American-owned corporations operating 59 U.S.-Flag vessels exclusively on the Great Lakes. The Association members and other U.S.-Flag carriers on the Lakes have carried more than 230 million tons of cargo during the past two navigation seasons. These cargos, most of which move between U.S. ports in what is called the Jones Act trade, are crucial to the economic viability of our steel, power generation and construction industries, just to mention a few.
The Association is proud to appear before this Subcommittee and testify on the need to safeguard the existing Cabotage laws of the United States, best known of which is the Jones Act. While every segment of the U.S.-Flag Jones Act fleet has many outstanding features, we categorically state that the Lakes Jones Act fleet is in a class of its own. We challenge any critic to find a waterway where there are larger and more efficient vessels than those flying the U.S.-Flag on the Great Lakes. Our largest ships are more than 1,000 feet long and haul approximately 70,000 tons of cargo each trip. These behemoths, along with their smaller counterparts, are self-unloaders, a technology pioneered and perfected by Lakes Jones Act operators. Self-unloading vessels are exactly what their name implies - the ships are so equipped that their crews can discharge cargo without any assistance from shoreside personnel or equipment. Despite the fact that self-unloading vessels spare customers the need to install and maintain costly shoreside rigs, only one other nation, Canada, has embraced the concept to any great degree.
Like all forms of transportation, Great Lakes shipping is a service industry. The number of ships in service at any given time reflects customers' need for cargo. On the Great Lakes, the largest single customer is (and has long been) the American steel industry. We estimate that approximately 70 percent of the cargos our members carry are either directly or indirectly tied to steel production. The Great Lakes basin has always been the heart of our nation's steel industry. Even with diversification and restructuring, the Great Lakes basin still accounts for more than 70 percent of the nation's steelmaking capacity.
The Merchant Marine Act of 1920, which contains Section 27 - what we refer to as the Jones Act - begins with "That it is necessary for the national defense (emphasis added) and for the proper growth of its foreign and domestic commerce that the United Sates shall have a Merchant Marine..." The Jones Act provides our nation the maritime foundation upon which our deep sea fleet draws in times of conflict. Without the Jones Act fleet, the United States would not have the shipyards and skilled mariners so needed in times of conflict when our troops are thousands of miles from the U.S.A.
We submit that it is also necessary for the national defense that America's steel industry be served by vessels owned and crewed by corporations and mariners whose allegiance is to the United States, not some foreign power. During World War Two, the locks at Sault Ste. Marie, Michigan, were among the most closely guarded installations in this country so America's steel mills would receive the iron ore they needed to arm the nation. During World War Two, the United States Coast Guard built the MACKINAW, then the world's most powerful icebreaker, so America's steel mills would receive the iron ore they needed to arm the nation. U.S.-Flag shipping on the Lakes is Steel's raw materials lifeline. At the Propeller Club of the United States convention in Buffalo last year, a steel industry executive had this to say about Great Lakes shipping in a post-Jones Act world: Think with me if you will, out several years; not too many, though. The major independent fleets as we know them today are gone. They have been sold to foreign interests, controlled from Europe, Asia and South America. All crews would also be foreign. They would have long since gotten relief from having to have U.S. pilots. They would have difficulty adjusting to the Great Lakes system and to the 9-10 month season. Some of their vessels would go out of the Lakes and all of their crews would go out of the Lakes in the off season. The Soo Lock repair budget might escalate from constant incidents of damage. Where would the reliability of this system be?
But let's take this a little farther. Let's say one winter the U.S. has a dispute with someone in the Middle East and we have allies and together we're addressing that dispute and it ends in a confrontation. But the three countries that represent the ownership of the Great Lakes fleet are not with the United States, so they are told in the spring do not bring your crews back, do not bring your ships. Disaster to our economy, to the war effort. Impossible? No. Probable? Yes.
