Wednesday, November 15, 2023

REMARKS AS DELIVERED BY

MARITIME ADMINISTRATOR REAR ADM. (RET) ANN PHILLIPS

AT USMMA INDUSTRY HOUR

WASHINGTON, DC

INTRODUCTION

Good afternoon, it's such a pleasure to address you all today-and I'm sorry that I couldn't be there in person.

I was at an event earlier today with the Navy League here in Washington, D.C.

For those of you who haven't heard of the Navy League, you will at some point in your career.

It's an organization founded with the help of President Theodore Roosevelt.

President Roosevelt understood the importance of American sea power and, as many of you know from your high school history books, President Roosevelt assembled the nation's first large fleet, which was critical to extending American power from land to sea.

The fleet consisted of more than a dozen U.S. battleships-each painted white to signify that it was in a peacetime armada-and the fleet sailed around the globe, anchoring in 20 ports along the way.

The ships' white steel against the blue waves was indeed a spectacle of the sea, but more importantly, an introduction of American sea power to the world stage.

While the circumference of the world is still the same today-technology and geopolitics have made tipping points tilt faster and harder. And technology has evolved to the point at which we no longer even have battleships!

The "world" is a word that you'll hear me mention a few times today… because it's also changing in regard to the maritime industry, and it's important to understand this as you seek your place in it.

Earlier today, I was in a room filled with senior Naval Officers, some retired, some not, including Admirals and Master Chief Petty officers of the Navy-Sailors who conducted operations in support of the wars in Iraq and Afghanistan, and who spent most of their adult lives sailing the world, executing joint-training exercises, and spearheading wartime missions-all as part of a revered responsibility to this country and a fundamental belief in the values for which it stands.

And they came together to hear me talk about the vessels and capabilities we need to move the beans, bombs, bullets, and fuel that will be essential to winning the next fight.

They came to hear about busting bottlenecks in our supply chains and building back our shipyards.

Most importantly, though, they came to hear me talk about YOU.

Because YOU are the future of the maritime industry. I know at times it might be hard to see this-such as when the cold wind is whipping off the Sound and you're up before first light PT'ing, your days filled with study, hospital corners, and shined shoes.

But in rooms not so far from where you are all sitting, just like the one I was in this morning, leaders of industry and of our military understand the critical importance of the United States Merchant Marine Academy-and how

the merchant marine is a core component of America's dominance on the high seas in both trade and defense.

They understand the potential YOU bring and how valuable it is to our world, our national security, our economic growth, and our superior sea power.

Potential is the common denominator for all of YOU. Yet it will always remain a mere fraction-substantially less than one-without the numerator of opportunity.

So, as you contemplate the next steps in your journey as Midshipmen, I want you to know that there is a world of opportunity before you-from the halls of Kings Point to the open seas.

And I also want you to know that no matter where your journey takes you, each of you will play a critical role in something larger than yourselves.

One day soon, you will be standing on the decks of low and zero emission ships, moving freight faster and more efficiently than ever before. Or you will be sailing on an aircraft carrier-or flying off one. Or working on building a new Offshore Wind facility, or in an American shipyard.

Whatever path you choose, you will be making a difference.

I have sailed to the far corners of the world. In some of those corners I was a young Ensign and, in other corners, I was an Admiral. What I learned from nearly three decades at sea was that life is not about position. It's about purpose.

*** [MA, please feel free to add a personal story or anecdote here] ***

During my career, I had the opportunity to respond with the U.S. and NATO in support of earthquake relief in Pakistan.

I had the thrill of commanding a large multi-national exercise in the Baltic Sea, sailing with superbly professional Allies and Partners.

And I had the chance to meet young children at an orphanage and school in South America, and to spend the day with them, learning from them and their teachers- and helping to make their surroundings safer and more beautiful.

Very often when I have spoken with you before today, I have been focused on issues specific to the Merchant Marine Academy.

But today, as you contemplate the career choices ahead of you, I want to tell YOU about the state of our maritime industry-and the work I am leading at the Maritime Administration.

