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MARITIME TRANSPORTATION: 

OPPORTUNITIES AND CHALLENGES FOR 

THE MARITIME ADMINISTRATION 

AND FEDERAL MARITIME COMMISSION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SURFACE TRANSPORTATION 

AND MERCHANT MARINE INFRASTRUCTURE, 

SAFETY AND SECURITY 

OF THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

MAY 9, 2017 

Printed for the use of the Committee on Commerce, Science, and Transportation 

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JOHN THUNE, South Dakota, Chairman 

ROGER F. WICKER, Mississippi 

ROY BLUNT, Missouri 

TED CRUZ, Texas 

DEB FISCHER, Nebraska 

JERRY MORAN, Kansas 

DAN SULLIVAN, Alaska 

DEAN HELLER, Nevada 

JAMES INHOFE, Oklahoma 

MIKE LEE, Utah 

RON JOHNSON, Wisconsin 

SHELLEY MOORE CAPITO, West Virginia 

CORY GARDNER, Colorado 

TODD YOUNG, Indiana 

BILL NELSON, Florida, Ranking 

MARIA CANTWELL, Washington 

AMY KLOBUCHAR, Minnesota 

RICHARD BLUMENTHAL, Connecticut 

BRIAN SCHATZ, Hawaii 

EDWARD MARKEY, Massachusetts 

CORY BOOKER, New Jersey 

TOM UDALL, New Mexico 

GARY PETERS, Michigan 

TAMMY BALDWIN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

MAGGIE HASSAN, New Hampshire 

CATHERINE CORTEZ MASTO, Nevada 

NICK ROSSI, Staff Director 

ADRIAN ARNAKIS, Deputy Staff Director 

JASON VAN BEEK, General Counsel 

KIM LIPSKY, Democratic Staff Director 

CHRIS DAY, Democratic Deputy Staff Director 

RENAE BLACK, Senior Counsel 

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT 

MARINE INFRASTRUCTURE, SAFETY AND SECURITY 

DEB FISCHER, Nebraska, Chairman 

ROGER F. WICKER, Mississippi 

ROY BLUNT, Missouri 

DEAN HELLER, Nevada 

JAMES INHOFE, Oklahoma 

RON JOHNSON, Wisconsin 

SHELLEY MOORE CAPITO, West Virginia 

CORY GARDNER, Colorado 

TODD YOUNG, Indiana 

CORY BOOKER, New Jersey, Ranking 

MARIA CANTWELL, Washington 

AMY KLOBUCHAR, Minnesota 

RICHARD BLUMENTHAL, Connecticut 

TOM UDALL, New Mexico 

TAMMY BALDWIN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

MAGGIE HASSAN, New Hampshire 

(III) 

C O N T E N T S 

Page 

Hearing held on May 9, 2017 ................................................................................. 1 

Statement of Senator Fischer ................................................................................. 1 

Statement of Senator Booker .................................................................................. 3 

Prepared statement .......................................................................................... 3 

Statement of Senator Wicker .................................................................................. 30 

Letter dated May 8, 2017 to Hon. Deb Fischer and Hon. Cory Booker 

from Paul Doell, National President, American Maritime Officers .......... 30 

Statement of Senator Young ................................................................................... 34 

Statement of Senator Baldwin ................................................................................ 40 

Statement of Senator Blumenthal .......................................................................... 42 

WITNESSES

Hon. Michael A. Khouri, Acting Chairman, Federal Maritime Commission ...... 4 

Prepared statement .......................................................................................... 5 

Hon. Rebecca Dye, Commissioner, Federal Maritime Commission Supply 

Chain Innovation Teams ..................................................................................... 9 

Prepared statement .......................................................................................... 10 

Joel Szabat, Executive Director, Maritime Administration, U.S. Department 

of Transportation ................................................................................................. 12 

Prepared statement .......................................................................................... 13 

Rear Admiral James Helis, U.S. Maritime Service Superintendent, United 

States Merchant Marine Academy ..................................................................... 17 

Prepared statement .......................................................................................... 19 

Hon. Mario Cordero, Commissioner, Federal Maritime Commission .................. 22 

Prepared statement .......................................................................................... 25 

APPENDIX

Response to written questions submitted to Joel Szabat by: 

Hon. Todd Young .............................................................................................. 45 

Hon. Tammy Baldwin ...................................................................................... 45 

(1) 

MARITIME TRANSPORTATION: 

OPPORTUNITIES AND CHALLENGES FOR 

THE MARITIME ADMINISTRATION 

AND FEDERAL MARITIME COMMISSION 

TUESDAY, MAY 9, 2017 

U.S. SENATE, 

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND

MERCHANT MARINE INFRASTRUCTURE, SAFETY AND SECURITY,

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:33 p.m. in room 

SR–253, Russell Senate Office Building, Hon. Deb Fischer, Chairman of the Subcommittee, presiding. 

Present: Senators Fischer [presiding], Booker, Wicker, Young, 

Baldwin, Blumenthal, Cantwell, Klobuchar, Gardner. 

OPENING STATEMENT OF HON. DEB FISCHER, 

U.S. SENATOR FROM NEBRASKA 

The CHAIRMAN. The hearing will come to order. Welcome. Thank 

you all for being here today for our fourth hearing of the Surface 

Transportation and Merchant Marine Infrastructure, Safety and 

Security Subcommittee. Today’s hearing is entitled, ‘‘Maritime 

Transportation: Opportunities and Challenges for the Maritime Administration and Federal Maritime Commission.’’ 

As I mentioned before in this Subcommittee, the United States 

has a rich maritime heritage. In fact, shipbuilding is one of our 

country’s oldest industries, dating back to the early colonial period. 

From the beginning, America’s coastal and inland waterways were 

used for exploration, commerce, transportation, defense, and recreation. 

Today, ocean transportation and seaports remain critical to the 

economy and our Nation’s transportation system. According to the 

International Maritime Organization, over 90 percent of global 

trade is transported by ocean carriers. 

The Bureau of Transportation Statistics has found that freight 

tonnage on our Nation’s transportation network will grow by 40 

percent over the next 30 years. As our freight flows grow, seaports 

will serve as a key connection point for all modes of transportation. 

In Nebraska, our agriculture producers work hard to feed a hungry world, but in order for these producers to compete internationally and meet customer needs, they rely on efficient ports and access to maritime carrier services. 

2 

Today, our Subcommittee will examine the activities of the U.S. 

Maritime Administration, U.S. Merchant Marine Academy, and 

Federal Maritime Commission. The Maritime Administration plays 

an important role in our national security. MARAD manages the 

Department of Defense Ready Reserve Force, which serves to 

transport combat support, resupply, and unit equipment to the 

Army and Marine Corps. 

Senator Booker and I have authored and passed significant reforms to strengthen MARAD over the past 2 years. In addition to 

reauthorizing MARAD’s national security vessel programs, we included measures recommended by the DOT Inspector General to 

improve workforce management at the agency. Our 2016 MARAD 

legislation, which was included in the annual National Defense Authorization Act, also provided greater flexibility for joint DOT and 

DOD vessel management programs. 

Importantly, we also included significant measures to help address instances of sexual assault and harassment at the U.S. Merchant Marine Academy. The Academy’s 2015 anonymous survey of 

midshipmen found that as many as 28 women and 24 men had 

been sexually assaulted on campus. However, the Academy noted 

there was only one officially reported case of sexual assault. 

Because of our legislative efforts, midshipmen will have greater 

access to victim advocates and a 24/7 hotline. Moreover, the Academy is now required to employ sexual assault response professionals and provide preventative training to midshipmen. 

As one of our five service academies, the USMMA plays a vital 

role in developing future leaders in the maritime industry, including many who will go on to serve in our nation’s armed forces. I 

am thankful for their service to our country. Moving forward, we 

must continue to work toward ensuring a safe environment on 

campus and during the Sea Year program. 

We are also going to hear testimony from three Commissioners 

of the Federal Maritime Commission. The FMC is an independent 

Federal agency tasked with fostering a fair, efficient, and reliable 

international ocean transportation system for U.S. exporters, importers, and consumers. The FMC is responsible for regulating 

ocean carrier activities, approving ocean carrier alliances, and monitoring ocean transportation, operation, and rates. The FMC also 

has an important role in overseeing freight activities at our Nation’s port terminals. 

As many here are aware, the 2015 West Coast ports slowdown 

caused massive congestion and gridlock. According to a study by 

the National Retail Federation and National Association of Manufacturers, a 5-day West Coast ports stoppage would reduce U.S. 

GDP by $9.4 billion and disrupt 73,000 jobs. Greater information 

is essential to improving the efficiency of our ports. 

I want to commend Commissioner Rebecca Dye, who has led in 

this area by establishing the Supply Chain Innovation Teams initiative. Better communication between stakeholders and real-time 

data sharing will go a long way toward addressing bottlenecks and 

enhancing the flow of goods through our ports. 

I look forward to learning more about how the FMC is working 

to strengthen ocean transportation. Thank you again to our witnesses for being here today. 

3 

And I would now turn to my colleague and Ranking Member 

Senator Cory Booker for his opening remarks. 

Senator Booker. 

STATEMENT OF HON. CORY BOOKER, 

U.S. SENATOR FROM NEW JERSEY 

Senator BOOKER. Chairman Fischer, this is going to disappoint 

my colleagues, but I’m just going to submit my testimony for the 

record. They can get it from me if they would like. And we have 

a big panel, we should probably get to it. 

[The prepared statement of Senator Booker follows:] 

PREPARED STATEMENT OF HON. CORY BOOKER, U.S. SENATOR FROM NEW JERSEY

Thank you, Chairman Fischer for holding this important hearing on the opportunities and challenges facing the Maritime Administration and the Federal Maritime 

Commission. 

The country’s ports, vessels, and mariners are critical to our Nation’s economic 

growth, military preparedness, and disaster relief efforts. 

Our nation’s ports and marine terminals, as well as the rail and road networks 

that support them, are essential for getting American products to overseas markets 

and generating U.S. jobs. 

Residents of my home state of New Jersey know this as well as anyone. 

New Jersey is home to the Port of New York and New Jersey, which has moved 

more than 120 million tons of cargo annually in recent years, and is the busiest port 

in the East Coast. 

Overall, New Jersey’s ports and the trade industries that rely on them, employed 

285,000 people in New Jersey in 2014, and generated $60 billion in family incomes 

and business revenues for New Jersey’s economy. 

In the past few years, the public and private sectors have helped fund more than 

$2 billion in infrastructure improvements at the Port of New York and New Jersey 

to expand the region’s economic capacity. 

And this is in addition to the more than $1 billion invested by the Port Authority 

to raise the roadway of the Bayonne Bridge to allow larger and taller ‘‘postPanamax’’ ships to serve the region. 

While investments like these are essential, and offer long-term benefits to our regional economy, they cannot—by themselves—reduce the congestion caused by our 

Nation’s outdated infrastructure. 

That’s why I’m proud of the work this Committee did last Congress to pass the 

FAST Act and establish the Nation’s first multimodal freight grant program. 

Last year, the FASTLANE multimodal freight grant program, when combined 

with the important TIGER grant program, invested more than $850 million in our 

Nation’s port infrastructure. 

While the FAST Act was a substantial achievement, there is more that we must 

do. 

For many decades, the United States has relied upon the U.S. Merchant Marine, 

with its fleet of commercial vessels and crew of U.S. mariners, to assist the military 

during times of war or national emergency. 

But as the U.S. international fleet has diminished, U.S. Mariners lose employment and the opportunity to remain certified to crew large ocean-going vessels. 

And as we lose U.S. mariners, we lose sealift capacity to support the U.S. military 

during times of war or in national disasters. 