There are, of course, many other users of Great Lakes shipping, and it is important that they be served as efficiently as possible. The members of Lake Carriers' Association have long term relationships with the shippers--the customers who are so vital to their success. In the domestic trade on the Great Lakes, carriers and shippers are partners seeking to improve productivity of the transportation system. When there is a technical problem dealing with raw material delivery, quality of product, mix of product, storage of product on the dock, transfer of product to the process point, inventory cost control, size of load capable of being received, navigation problems at load, route of delivery or discharge site (such as draft constraints, width or length of berth or port channel, private or public aids to navigation, etc.) the carrier and the shipper sit down to discover ways to solve the problem. Such working relationships are possible when there are principals who are committed to the long term. It is the need for such a strong long term service sector provider relationship that has made American industries such as steel, automotive and Great Lakes shipping competitive in the marketplace. There is no room for the short term thinker who is after a quick buck, a cheap spot freight rate from any fly by night carrier.
To give an example of how efficiency has increased since enactment of the Jones Act, consider this - during the 1920 Great Lakes shipping season, the most cargo hauled by a laker in the Head-of-the-Lakes trade was 462,498 net tons. During the 1995 shipping season, a 1,000-foot-long self-unloader carried 3,183,120 tons of cargo. In other words, just one ship today does the work of seven 1920-vintage vessels! (See Attachment A.)
Some of the specific partnership services provided by some of our members include:
Conscientious consistent commitment to cost controls in order to keep freight rates as low as possible. This is why Great Lakes ships have reduced the size of the crew over the years, consistent with the work load, and safety and regulatory requirements, and have invested in the latest propulsion, navigation and communications equipment available.
Maintenance of older ships in service while meeting the stringent corporate, Coast Guard and classification standards of safety and environmental protection helps keep freight rates down since the capital costs of new tonnage do not need to be recovered in the freight rates. When new engines, unloading gear, mid-section extensions or other capital improvements are needed on the vessel they are carried out because there is a shared vision of the future use of the improved vessel. While some misinformed pundits who know little about transportation economics and operations frequently criticize the average age of the Great Lakes fleet, the age of these highly productive and safe vessels is one of the best kept secrets of cost containment in the world. In the fresh water environment and in a climate of long term partnership such actions are possible.
Carriers increased the length of the navigation season from 250 to 300 days (and longer in selected trades) despite the recognition that delays and damage due to heavy ice have a negative impact on carriers' productivity. Shippers need the assurance of a longer season in order to reduce inventory costs such as land, capital, and tax. Such cost reductions help the shipper compete in the world market.
In order to help shippers of smaller sizes of cargo, some carriers are able to load different commodities into different cargo holds for multiple customers, or to discharge part lots for the same customer at different docks.
Some shippers want different grades of coal, stone or iron ore delivered on the same vessel in order to take advantage of a lower freight rate for a volume movement to serve their process or customers better. Despite the added delays and operational difficulties these needs are met if the stability of the vessel is not compromised.
In order to take advantage of the economies of scale offered by the larger vessels, there have been a number of cargoes carried to and from ports which were not previously served by 1000-foot-long vessels. This required substantial investigations into the safety requirements and operational changes required for such a new navigation challenge on the part of the carrier. In other cases where the receiving dock could not accommodate these large vessels, the cargo was transferred to smaller vessels capable of reaching the customer's dock. These transshipments provide a long haul rate advantage, offset only by the extra handling and time in transit increases.
Some cargoes stick to the cargo hold slopes of self-unloaders and thus the shippers have not been able to take advantage of the efficiency of this technology which negates the use of shoreside labor and equipment. Where there has been a long term commitment to offer the sticky cargo for carriage, some carriers have installed linings on the cargo slope and/or installed vibrators in order to speed up the flow of the sticky product.
In some cases the Jones Act ship has become a vital and integrated link in the transfer of cargo, not only from the loading port to the customer but while at the dock where the speed of the unloading gear is matched to the speed of the shoreside cargo transfer equipment either close to the process facility storage or to the pile which immediately feeds the process. This is possible when there is a long term relationship between shipper and carrier. Our members do not just deliver cargo.
