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MAY 17, 2018

11:00AM – 12:00 PM

Thank you for having me for today’s celebration of National Maritime Day here in San Diego.  Always nice to be back in this seafaring town.

I’m honored to be joining so many maritime leaders and friends from our industry – my old shipmate Dave Thomas, vice president and general manager of BAE Systems San Diego Ship Repair, and his team.

Commander Don Montoro of the U.S. Coast Guard in San Diego; Kevin Graney, President of NASSCO, and your team;  Rafael Castellanos, chairman of the Port of San Diego; San Diego Mayor Kevin Faulconer and councilmember David Alvarez; and all of the other maritime business leaders and friends in attendance.

I had a great tour of the 10th Avenue Marine Terminal earlier this morning, and after lunch I’ll be kicking steel over at bae and at NASSCO. I look forward to that.

MARAD has partnered and collaborated with San Diego for many years, and part of the reason I wanted to visit the 10th Ave Terminal was to see how the $10 million Tiger Grant was going to be applied to rehabilitate the terminal.

By the way, Tiger is now called “BUILD” which stands for “Better Utilizing Investments to Leverage Development.”  I can report that another $1.5 billion is being awarded this year, a portion of which will be committed to port upgrades and expansions.

This region is a model for the modern maritime industry, and I’m proud to be joining you to celebrate national maritime day — a day when we have the privilege to honor America mariners who have served the U.S. admirably in times of peace and war. Many of those have made the ultimate sacrifice for our nation.
Today…  it’s my privilege to recognize the many dedicated seafaring men and women of the U.S. merchant marine who have fueled the economy of the united states of America . . . And supported our growth as a nation for more than 240 years.

By delivering supplies and equipment to our military forces overseas, and commercial cargoes here at home and to other nations, these mariners have helped to sustain the American way of life.
In ways I can’t possibly recount, they have contributed to our society’s security and prosperity. So we owe a great debt to our American mariners – and that includes the many thousands presently employed in oceangoing, great lakes, inland river, and marine-related shore side jobs here stateside and around the world.

You know, we often forget that our nation began with a voyage:  a native American paddling his canoe – the very first Jones Act vessel!  An international ocean voyage intended to grow maritime trade occurred years later… and it was financed by maritime trade.

That early seagoing enterprise transformed an unexplored continent into the most powerful nation on earth.

Through shipping… our country grew in power and influence, gained its independence and ushered in a new, democratic way of life for humankind.

Our founders recognized our enormous waterborne resources – three ocean coastlines, the world’s largest freshwater lakes to our north, and thousands of miles of inland rivers and waterways traversing the heartland – and they wisely linked our nation’s future to growing our maritime strength.

Everything that the maritime industry meant 200 years ago… it still means today.

Through the years the industry has undergone many changes, but one thing hasn’t changed.

During times of domestic or international emergency, America’s merchant mariners are among the first to be called to action to help those in need, both at home and abroad.

We saw that play out vividly during last summer’s hurricane season when America mariners in U.S.-built ships provided the vast majority of the cargo lift – 24 ships – to service the hard-hit island of Puerto Rico and the Virgin Islands.

Hats off to Jones Act carriers Crowley, Tote, Trailerbridge and North America for their tremendous response.  And they are still there today. And special shout out to pasha for sending the “horizon spirit” around from this coast to assist in the relief effort.

Our mariner’s efforts have been absolutely essential to our national defense, from the revolutionary war on to the wars in Iraq and Afghanistan… and every conflict in between.

Today, as we honor maritime’s proud past… We look expectantly to the future– like always, a future “full and down” with challenges.

Many of you may have read my recent testimony before Congress where I expressed my grave concerns about our ability today to meet the nation’s sealift requirements for a prolonged major overseas engagement.

Shrinking numbers of vessels in the U.S. merchant marine, and the resulting decline in our pool of qualified mariners, puts us on the edge of not having enough people to support the world’s most powerful military that we’re preparing to recapitalize.
The simple formula is this: to have enough U.S. ships and mariners to serve our nation’s sealift and sustainment requirements in times of crisis, we need a healthy peacetime maritime industry with enough ships and mariners to meet the crisis demand.   And the key element that determines ship numbers and mariner numbers is cargo.

Today the U.S.-flag fleet in international trade currently carries less than 2 percent of our annual foreign trade.

The U.S.-flag presence in international commercial trade is at an historic low with only 81 ships, which means the pool of qualified mariners needed to crew a prolonged sealift mobilization is also at an historic low. MARAD recently estimated a shortfall of 1,800 mariners for a long term sealift effort.
My team and i have been working closely with us transportation command, military sealift command, the coast guard, and our commercial partners to address these issues.

There are no silver bullets or easy answers, but to meet our national security objectives, i have three tools at my disposal — the Maritime Security Program, or MSP, Cargo Preference, and the Jones Act.