We must also address challenges that could prevent students from wanting to 

enter the field in the first place. 

I know the U.S. Merchant Marine Academy has been focused on preventing sexual assault and harassment at the Academy and during Sea Year. 

I appreciate the changes that have occurred at the Academy under Admiral Helis’ 

leadership. 

However, there is more work to be done. Each year I nominate promising young 

women and men from New Jersey to attend this academy, and we must ensure that 

every cadet has an environment of respect, safety, and dignity. 

Last but not least, delays in the freight network remain a serious concern. 

The maritime industry is experiencing significant changes that impact how and 

where goods are moved. 

4 

Unfortunately, when one part of the network experiences a problem, it can have 

ripple effects that spread through every part of the network. 

That’s why it is important that we aren’t looking at changes in a vacuum. 

Whether it’s changes that impact ports, shipping, rail or trucking—these changes 

must be viewed by how they impact the whole system. 

I look forward to hearing from each of our witnesses about these and other issues 

that the Committee should consider as we work to improve our Nation’s maritime 

transportation system. 

The CHAIRMAN. Thank you, Senator Booker. 

Next I would ask our witnesses to please give their opening 

statements. We will begin with the Acting Chairman, Michael 

Khouri—did I pronounce that correctly?—with the Federal Maritime Commission. Chairman Khouri has served as an FMC Commissioner since 2009 and as Acting Chairman since January 2017. 

Welcome. 

STATEMENT OF HON. MICHAEL A. KHOURI, ACTING 

CHAIRMAN, FEDERAL MARITIME COMMISSION 

Chairman KHOURI. Chairman Fischer, Ranking Member Booker, 

Senators, thank you for the opportunity to appear today on behalf 

of Federal Maritime Commission. 

First, I am pleased to be joined by my colleague, Commissioner 

Rebecca Dye. 

And we want to especially recognize our friend, Commissioner 

and former Chairman Mario Cordero, and thank him for his commendable service and leadership of the FMC. This is his last week 

with us, and he moves on to become the Executive Director of the 

Port of Long Beach, California. We look forward to his comments 

today. We wish him well as he takes the helm of a major seaport 

that is a critical part of our Nation’s maritime supply chain. 

I would like to address a number of matters about the Commission and the Shipping Act that are of current interest to the Subcommittee. The FMC is a specialized competition agency charged 

by Congress to prevent anticompetitive behavior by competitor collaborations in the international ocean liner industry. Since 1916, 

Congress has recognized that special factors affecting this international industry, which transports 65 percent of our Nation’s waterborne international exports and imports, and requires a dedicated agency of specialized expertise to ensure certain national objectives are met. The Shipping Act of 1984 provides the Commission with authority to address the issues under our jurisdiction and 

protect a competitive marketplace. 

2016 was a financially challenging year for international open 

shipping with ongoing consolidation and a major carrier bankruptcy. By mid-2018, there will be 10 companies arranged into 

three major operating joint ventures called ‘‘alliances,’’ that, combined, will carry 82 percent of containerized cargo across all U.S. 

ocean trade lanes. 

Even with these developments, however, the liner industry is 

still relatively unconcentrated by traditional antitrust standards. It 

is important to note that these alliances are not permanent mergers. Alliances provide the carriers with flexibility, cost savings, and 

efficiencies. There is vigorous price and capacity competition within 

alliances, and participants can and do change quickly in response 

to market forces, as we have seen in the last year. As long as they 

5 

do not exercise market power, alliances are widely recognized as 

potentially beneficial and pro-competitive and ultimately benefiting 

U.S. shippers and consumers. And as noted by the Supreme Court, 

these carrier joint ventures can help prevent outright mergers, 

thus preserving competition. 

Concerns about these trends, however, have been expressed by 

U.S. cargo interests as well as other participants in the ocean cargo 

supply chain. As larger alliance agreements have been filed at the 

Commission, we have strengthened our economic and competition 

review process and require tighter limits on the scope of each 

agreement’s authority. We will continue to review and monitor 

these agreements carefully for anticompetitive behavior to safeguard against harm to shippers and consumers. 

As Congress directed the Commission in both the 1984 Act and 

the 1998 amendments, the FMC remains committed to finding additional ways to reduce unnecessary regulatory costs and burdens, 

and obtaining greater efficiencies for the regulated community. 

Most recent, March 6, the Commission unanimously approved a 

new rule to reduce the complexity, burden, and cost of contract filings for the 165 ocean carriers and the 6,200 ocean transportation 

intermediaries who submit 53,000 service contracts and over 

730,000 contract amendments with the agency each year. 

I intend for this deregulatory effort to continue as we take up 

other pending and proposed issues. After consulting my fellow 

Commissioners, I designated the FMC’s Managing Director, Karen 

Gregory, as the Regulatory Reform Officer. She is now standing up 

a task force to execute on the regulation review process. 

Commissioner Dye will address her commendable efforts to help 

the industry develop information-sharing protocols that should 

prove extremely beneficial in integrating the global supply chain 

and providing a boost to the American economy. 

To close, the Federal Maritime Commission, with its industry expertise and experience, is well positioned to understand the unique 

dynamics of the shipping industry and all of its stakeholders, to 

apply the competition laws fairly in this area, and to prevent anticompetitive behavior in these carrier agreements, all to ensure 

maximum benefit for the U.S. shipping public. 

Thank you for your attention. And I respectfully ask that my full 

written remarks be accepted into the record. I’ll be pleased to answer any questions you may have. 

[The prepared statement of Chairman Khouri follows:] 

PREPARED STATEMENT OF HON. MICHAEL A. KHOURI, ACTING CHAIRMAN, 

FEDERAL MARITIME COMMISSION

Chairman Fischer, Ranking Member Booker, Senators, thank you for the opportunity today to discuss issues related to the Federal Maritime Commission. 

I am pleased to be joined at the table by my colleague, Commissioner Rebecca 

Dye. And I want to especially recognize our friend, Commissioner and former Chairman Mario Cordero and thank him for his exemplary service and leadership of the 

FMC. This will be his last week with us as he moves on to become the Executive 

Director of the Port of Long Beach, California. We look forward to his comments 

today and wish him well as he takes the helm of a seaport that is such a critical 

part of our Nation’s maritime supply chain. 

The United States has always been a nation that has engaged in trade, even from 

the earliest days of our existence as a group of colonies. Transporting goods of all 

descriptions by ocean, coastal and inland ships is an integral part of American comVerDate Nov 24 2008 13:26 Feb 26, 2018 Jkt 075679 PO 00000 Frm 00009 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\28642.TXT JACKIE
6 

merce. There is simply no more efficient or economical way to move large volumes 

of commodities than aboard vessels, and the sectors of our economy tied to international trade depend on an efficient global intermodal transportation system. As 

the Acting Chairman of the Federal Maritime Commission, I am proud of the dedicated men and women of our agency and the work they do every day to safeguard 

competition in ocean transportation for the benefit of the America’s exporters, importers and ultimately, our Nation’s consumers. 

One of the most positive ways to benefit our American consumers is by helping 

to keep the end cost paid for goods as low as possible. Identifying and addressing 

regulations in the ocean transportation sector that are out of date with current commercial practices and technology or have become unreasonably burdensome will always increase consumer choices and lower costs. At the Federal Maritime Commission, we view a commitment to deregulation in the ocean container supply chain as 

an essential and critical factor in expanding America’s economic competitiveness. 

As such, we are working to be a more efficient organization by making a concerted 

and focused effort to reduce regulatory burdens on our constituents. The Commission is aggressively looking for ways to make compliance with its statutory and regulatory requirements easier and more cost effective for shippers, carriers, and ocean 

transportation intermediaries. An example of the sort of common sense deregulatory 

action the Commission can take was exhibited on March 6 when we approved key 

changes to regulatory requirements for ocean carrier service contract filings and 

non-vessel-operating common carrier (NVOCC) service arrangement filings. The 

Commission will make it easier and more efficient for shippers and carriers to do 

business. 

Further toward the goal of eliminating or reforming regulations, we have designated Ms. Karen V. Gregory, the Managing Director of the Commission, as our 

Regulatory Reform Officer. Ms. Gregory is now leading an internal team that is 

identifying those regulations that have become less relevant in today’s fast moving 

commerce, are more burdensome than current business needs require, and otherwise need updating and revision. They will then establish a definitive timeline within the agency to move those items to a vote before the Commission. This initiative 

is consistent with the January 30 ‘‘Presidential Executive Order on Reducing Regulations and Controlling Regulatory Costs.’’ While the Commission may not be technically required as an independent agency to take this step, I believe that it is the 

right action to take and is consistent with the broader deregulatory history and 

scope of the Shipping Act. 

Over the past two to three years, there have been tremendous changes to the 

ocean transportation services marketplace. This period has been marked by considerable merger and acquisition activity among shipping lines, as well as the bankruptcy of a ‘‘top ten’’ carrier late last summer. As a result of these events, the number of major shipping lines operating in the international trades has dropped from 

20 in 2015 to what will be 13 by next year when the three Japan-based carriers 

create a new, consolidated container line. Of equal consequence, consolidation 

among the liner carriers has led to a reordering of the carrier alliance system and 

the creation of two new organizations—‘‘THE Alliance’’ and ‘‘The OCEAN Alliance’’—that will join the already existing ‘‘2M Alliance.’’ 

Some stakeholders have expressed concern about these changes, especially developments related to alliances. It is important to note that the evidence shows that 

carrier and marine terminal alliances can be very beneficial for U.S. exporters, importers, and consumers. Alliances are not permanent mergers like those reviewed 

by DOJ, but are much more dynamic arrangements that—number one—preserve 

price and service competition between and among participants. The ocean common 

carrier members of the alliance do obtain efficiencies and cost-savings that have historically been passed on to domestic consumers especially when healthy competition 

exists among vessel operators. The benefits of alliances and other forms of joint commercial arrangements are recognized and addressed in the Shipping Act of 1984, as 

amended, and the contemporaneous Congressional record. 

A reassuring data trend that we receive through our alliance monitoring programs 

shows us that the individual ocean carriers within each alliance continue to independently and vigorously compete on pricing. Further, individual ocean carriers 

within the alliances continue to add and withdraw vessels from trades both inside 

and outside the alliances in which they participate, demonstrating that competition 

remains in both vessel capacity decisions and pricing decisions within the alliances. 

Finally, these joint ventures provide ocean carriers with flexibility and may facilitate the survival of independent companies, preserving competition and averting 

further industry concentration. The interests of the American shipping public and 

the American consumer will not be well served if carrier consolidations ultimately 

7 

result in only a handful of mega-carriers remaining to transporting the Nation’s 

cargo. 

Clearly, the industry is entering a new era and it is not surprising that some 

question whether ocean carriers will move into a position to exert some level of market power on freight rates. In fact, by all economic benchmarks used by the Department of Justice (DOJ), the Federal Trade Commission (FTC), and the FMC, the 

ocean liner marketplace is not concentrated. Concentration is assessed using the 

Herfindahl-Herschman Index (HHI). The greater the degree of market concentration 

by virtue of fewer competitors, then the HHI rises. In DOJ’s merger guidelines, 

their Antitrust Division regards markets as not concentrated if the HHI is below 

1,500. Following the last ocean common carrier merger, the HHI for the container 

shipping industry in the international U.S. trades today is 752, far down into the 

‘‘safe harbor’’ area. 

The reduced number and increased size of the major alliances (2M, THE Alliance, 

and OCEAN Alliance) has indeed changed the way in which the Commission approaches these joint ventures. The Commission carefully and thoroughly reviews 

filed agreements and engages in extensive consultations with filing parties to assure 

that an agreement that ultimately goes into effect is narrowly crafted and only permits specific authorities that provide specific operational benefits. Broad agreements 

with imprecise authority language will not go unchallenged. 