Carriers have conformed the vessel unloading system to comply with the customers environmental standards with respect to dust and water control.
Some members have been lengthening the cargo boom so the shipper can utilize more acreage in the bulk commodity storage yards. This reduces the transfer costs for the customer and utilizes a larger portion of the waterfront land.
There is no greater inducement for continued improvements in productivity and efficiency than competition. Lakes Jones Act carriers compete fiercely on several levels ... among themselves ... with the emerging tug/barge industry ... and in certain trades, with trucks. It is, however, the railroads that represent the greatest competitive challenge.
This ever-present competition is by no means unique to Great Lakes shipping. The history of transportation in the United States is rich with examples of competition between the modes of transportation for the carriage of cargo and passengers.
Passengers, often immigrants, moved on foot, covered wagons, stage coaches, canal boats, flat bed river boats, and crowded steam powered side wheel and propeller driven passenger vessels--often using four modes if necessary to get to the destination, their promised land. Then came the railroad which added another Intermodal dimension to passenger movement. Gradually the railroads took over most of the passenger trade, only to be supplanted by the passenger car, interstate bus and then the airplane. Passengers now move by bus, car, train, and airplane. I know when I travel to Washington to testify I use a private car, a minibus, airplane, bus, train and then take a brisk walk to Capitol hill. The railroad is an important part of that Intermodal move.
Cargo movements within the United States were dominated by water transportation as our nation's founders settled by the oceans, bays, lakes and rivers which bless our land. They could use sail powered and later steam powered vessels, canal boats, lake steamers, flat bed river boats--almost anything which could float with a load secured to it. Those who moved into the hinterland used mules, oxen, horses, wagons, and then railroads. Trucks made inroads into the railroad business just as the railroads drove out of business the canal boats and many a vessel service on the coasts, lakes and rivers. The competition for the movement of freight is now intense between the barge, and self-propelled vessels, the railroads and the trucking industry for much of the nations cargo. The airlines have a significant share of the high value, time sensitive cargo unless the trucks and rails successfully compete for it. Competition is very keen, since once a shipper makes a decision to use a mode for all or a portion of its freight, it usually stays with that mode.
In the marine transportation business, the impact of rail competition has been significant. On the Great Lakes, the railroads have offered services to the millers and farmers which successfully removed most of the grain from water transportation. Just in time delivery, inventory in transit, inland elevators closer to population centers, unit trains, reduced crews on the rails--all combined together to make the railroads more attractive to the shipper. Only in a few niche markets are there any significant vessel movements of grains on the Great lakes. To several inland steel mills where a rail/ship/rail delivery was the norm, the railroads offered economic packages for the long term delivery of iron ore completely by rail and won the business. It is doubtful if this particular segment of cargo will ever be moved by ship again. General cargo, often called package freight, was carried on ships throughout the Great Lakes before the vast improvement of the highway system and the rail integration in the U.S. and Canada. Today all the domestic movement of general cargo is moved by truck or rail--none on the water. When the Seaway opened, much of the International cargo was moved by ships to and from U. S. Great Lakes ports. Today much of that cargo is carried in Intermodal containers by rail to Mid-west destinations from east or west coast ports. Only neo-bulk, bulk, project and heavy-lift cargo predominates in the international trade by water from Great Lakes ports. Given the closed navigation for 13-14 weeks, due to ice in the St. Lawrence River, the railroads and intermodal transfers have forever taken that freight from water commerce. As stated earlier, once the railroads get a long term contract for the carriage of a cargo, it is very difficult to get it back to water. However, the railroads competed fairly for the business, adhering to U.S. laws, paid U.S. taxes, hired U.S. citizens--that is fair competition on a level playing field.
