House Subcommittee Hearing on U.S. Maritime Supply Chain During the COVID-19 Pandemic
On Friday, May 29, the House Subcommittee on the Coast Guard and Maritime Transportation held a hearing entitled “The Status of the U.S. Maritime Supply Chain During the COVID-19 Pandemic.” Witnesses included:
- Lauren Brand, President, National Association of Waterfront Employers
- Jennifer Carpenter, President and Chief Executive Officer, The American Waterways Operators
- Christopher J. Connor, President and Chief Executive Officer, The American Association of Port Authorities
- Eric Ebeling, President and Chief Executive Officer, American Roll-On-Roll-Off Carrier, On behalf of USA Maritime
- Michael Roberts, President, American Maritime Partnership
In the wake of the COVID-19 pandemic and its impacts on commerce and international supply chains, the subcommittee discussed current challenges facing the maritime industry and identified opportunities for future financial and logistical assistance. Witnesses and members addressed a range of topics including the need for further financial assistance to the maritime industry, testing and PPE availability, worker safety precautions, and the long-term outlook for maritime trade.
Connor’s opening testimony highlighted some of the recent operational challenges and trends facing the industry. These include a nearly 20% drop in containerized cargo from 2019-levels, major reductions in roll on/roll off cargo in the wake of shuttered automobile production, as well as 25% reduction in bulk cargo movements – including agricultural and energy products – at some of the nation’s largest bulk cargo ports. Other operational challenges include the near-halt of tourism activity and business at U.S. ports, as well as layoffs and postponed capital improvements at the nation’s smaller ports, which often handle a limited range of cargo products. He called for an appropriation of $1.5 billion in relief for U.S. ports in future COVID-19 legislation to allow ports to maintain a state of readiness.
Roberts’ testimony highlighted current efforts undertaken by the industry to maintain operations amid the pandemic. In particular, he cited organizations and efforts like the Ship Operators Cooperative Program which developed industry guidance and protocols to prevent COVID-19 outbreaks on-board and instruct officials on how they should respond to and manage instances of COVID-19 cases. Roberts also emphasized that cargo ships should never quarantined, but rather infected mariners and crew should be treated and quarantined promptly, the vessel sanitized, and new crew brought in to ensure the continued, safe transport of goods.
Carpenter outlined actions taken by the nation’s maritime industry to protect crew members and limit disruptions in the movement of goods. Efforts highlighted include pre-screening crew members before boarding, minimizing non-essential contact between crew and non-crew members, modifying crew-change procedures, and more stringent cleaning procedures. She also called on Congress to resist efforts to waive the Jones Act – which prohibits foreign owned or built vessels from transporting goods between U.S. ports – and enact temporary liability protections for maritime employers who make good-faith efforts to abide by public health guidelines. (Ed. Note: Happy 100th Birthday, Jones Act – signed into on June 5, 1920 by Woodrow Wilson.)
Brand outlined four key challenges facing marine terminal operators: taking care of workers, adjusting safety protocols while continuing operations, rearranging terminal facilities to accommodate new needs, and maintaining liquidity. She also noted that declining exports have led to the prioritization of higher value cargo, which can lead to lower value cargo remaining stranded at terminals. With abandonment of cargo expected to increase over the near-term, operators will be required to rearrange terminal facilities and increase monitoring to ensure proper handling and storage. Lastly, Brand spoke to the financial challenges brought on by the pandemic. While the availability of PPE has now stabilized amid shortages earlier this year, the increasing cost of acquiring PPE for workers was a major financial hit for the industry. In addition to declining revenues, the industry is also struggling with empty containers building up at ports, outstanding lease payments, implementing temperature checks, and expanding sanitation of facilities.
Ebeling spoke to the unique challenges facing the government-owned/controlled and privately-owned U.S.-flag fleet utilized by the Department of Defense under the Maritime Security Program (MSP) in the wake of shrinking cargo traffic. The MSP provides military access to a fleet of commercially viable ships that engage in international commerce while being “on-call” for national defense purposes. He noted that U.S.-flag carriers operating under the MSP are unable to access the $17 billion appropriated for defense contractors under the CARES Act, and that the stipend provided to carriers for operations under the MSP program is not enough to maintain normal service during the pandemic. In response, Ebeling called on Congress to provide $219 billion in emergency stipends for the remainder of FY20 and through FY21. Additionally, he proposed requiring 100% of all government owned or financed cargoes to be transported on U.S.-flag ships, and urged Congress to consider appropriating funds for additional purchases of ships for the government-owned sealift fleet as a means of supporting continued operations of the U.S.-flag fleet.
Questions from members primarily focused on security protocols to prevent outbreaks on board, impacts of the pandemic on abandoned cargo, and projections on the long-term impact of COVID-19 on the maritime supply chain. Transportation and Infrastructure Committee chairman Peter DeFazio (D-OR) and Rep. Chris Pappas (D-NH) probed witnesses on the impacts of potential employee quarantines on the supply chains and the state of testing access across ports. Witnesses reported that while there have been limited instances of infections on ships or of major, prolonged quarantines, operators are prepared to respond to cases by isolating and treating infected personnel while sanitizing and returning their ship to service. Carpenter and Ebeling pointed to recent efforts to ramp-up prescreening measures and distributing PPE free-of-charge to crew members, but called for priority access to testing kits that would allow operators to quickly identify, isolate, and respond to new cases.
In response to questioning about abandoned cargo and long-term impacts of the pandemic on the maritime supply chain, witnesses reassured members that abandoned cargo currently constitutes a relatively small share of total traffic and are primarily low-value exports like wastepaper as opposed to temperature-sensitive or perishable items.
While there was no clear consensus on the long-term outlook for the maritime supply chain, Connor projected that the trade volume downturn will likely persist through the end of 2020, though the future of supply chain disruptions remains difficult to forecast, particularly as the industry attempts to repatriate essential goods to the United States. Despite the uncertain economic outlook for the maritime industry, witnesses were unanimous in calling for dedicated Federal maritime assistance and expanded access to testing to ensure continuity of operations and minimize future disruptions to the supply chain.