Since these are ongoing cooperative agreements rather than mergers, the Commission is further charged by Congress with continuous monitoring after the initial 

review and following the effective date of the agreements. The Commission checks 

for anticompetitive behavior that would violate the Shipping Act. The Commission 

may challenge an agreement at any time after the effective date. Just as the marketplace has changed, so has how the Commission monitors agreements. Over the 

past five years, the FMC has been steadily refining reporting requirements mandated of agreement parties both in terms of the information our economic analysis 

team wants to review, as well as how often data must be provided to the Commission. Additionally, we are working to reinforce our already very capable team of 

economists and analysts in order to increase our capacity to review and monitor 

agreements and the marketplace. Finally, I would note that in recent months, the 

Commission has twice rejected agreement filings, one on jurisdictional grounds and 

the second for failing to meet the clear and definite disclosure standard required by 

law, demonstrating that we are far from being a rubberstamp agency. 

The current circumstances in the international container industry perfectly illustrate why the Federal Maritime Commission was created, what its job is, and how 

the agency provides a benefit to American shippers, to our citizen consumers, and 

to our economy more broadly. The FMC is an independent agency of specialized expertise that administers an antitrust regulatory regime tailored to the special factors affecting the international ocean liner trade. The Shipping Act of 1984, and the 

Federal Maritime Commission that administers the Act, are related to, but separate 

from Department of Justice and the Federal Trade Commission and the competition 

and antitrust statutes they administer. 

Under the Shipping Act, cooperative or collaborative agreements between or 

among competitor international ocean liner carriers are filed with the Commission 

and reviewed under the Shipping Act’s competition standard to prevent anticompetitive behavior in these agreements. This standard the Commission uses to review 

carrier agreements, 46 U.S.C. § 41307(B)(1)—‘‘Anticompetitive Agreements,’’ commonly referred to as 6(g), is analogous to the standard employed by DOJ and the 

FTC to review mergers, acquisitions, and competitor collaborations. Under 6(g), an 

agreement filed with the Commission goes into effect UNLESS the Commission determines (and convinces a judge to agree) that the agreement is likely, by a reduction in competition, to produce an unreasonable reduction in transportation service 

or an unreasonable increase in transportation cost. In the event of such determination, the Commission then must go to a Federal District Judge as discussed below. 

The Commission’s process for agreement review under 6(g) is modeled on the 

Hart-Scott-Rodino Act of 1976 governing premerger clearance of proposed acquisitions and mergers. Congress adapted this process for the Commission as part of the 

Shipping Act of 1984. Prior to 1984, the Commission reviewed and approved agreements under a broad ‘‘public interest’’ standard. Because approval became a lengthy 

process sometimes stretching into years, Congress put a Hart-Scott-Rodino type 

framework in place for Commission review of carrier agreements under the Shipping Act to ensure that that potential efficiencies and cost-savings would not be lost 

by consumers because of delay in agreement effective dates. Agreements filed with 

the Commission go into effect automatically in 45 days unless the Commission determines (and a judge agrees) that the agreement is anticompetitive under the 6(g) 

standard referred to above. Under certain circumstances, the Commission may ask 

8 

for additional information necessary to make a determination under 6(g), extending 

for an additional 45 days after receiving that information the time before the agreement becomes effective. In order to prevent the agreement from going into effect, 

the Commission must bring a civil action in the United States District Court for the 

District of Columbia and successfully obtain an injunction to halt the operation of 

the agreement. The burden of proof is on the Commission. 

If parties agree to undertake activities that are governed by the Shipping Act, but 

do not comply with the Commission’s process of review, they risk not only Shipping 

Act sanctions, but also Federal criminal sanctions prosecuted by DOJ under the 

Sherman Act. 

Some claim that section 6(g) is ineffective because it presents too high a bar to 

a successful court challenge of an anticompetitive agreement by the Commission. On 

the contrary, the paucity of 6(g) cases and the historical absence of the Commission’s need to challenge agreements in court is testament to the Commission’s successful efforts to mitigate or eliminate potentially anticompetitive provisions in 

pending agreements through detailed discussions with filing parties during the review process. One need only look at the THE Alliance and the OCEAN Alliance to 

see recent examples of cases where the major carrier alliance agreements, as originally filed, requested authority to jointly negotiate for goods and services. Following 

Commission review, however, the agreements lacked these joint purchasing authorities when they went into effect. By its terms, the Shipping Act provides an opportunity for the public to express its concerns about filed agreements. The Commission 

takes these comments seriously, and uses them together with its own economic 

analysis under 6(g) during the review process to consider and address anticompetitive concerns. 

In addition to the review of carrier agreements for potentially anticompetitive effects under 6(g), the Commission may use section 10, the ‘‘Prohibited Acts’’ provisions in the Shipping Act, to preserve competition. This section of the Act includes 

prohibitions on a number of business practices on concerted carrier conduct acting 

outside of approved authority (such as price fixing or market allocation), unreasonable practices, discrimination in price or accommodations, refusal to deal, retaliation, boycotts, predatory practices, and discrimination based on shipper affiliation., 

46 U.S. Code § 41105(4), prohibits carriers from jointly negotiating with non-ocean 

carriers if doing so would violate antitrust laws (emphasis added). 

These prohibited practices mirror remedies found in other competition statutes, 

such as the Robinson-Patman Act of 1936. The Commission, of course, may enforce 

section 10; but private litigants may bring actions under these Shipping Act provisions to protect their interests. 

Since 1916, Congress has recognized that the international ocean liner industry, 

which transports a large percentage of the international exports and imports so essential to this Nation’s economy, requires special consideration because of the industry’s critical role in our international commerce, its international dimension, and the 

competing and potentially conflicting regulatory regimes and interests of our international trading partners. The FMC reviews and monitors international ocean liner 

carrier joint collaborations or agreements under the Shipping Act to ensure that 

procompetitive efficiencies and cost savings are obtained for the benefit U.S. consumers and anticompetitive effects are prevented or properly mitigated. 

The global supply chain that has been built around the ocean container is essential to the modern American economy and the competitiveness of the Nation. The 

Federal Maritime Commission plays a vital role in assuring a fair, efficient, and reliable international ocean transportation system. Thank you for your attention and 

interest in the work of the Commission, I am happy to answer any questions you 

might have. 

The CHAIRMAN. Thank you, sir. 

Next we have Rebecca Dye, Commissioner with the Federal Maritime Commission. Ms. Dye has served on the FMC since 2002. She 

previously served as a law instructor at the U.S. Coast Guard 

Academy and an attorney at MARAD. 

Welcome. 

9 

STATEMENT OF HON. REBECCA DYE, COMMISSIONER, 

FEDERAL MARITIME COMMISSION SUPPLY CHAIN 

INNOVATION TEAMS 

Ms. DYE. Thank you, Chairman Fischer, Ranking Member Booker, and members of the Subcommittee. I appreciate the opportunity 

to appear before you today on behalf of the members of the Federal 

Maritime Commission Supply Chain Innovation Teams. And on 

their behalf, I thank you for the kind recognition, Chairman Fischer. 

To accompany my statement, I submitted a list of the companies 

represented on our Innovation Teams, and the port directors, business, and academic advisors, and trade association consultants who 

supported the initiative. 

I would like to take the opportunity to publicly thank the talented individuals and their companies who volunteered their time 

and resources to advance this project. 

After issuing a report in 2015 on the results of the port congestion and supply chain forums the Commission held at ports around 

the country, we asked ourselves: Should the Commission become 

more involved in international supply chain challenges? And if so, 

how could we add value? 

As you know, the Commission has broad statutory authority over 

international ocean carriers, ports, marine terminal operators, and 

ocean transportation intermediaries. As a result of our work with 

them, we understand the commercial realities that our stakeholders face. The overall goal of the Commission’s competition enforcement program under the Shipping Act of 1984 is to provide 

competitive ocean transportation rates and service for American exporters and importers, ultimately to the benefit of American consumers. 

Our programmatic responsibilities give us a vital perspective on 

the international supply chain challenges of American exporters 

and importers. 

We concluded that the Commission could add value and help address the challenges of America’s international supply chain, but 

rejected the idea that performance of the commercial supply chain 

would be improved by additional government regulation. 

The approach we adopted for this initiative is built on two concepts: small teams and process innovation. We heard from industry 

groups that many business leaders were anxious to roll up their 

sleeves and actively engage across the table to address end-to-end 

global supply chain issues. To respond to this desire for active engagement, we organized small teams of industry leaders representing key supply chain industries: ocean carriers, U.S. ports, 

marine terminal operators, warehouse operators, chassis providers, 

longshore labor, trucking, railroads, intermediaries, and American 

exporters and importers. 

Second, we directed our teams to focus on actionable process innovation. We asked them to step out of their business silos and 

identify one key process innovation that they believed and agreed 

would improve overall international supply chain reliability and resilience. 

At our launch of our Supply Chain Innovation Teams last May, 

our three teams quickly identified supply chain visibility as one of 

10 

the most effective ways to increase supply chain performance. Integrated information systems provide visibility that encourages businesses to act in a more coordinated and effective way. 

Our Innovation Teams identified the development of a national 

seaport information portal as the one process innovation that could 

be adapted for use by ports around the United States. Our import 

teams developed standardized information for each actor in the 

chain, and determined when that information should be made 

available to them. In July, our export teams will begin developing 

standardized information for the export supply chain. 

The collateral benefits of our initiative include the insights that 

team members have gained into the business reality of other actors 

in the supply chain teams—in the supply chain system. There were 

plenty of aha moments, and, ‘‘Do you really do it like that?’’ 

We’ve also gained great insights into the strengths of U.S. ports 

from interviews we have organized with ten directors of major container ports on the East Coast, the West Coast, and the Gulf. Their 

professionalism, dedication, and commitment is impressive. 

Chairman Fischer, we believe that information infrastructure 

that will increase the performance of the country’s international 

supply chain is key to America’s economic competitiveness. 

We have suggested to you legislative authority for the Commission to develop a demonstration project for a national information 

portal. 

We do not recommend that the Federal Government build or 

maintain an information system. However, while our teams are intact and available for consultation, we believe the time is right to 

take the next step and test the concept of a national seaport information portal. 

Thank you so much, Chairman Fischer and members of the Subcommittee. I’m pleased to answer your questions. Thank you. 

[The prepared statement of Ms. Dye follows:] 

PREPARED STATEMENT OF HON. REBECCA DYE, COMMISSIONER, 

FEDERAL MARITIME COMMISSION SUPPLY CHAIN INNOVATION TEAMS

Chairman Fischer, Ranking Member Booker, and Members of the Subcommittee, 

thank you for the opportunity to appear before you today on behalf of the members 

of the Federal Maritime Commission Innovation Teams. 

To accompany my statement, I submitted a list of the companies represented on 

our Innovation Teams, and the port directors, business, and academic advisors and 

trade association consultants who have supported the initiative. 

How to Add Value to Supply Chain Debate 

After issuing a report in 2015 on the results of the port congestion and supply 

chain forums the Commission held at ports around the country, we asked ourselves: 

Should the Commission become more involved in international supply chain challenges? And if so, how could we add value? 

Why the Federal Maritime Commission 

As you know, the Commission has broad statutory authority over international 

ocean carriers, ports, marine terminals, and ocean transportation intermediaries. As 

a result of our work with them, we understand the commercial realities our stakeholders face. 

The overall goal of the Commission’s competition enforcement program under the 

Shipping Act of 1984 is to provide competitive ocean transportation rates and service for American exporters and importers, ultimately to the benefit of American consumers. 