In the Great Lakes Basin there are an even greater number of examples of intermodal coordination for the carriage of vital raw materials by a combination of vessel and rail. The Great Lakes Basin is the steel making center of the United States. More than 70% of the steel produced in our nation is produced in the Basin and the vast majority of the iron ore for the steel industry is carried by rail/ship and rail/ship/rail. Western coal from Montana and Wyoming to power plants in Michigan travels by rail and ship. Eastern coal from Pennsylvania, West Virginia, Kentucky, and Illinois travels in rail/ship movements to Canadian and other Great Lake states utilities on waterside.
The Great Lakes shipping industry recognizes that the American rail industry is an important competitor and at times a partner. We would consider it unthinkable for Congress to change the law of the land to allow foreign ships, with foreign crews, to come into head-to-head competition with the railroads. That is precisely what the currently considered changes to the Jones Act would do. Let's call a spade a spade: Those who want to change the Cabotage laws to allow foreign sweatshop seamen to work in the U.S. domestic trades are attempting to legalize the kinds of conditions deplored by responsible businesses, such as the El Monte, California, Thai immigrants being held in bondage in locked compounds while they worked up to 17 hours per day for 60 cents per hour. Many foreign seamen work for wages only a little better than that with no benefits. They can be kept on board the vessel, out of sight of caring Americans, just as the El Monte workers were. Congress must not be a partner in legalizing a bondage foreign worker class in America.
One of the key elements of the Jones Act is the requirement that the vessel be documented under the laws of the United States. That requirement means that the ship is built, maintained and operated according to the world's highest safety standards. While a commitment to safety is important on all U.S. waters, the need is perhaps even greater on the Great Lakes. The Great Lakes are the world's largest body of fresh water and are the source of drinking water for 25 million North Americans.
The exemplary safety record of Great Lakes shipping will be imperiled if the Jones Act is repealed. We would soon see the "Ships of Shame" inundate the system in hot pursuit of the 120-plus million tons currently carried by Jones Act fleets. Even at its current staffing level, the United States Coast Guard could never adequately inspect all these foreign ships tramping about the Lakes. The problem would only get worse as the Coast Guard continues to downsize.
Lest there be any misunderstanding, this warning in no way applies to Canadian-flag vessels. Canada's construction and operation standards virtually mirror current U.S. laws. The ocean-going vessels operated by FedNav, a Canadian concern which flags its vessels elsewhere, likewise operate under high safety standards and they and other operators with high standards should always be welcome visitors to the Great Lakes.
These compliments sadly do not apply to all the other Flag States and operators. As evidence we list the 24 Flag States whose registered ships the United States Coast Guard has targeted to increased inspections when operating in U.S. waters since they are judged most likely to be operating substandard ships which, by nature of their conditions, pose an increased risk to crew safety, the marine environment, or the port:
Algeria Malta Antigua & Barbuda Marshall Islands Belize Mexico Brazil Mayanmar (Burma) Cape Verde Islands Panama China Peru Cyprus Romania Honduras Russia India St. Vincent & The Grenadines Italy Turkey Kuwait Ukraine Lithuania Venezuela
In the international trade, the Institute of London Underwriters indicated an increase in the number of ship casualties in the first quarter of 1996. Thirty-one (31) ships were sunk and 148 human beings died. This was an increase of 19 percent over 1995. Chinese, Panamanian, Liberian were the flags of registry of these ships of shame
Through March of this year, the U.S. and Canadian Coast Guards have detained more than 30 Third-Flag vessels for safety violations ranging from cracks in the hull to defective fire fighting equipment and damaged steering gear. The detained ships were from some of the above countries, plus the Bahamas, Greece, the Philippines, Norway, Hong Kong and Liberia. We are fortunate that the level of Third-Flag shipping on the Lakes is within the capabilities of current inspection resources, but let's realize a simple fact. Those who want to gut the Jones Act want to engage "spot market" ships on the world market, most of which are drawn from the above lists. Both the U.S. and Canadian Coast Guards would be overwhelmed by the influx of hulls. Time would not permit thorough examinations of each vessel.
There is no regular movement of grains from the Great Lakes port range to the South Atlantic or North Atlantic port ranges. Should such a movement become viable there are a number of U.S. flag carriers interested in the business.
