The US is currently bracing for one of the most divisive presidential elections in its history, with Donald Trump and Joe Biden preparing to hit the polls on Tuesday.
As the pair approach the end of their race to the White House, maritime stakeholders have a tough decision to make ahead of them. The sector has seen a dramatic drop in traffic and economic activity since the start of the Covid-19 pandemic and is in dire need of financial support and reforms.
According to Cozen O’Connor attorney Jeff Vogel, President Trump has implemented a “mixed bag” of positive and negative initiatives for US maritime since 2016, supporting development in some areas while significantly limiting others.
A Washington-based law firm specialised in maritime matters, the Cozen O’Connor Maritime practice group has been closely following the Trump administration’s work on the industry for the past four years. With just a few days left until the voting closes, Vogel comments on President Trump’s contributions to the sector during his current mandate.
Driving change in port development and shipbuilding
Under the work of Secretary of Transportation Elaine Chao, many US ports have benefitted from increased funding, courtesy of initiatives such as the Port Infrastructure Development Program. Established earlier this year, the scheme aims to support improvements to port facilities and freight infrastructure with grants rolled out in February and October 2020.
Recipients of the grants include some of the most high-profile hubs in the country, such as Anchorage in Alaska, Los Angeles in California and Cape Canaveral in Florida. “This infrastructure investment hasn’t been in the trillions of dollars as was indicated during [Trump’s] 2016 campaign but this has been a very successful programme by Secretary Chao,” comments Vogel.
TODAY: @SecElaineChao joined @GovRonDeSantis, @MarioDB, @MayorGimenez, and other officials to announce more than $280 million in grants for our Nation’s ports through the Department’s new Port Infrastructure Development Program. https://t.co/9c46p4PmJG pic.twitter.com/RcwR40thGG
— TransportationGov (@USDOT) February 14, 2020
Beyond port development, another area that saw increased funding during the current administration is the shipbuilding sector. Specifically, Vogel says, President Trump authorised funding of the National Security Multi Mission Vessels, a set of training vessels that will be used by state maritime academies and then can be deployed in humanitarian aid and disaster relief operations.
“That total contract has been awarded to Philly Shipyard in Philadelphia and is in the range of about $1.5bn,” he explains. “This represents significant investment in terms of the commercial side investment in shipbuilding.”
International profile: the heavy toll of the China trade war
From an international point of view, nothing has raised more eyebrows than the ongoing trade war between the US and China. The most significant trade-restricting measure in the world, this protectionist policy has been in place since March 2018 and looks likely to remain in place were Trump to succeed on Tuesday.
For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight….
— Donald J. Trump (@realDonaldTrump) August 23, 2019
“[Recent terrorist attacks] have had an impact on the industry and we’ve certainly seen that in a number of sailing cancellations in the Pacific trade,” comments Vogel. “That has impacted both US-flagged and non-US flagged operations as China was a significant trade partner of the US. These tariffs, the chilling effect of ongoing negotiations and the continuing standoff between the White House and China have certainly impacted trade in the Pacific.”
Adding to these tensions is a recent fall-off in US-flagged preference cargoes. Under the Cargo Preference Act of 1954, about 50% of Civilian Agencies cargo and Agricultural Cargo needs to be carried on US-flagged vessels.
However, Vogel explains that a recent drop in the available cargo is having a negative ripple effect on the programmes that depend on it, such as the Food for Peace scheme. “This is where agencies like the US Agency for International Development purchase food commodities from US farmers and ship them overseas in support of humanitarian aid disaster relief operations,” he adds. “Those programmes are reviewed each year, and over time they have been zeroed out in the President’s programme.”
Despite recent attempts to restore funding for the programmes, the ongoing Covid-19 pandemic has diverted the focus away from them, putting more emphasis on national development projects.
The Jones Act and its role within offshore wind development
Having just marked 100 years since its establishment, the Jones Act is one of the most controversial laws in US maritime, one that the Trump administration has so far failed to take a stance on.
A section of the 1920 Merchant Marine Act, the Jones Act is one of the world’s strictest cabotage laws at it only allows US-flagged and built ships to move goods between national ports. It also states that vessels must be registered in the US with 75% of crew formed by US citizens.
“What we saw early on in the administration was mixed messages, though mainly leaning towards not supporting the Jones Act,” says Vogel. “There was a long period of conversations about providing a full waiver of the Jones Act for trade between the continental US and Puerto Rico, [as well as] waivers for liquefied natural gas (LNG) going into New England.”
But under pressures from industry stakeholders, these waivers never eventually came to fruition. “The net result is that there were a few limited waivers that were granted as responses to hurricanes that hit the US, [consistently] with what we’ve seen in past administrations,” he adds.
Jones Act at 100: could now be the time for a change? With comment from @AnneKrueger4 from @JohnsHopkins and @cpgrabow from @CatoInstitutehttps://t.co/WhwBnLHkMF #jonesact #shipping #US #trade #business #debate
— Ship Technology Global (@ShipTechMag) September 10, 2020
Despite failing to drive change in this field, the Trump administration still managed to indirectly affect some of the areas the Jones Act focuses on, such as offshore wind development.
“There are a number of questions regarding the application of the Jones Act to offshore wind development,” says Vogel. “The administration has not taken any steps to clarify those issues.”
However, this has not stopped companies like Danish power supplier Ørsted from continuing their wind development projects. “Things have not gone as quickly as stakeholders would have liked in large part because it’s not a policy priority of the current administration,” Vogel explains.
Reducing carbon emissions in maritime
The past few years have seen increasing pressures on the global maritime industry to reduce its carbon emissions, driven primarily by the International Maritime Organization. According to Vogel, this is an area where the US has achieved progress despite President Trump’s much-debated decision to withdraw from the 2015 Paris Agreement.
International shipping accounted for about 2% of global energy-related CO2 emissions in 2019.
— IEA (@IEA) August 28, 2020
“[Withdrawing from] the Paris Accord speaks for itself as to the administration’s priorities for emission control but, notwithstanding that sort of policy change, a number of Jones Act operators have already made significant investments into cleaner forms of propulsion for their vessels,” he comments. “Operators such as Tote Maritime and Crowley Maritime that are operating in the Jacksonville to Puerto Rico trade route have made significant investments in dual-fuel vessels over the past seven/eight years.”
Many shipowners and operators are also investing in increasing their capacity for LNG-powered vessels running between Florida and Puerto Rico through private funding.
“Another area that we’ve seen move forward – despite not being a White House priority – is the control of invasive species through ballast control systems,” he concludes. These initiatives started before the current administration, though their successes have convinced the US Coast Guard and Environmental Protection Agency to approve new systems that are currently being implemented to reduce the environmental impact of ballast water discharge.