Remarks by

Captain William G. Schubert

Maritime Administrator

Houston Chapter Alumni

Kings Point

Houston, TX

November 19, 2004

It is always a pleasure to meet with graduates of our alma mater and especially to be among many friends and familiar faces. I am honored to be your guest today.

I have had the honor of serving President George W. Bush and Secretary of Transportation Norman Y. Mineta for the last three years as head of the Maritime Administration.

Let me start my talk by giving you an overview of the Maritime Administration. In particular, I want to share with you the important role MARAD plays in national security by assuring sufficient sealift capability.

As you know, MARAD is responsible for a fleet of ships, called the Ready Reserve Force (RRF). The fleet delivers military equipment and other supplies to deployed U.S. Forces in peacetime and war.

Currently, the Beaumont Reserve Fleet has 43 ships, including 4 RRF ships. The Fleet contributes about $4.3million to the local economy in vessel maintenance and core operating support to the Fleet, facts which are noteworthy on both the local and the State level.

Since October of 2002, a total of 73 ships have been activated from the Ready Reserve Force to carry critical military cargo to support our troops in Iraq. Ninety-two percent of the cargo moved in Operation Iraqi Freedom, approximately 50 million square feet, was carried aboard U.S.-flag vessels and has moved through fourteen of the fifteen strategic ports. 

Texas has played a critical role in sealift operations in support of Operations Enduring and Iraqi Freedom. First, ports along the coast of Texas have enabled us simultaneously to handle the movement and security of commercial cargo as well as the deployment of U.S. military forces. Then too, one of the first ships activated to support Operation Enduring Freedom, the Cape John came from Texas. Operation Iraqi Freedom (OIF) saw 6 ships activated from Texas, with two in OIF 2 and now three more for OIF 04-06 (aka OIF 3).

As a result of the repeated load out of DOD military units deploying to Iraq and redeploying to their home forts/bases through Texas ports, the total economic impact on Corpus Christi, Beaumont, and Houston has been significant.

Knowing that some of you in the audience are as detailed oriented as I am, I want to take the liberty of listing some important, and relevant, statistics which demonstrate the importance of marine cargo transportation:

From January 1, 2003 through September 2004:

Ø MSC Chartered 131 ships resulting in –

Ø 49.6 million square feet of cargo

Ø Of those 131 ships – 86 were U.S.-flag ships carrying 92% of the cargo

Ø SDDC shipped 82,000 containers weighing about 1.2M short tons.

Ø SDDC shipped about 5M measurement tons of breakbulk cargo.

Ø 38 MSP ships were used for SDDC cargo, and 7 VISA ships.

Ø MSC has time chartered about 15 U.S.-flag vessels to support periodic OIF cargo movements.

Of course, our merchant mariners play a vital role in peacetime as well. And Secretary Mineta’s vision is for that role to be even greater in the future, which is why he has launched a comprehensive review of the Marine Transportation System/maritime industry. We call this initiative SEA-21.

The Sea-21 initiative addresses the maritime component of our overall transportation system and includes a Short Sea Shipping component.

Short Sea Shipping, broadly defined, is all marine transportation except for trans-oceanic. This includes shipping along the U.S. coasts as well as to/from Canada, Great Lakes, inland waterways, Gulf of Mexico (Mexico, Caribbean, and Latin America).

As our economy continues its recovery, trade is expected to grow—to double, and even triple in some cases over the next two decades. This growth makes it increasingly important to pursue new and innovative transportation options to relieve the pressure on traditional surface transportation modes, such as highways and rail.

That’s why the Bush Administration has placed unprecedented focus on how we can make more, and better, use of our “National Water Highway System” to improve our overall transportation system.

It is my firm belief that Short Sea Shipping can easily be combined with other modes of transportation to bring us a more efficient, environmentally-friendly transportation system—one that will support economic growth far into the future. Certainly, Texas is well-placed to benefit from the development of Short Sea Shipping.

Let me shift to another topic. On November 24, 2003, almost one year ago, President Bush signed the National Defense Authorization Act for Fiscal Year 2004, which includes a ten-year $1.734 billion reauthorization of the Maritime Security Program. (MSP). In reauthorizing MSP, and by expanding the RRF fleet from its current 47 ships to 60, Congress recognized the importance of the MSP program to assuring a continued U.S.-flag presence in international trade.