Our programmatic responsibilities give us a vital perspective on the international 

supply chain challenges of American exporters and importers. 

11 

No Additional Government Regulation 

We concluded that the Commission could ‘‘add value’’ and help address the challenges of America’s international supply chain, but rejected the idea that the performance of the commercial supply chain would be improved by additional government regulation. 

Nor should we look over the shoulders of port officials and attempt to duplicate 

or second-guess the tough decisions they are making to combat supply chain problems. 

Team Work and Process Innovation 

The approach we adopted for this initiative is built on two concepts: team work 

and process innovation. 

We heard from industry groups that many business leaders were anxious to ‘‘roll 

up their sleeves’’ and actively engage ‘‘across the table’’ to address end-to-end global 

supply chain issues together. 

To respond to this desire for active engagement, we organized teams of industry 

leaders representing key supply chain industries: ocean carriers, U.S. ports, marine 

terminal operators, warehouse operators, chassis providers, longshore labor, trucking, railroads, intermediaries, and American exporters and importers. 

Second, we directed our teams to focus on ‘‘actionable’’ process innovation. We 

asked them to ‘‘step out of their business silos’’ and identify one key process innovation that would improve overall international supply chain reliability and resilience. 

Innovation Teams Recommendation 

At the launch of our Supply Chain Innovation Teams initiative last May, our 

three teams quickly identified supply chain visibility as one of the most effective 

ways to increase supply chain performance. 

Integrated information systems provide supply chain visibility that encourages 

businesses to act in a more coordinated and effective way. 

National Seaport Information Portal 

Our Innovation Teams identified the development of a national seaport information portal as the one process innovation that could be adapted for use by ports 

around the United States. 

Our import teams developed standardized information for each actor in the international import supply chain and determined when that information must be available. 

In July, our export teams will begin developing standardized information for our 

export supply chain. 

Port Director Interviews 

Collateral benefits of our initiative include the insights team members have 

gained into the business realities of other actors in the supply chain system. 

We have also gained a great insights into the strengths of and opportunities for 

U.S. ports. We have organized interviews with many of our American port directors 

and are impressed by their professionalism and dedication. 

Information Infrastructure Key to American Economic Competitiveness 

Chairman Fischer, we believe that information infrastructure that will increase 

the performance of our country’s international supply chain is key to America’s economic competitiveness. 

We have suggested to you legislative authority for the Commission to develop a 

demonstration project for a national seaport information portal. 

We do not recommend that the Federal government build or maintain a national 

seaport information system. However, while our teams are intact and available for 

consultation, we believe that the time is right to take the next step and test the 

concept of a national seaport information portal. 

Thank you, Chairman Fischer and members of the Subcommittee. I’m pleased to 

answer your questions. 

The CHAIRMAN. Thank you, Commissioner. 

Next we have Mr. Szabat, who is the Executive Director of the 

Maritime Administration. 

And previously you served as Chief of Staff for the Small Business Administration and Transportation Counselor to the U.S. Ambassador to Iraq. Welcome. 

12 

STATEMENT OF JOEL SZABAT, EXECUTIVE DIRECTOR, 

MARITIME ADMINISTRATION, 

U.S. DEPARTMENT OF TRANSPORTATION 

Mr. SZABAT. Good afternoon, Chairwoman Fischer, Ranking 

Member Booker, and members of the Subcommittee. Thank you for 

the invitation to testify. 

The Department of Defense relies on U.S.-flag ships, crewed by 

volunteer American civilian mariners to move our warfighters’ 

equipment and supplies whenever and wherever they need to go. 

This U.S.-flag fleet of privately owned, commercially operated vessels, along with government-owned vessels, provide the sealift for 

the armed forces during times of conflict and also responds to humanitarian crises and natural disasters. 

MARAD is responsible for ensuring that enough U.S.-flag ships 

are available to meet these Department of Defense sealift requirements and that there are enough qualified merchant mariners to 

crew the entire sealift fleet of commercial and government-owned 

vessels. 

Three programs are essential to our sealift mission and to the 

commercial success of the U.S.-flag fleet: the Jones Act, which ensures the U.S.-flag fleet domestic trade; and Cargo Preference and 

the Maritime Security Program, which together provide an international U.S.-flag fleet supporting the U.S. military. 

As of today, the U.S.-flag commercial fleet is adequate to meet 

immediate military contingencies, but as the commercial fleet has 

declined in size in recent years, it no longer employs enough qualified American mariners to sustain an extended military sealift. 

To begin to address this shortfall, the most recent National Defense Authorization Act established a Maritime Workforce Working 

Group. This group has already begun to assess and define the pool 

of U.S. citizen mariners necessary to support the U.S.-flag fleet in 

times of national emergency. 

Nearly all of our merchant mariner officers qualified to crew 

commercial and government sealift ships graduate from the State 

Maritime Academies or from the Federal United States Merchant 

Marine Academy. Following incidents of sexual harassment and 

sexual assault at the U.S. Merchant Marine Academy, both on 

campus and at sea, the Department of Transportation and MARAD 

leadership suspended the USMMA’s critical commercial Sea Year 

training component. In the Maritime Administration, we look after 

our people. Any sexual violence or coercion against any of our people, especially including midshipmen at Kings Point, is unacceptable. 

During the suspension, a cultural audit of the Academy was conducted by the Department of Transportation to study the reasons 

for sexual harassment, sexual assault, and coercive behaviors. 

From that audit came recommendations for establishing strict criteria that commercial shipping companies must meet to participate 

in Sea Year. Superintendent Helis will discuss actions taken on 

campus in greater detail. 

Shortly after the Sea Year stand-down, a consortium of 14 leading maritime companies came together with MARAD and proposed 

ways to ensure that Sea Year training is conducted in a safe and 

respectful environment. Those proposals have been developed into 

13 

strict requirements for companies to meet and apply in to participate in Sea Year. To date, eight companies, representing 82 percent of the commercial Sea Year training prior to stand-down, have 

met these requirements and resumed hosting midshipmen on their 

vessels. 

Going forward, MARAD will continue to work with industry 

through the Ship Operations Cooperative Program, made up of 

maritime industry professionals focused on safety. The SOCP will 

develop computer-based sexual assault prevention and response 

training that companies can use to educate and equip their vessel 

crews. This summer, we will review these measures and make 

changes or improvements as needed. 

The NDAA also required MARAD to establish a Sexual Assault 

Prevention and Response Working Group to examine methods of 

improving the shipboard climate during Sea Year. The SAPR 

Working Group had its first meeting on January 31, with over 50 

members from industry, labor, the Merchant Marine Academy, the 

State Maritime Academies, and Federal Government representatives also participating. 

Finally, the Fiscal Year 2017 NDAA set deadlines for completing 

actions identified by the Department of Transportation’s Inspector 

General in a December 2015 management control audit. DOT and 

MARAD have completed 13 of the 16 recommendations, and we are 

committed to meeting the remainder. 

A final note, with me today, in pink, is my better half, best 

friend, and wife, who has two Commerce connections. Chiling Tong 

is a former Deputy Assistant Secretary in the Department of Commerce, and she is now President of the National AAPI Chamber of 

Commerce and Entrepreneurship. 

Thank you for your interest. I ask that my written statements 

be submitted into the record. And I’m happy to answer any questions you may have. 

[The prepared statement of Mr. Szabat follows:] 

PREPARED STATEMENT OF JOEL SZABAT, EXECUTIVE DIRECTOR, MARITIME ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION

Good afternoon, Chairwoman Fischer, Ranking Member Booker and members of 

the Subcommittee. Thank you for the invitation to testify on issues under the jurisdiction of the Maritime Administration, with an emphasis on the implementation of 

recent statutory requirements and the examination of topics relevant to upcoming 

reauthorization bills. This testimony will cover the current state of the U.S.-flag 

fleet and mariner workforce and implementation of the recent MARAD reauthorization bill, including measures affecting the U.S. Merchant Marine Academy (USMMA 

or Academy). 

The U.S.-Flag Fleet and Mariner Workforce 

MARAD is responsible for ensuring that U.S.-flag ships and merchant mariners 

are available to meet Department of Defense (DOD) sealift requirements. The U.S.- 

flag fleet of privately-owned, commercially-operated vessels, along with governmentowned vessels, provide a critical public-private sealift surge and sustainment capacity to move equipment and materials for the Armed Forces and Federal agencies 

when needed, and where needed, during times of conflict, humanitarian crises, and 

natural disasters. 

Three programs ensure that there are enough U.S.-flag vessels available to provide this capacity: the Jones Act, which ensures a role for the U.S.-flag fleet in domestic trade; and Cargo Preference and the Maritime Security Program (MSP) 

which, together, support a militarily useful, U.S.-flag fleet sailing internationally. 

MARAD and DOD also rely on the commercial fleet to employ enough qualified 

mariners to crew all the commercial ships tasked with supporting military operVerDate Nov 24 2008 13:26 Feb 26, 2018 Jkt 075679 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\28642.TXT JACKIE
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1Logistics Management Institute (LMI). December 2016. ‘‘Department of Transportation U.S. 

Merchant Marine Academy Culture Audit.’’ Available at: https://www.usmma.edu/sites/ 

usmma.edu/files/docs/USMMAReport%20508.pdf 

ations, as well as enough additional mariners to crew the ‘‘surge fleet’’ of Federallyowned cargo ships. As of today, the size and composition of the U.S.-flag commercial 

fleet is adequate to meet immediate military contingencies. However, due to the decline in size in recent years of both the domestic U.S.-flag fleet with unlimited 

horsepower and unlimited tonnage and the international U.S. flag commercial fleet, 

both the U.S. Transportation Command (USTRANCOM) and MARAD are concerned 

that there are not enough qualified mariners to sustain an activation of the entire 

sealift fleet, though there has never been a full activation of the entire sealift fleet. 

The National Defense Authorization Act for Fiscal Year 2017 (FY 2017 NDAA) required the establishment of a Maritime Workforce Working Group (MWWG) to examine and assess the size of the pool of U.S. citizen mariners necessary to support 

the U.S.-flag fleet in times of national emergency. The MWWG has been established 

and has begun meeting. The MWWG is comprised of more than 50 members that 

include representatives from industry, labor, the USMMA, State Maritime Academies, and Federal Government representatives, as well as subject matter experts 

from USTRANSCOM, DOD, and the Army. In addition to member meetings, a Federal Register Notice will be published to collect input from the public, as the 

MWWG prepares a report to Congress due in December 2017. 

Maritime Training 

Another MARAD responsibility is to provide funding and oversight for mariner 

training programs to produce highly skilled U.S. Coast Guard (USCG) credentialed 

officers for the U.S. Merchant Marine. Maintaining an adequate pool of American 

merchant mariners is vital to both the commercial success of the U.S.-flag fleet and 

to maintaining the capacity needed to project American sea power. The USMMA 

and the State Maritime Academies (SMAs) graduate nearly all USCG-credentialed 

officers. These are merchant marine officers who hold an unlimited tonnage or 

horsepower endorsement available to crew U.S.-flag ships. These graduates support 

our Nation as a cadre of well-educated and trained merchant mariners capable of 

serving in support of military emergency, national emergency, and humanitarian 

missions. 

Addressing Sexual Harassment and Sexual Assault at the U.S. Merchant 

Marine Academy 

The Academy is America’s flagship school for educating licensed merchant mariners capable of serving our Nation in peace and war. DOT, MARAD, and the 

USMMA take sexual assault and sexual harassment at sea and on campus very seriously. We adopted an approach to this problem similar to that used at the other 

Federal service academies. As best and as fast as we can, we are introducing policies to change the behavior and culture at the Academy to combat all kinds of abusive or coercive behaviors. This testimony discusses the actions MARAD has taken 

in conjunction with maritime industry, while testimony from Superintendent Helis 

will discuss actions taken to combat sexual assault and harassment on the USMMA 

campus. 