In fact, I want to tell you exactly what I told the former Admirals and Master Chief Petty Officers this morning at the Navy League.

As Admiral Alfred Thayer Mahan stated, quote, "Control of the sea, by maritime commerce and naval supremacy together, means predominant influence in the world."

To be crystal clear-our U.S.-flagged, commercially operated vessels and our shipyards are essential to ensuring that our nation is a "Maritime Nation."

And MARAD's mission is: To foster, promote, and develop the maritime industry of the United States to meet the Nation's economic and security needs. MARAD is a unique agency within DOT and the Department understands ours is a mission that is critical to our national defense and our economic security.

As the Maritime Administrator, I work closely with my colleagues-particularly General Jackie Van Ovost Commander, U.S. Transportation Command, and in the Navy, VADM Williamson, the N4 - Head of fleet readiness and logistics for the Navy, and Admiral Wettlaufer at Military Sealift Command-to understand and ensure MARAD meets our nation's evolving sealift needs.

As you know, in June of last year, we were honored to have General Van Ovost speak at the graduation of the U.S. Merchant Marine Academy.

I want to remind you of things she said while she was here. First, she said that, quote, "as a maritime nation, our national security depends on the Merchant Marine."

However, General Van Ovost also warned our graduates that they, quote, "are about to face challenges our country has not encountered since WWII."

She also warned that, and again I quote, "Contested waters will stress our logistics lines all the way from home port."

We must be able to meet this potential challenge. And to do that, it is critical to recognize that there that essential interdependence between the commercial and military elements of the maritime industry.

Just last week, I spent over an hour with General Van Ovost discussing the state of maritime readiness.

She needs us to be ready to fight-tonight if needed-and frankly I need her to help ensure we have the critical sealift capabilities to unilaterally provide sealift in peace, crisis, and war so that we can guarantee logistics capabilities to place combat power at the place and time of our choosing anywhere on the globe.

Against this backdrop, I will discuss the specific challenges we face in the areas of:

Mariner availability, and industry culture;

Recapitalization of the surge sealift Ready Reserve Force; and

Keeping old ships ready to sail.

MARAD works at these overlapping intersections to strengthen our sealift enterprise by:

helping to train the next generation of mariners-at the Merchant Marine Academy and at the State Maritime Academies and at other schools and training centers;

managing the operations of our government-owned Ready Reserve Force; and

supporting our commercial sealift.

STATUS OF THE MERCHANT MARINE

Let me start by discussing our merchant fleet.

Last year, in the U.S. Capitol in Washington, MARAD helped unveil the Congressional Gold Medal for the Merchant Mariners of World War II.

The medal honors the more than 240,000 merchant mariners who sailed the American convoys that President Roosevelt called, quote, "the arsenal of democracy."

American merchant mariners and American ships delivered the supplies we needed to defeat tyranny during World War II.

It is important to note, however, that the American fleet was dwindling at the onset of World War II and had to be rebuilt at great urgency to meet our war needs.

After World War II, America owned most of the world's shipping tonnage. However, today, while approximately 70 percent by weight of our import and export cargoes enter and leave the country directly by the sea, commercial vessels sailing under the U.S. flag carry less than two percent of these cargoes.

In 2012, there were 106 ships in foreign trade flying the U.S. flag. Four years later, there were just 77 vessels in international trade sailing under our flag.

Today, from that low point, we have grown back to 85 foreign trading, commercially operated ships under the U.S. flag. However, this is still a tiny fraction of the number of ships that were sailing under our flag after World War II-and it creates numerous challenges.

Keep in mind the issues of supply chain resilience that made headlines during the COVID pandemic as you consider how our U.S. import and export ocean trade moves: About 75% of our trade by weight is carried on these top 5 flags: Panama, Liberia, Marshall Islands, Singapore, and Bahamas.

No surprise there. China and Hong Kong flag ships collectively carry about 10% of the trade.

But the U.S. flag carries about 1 ½ percent of our trade. That's right, our U.S.-flagged vessels are carrying less than 2% of our import-export waterborne foreign commerce.