The MSP has been fully authorized for the remainder of fiscal year 2018, which is great news.  The program pays a stipend to 60 of the 81 internationally trading ships that I mentioned earlier.  Absolutely critical program.
And we continue to advocate for robust Cargo Preference levels to help U.S.-flag commercial shipping companies compete and employ an adequate pool of qualified mariners.

We are up on Capitol Hill regularly advocating for the strongest possible Cargo Preference quotas.

I alluded to the Jones Act earlier when talking about hurricane relief.  Here is another program essential to the health of the U.S. maritime industry.   Remember I just spoke about the 81 internationally trading vessels under the U.S. flag?  Well, of the 38,000 or so Jones Act vessels, 100 of them are large oceangoing ships.  That means that those ships provide the majority of the employment pool for unlimited license mariners.

Take away the Jones Act and you have just about cut the active mariner pool in half.   It would also have a devastating effect on domestic shipyards, the supply chains that support them, and vessel operators.   It would be an immediate threat to national defense.

It all comes back to cargo, and finding more opportunities for our ships to carry it.  More ships to carry more cargo equates to more jobs…and more resilience in our sealift capability.

Things aren’t all doom and gloom though!

Between hurricanes Harvey and Maria, MARAD dispatched four of our school ships to locations in Texas, Florida, and the Caribbean, including Puerto Rico, providing over 35,000 berthing nights and 52,000 meals to first responders.  They demonstrated the importance of having ships ready to respond on short notice for humanitarian assistance and disaster response.
A few months later, we saw Congress add $300 million to the MARAD budget, full funding for this country’s first purpose-built training vessel: which we call the National Security Multi-Mission Vessel. And it’s going to be built in a U.S. shipyard, and there will very likely be more than one.
That plus up was part of the largest budget in MARAD’s history. At $979.6 million for fiscal year 2018, it’s nearly a half-a-billion-dollar increase over our 2017 budget.

Congress also provided $45 million in funding for capital improvements at the U.S. Merchant Marine Academy – an increase of $34 million over FY 2017. That will allow us to accelerate many needed repairs and building replacements.  The six state maritime academies received a total of $32 million for a range of important programs — an increase of $3 million over FY 2017.

These funds will go toward training the young mariners who will serve our military, strengthen our national security, crew our commercial shipping industry and serve the U.S. merchant marine in the years ahead.

Another $289.3 million came to MARAD from the Department of Defense in FY 2018 to maintain the 46 vessels in our ready reserve force, and begin service-life extensions for some.

The average age of this fleet is 43 years old, and 23 of the 46 are steam driven.  Its time to recapitalize this capability.

And in addition to the newly-named “BUILD” grants I mentioned earlier, another $20 million is available in Small Shipyard Grants this year, and we received $7 million for the marine highway grant programs. The notice of funding opportunity should be out before summer on that one.
Major opportunities for innovation and a healthier, more competitive U.S. maritime industry, will probably come through technology.
MARAD has some important developments underway in this area. I have put my deputy administrator – Dick Balzano (Maine Maritime grad) in charge of MARAD’s new research and development program.

His group will be studying and assessing new technologies such as autonomous vessels and cyber-security related innovations, among others.

So things are happening, and MARAD is working with industry and our federal partners to ensure that this new frontier compliments and enhances our industry.

Work is also continuing on our National Maritime Transportation Strategy – which provides a strategic platform for our industry’s resurgence. We view it as our blueprint for the future. It was drafted under previous Administrator Chip Jaenichen’s watch, but I support it and intend to push it forward.

It will help our nation’s maritime leaders prepare for the predicted increased freight flows driven by an increasing population… and guide us in stimulating the modernization, and expansion, of our merchant marine. I want to see it adopted because i believe it can be a steering star for our way ahead. So stay tuned on that.

So, yes, we are working through an extended season of significant challenges in the maritime industry but I think there is also lot to be upbeat on Maritime Day this year.

When it’s all said and done – when we’ve concluded all of our discussions about ships and ports and cargo and intermodal connectivity — the real story is that there are “people” behind those great ships. There are dedicated, highly skilled mariners making the merchant marine work for this nation… keeping the industry afloat, and… on occasion, paying the ultimate price.

In celebrating and saluting these fine men and women – past, present, and future – i commend them for consistently going far beyond the call of duty.

Just last week, I awarded merchant marine Meritorious Service medals to two Maryland pilots, and three launch operators who set out in hurricane force conditions off the Virginia capes to bring a carnival cruise lines ship into the bay that was trying to evade the heavy weather.  20-foot seas and 80 knots of wind – pretty sporty.

But they got the job done safely.

This National Maritime Day observance is fitting tribute to those who have served our nation honorably for more than 200 years. To all of you I say congratulations… and thank you!

Updated: Monday, November 19, 2018