In addition, President Bush signed the American Jobs Creation Act of 2004, a bill that contains tax relief for the U.S. shipping industry. In my opinion, the so-called “tonnage tax” legislation is the single most important thing we could do to jump-start the process of turning around our fleet’s decline. By softening the federal tax burden on U.S.-flag vessel operators, the industry will be able to invest more on strengthening and rejuvenating our national fleet.

I have additional good news. The Export-Import Bank of the United States (Ex-Im Bank) and the Maritime Administration (MARAD) recently signed a Memorandum of Understanding to establish a program to provide Ex-Im Bank-guaranteed working capital loans for shipping, logistics and other companies involved in ocean freight transportation.

By providing credit terms and more access to working capital for small and medium U.S. exporters and their logistics service providers that ship on U.S.-flag, we will make them more competitive and create more U.S. jobs.

There are more encouraging developments on the international front. Recently, the United States and China signed an historic Maritime Agreement. In it, the Chinese government committed to changing the business licenses of U.S. carriers in such a way as to improve U.S. carriers’ access to the Chinese transportation market. This five-year bilateral agreement became effective in April and is the most far-reaching agreement in the history of maritime trade between the two nations. For the first time ever, U.S.-registered shipping companies operating in China have the legal flexibility to perform an extensive range of business activities in China, enjoying the same free market access that Chinese carriers enjoy in the United States.

We are also pleased that China has agreed to be our partner in another critically important program—the Container Security Initiative—or CSI. This groundbreaking program of Customs and Border Protection allows cargo containers to be pre-screened prior to lading for transit to the United States. CSI will not only detect but also deter attempts by terrorists to exploit cargo containers, and, as such, will act as an insurance policy against disruption of trade between our countries.

Before I conclude, I would like to share a few thoughts about our alma mater.

It is with great pride that, as the Maritime Administrator, I have been able to turn to the Merchant Marine Academy to help carry out our responsibilities for maritime training related to security. Congress specifically gave DOT, via MARAD, the authorization for maritime training.

The USMMA team, through its collaborative relationship with the Coast Guard and the Government of India, wrote three model maritime security courses for the International Maritime Organization. These courses were reviewed by an international validation panel, and are now the established international standard for maritime security education and training. Certainly, the world-wide acceptance of our model courses is an indication of the high quality, professional work done by the team.

As you may know, King Point’s budget in 2000 was $33.9 million dollars. Today I am pleased to report that it is $55.7 million dollars. Furthermore, our academy received $13 million dollars for its Capitol Improvement Project. To quote Florida’s Congressman Bill Young, our academy is “the greatest hidden treasure in the country.”

I have further great news. Our six State schools increased their 4-year Student Incentive Payment (SIP) Program from $3,000 dollars to $4,000 per year. Clearly, we are on the right track.

One reason the Academy’s star is rising is the role it has played following the enemy attacks of September 11, 2001. Our motto “Action not Words” was put to the test and proved true. Midshipmen at the USMMA responded quickly and efficiently to transport firefighters, police officers, other emergency personnel and tons of food, water and medical supplies from locations in Brooklyn and New Jersey to “Ground Zero.”

More recently, members of the academy participated in Operation Iraqi Freedom, carrying necessary material through hostile waters to our troops. Currently they are participating in the humanitarian efforts in Iraq.

There is a new respect for the Merchant Marine and their vital mission as the logistical lifeline to the troops defending our freedom abroad.

As the Maritime Administrator let me assure you that the Maritime Administration remains strongly committed to supporting the USMMA. Our academy has contributed not only to the preservation and enrichment of our merchant marine, but also to our national defense and economic well-being. You and I certainly value that.

In closing, I am pleased to report that MARAD has produced a video named “Making A Difference-30 Years Of Women At Kings Point.” As you know, our academy showed tremendous foresight when it opened its doors to women 30 years ago. That proud tradition continues today. This video highlights MARAD’s efforts to recruit women and minorities for our academy. We at MARAD will be pleased to provide copies of this video for those of you who are interested

Thank you for inviting me to be with you, and for your kind attention.

On behalf of the Bush Administration and Secretary of Transportation Mineta, I want to thank you again for the privilege of speaking with you today.

Thank you.

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