Criteria For Vessel Operators to Participate In Sea Year 

The USMMA’s shipboard training program, or ‘‘Sea Year,’’ gives Midshipmen experience of life at sea on board commercial and military vessels and provides costeffective hands-on seamanship and engineering sea time that meets the requirements to secure USCG mariner credentials. Midshipmen are required to have 360 

days of sea service during their four-year maritime education to obtain their USCG 

merchant mariner credentials. Shipping companies and the U.S. Navy are part of 

a cooperative effort to ensure that a Midshipman’s shore based education is enhanced by the required on-the-job training at sea. 

Sea Year is critical to the education and training of Midshipmen at the USMMA, 

and all training must be conducted in a safe and respectful environment. In the 

wake of a series of studies and surveys that indicated problems with sexual misconduct and other coercive behaviors, both on campus and at sea, DOT and MARAD 

leadership suspended commercial Sea Year so we could develop a better understanding of the problem and a strategy to ensure the safety of the Midshipmen. An 

independent external consultant assessed the organization and made recommendations in December 2016.1

Last year, Secretary Foxx’s decision to stand down commercial Sea Year over concerns about Midshipmen being subjected to sexual misconduct stirred vocal disVerDate Nov 24 2008 13:26 Feb 26, 2018 Jkt 075679 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\28642.TXT JACKIE
15 

agreement from industry leaders. Those same leaders, including many USMMA 

alumni, worked with MARAD through an extended stand down of Sea Year while 

the cultural audit was conducted. A consortium of 14 leading maritime companies 

came together with MARAD to examine ways to ensure that Sea Year training is 

conducted in a safe and respectful environment. Just two weeks after the stand 

down, the consortium brought forth a proposal to address sexual assault and harassment prevention and response. MARAD and DOT subsequently created the Shipboard Climate Compliance Team (SCCT) to establish standards and collaborate with 

industry, labor and the consortium, and lay out workable criteria for the companies 

to achieve those standards. The SCCT is led by a MARAD Senior Executive Service 

leader, who is a USMMA graduate. The team is made up of 10 experienced mariners and sexual harassment and sexual assault prevention experts and civil rights 

professionals. The SCCT has established stringent new requirements that companies must meet to be eligible to participate in Sea Year training. This strong working relationship between MARAD and these maritime leaders resulted in six companies, representing 75 percent of the commercial Sea Year training provided prior to 

the stand down, being reinstated to accept Midshipmen as of today. The SCCT 

standards meet the requirement in Section 3514 of the FY 2017 NDAA for MARAD 

to establish, in consultation with operators of U.S.-flag vessels, criteria that vessel 

operators must meet to participate in Sea Year and a process for verifying compliance with the criteria. 

MARAD’s ‘‘Sea Year Eligibility’’ criteria include the following: 

Company-Wide Zero Tolerance Message—Shipping company CEOs will issue an 

annual company-wide message outlining specific rules for the workplace, strongly stating that sexual assault and sexual harassment, including any retaliation 

based on a complaint, are unacceptable, and committing the company to eradicate such behavior and enforcing a zero-tolerance policy. 

Annual Sexual Assault and Sexual Harassment Prevention Training Requirement for Crew—Annual sexual assault and harassment prevention training will 

ensure that crewmembers clearly understand what constitutes sexual assault 

and sexual harassment, its negative impact, the importance of prevention, and 

the penalties for engaging in prohibited behavior. 

Mentors with Enhanced Selection Criteria and Duties—Mentors for each ship 

play a crucial role in the success and development of cadets. Per enhanced mentor qualifications, a mentor must certify that he/she does not have any pending 

complaints or history of violations of any other company’s Sexual Assault Sexual Harassment policies. The mentor must be of good character, and know, support, and advocate for the company’s sexual assault sexual harassment prevention and response policies. 

Verify Annual Sexual Assault and Sexual Assault Prevention and Response 

Training—Each company will provide MARAD documents describing companyspecific training protocols; the company’s anti-discrimination, harassment, retaliation and sexual misconduct policies, including complaint reporting policies and 

procedures; a description of the company’s investigation process and enforcement procedures; and, a mechanism for verifying their understanding of the 

issue. 

Zero-Tolerance Policy Regarding Romantic or Sexual Relationships—Companies 

will actively support the USMMA Sea Year Conduct policy for Midshipmen, 

which prohibits romantic or sexual relationships between Midshipmen and 

crewmembers, and the consumption of alcohol by Midshipmen under 21 years 

old. Companies will immediately report known Midshipmen violations to the 

USMMA. A violation of the USMMA Sea Year policy may result in counseling 

or punishment pursuant to the Midshipmen Regulations. 

MARAD Will Maintain a Record of all Relevant Company Policies—Companies 

will submit all relevant policies and documentation to MARAD, and MARAD 

will verify compliance annually. Required documentation includes, but is not 

limited to, sexual assault and harassment prevention and response policies; a 

description of company’s complaint reporting process and procedures; policies 

related to confidentiality, enforcement, and retaliation and investigation procedures; and, the location of sexual misconduct prevention policies onboard the 

vessel. 

Company Debrief—Currently, both Midshipmen and the Vessel Masters evaluating them provide a report to the USMMA upon completion of an individual’s 

Sea Year training. In addition to these reports, the new criteria require the 

company to provide the Academy a sexual assault and sexual harassment debrief at the completion of the Midshipmen’s Sea Year time with the company. 

16 

2The six SMAs are: California Maritime Academy in Vallejo, California; Great Lakes Maritime Academy in Traverse City, Michigan; Texas A&M Maritime Academy in Galveston, Texas; 

Maine Maritime Academy in Castine, Maine; Massachusetts Maritime Academy in Buzzards 

Bay, Massachusetts; and State University of New York (SUNY) Maritime College in the Bronx, 

New York. 

The requirements outlined above will be reviewed in September this year, and annually thereafter. The SCCT has implemented a company-by-company review process to recommend eligibility for carrying USMMA Midshipmen aboard their commercial ship. The SCCT will review documents provided by carriers to ensure compliance with the criteria. Once that process is complete, the USMMA Superintendent may issue an eligibility letter. MARAD Headquarters will coordinate with 

USMMA to board vessels and visit companies to conduct Shipboard Climate Compliance Team (SCCT) audits. The audit priority will be driven by review of company 

documentation that pertain to sexual misconduct. Additional feedback from the companies will be provided in accordance with the SCCT requirements. This is in addition to current reporting from the Midshipmen to the USMMA Department of Shipboard Training Academy Training Representative Midshipman Assignment Report, 

which provides feedback from the cadet about the company and Sea Year experience. Each of these reports and opportunities for feedback will specifically addresses 

sexual harassment and sexual assault. 

At present, six companies have met compliance requirements and resumed 

hosting Midshipmen on their vessels. MARAD is also reviewing the packages of several other companies which have applied to meet the Sea Year requirements. Collectively, the companies that have been approved, or are applying, represent 84 percent of the commercial Sea Year training provided before the suspension. 

Sexual Assault Prevention and Response Working Group 

Section 3517 of the FY 2017 NDAA required MARAD to establish a Sexual Assault Prevention and Response Working Group (SAPR WG) to examine methods to 

improve the shipboard climate during Sea Year, including prevention and response 

to sexual assault, sexual harassment, and other inappropriate conduct. The SAPR 

WG had its first formal meeting on January 31, 2017. With over 50 members, the 

WG includes members from industry, labor, the USMMA, SMAs, and Federal Government representatives in accordance with the FY 2017 NDAA requirements. In 

addition to member meetings, public input is being sought through a Federal Register Notice which was published May 1, 2017. The WG will report its findings to 

Congress by September 25, 2017 as required by the FY 2017 NDAA. 

In an additional effort to work with industry to address the problems of Sexual 

Harassment and Sexual Assault, MARAD has entered a cooperative agreement with 

the Ship Operations Cooperative Program (SOCP) to develop computer-based sexual 

assault prevention and response training that will be made available for companies 

to train their vessel crews. SOCP is a trade association made up of maritime industry professionals focused on safety. MARAD is also working with SOCP to roll out 

management ‘best practices’ this summer. These efforts will especially benefit smaller companies without the resources to develop robust programs of their own. 

School Ships 

In addition to providing oversight of the USMMA, MARAD provides funding assistance to six State Maritime Academies (SMAs), which collectively graduate more 

than two-thirds of the entry-level Merchant Marine officers annually.2 Approximately 972 Cadets are expected to graduate from the SMAs in 2017. Assistance provided to the SMAs also includes funding for maintenance and repair costs for training ships on loan from MARAD. Unlike the USMMA Midshipmen, the SMA Cadets 

receive most of their sea time on these training ships, under the instruction of each 

school’s faculty. 

The maintenance and repair projects are particularly important as the training 

ships age and approach or exceed their designed service life. Two training ships 

have been in service over 50 years, which is twice the standard service life. Accordingly, MARAD is using the funds to address priority maintenance across all the 

training vessels, with emphasis on the Training Ship EMPIRE STATE, to ensure 

that they all meet safety and functional requirements and remain in service as long 

as necessary. 

OTHER FY 2017 NDAA REQUIREMENTS

Ship Disposal Program 

MARAD is responsible for the disposal of obsolete Federal Government, merchanttype vessels that are 1,500 gross tons or greater. A portion of the funds generated 

17 

3Office of Inspector General. 2015. Report Number ST–2016–011. Audit report: Weaknesses 

in MARAD’s management controls for risk mitigation, workforce development, and program implementation hinder the agency’s ability to meet its mission. 

by the sale of these vessels is dedicated for maritime heritage preservation, including funding the National Park Service’s National Maritime Heritage Grant Program. Section 3507 of the FY 2017 NDAA established a new formula for distributing 

these sales proceeds to increase the amount of funds available for the NPS grant 

program. MARAD is prepared distribute any new funds received from ship recycling 

sales pursuant to this allocation. In addition, MARAD will provide a report to Congress on the management of MARAD’s ship disposal program as required under Section 3507. 

Workforce Plans and Onboarding 

In a December 2015 audit,3 the DOT OIG made recommendations for improvements in MARAD’s management controls related to workforce development and uniform policy. Sections 3519, 3520, and 3521 of the FY 2017 NDAA set deadlines for 

completing the actions recommended in this audit. MARAD is committed to meeting 

these deadlines. The MARAD Workforce Analysis, Leadership Succession Plan, and 

Strategic Human Capital Plan are currently being updated. MARAD expects completion of this requirement by the deadline set in the FY 2017 NDAA. MARAD has 

performed the review related to new hire orientation, training, and misconduct, and 

the OIG recommendation regarding onboarding policies and procedures was closed 

on January 10, 2017. 

Drug and Alcohol Policy 

In compliance with Section 3520 of the FY 2017 NDAA, MARAD has reviewed its 

drug and alcohol policies, developed training, and established a system to track 

training sessions. The OIG recommendation to address these issues was closed on 

August 1, 2016. 

Vessel Transfers 

As recommended by the OIG, MARAD conducted a review and revised its Vessel 

Transfer Office (VTO) procedures to reflect the current range of VTO responsibilities 

and processes. This recommendation was closed on May 10, 2016. In accordance 

with Section 3521 of the FY 2107 NDAA, MARAD will submit a report to Congress 

in September 2017 detailing the updated VTO procedures to process vessel transfer 

applications. 

DOT and MARAD are committed to implementing the changes outlined in the 

NDAA and we intend to build upon the improvements that have been made in recent years. We appreciate the support this Subcommittee has provided and look forward to working with you to ensure the Maritime Administration’s progress. 