The reasons this movement is problematic or questionable are many. First, shippers need a reliable year round regularly scheduled delivery of grains unless they have no other option. Since the St. Lawrence Seaway closes to commercial traffic from approximately December 20 to April 1, shippers would have to find an alternative mode, such as rail or truck, to deliver the grains for 13-14 weeks each year. This requirement usually leads to a year round commitment to rail delivery since the cost of arranging for rail delivery for 14 weeks would be astronomical considering the possibility that the railcars and locomotives and rail system might be underutilized for the other 38 weeks. If there are no rail options the shipper might consider the expense of stockpiling grains for 14 weeks plus another 4 weeks of security in case of late deliveries in the spring.
The second reason there is no significant movement of grains specifically to North Carolina ports is because there are only primitive, inefficient grain handling facilities at those ports. The shipper would have to be willing to make a long term commitment to use the port for the domestic or international movement of grains before any business person would make a sound economic investment in grain receiving and storage and transfer facilities at the port. Further the costs of transfer to rail or truck and then the transportation costs to inland locations such as Rose Hill would make the move prohibitively expensive.
While the hog and turkey farmers in North Carolina are apparently experiencing problems with the cost and supply availability of railcar delivery of grain, the search for an outlet from the Great Lakes is illusory at best in that the Seaway was closed when the recently published reports of grain delivery shortages occurred in December and January. The best route to seek alternative supply from within the U.S. is through North Atlantic, South Atlantic or Gulf ports. In fact when several U.S. Flag carriers met with North Carolina hog interests, they offered service from Norfolk, Albany, Philadelphia, Baltimore, New Orleans and other ports. Recently there was an advertisement in the Journal of Commerce by the port of Virginia advertising they are within 24 hours of 2/3 of the U.S. population. The Port of Virginia proudly calls themselves the world's gateway to America, The American Connection. If only these hog interests would make a commitment to a long term solution to their dilemma instead of looking for a change of law to bring about rates based on foreign crew and operating costs in order to beat the railroads in the U.S., there would be no need for this hearing today.
When ever Lake Carriers' Association argues in support of the Jones Act, we are confronted with the notion that the principles of the Jones Act are somehow unique to maritime. Once again, we must state that there is only one aspect of the Jones Act that is truly particular to the marine mode, and that is the requirement that the ship be built and maintained in the United States. This U.S.-build requirement is necessary, if only for national defense. We are still an island nation and must have a domestic shipbuilding capability if we are to protect our interests worldwide.
Save for the build requirement, maritime plays by basically the same groundrules as do railroads, trucks, airlines, buslines.... For certain, the percentage of foreign ownership allowed varies from mode to mode, but in essence, American railroads, trucklines... must be operated by an American entity and employ American citizens (or legal aliens). A British airline can't embark passengers in Cleveland and disembark them in Washington. A Canadian railroad with Canadian crews can't load iron ore on Minnesota's Mesabi Range to deliver to a steel mill in Indiana.
The Committee on Transportation and Infrastructure has jurisdiction over many aspects of the U.S.-Flag merchant marine, both in the domestic and international trade. The competitiveness of the Jones Act fleet is seriously affected by the regulations of Federal agencies, not least of which is the U.S. Coast Guard. The productivity of the domestic fleet is vitally impacted by legislation dealing with flood control and improvements, ice breaking, oil spill regulations and a myriad of other important matters which are clearly recognized to be within the jurisdiction of this Committee. The Merchant Marine is the Fourth Arm of National Defense. This fact has been recognized by Congress (and by the Department of Defense, particularly during and immediately after a conflict when the military realizes their stark dependence on the merchant marine). The Committee on National Security has been granted jurisdiction over the national security aspects of the merchant marine including Cabotage laws. We are pleased to present this testimony to the Subcommittee on Coast Guard and Maritime Administration since there are many legislative matters over which this committee has jurisdiction and which do vitally impact on the productivity and viability of the Jones Act fleets.
