August 16, 1996
The Honorable Nick Smith
U.S. House of Representatives
Washington, DC 20515-2207
Dear Representative Smith:
The Great Lakes Maritime Task Force was founded in 1992 to promote a healthy U.S.-Flag fleet and related maritime activity on the Great Lakes. Our membership includes both labor and management and represents ship operators, shipboard unions, shipyards, longshoremen, dredging contractors...
The Great Lakes Maritime Task Force considers the Jones Act the foundation of a healthy Great Lakes shipping industry. We are therefore deeply troubled that your bill, HR 4006, would make significant and negative changes in our nation's Cabotage laws. However, your comments have been devoid of the hyperbole that characterizes the leading Jones Act opponents, so we believe that a factual discussion of the issue can persuade you to support the existing Jones Act.
We will confine our comments to the Great Lakes. Your legislation states that the Great Lakes has "shrunk" to 59 vessels (in fact the fleet totals 65 large self-propelled ships and tug/barge units and 20-plus smaller t/b's in the liquid bulk trades) and then presumes that this shrinkage has produced shipping shortages. This conclusion is a bit difficult to fathom seeing as U.S.-Flag carriage on the Lakes set a post-recession record during the 1994 shipping season (more than 115 million tons) and would have neared 120 million tons last year had not the Lakes been visited by the worst winter in recent memory. Even so, the Lakes Jones Act fleet carried 114.6 million tons during the '95 season.
Whenever we discuss the U.S-Flag fleet, be it on the Lakes or the oceans, we must not focus on the number of ships, but rather on cargo carried. There have been tremendous technological advances in the past few decades that have vastly increased vessel carrying capacity. In 1960, the "Queens" of the Lakes were 730' x 75' and carried maybe 30,000 tons at mid-summer draft. Most of these ships were straight-deckers that needed shoreside equipment to be unloaded. As such, it took 18 hours or more to unload those 30,000 tons.
Today the benchmark is the 1,000-footer that routinely loads 65,000-70,000 tons of cargo each trip. Being a self-unloader, the ship is out of port in 10 hours or less.
What this all means is that a relatively small of number of ships carry a tremendous amount of cargo. Without a doubt, there is the occasional spot cargo that must move by land rather than water because the proper U.S.-Flag ship is not available, but such instances are rare.
It is reported that you introduced this legislation because lack of a Jones Act-qualified vessel forced some Michigan farmers to forfeit a sale of grain to Atlantic Coast customers. If this situation is the Murphy Farms case, please don't take the Jones Act Reform Coalition's version as the gospel truth. There's a little more this story.
It is true that there is no regular U.S.-Flag service from the Lakes to the East Coast, largely because demand has been lacking. (The seasonal nature of shipping via the Seaway also encourages a rail routing from the Lakes region to East Coast customers.) However, when Murphy Farms aired their displeasure with U.S.-Flag service, a number of carriers with Jones Act-qualified vessels and tug/barge units offered to model the move and make a formal bid. One carrier even offered to modify an existing ship or build a new one if Murphy Farms would commitment to a haulage contract. Suffice it to say that Murphy Farms has been unresponsive to these overtures.
We will, at your request, provide any and all information you need about Jones Act shipping on the Lakes. We'd now like to discuss the basics of this issue, namely American jobs for American workers. It is true that your legislation would require American sailors on the foreign ships you would allow to trade domestically, but there's a loophole which offers ample opportunity for abuse. We are concerned that "Irregular Service" would become the norm on the Lakes. Ships would enter the system, carry a few cargos and then depart. Your legislation would legally allow these ships to employ alien crewmembers and escape the very U.S. laws and regulations your bill requires them to obey if in regular U.S.-Flag service.
There is also an environmental aspect to this debate, and it is very important to your state - Michigan has the longest shoreline of any Great Lakes state. That issue is unsafe ships. We will be the first to agree that many foreign-flag operators are responsible and do not pose a threat to the waters of the Great Lakes. Nonetheless, the United States Coast Guard has recently singled out 24 shipping registries for much increased surveillance because their track record raises serious safety concerns. Our Coast Guard is downsizing and simply would not have the personnel to adequately inspect all the foreign-flag ships that would come to the Lakes. Even if the Federal government increases the Coast Guard's budget to allow for more ship inspectors, would customers benefit from having ships detained for days or weeks until the safety violations are corrected?
Surely you recognize that for national defense purposes alone, the United States must have a domestic shipbuilding and shiprepair industry. Your legislation would merely legalize importation of subsidized ships. U.S. yards could never compete against overseas builders who receive massive subsidies and other supports. Nor could existing U.S.-Flag carriers match rates with ship operators employing foreign-build tonnage. (Vessel cost is a major factor in freight rates.) Your legislation takes a level playing field and skews it heavily against existing American ship operators and shipyards.
The Great Lakes Maritime Task Force shares your goal of increasing transportation options. Waterborne commerce is the most fuel efficient and environmentally friendly mode of transportation. It is, however, unnecessary to change the Jones Act to accomplish this goal. Jones Act operators on the Lakes and other waterways have built and operate some of the world's most technologically advanced ships and every day compete fiercely among themselves and with other modes of transportation. A delegation from the Task Force will gladly meet with you at any time to further discuss this issue and answer any questions you have.
Sincerely,
Patrick J. O'Hern
President