Thank you for your interest, and I am happy to answer any questions you may 

have. 

The CHAIRMAN. Thank you, sir. 

Next we have Rear Admiral James Helis, Superintendent, the 

United States Merchant Marine Academy. 

Welcome, Admiral. 

STATEMENT OF REAR ADMIRAL JAMES HELIS, U.S. MARITIME 

SERVICE SUPERINTENDENT, UNITED STATES MERCHANT 

MARINE ACADEMY 

Admiral HELIS. Thank you, Senator. And good afternoon, Chairman Fischer, Ranking Member Booker, and members of the Subcommittee. Thank you for the opportunity to testify on the implementation of the recent Maritime Administration reauthorization 

bill’s measures affecting the United States Merchant Marine Academy. 

The Academy’s mission is to educate and graduate licensed merchant mariners and leaders of exemplary character to serve our 

Nation’s marine transportation and national security needs. The 

Academy attracts quality young men and women who meet rigVerDate Nov 24 2008 13:26 Feb 26, 2018 Jkt 075679 PO 00000 Frm 00021 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\28642.TXT JACKIE
18 

orous admission standards. They demonstrate superior character 

and leadership qualities to complement a strong academic record. 

In compliance with the Fiscal Year 2017 NDAA, I will post a 

public profile of each class’s demographics by state, country, gender, race, and ethnicity, and prior military service this August. I’m 

glad to say that in recent years, the quality and diversity of our 

incoming classes have improved considerably, which feeds into our 

efforts to build a healthy, respectful campus culture. 

This culture is an important dynamic that supports my top priority, of ensuring the Academy is a safe learning environment for 

all students. This committee has also made this a priority, and several requirements of the Fiscal Year 2017 NDAA addressed the 

prevention of sexual assault, sexual harassment, and other coercive 

behaviors on campus and during Sea Year training. 

Sexual assault and sexual harassment are unacceptable behaviors at any institution of higher education, especially one committed to developing our Nation’s future leaders. To that end, we 

have taken a number of aggressive steps since 2012 to address the 

problem. 

In Fiscal Year 2012, the Merchant Marine Academy hired its 

first Sexual Assault Response Coordinator, or SARC, and established a 24/7 victim hotline. The Academy also works closely with 

a local victim advocacy agency to provide another confidential reporting option. 

We have beefed up mandatory training for our faculty, staff, and 

midshipmen on sexual assault, sexual harassment, dating violence, 

stalking, and bystander intervention. We also have implemented 

recommendations made by the Department of Transportation’s Inspector General in Fiscal Years 2013 and 2014 after a thorough 

evaluation of the Academy’s Sexual Assault Prevention and Response program. 

In addition, a campus cultural study commissioned by the Department of Transportation in 2016 generated more valuable recommendations that are also being implemented. 

The Defense Manpower Data Center continues to administer a 

Gender Relations Survey and conduct focus groups across our campus. While we’ve made progress in increasing midshipmen awareness and understanding of sexual assault and sexual harassment, 

we are extremely disappointed that the surveys show we are not 

seeing a decrease in the number of incidents. 

In 2016, we redoubled our efforts by recognizing that the core 

issue is the culture of the Academy and providing a safe learning 

environment which values and respects every midshipman and allows them to develop into exemplary leaders. 

Additionally, this past fall, we created a Sexual Assault Prevention Response Office, or SAPRO, and we are hiring two victim advocate educators and a Sea Year coordinator to plan and execute 

training for victim services and prevention. 

A special team of staff, faculty, and midshipmen participated in 

a cultural change conference in February 2017 and are now drafting a comprehensive campaign to transform the Academy’s culture. 

Another committee is working to overhaul all Sea Year policies and 

training. 

19 

Other actions this past year include vetting maritime companies 

through a MARAD Shipboard Climate Compliance Team to enact 

standards preventing sexual assault and harassment from happening at sea. 

All of our efforts are focused on building a community with zero 

tolerance for sexual assault, sexual harassment, retaliation, bullying, hazing, coercion, victim blaming, and alcohol misuse and 

abuse. We know that our leadership, staff, faculty, and midshipmen must work together to eliminate these behaviors and hold 

those who violate Academy standards accountable. 

I have a very personal stake in solving this problem, as my own 

experience in assisting victims of sexual assault dates back to the 

1990s when I served in the Army as a battalion commander. I 

know firsthand from working with victims the lifelong harm these 

crimes inflict. It undermines unit readiness and cohesion and hurts 

our ability to accomplish our mission. As a Federal service academy, the U.S. Merchant Marine Academy should be setting an example for eliminating sexual assault and sexual harassment. Anything less is a failure on our part. 

The work we’ve done to improve sexual assault prevention and 

response also addresses one requirement the Academy must meet 

for reaccreditation. In June 2016, the Middle States Commission on 

Higher Education placed the Academy in a warning status for not 

meeting 5 of their 14 standards of accreditation. As detailed in my 

written testimony, the Academy is taking actions to correct the deficiencies identified by Middle States, and we submitted a required 

report on our progress to them on March 1. The Academy remains 

fully accredited as we work to address the recommendations made 

by Middle States, and we anticipate their next final report in July. 

Thank you for inviting me to testify today. I ask that my written 

statement be entered into the record. I appreciate your interest and 

continued support for the Academy and will be happy to answer 

any questions you may have. Thank you. 

[The prepared statement of Admiral Helis follows:] 

PREPARED STATEMENT OF REAR ADMIRAL JAMES HELIS, U.S. MARITIME SERVICE

SUPERINTENDENT, UNITED STATES MERCHANT MARINE ACADEMY

Good afternoon, Chairwoman Fischer, Ranking Member Booker and members of 

the Subcommittee. Thank you for the invitation to testify on issues under the jurisdiction of the Maritime Administration, with an emphasis on the implementation of 

recent statutory requirements and the examination of topics relevant to upcoming 

reauthorization bills. This testimony will cover the implementation of the recent 

MARAD reauthorization bill’s measures affecting the U.S. Merchant Marine Academy (USMMA or Academy). 

The mission of the Academy is to educate and graduate licensed merchant mariners and leaders of exemplary character who will serve America’s marine transportation and defense needs in peace and war. Each year the Academy graduates highly-qualified U.S. Coast Guard (USCG) credentialed mariners committed to serving 

the Nation as officers in the Armed Forces and the Merchant Marine. 

The Academy provides a comprehensive four-year leadership development experience. All graduating Midshipmen will receive a Bachelor of Science degree, a USCGissued Merchant Marine officer’s license, and a commission in an Active or Reserve 

Component of one of the Armed Forces. They can meet their service obligation in 

one of two ways: twenty to twenty-five percent will choose to serve five years on 

Active Duty as an officer in any branch of the Armed Forces, while the remaining 

majority of the class will sail for five years as a Merchant Marine officer on USflagged commercial ships or with a Federal agency, which can include the Military 

Sealift Command or the National Oceanographic and Atmospheric Administration. 

20 

The Academy’s mission begins with the men and women who pass through its 

gates in late June to begin their four-year journey. The Academy has a highly competitive and selective admissions process. Candidates must have a strong academic 

record and demonstrate superior character and leadership potential through their 

participation in co-curricular activities, athletics, and community service. They must 

meet rigorous medical and physical fitness qualifications for military service. And 

they must receive a nomination from a Member of Congress or qualify for one of 

fifty direct appointments by the Secretary of Transportation by demonstrating qualities deemed to be of special value to the Academy. 

My top strategic priorities for the Academy are preventing sexual assault and sexual harassment and other coercive behaviors, reaccreditation by the Middle States 

Commission on Higher Education (MSCHE), continuing our work to modernize and 

renovate campus infrastructure and facilities, and strengthening Midshipmen leadership development. I will focus my testimony today on the actions which the Academy has taken on meeting the requirements of the National Defense Authorization 

Act for Fiscal Year 2017, P.L. 114–328, (FY 2017 NDAA) to address sexual assault 

and harassment. 

The FY 2017 NDAA requires that the superintendent post a public profile of each 

class’ demographics by state, country, gender, race and ethnicity, and prior military 

service. The USMMA will post this report on the Academy’s website by August. I 

believe that enhancing the diversity of the Regiment of Midshipmen will strengthen 

our efforts to improving the campus culture, which in turn is critical to eliminating 

sexual assault, sexual harassment, and other coercive and unacceptable behaviors. 

Over the past six years the quality and diversity of the incoming classes has improved considerably. Comparing the classes of 2014 and 2020, the most recently admitted, we saw the mean score on the Scholastic Aptitude Test improve from 1215 

to 1280. The percentage of women admitted rose from 12.9 percent to 19.7 percent. 

Admission of individuals who represent racial minorities similarly rose from 15.2 

percent to 24 percent. Other indicators of the quality of our incoming candidates include class rank and grade point average, as well as candidates who have held key 

leadership positions in student government, athletics, and co-curricular and community activities. We are pleased with the progress we are making and expect to see 

continued improvements in the quality and diversity of future classes. 

Sexual assault and sexual harassment are unacceptable behaviors that have no 

place at any institution of higher education, especially one committed to developing 

our Nation’s future leaders. I am committed to the elimination of sexual assault and 

harassment on our campus and improving the environment at the Academy so that 

victims are comfortable reporting all incidents and they are confident that Academy 

personnel will respond appropriately to reported incidents. The steps we have taken 

since 2012 to address sexual assault and harassment are included in our annual reports to Congress. We welcomed an evaluation of our programs by the Department 

of Transportation’s (DOT) Inspector General in FY 2013 and FY 2014, which provided another set of eyes on our programs and useful recommendations which we 

have implemented. In addition, the FY 2017 NDAA requires the DOT Inspector 

General to report, by March 31, 2018, on the effectiveness of the sexual assault and 

sexual harassment prevention and response program (SAPR) at the Academy. As required in the NDAA, the Defense Manpower Data Center continues to administer 

the Service Academy Gender Relations Survey in even numbered years, and conducts focus groups with Midshipmen, staff and faculty in odd-numbered years as 

they do for the other four Federal Service Academies. The next focus group study 

will be conducted in 2017. Additionally, the results of the study commissioned by 

the Department of Transportation in October 2016 on the Academy culture have 

been reviewed, and we are incorporating the suggestions across campus. 

I am personally committed to solving this problem. My experience in assisting victims of sexual assault dates to the 1990s when I served in the Army as a battalion 

commander. I know from working firsthand with victims the immeasurable, lifelong 

harm these crimes inflict, and how they undermine unit readiness and cohesion. 

Sexual assault and harassment are fundamentally at odds with our values as a Nation—values that we are obligated as leaders to live by, model, and expand on. They 

undermine our ability to accomplish our mission. The USMMA, a Federal service 

academy, should be setting the example for the Nation in eliminating sexual assault 

and sexual harassment. Anything less is a failure on our part. 

At the Academy, we established a multi-disciplinary Sexual Assault Review Board 

(SARB), which meets monthly, to provide executive oversight and procedural guidance for the SAPR program by reviewing ways to improve processes, system accountability and victim access to quality services. The SARB has implemented 

standard operating procedures entitled ‘‘Investigating an Unrestricted Report of 

21 

Sexual Assault; Processing a Restricted (confidential) Report of Sexual Assault; and, 

Maintenance of Restricted and Unrestricted Reports.’’ 

In FY 2012, USMMA hired its first Sexual Assault Response Coordinator (SARC). 