I would offer that that 1 ½ percent hardly meets the statutory requirement that the United States have a merchant marine sufficient to carry … a, quote, "substantial part" of the waterborne export and import foreign commerce of the United States.

MARINER AVAILABILITY

These numbers also have another significant consequence. As I said earlier, the number of ships under our flag determines the number of commercial billets available to you and to all our commercial mariners.

MARAD's most recent study assessing mariner availability-which was completed in 2017 at the request of Congress-estimated that there was a shortfall of approximately 1,800 mariners-and that's assuming all mariners are willing and available to serve when called upon.

However, recent anecdotal evidence suggests the mariner shortage may be worse. And I can tell you that whenever I meet with industry or labor, the issue of mariner availability is repeatedly raised.

The merchant marine, like every industry, has been profoundly affected by the COVID-19 pandemic.

In September of last year, I convened a forum attended by more than 75 industry stakeholders to discuss the mariner shortage.

Among many issues, we discussed the fact that providing better work/life balance to today's merchant mariners-comparable to the quality of work life that workers in other sectors of the economy-is fundamental to making any headway in mariner availability.

We are working to help everyone in the maritime industry understand that there must be a clear recognition that mariners do not just work on their ships-they also live on them.

Mariners deserve a commitment from their employers to a high-quality work/life balance, including safety at sea, along with digital connectivity and modern quality of life on board their ships.

There are also basic human resource managerial issues such as career planning for mariners and support for professional development aspirations that are essential.

EMBARC

Further, we must ensure that mariners' working environments are safe-and that the maritime industry is a place where every mariner can succeed on the basis of their professionalism and skill.

The Every Mariner Builds a Respectful Culture or EMBARC that we rolled out in December 2021 is a critical part of the change we need.

And by the way, I am pleased to announce that just since I was at the Academy with Coast Guard Admiral Arguin and Coast Guard Investigative Service Director Gauthier on January 23rd, two more carriers have joined EMBARC, meaning there are now 16 carriers enrolled in the program-and all of the vessels enrolled in the Maritime Security Program are now enrolled in EMBARC.

As we discussed last month, it is now the law of the land that commercial carriers must enroll in EMBARC to be able to train cadets from the Merchant Marine Academy.

It is also the law of the land that ocean going vessels must include sexual assault prevention and response provisions in their safety management systems-which is a critical step forward.

I know that culture change is happening-and I made crystal clear to everyone with whom I spoke this morning that they have also have critical roles to play in supporting continued change.

This change is essential to the continued success of our merchant marine.

SEALIFT ENTERPRISE

What else is MARAD doing to strengthen our sealift enterprise?

FEDERAL SEALIFT

Let me talk first about our federal sealift programs.

MARAD is in its 77th year of maintaining the Nation's reserve of sealift ships, including the Ready Reserve Force fleet, which as of today, is a fleet of 45 vessels that we maintain on a reduced operating status at ports around the nation to be ready to sail within five days of activation.

Some of you may have-or perhaps will-spend part of your sea year time on a Ready Reserve vessel.

We are in the process of conducting the urgent recapitalization of this fleet, given that the average age of the vessels is 43 years.

In March of last year-and for the first time in nearly 30 years-we announced the purchase of two vessels to continue modernizing the Ready Reserve fleet.

These two ships, the former HONOR and FREEDOM, joined the Ready Reserve Fleet as the CAPE ARUNDEL and CAPE CORTES, adding more than 432,000 square feet of total sealift capacity and 316,000 square feet of military cargo capacity.

And these vessels were purchased using commercial best practices.

The vessels are also being upgraded in U.S. shipyards to add additional capacities and this work should be completed this spring.

While this is the "worst" market timing to buy ships, we are nearing the purchase of the next several ships-newer RO/ROs, to join the RRF.

And we're not stopping there as the current authorization allows us to purchase 9 ships in total.

In the 2023 National Defense Authorization Act, MARAD was also directed to develop a Roll-On/Roll-Off ship design for the construction of 10 new vessels for the RRF to begin in 2024.

