Maritime Security Program (MSP)  

Overview 

The greatest challenge facing the US merchant marine fleet is the ongoing debate over the role of subsidies in maintaining an adequate capability to meet national defense needs. US mobility plans rely heavily on the US-owned merchant fleet for the sustainment of US forces deployed overseas, and subsidies have been considered a cost-effective means of ensuring that military-useful vessels, primarily container and a small number of roll-on/roll-off (RO/RO) ships, are available. The Operating Differential Subsidy (ODS), which expired in 1997, offset higher costs associated with all-US-citizen mariner crews.

By the end of FY 1995, authorizing committees in both the House and Senate passed legislative initiatives similar to that proposed by the Administration. The House and Senate versions allowed for payments to vessels enrolled in the MSP of $2.3 million per vessel in FY 1996 and $2.1 million for the remaining nine years. Contracts awarded during the first year would be renewable, subject to availability of funds in fiscal years 1997 through 2005. Opponents believed that the 10-year program's $1 billion price tag was too steep and that US cabotage laws (the Jones Act) and government cargo preferences adequately support sufficient sustainment capacity in the US-flagged fleet. Subsidy opponents also noted that US shipping that does reflag will remain under effective US control and will continue to be available to meet defense needs. On September 24, 1996, the United States Senate joined the House of Representatives in passing H.R. 1350. President Clinton signed Public Law 104-239, the Maritime Security Act, on October 8, 1996.

Under the Maritime Security Program (MSP), the Government contracts with the owners of U.S.-flag commercial ships for service when needed for national emergencies or war. These U.S.-flag merchant ships are owned by U.S. citizens and crewed by American seafarers. This approach avoids the need to spend billions of dollars to acquire additional cargo ships dedicated solely to carrying military cargoes, and the millions of additional dollars required to maintain more standby vessels.

The Maritime Security Program provides limited operating assistance to keep 47 US commercial militarily-useful ships sailing under US flags. The Department of Transportation funds this 10-year program which replaces the $4 million a year per ship Operating Differential Subsidy and provides annual payments of $2.5 million per vessel for 3 years and $2.0 million thereafter. Participating carriers are required to enroll in an Emergency Preparedness Program established to provide intermodal sealift support in time of war or national emergency. The commercial transportation resources to be provided would include shipping capacity, intermodal equipment, terminal facilities, and management services. The ship capacity and associated intermodal capabilities of the MSP vessels are enrolled in the new sealift Emergency Preparedness Program, the Voluntary Intermodal Sealift Agreement (VISA), providing efficient and effective maritime capability to support US national security objectives.

All US flag ships — commercial and military (prepositioning, RRF and FSS) — are manned by US citizen merchant mariners. Today, there are about 26,000 US merchant mariners. During a contingency, USTRANSCOM will need about 4,000 of them. By the turn of the century the industry is estimated to be down to about 13,000, of those USTRANSCOM will still need 4,000. The Maritime Security Program (MSP) prevented a projected shortfall because of the MSP's reemployment rights and support of a baseline of US flag merchant vessels that provide civilian employment for the mariners USTRANSCOM will need during crises.

Sources and Resources  Return to Top

• U.S. Transportation Officials Laud Passage of Maritime Security Act MAR 10-96 -- Secretary of Transportation Federico Peña today thanked Congress for its strong, bipartisan support of the Maritime Security Act, which President Clinton soon will sign into law.
• APL PARTICIPATION COMPLETES 47-SHIP MARITIME SECURITY PROGRAM MAR 2-97 - American President Lines, Ltd., yesterday enrolled nine modern containerships in the new Maritime Security Fleet, completing the 47-ship program authorized by Congress late last year.