The SARC resides at the Academy, and is available to Midshipmen 24/7 through 

a victim hotline. Victims are provided with information and referrals, and assistance 

in obtaining any necessary medical or mental health treatment at the Academy or 

at an appropriate facility in the local community and/or victim advocacy agency. Victims have access to confidential (also known as restricted) reporting through the 

SARC, Health Clinic counseling staff, the Chaplain and a small number of specially 

trained staff and faculty victim advocates. The Academy works closely with the local 

victim advocacy agency to provide an additional confidential reporting option. A victim may also make an unrestricted report, which will result in the initiation of a 

criminal and administrative investigation. 

The SARC, working with the Superintendent, Commandant and Dean of Academics, has significantly improved training across the Academy aimed at the prevention of sexual assault and sexual harassment. Faculty and staff receive mandatory training annually. Incoming Midshipmen receive mandatory training in the 

first three weeks in small group settings (20–25 midshipmen per training) covering 

the topics of sexual assault, sexual harassment, dating violence, stalking, and bystander intervention. Beginning with the Class of 2019, we increased training to 

three hours from the one hour that previous classes received. The SARC and Commandant continue to provide quarterly training throughout each Midshipman’s academic career in both small and large group settings. To meet the NDAA’s requirements for awareness training programs, the SARC and the Department of Professional Development and Career Services provide special training sessions prior to 

departure for Sea Year (sophomores spend four months at sea and juniors spend 

eight months at sea). Training focuses on where to seek help or assistance (captain, 

designated person ashore, SARC’s 24/7 hotline), situational awareness, risk reduction, and bystander intervention. In 2016, the Academy adopted the Green Dot Bystander Intervention Program, which teaches students to identify volatile situations 

in which there could be the possibility of sexual violence and to defuse those situations through diversion or distraction. In addition, the SARB recently decided to increase our training on sexual assault and proper conduct for Midshipmen prior to 

their departure for sea training this summer. 

Our survey results since 2012 indicate that Midshipmen have much better awareness and understanding of sexual assault and sexual harassment, and appreciate 

the commitment of everyone from the Secretary of Transportation through MARAD, 

the Academy’s senior leadership, and Midshipmen Regimental officers to eliminate 

this scourge from the Academy. We are extremely disappointed that we are not seeing a decrease in incidents in the survey results. In 2016, we redoubled our efforts 

to address this problem. 

As a first step, we analyzed the available data and feedback from the Advisory 

Board and our own conversations with Midshipmen. It became clear to me that we 

needed to more closely examine the Sea Year and its potential effects, as that is 

the component of our program that sets USMMA apart from the other Federal service academies. MSCHE affirmed this concern in their report last year, highlighting 

a need for the USMMA to address the issues of sexual assault and harassment at 

sea and on campus. After further analysis and discussion among the senior leadership at USMMA, MARAD, and DOT, as MARAD Executive Director Joel Szabat discussed in his testimony, former Secretary Foxx decided to stand down Sea Year 

training until procedures were in place to better assure a safe climate for our Midshipmen. The combined efforts of USMMA, MARAD, DOT, and industry and labor 

resulted in the certification process described by Mr. Szabat, which we have now 

implemented. 

In addition to the Sea Year stand down, Secretary Foxx directed a deep dive into 

USMMA culture to identify other factors that could be contributing to our challenges with sexual assault and harassment and other unacceptable behaviors. The 

study has provided useful analysis that will inform our way forward. 

We have implemented policies and programs based on best practices adopted in 

the military and higher education, including procedures for disciplinary action. 

However, we have not seen the results we desire or expect. The core issue we must 

address—that we are now addressing—is the very culture of USMMA. We must 

take actions to transform the USMMA culture such that every Midshipman is respected, valued, and can develop to her or his fullest potential to serve the Nation 

as a leader of exemplary character. The entire USMMA community must have zero 

tolerance for sexual assault and sexual harassment, retaliation, bullying, hazing, coercion, victim blaming, and alcohol misuse/abuse. Leadership, staff, faculty, and 

Midshipmen must all unite to eliminate this behavior and support victims, and hold 

22 

those who violate Academy core values and standards accountable for their actions, 

when incidents take place. 

In the fall of 2016, we determined that the work related to managing USMMA’s 

sexual assault prevention and response program had become more than one individual could reasonably handle. Accordingly, we created a Sexual Assault Prevention and Response Office (SAPRO) and are converting the SARC position, which became vacant in December 2016, to a SAPRO director. We are hiring two Victim Advocate-Educators who will assist the SAPRO director in planning and executing 

training and providing victim services. We have also added a Sea Year coordinator 

to the SAPRO. 

Additional steps we have taken over the past six months include a reintegration 

program for Midshipmen when they return from sea and the addition of mandatory 

online interactive sexual assault and alcohol abuse prevention training. A special 

team made up of staff, faculty, and Midshipmen participated in a cultural change 

conference at the United States Air Force Academy in February 2017 and are now 

drafting a comprehensive campaign plan to transform USMMA culture. The Deputy 

Superintendent led an effort which has produced a comprehensive and integrated 

Sexual Assault Prevention and Response Framework. A committee also has begun 

work to overhaul Sea Year policies and all training in preparation for Sea Year. 

In addition to the efforts to improve the Sea Year training experience, the 

USMMA has developed a comprehensive plan to reduce sexual assault and sexual 

harassment on campus. The USMMA SAPR Program has significantly improved 

training across the Academy aimed at the prevention of sexual assault and sexual 

harassment, including online prevention training, case studies, videos, social media, 

professional speakers and small groups. Actions taken by the USMMA have included installation of new emergency call boxes and security cameras, improvement 

of the security guard force, implementation of a 24/7 hotline for reporting inappropriate behaviors, and victim assistance in obtaining medical or mental health treatment. Efforts will continue to improve upon the SAPR Program as the USMMA implements recommendations from the cultural audit and responds to feedback from 

Midshipmen. 

The Academy’s work to improve sexual assault and sexual harassment prevention 

and response addresses one of the recommendations made by MSCHE, which accredits the Academy’s academic degrees. In June 2016, MSCHE placed USMMA in 

a warning status because USMMA was not meeting five of MSCHE’s fourteen 

standards of accreditation. We are presently taking action to meet the requirements 

identified by MSCHE to be granted full accreditation. Actions taken over the past 

year include MARAD’s establishment of the Maritime Education and Training Executive Review Board, which serves as a formal governing and oversight body for 

USMMA; requesting and receiving relief from Congressional legislation constraining 

the Academy’s budget during the interim Continuing Resolution period; developing 

templates for budget development and tools for linking resources with the Strategic 

Plan. 

Thank you for inviting me to testify today. I appreciate your interest and continued support for the Academy and will be happy to answer any questions you may 

have. 

The CHAIRMAN. Thank you, Admiral. 

Next we have Mario Cordero, the Commissioner, Federal Maritime Commission. Mr. Cordero has been a Commissioner on the 

FMC since 2011 and served as Chairman from April 2013 till January 2017. 

Welcome, sir. 

STATEMENT OF HON. MARIO CORDERO, COMMISSIONER, 

FEDERAL MARITIME COMMISSION 

Mr. CORDERO. Chairman Fischer, thank you, Ranking Member 

Booker, and members of the Subcommittee. Thank you for providing me this opportunity to appear before you today. 

As noted, President Obama designated me to serve as Chairman 

of the Commission on April 1, 2013, and I had the honor to serve 

in that role for nearly 4 years. I wish to congratulate my colleague, 

Michael Khouri, on his recent appointment as Acting Chairman of 

the Federal Maritime Commission earlier this year. 

23 

During my time as Chairman, the FMC navigated the Hanjin 

bankruptcy, the implementation of the VGM container weight 

issue, and aggressively advocated for the maritime industry on 

high-level trade talks, and engaged in rulemaking that protected 

the American shipping consumer and streamlined rules to promote 

competition. Importantly, we also investigated and/or monitored 

port congestion, demurrage and detention, and carrier alliances 

and consolidation. I thank you for your support throughout my tenure. 

I will touch upon four topics today: the current state of the industry, the alliance agreements, the supply chain, and other issues 

of relevance to U.S. exporters and importers, and the American 

shipping consumer. 

First, the industry. The international shipping community has 

experienced some dramatic challenges in the last decade. These 

challenges have been twofold. First, in 2008, the economic global 

recession and its severe impact on the international maritime 

transportation carriers, who continue to struggle with unsustainable transportation rates. 

Second, what many today regard as a geopolitical recession as a 

result of the global dialogue on protectionism and isolationism. 

Today, international trade is an integral part and a critical part of 

the U.S. economy. More than one-third of our Nation’s GDP is tied 

to global commerce, and this figure is only predicted to become 

more significant in the coming years. 

Ocean transportation of goods and commodities is the backbone 

of our trading system. Indeed, 90 percent of world trade is transported by shipping lines. Each of us, as consumers or investors, 

benefit from the competitive marketplace the Commission works to 

maintain. 

In the last decade, we have seen the rise of very large container 

vessels, that is, vessels that exceed 10,000 TEUs, to more than 398 

in the current worldwide fleet as of April 2017, which includes 

20,000 TEU vessels. Our investments in maritime infrastructure 

have slowly tried to match that growth. We must invest in ports 

to remain competitive, plain and simple. 

Although we acknowledge the importance of trade in the American economy, and the obvious imbalance of the export-import question, we still need to realize that our export growth is dependent 

on the global consumer. 

For example, recent reports indicate that U.S. exports of beef, 

pork, oil, gas, and LNG have grown consistently in the last few 

years. Within the next 3 years, the U.S. may be the largest exporter of LNG. Overall, containerized exports grew, and the value 

of exports transported by vessel in 2016 was in excess of $475 billion. 

Perhaps the most significant development in the international 

shipping industry is carrier consolidation. In 2011, the year I commenced my service here at the FMC, there were approximately 21 

major global water transportation carriers. Today, essentially we 

have 13, and next year, 2018, this may be down to 10, which will 

account for 70 percent of the containerized global capacity, each belonging to one of the three alliances that commenced in April of 

24 

this year: the 2M, the OCEAN, and THE ALLIANCE. Frankly, I 

am not sure we have seen the end of carrier consolidation. 

An alliance agreement between carriers, which requires a filing 

with the Federal Maritime Commission, essentially is a vesselsharing agreement. Motivated by economies of scale, the carriers 

focus on achieving cost savings given the challenge of securing sustainable transportation rates. The vessel-sharing alliance concept is 

not a new concept. However, the current level of debate and scrutiny within the industry commenced when the three largest carriers—Maersk, Mediterranean Shipping Company, and CMA– 

CGM—filed the P3 agreement back in October 2013. That filing 

began what I term as the second generation of alliances. 

The P3 agreement was eventually withdrawn by the parties. 

However, the two largest carriers, Maersk and MSC, subsequently 

filed and moved forward as the 2M alliance and thus commenced 

the rush to achieve economies of scale by the major water transportation carriers. 

A question for the maritime shipping community and the supply 

chain is, what will be the impact of these second-generation alliance? I believe it will be in cost savings and efficiencies. For the 

carriers, cost savings is a paramount concern, especially given the 

need for investment in cutting-edge technology. 

To be clear, I am a supporter of the alliance model. However, legitimate concerns by stakeholders do remain. These second-generation alliances have introduced us to the concept of operation centers, information sharing, and joint contracting. The last two concepts have been raised as serious concerns by some stakeholders in 

the shipping community because of the potential of anticompetitive 

behavior. 

In addition to the formation of new alliances, we have witnessed 

generational changes in the shipping industry, including carrier acquisition, consolidations, bankruptcies, and joint ventures. The 

international shipping industry will continue to evolve, whether as 

to structure, service delivery, or cost-saving efficiencies. 

Finally, I want to discuss industry progress on the incorporation 

of technology, another way in which our industry partners have 

tried to save costs. Both Amazon and Alibaba are starting to establish themselves as movers of cross-border freight. Indeed, earlier 

this year, Amazon announced its intention of becoming an NVOCC. 