The NDAA also directs MARAD to enter into an agreement with a commercial Vessel Construction Manager to build the new ships-following the management model used to construct the new National Security Multi-mission Vessels.

Of note, no funding was appropriated in FY 2023 for this effort-but this is still an incredible responsibility we have been given and is a vote of confidence in MARAD's ability not only to maintain ships but to oversee their construction.

COMMERICAL SEALIFT SUPPORT

In addition to operating the Ready Reserve, MARAD implements several critical programs to support our commercial sealift, including the Maritime Security Program and our cargo preference programs, and a new Tanker Security Program. Let me talk about these briefly.

Maritime Security Program

While MARAD's Ready Reserve fleet provides an effective and rapid source of ships for strategic deployment, even the RRF and the sealift capabilities of Military Sealift Command together could not sustain a serious and prolonged military deployment overseas.

Additional support from a commercial U.S.-flag merchant marine is essential for strategic sealift requirements, as was proven in all American wars of the twentieth century.

The Maritime Security Act of 1996 established the Maritime Security Program (MSP). The MSP maintains a fleet of 60 modern, privately owned U.S.-flag ships, active in international commercial trade and available on-call to meet U.S. Department of Defense (DOD) contingency requirements.

The current MSP fleet provides cargo capacity that now exceeds 3.4 million square feet-the highest level in the program's history-and it employs some 2,400 U.S. mariners.

Many of you have sailed-or will sail-on vessels in the MSP as part of Sea Year. These ships will each receive payments that total $5.3 million in Fiscal Year 2023 for operating in international trade under the U.S. flag. This support is essential to maintaining these ships under the U.S. flag.

Tanker Security Program

Finally, I want to explain that a study required by the 2020 National Defense Authorization Act found a substantial risk to the nation associated with heavy reliance on foreign-flagged tankers, particularly in a contested environment.

Remember Teddy Roosevelt's fleet? Well, the U.S. didn't have enough capacity to refuel that fleet at the time of its voyage.

Fuel, which was coal at the time, had to be provided through foreign-flagged chartered vessels. Perhaps not so hard in peacetime, but what about in war time? And frankly, we have the same problem today.

In response to the study mentioned above, a new Tanker Security Program, or TSP, was created.

The TSP, which will be modeled on the Maritime Security Program, will be comprised of active, commercially viable, militarily useful, privately owned product tank vessels.

I am pleased to report that at the end of last year, MARAD issued the rules we needed to enable vessels to apply to join the Tanker Security Program, and the application period closes on February 17th.

We anxiously await the review process to award the new TSP agreements which will increase the number of tankers under our flag.

Some of you may find yourself working on tankers that enroll in the Tanker Security Program-and I hope you will remember MARAD's role in administering that program.

CONCLUSION

As I close, let me reiterate the key frame within which to see the critical importance of the U.S. merchant marine.

By providing strategic sealift, our merchant marine constitutes our nation's "fourth arm of defense" and has been historically organized, trained, and equipped to perform three essential functions: sea control, power projection, and maritime security.

Our merchant marine-including the ships under the U.S. flag and our mariners-are critical to strengthening national and economic security, and expanding our world presence.

The Maritime Administration is working to ensure that our mariners have the ships, training, and resources they need to meet our evolving sealift needs-and to meet the logistics needs in contested waters of which General Van Ovost warned.

And with the unprecedented commitment of the Biden-Harris Administration, we are growing our fleet, recapitalizing the Ready Reserve, pioneering new models to build ships on time and on budget, and supporting our mariner pool and advancing culture change throughout the industry.

Through these efforts, we are working to ensure that our sealift enterprise is ready to deliver for our nation!

And this is where YOU come in again.

We need YOU to sail-and we need you to apply your extraordinary potential to support our maritime industry-and thereby to contribute to our economic security and our national security.

Your career options are virtually limitless. With the education you have received at USMMA, you are ready for anything. And we need the skills and commitment you will bring to ensure our nation is ready with the seapower to meet any challenge!

Thank you for the opportunity to join you today!

###