The debate, played out in the US Senate and in the press, highlights one undeniable aspect about shipping in the States, where the industry’s issues are far removed for the general public at large, US maritime policy is as much about politics as about economic realities, so a lot of noise has been generated about very small volumes flows of cargo.
The US flag maritime business, already withered over the decades since its glory days up to the early 1970s, will sink further towards a seeming oblivion, caught in the vortex as the US government seeks “efficiency” in its foreign aid program. Cash grants will be given to foreign aid recipients, instead of sending aid cargoes to them partly in US-flagged vessels.
Basically, US cargo preference rules had mandated that had mandated that 75% of US food aid cargoes move on US-flagged vessels, up until mid 2012, when the US share was lowered to 50%. For fiscal 2010 (mid-2009 to mid-2010), the last year where complete US Department of Agriculture Data is available, overall US foreign aid exports totalled 2.6m tonnes, spread across multiple programmes. Recipients were dominated by African countries receiving 1.9m tonnes, mainly Ethiopia and Sudan. Compared to overall worldwide grain movements, the US foreign aid portion is extremely small, less than 1%; in 2010, worldwide grain shipments totaled 343m tonnes, according to UNCTAD data. US agricultural exports (including the aid shipments) totaled roughly 90m tonnes during the same time period, led by corn and wheat.
Reactions and positions in this kerfuffle are dogmatic, with the US owners pitted against everyone else in this increasingly public drama. The trade associations representing the owners point to the employment impacts and the security benefits of employing US mariners, who could be available if needed in wartime. The associations also attempt to dispel notions about the extreme cost differentials for cargo moving on US-flagged ships.
On the other side are views espoused by Beltway think-tanks and media across a broad swath of political viewpoints. The very free-market Cato Institute has noted that food aid is not a desirable vehicle for industrial policy. A writer in the Washington Post’s Opinion pages, took direct aim in an inference to shipping’s non-existent U. political base, offering that: “A company doesn’t have to be American to run ships under the American flag. By far the largest beneficiary in the current system is a Danish conglomerate.” The New York Times, in a similar article, mentions Maersk by name.
The real comparison may be framed differently than the oft-cited, albeit exaggerated, rate premiums commanded for US liftings. While US aid may arguably benefit special interests in the States (certainly the farmers, and certain pockets of the maritime business), “voucher” programmes, where recipients can allocate their entitlements, seem to fail at many levels- as demonstrated over and over again. One view, is from maritime commentator Joe Keefe, a Massachusetts Maritime graduate who is admittedly on the side of a US fleet involvement. In a piece called “Sure Signs that the Apocalypse is upon us," Keefe notes the absurdity of US efforts to allow local efforts at infrastructure finance in East Africa. One must ask whether “efficiency”-driven efforts to enable local purchasing of commodities and non-US ocean freight will work out any better.
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