May 29, 2020

Chairs DeFazio, Maloney Statements from Hearing on the Status of the Maritime Supply Chain During COVID-19

Washington, D.C. — The following are opening remarks, as prepared for delivery, from Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR), and Chair of the Subcommittee on Coast Guard and Maritime Transportation Sean Patrick Maloney (D-NY) during today’s hearing titled: “The Status of the U.S. Maritime Supply Chain During the COVID-19 Pandemic.” Members and witnesses appeared by videoconference. 

Chair DeFazio:

Thank you, Chairman Maloney, I commend you for quickly organizing this afternoon’s hearing to examine the impacts on the U.S. maritime supply chain caused by the COVID-19 pandemic.

I also want to extend my thanks to our witnesses for making themselves available, not only on short notice, but also under this new virtual format. I look forward to your participation this afternoon.

It is vitally important that this committee understand how the pandemic has affected the reliability and efficiency of our maritime industry. 

With so much of U.S. trade and our national economy dependent on a seamlessly efficient global maritime supply chain, it is critical that we understand the impacts and implications moving forward as we shape future response and recovery actions.

And make no mistake about it; our Nation will recover from this pandemic. The fundamental question is: how quickly?

No one can know for sure what the answer is to that question.  

One thing I do know for sure, however, is that unless we begin now to take constructive actions to shore up and support all sectors in our maritime supply chain – from Coos Bay to PortMiami – we will only frustrate, and not facilitate, our efforts to re-float our economy as quickly as possible. 

I realize that the Congress has already committed trillions in spending to address the fall-out from the pandemic.  Some members may feel that additional spending is unwarranted.

But at this point, it would be “penny wise and pound foolish” to believe that we should not take aggressive action to shore up the lifeline to our national economy – the maritime supply chain.

And that is why this afternoon’s hearing is important. We need to understand the needs to be able to best tailor the assistance. But in doing so, we must first think holistically and recognize the interconnectedness of the entire enterprise itself. 

For it will do little good if we address the financial issues affecting our marine terminal operators, but we do nothing to ensure that our longshore workers and Coast Guard service members have the protective gear they need to stay safe and healthy on the job.

Moreover, we can help our ports get through the steep drop in trade volumes, but it will come to naught if all of the services that make our ports function, such as harbor pilots, assist tugs, drayage operators, fuel bunkers and others are allowed to go out of business.

We must treat the totality of the industry, not just one segment. And we need to call upon the various segments of the industry to work together for truly, you will all sink or swim together.

That is why I am looking to develop legislation to finally provide the Maritime Administration with a specific emergency authority to allow it to provide financial relief and assistance to each link in the maritime supply chain that serves both the foreign and coastwise trades of the United States.

Too much of our economic recovery and future prosperity rides on what we do over the next couple of months to ensure that when our economy re-starts, that we have a maritime industry and supply chain able to reliably and efficiently move that commerce. I urge members to join me in that effort.

Chair Maloney:

Good morning, and welcome to the Transportation and Infrastructure Committee’s first ever videoconference hearing to examine the state of the U.S. maritime supply chain amid the COVID-19 pandemic. 

It is unfortunate that this pandemic prevents us from conducting this hearing in person, but the Subcommittee on Coast Guard and Maritime Transportation has been around in one form or another throughout our country’s history, and I am confident in the Subcommittee’s ability to address the unique issues facing the maritime transportation system as well as the U.S. Coast Guard. As we all adjust to the new normal, I look forward to working with Ranking Member Gibbs and the other Members of the Subcommittee to ensure this body rises to the challenges our country now faces.  

One cannot overstate the importance of our nation’s maritime industry. In a typical year, over $4.6 trillion worth of commerce flows through a maritime transportation system that is rapidly becoming more complex and interconnected. Unprecedented safety measures and a recent decrease in cargo, some of which began before the onset of the pandemic, will challenge the industry for months and years to come.  

My hope is that this hearing will help the Committee better understand the difficulties facing the maritime industry and identify areas of support that may be needed to ensure the seamless movement of cargo and protect the associated maritime jobs.  

The U.S. maritime industry includes four major components: the internationally trading U.S. flagged fleet, the domestic (or Jones Act) trades, shipbuilders, and U.S. ports. Longstanding durable maritime statutes such as the Jones Act, Cargo Preference, and the Maritime Loan Guarantee Program, have been supplemented by more recent programs such as the Maritime Security Program, Small Shipyard Grant Program and the Port Infrastructure Development Program. But those programs may not be enough to enable the industry to weather the current pandemic and the associated economic downturn. 

Unless you live near a port, the maritime industry typically goes unnoticed even though 90 percent of goods are, at some point, carried by water. While the industry has managed to maintain an acceptable level of service by adapting and instituting comprehensive safety measures, declining cargo volumes threaten the viability of vessel owners and operators, ports, shipyards, and the workers employed by those industries who are vital to our economic and national security. While our ports are projecting a 20-30 percent drop in business, some shipping trades are expecting a 50 percent drop in cargo for the second quarter of 2020. 

It is unclear what the U.S. maritime transportation system will face in the coming months and years. What is clear is the need to maintain capacity across all maritime sectors. What may seem expensive now, pales in comparison to the investment that would be needed to rebuild these industries from scratch. For instance, the Maritime Security Program, which supports 60 vessels and employs thousands of mariners, ensures that the Department of Defense can project force internationally. While the program currently costs $300 million per year, the U.S. Transportation Command has estimated that the cost to organically replicate the program’s capacity would exceed $65 billion.  

While I recognize that the Maritime Administration has recently released their long-awaited Maritime Strategy, the lack of a comprehensive plan with concrete goals, action items, and milestones remains a major hurdle for the maritime industry. Without a whole-of-government approach that addresses the entire industry, our maritime supply chain is at risk. The pandemic only amplifies that risk. 

Although I do not anticipate a positive message, I look forward to hearing from our witnesses.