This is not to say that they are going to own or operate vessels, 

but, rather, they will aim to increase buying power with the ocean 

common carriers. I note that many ocean common carriers are 

maintaining close links to cloud-based supply chain specialists like 

INTTRA, GT Nexus, and CargoSmart, who were all early adapters 

of e-commerce. 

Currently, much of the focus on technology in containerized trade 

is in tracking logistics, such as real-time information on container 

movements. I believe this year will see an escalation in the number 

of digital and e-commerce applications designed to provide more 

visibility and transparency in the movement of containerized 

freight and implementing cost-effective solutions in the supply 

chain. 

Earlier this year, the Journal of Commerce reported that Maersk 

and IBM are teaming up to digitize the global container supply 

25 

chain using blockchain technology to improve efficiency and cost. 

This technology will result in enhancing visibility in container 

transport. In addition, both Maersk and CMA–CGM have moved to 

partner with e-commerce entity Alibaba to integrate transportation 

and logistics. Actions such as these can reduce cost and improve 

the reliability of supply chain systems. In sum, many believe we 

are on the course of the fourth industrial revolution, which essentially is the acceleration of the implementation of technology and 

digitalization in a rapidly changing industry. 

The supply chain has been a central focus for the Federal Maritime Commission for several years now. More efficient supply 

chains increase not only the volume of trade by lowering the cost 

of goods, but it also increases the distances over which these goods 

can be transported. We noted in our—— 

The CHAIRMAN. Commissioner, I would ask you to wrap it up, 

please. 

Mr. CORDERO. Yes, Madam Chairman. 

So in summation, as we noted in our congestion study in 2015, 

this industry is rapidly evolving, and there are certainly concerns 

with regard to congestion and mitigating congestion. And in that 

regard, I’ll be happy to answer any questions that the Committee 

may have. So thank you so much for your time. 

[The prepared statement of Mr. Cordero follows:] 

PREPARED STATEMENT OF HON. MARIO CORDERO, COMMISSIONER, FEDERAL MARITIME COMMISSION

Chairman Fischer, Ranking Member Booker, and Members of the Subcommittee, 

thank you for providing me with this opportunity to appear before you today. 

President Obama designated me to serve as Chairman of the Commission on 

April 1, 2013. I had the honor to serve in that role for nearly four years. I congratulate my colleague, Michael Khouri, on his appointment as Acting Chairman of the 

FMC earlier this year. During my time as Chairman, the FMC navigated the Hanjin 

bankruptcy, the implementation of VGM (the container weight rule), aggressively 

advocated for the maritime industry in high-level trade talks, and engaged in rulemakings that protected the American shipping consumer and streamlined rules to 

promote competition. Importantly, we also investigated and/or monitored port congestion, demurrage and detention, and carrier alliances and consolidation. I thank 

you for your support throughout my tenure. 

I will touch upon four topics today: the current state of the industry, alliance 

agreements, the supply chain, and other issues of relevance to the U.S. exporters, 

importers, and the American shipping consumer. 

First, the industry. The international shipping community has experienced some 

dramatic challenges in the last decade. These challenges are twofold: first, the 2008 

economic global recession and its severe impact on the international maritime transportation carriers who continue to struggle with unsustainable transportation rates; 

and second, what many today regard as a geopolitical recession, as a result of the 

global dialogue on protectionism and isolationism. Today, international trade is an 

integral and critical part of the U.S. economy. More than one-third of our Nation’s 

GDP is tied to global commerce and this figure is only predicted to become more 

significant in the coming years. Ocean transportation of goods and commodities is 

the backbone of our trading system. Indeed, 90 percent of world trade is transported 

by shipping lines. Each of us, as consumers or investors, benefit from the competitive marketplace the Commission works to maintain. In the last decade, we have 

seen the rise of Very Large Container Ships (VLCS)—vessels of 10,000 TEUs or 

more—to more than 398 in the current worldwide fleet as of April 2017, which includes 20,000 TEU vessels. Our investments in maritime infrastructure have slowly 

tried to match that growth. We must invest in ports to remain competitive—plain 

and simple. 

Although we acknowledge the importance of trade to the American economy, and 

the obvious imbalance on the export-import equation, we still need to realize that 

our export growth is dependent on a global consumer. For example, recent reports 

26 

indicate that U.S. exports of beef, pork, oil, gas, and LNG have grown consistently 

in the last few years. Within the next three years the U.S. may be the third largest 

exporter of LNG. Overall, containerized exports grew, and the value of exports 

transported by vessel in 2016 was in excess of $475 billion. 

Perhaps the most significant development in the international shipping industry 

is carrier consolidation. In 2011, the year I commenced my service at the FMC, 

there were 21 major global water transportation carriers. Today, we essentially have 

13 carriers accounting for 70 percent of containerized global capacity with each belonging to one of three alliances that commenced in April of this year: 2M, OCEAN, 

or THE ALLIANCE. Frankly, I am not sure we have seen the end of carrier consolidation. 

An alliance agreement between carriers, which requires a filing with the FMC, 

essentially is a vessel sharing agreement. Motivated by economies of scale, the carriers focus on achieving cost savings given the challenge in securing sustainable 

transportation rates. The vessel sharing alliance concept is not new. However, the 

current level of debate and scrutiny within the industry commenced when the three 

largest carriers—Maersk, Mediterranean Shipping Company (MSC), and CMA– 

CGM—filed the P3 vessel sharing agreement with the Commission in October 2013. 

That filing began what I term as the second generation of alliance agreements. The 

P3 agreement was eventually withdrawn by the parties. However, the two largest 

carriers, Maersk and MSC, subsequently filed and moved forward as the 2M Alliance and thus commenced the rush to achieve economies of scale by the major global water transportation carriers. 

A question for the maritime shipping community and the supply chain is what 

will be the impact of the second generation of alliances? I believe it will be in cost 

savings and efficiencies. For the carriers, cost saving is a paramount concern, especially given the need for investment in cutting-edge technology. To be clear, I am 

supportive of the alliance model. However, legitimate concerns by stakeholders do 

remain. These second-generation alliances have introduced us to the concepts of operations centers, information sharing, and joint contracting. The last two concepts 

have been raised as serious concerns by stakeholders in the shipping community because of the potential for anticompetitive behavior. 

In addition to the formation of new alliances, we have witnessed generational 

changes in the shipping industry, including carrier acquisitions, consolidations, 

bankruptcies, and joint ventures. The international shipping industry will continue 

to evolve, whether as to structure, service delivery, or cost-saving efficiencies. 

Finally, I want to discuss industry progress on the incorporation of technology, another way in which our industry partners have tried to save costs. 

Both Amazon and Alibaba are starting to establish themselves as movers of crossborder freight. Indeed, earlier this year, Amazon announced its intention of becoming an NVOCC. That is not to say that they will own or operate vessels, but rather 

that they will aim to increase buying power with ocean common carriers. I note that 

many ocean carriers are maintaining close links to cloud-based supply chain specialists like INTTRA, GT Nexus and CargoSmart who were all early adapters to e-commerce. 

Currently, much of the focus on technology in containerized trade is in tracking 

logistics, such as real time information on container movements. I believe this year 

will see an escalation in the number of digital and e-commerce applications designed 

to provide more visibility and transparency in the movement of containerized freight 

and implementing cost-effective solutions in the supply chain. Earlier this year, the 

JOC reported that Maersk and IBM are teaming up to digitalize the global container supply chain—using block chain technology to improve efficiency and cost. 

This technology will result in enhancing visibility in container transport. In addition, both Maersk and CMA–CGM have moved to partner with e-commerce entity 

Alibaba to integrate transportation and logistics. Actions such as these can reduce 

cost and improve the reliability of supply chain systems. In sum, many believe we 

are on course to the fourth industrial revolution—the acceleration of the implementation of technology and digitalization in a rapidly-changing industry. 

The supply chain has been a central focus of the FMC for several years now. More 

efficient supply chains increase not only the volume of trade by lowering the cost 

of goods, but it also increases the distances over which those goods can be transported. We noted in our congestion study in 2015 that in many ways, ‘‘the elimination of congestion is today’s most critical and relevant trade-related issue.’’ As 

Chairman, I launched an initiative to address congestion in three phases. The first 

phase, beginning in September 2014, was the port forums which were held on the 

U.S. West Coast, the mid- and north Atlantic coast, the south Atlantic ports, and 

the Gulf Coast ports. These one-day listening sessions were each led by at least one 

Commissioner, and served as an opportunity for the FMC to hear firsthand the 

27 

problems that ports, their customers, and other partners in the U.S. intermodal system were facing that were related to port congestion, including detention and demurrage issues. Our takeaway from those forums was that we need to look beyond 

the docks, at the entire supply chain, and find common ground amongst the various 

players in the chain. Our second phase was the detention and demurrage study 

issued in April 2015, and the congestion study issued in July 2015. Finally, with 

the issue of port metrics on the minds of legislators, we launched the last phase 

in February 2016: our Supply Chain Innovation Team initiative, led by Commissioner Dye. During that phase, we brought together industry leaders to work on 

teams to develop process innovations that will improve the reliability, resilience, 

and competitiveness of America’s global supply chain. The teams announced in December 2016 that critical information delivered to supply chain actors via a national 

portal will improve port performance and increase American economic competitiveness. This national portal will further the goal of collecting data on port metrics. 

Finally, more than a year ago, I testified before your House counterpart on the 

paramount concern of having a well-funded and resourced FMC. I explained then 

that the Commission’s statutory mandate to regulate the international ocean transportation system for the benefit of domestic exporters and importers is ever more 

important in the second decade of the 21st century. I stand by that testimony today. 

Further, I believe that the Commission’s authorities need to be improved and updated to match the current state of the industry. Our monitoring responsibilities 

under the Shipping Act are crucial today, and I appreciate that the Committee has 

taken an interest in the FMC in that regard. I look forward to seeing what is included in the authorization bill, and would be happy to provide you with further 

insight. 

Thank you, again, for inviting me to testify. It has been a pleasure to work with 

you on matters of mutual concern over these many years, and I want to thank you 

again for your support. It has been an honor to serve the people of the United 

States, to advance the stature of the Commission, and to protect the American shipping public. I am grateful for my time at the FMC. 

The CHAIRMAN. Thank you very much, sir. Appreciate that. 

Chairman Khouri, in your written testimony, you mentioned that 

the FMC is expanding its team of economic analysis to increase capacity to review and monitor the three major ocean carrier alliances. Can you elaborate on some of the ways that the FMC conducts that continuous monitoring of the agreements? 

Chairman KHOURI. Yes, Chairman. In several different ways. 

First, when the newer agreements are coming in, we have been 

much more strict, much more aggressive, in tightening the terms 

of the agreements’ various authorities, meaning that if they want 

to come back and do something different, they have to come back 

with an amendment. So the terms themselves have become much 

tighter. 

The monitoring is where we would be looking at things like once 

every 45 days or 3 months, and with a period of time following, 

that they would report on TEU—or excuse me—container boxes 

along trade lanes, volumes, rates that have been charged, a number of different operational pieces. It has been brought down to 

they have to report every 30 days, promptly afterwards so that we 

can keep a very tight watch on what other exogenous events may 

be happening in the world economy, what’s happening to the rates 

within each member of each alliance. 

We’re also very much interested in the decisionmaking as to capacity. So the alliances, there’s a part of an alliance operation that 

has to have some capacity rationalization. In other words, if they’re 

operating at 70 percent load rate, something is going to have to 

give, they’re going to take a ship out. But do you also have each 

member of the alliance making independent decisions about bringing equipment in outside of the alliance operation or taking it back 

28 

out outside of the alliance operation? And is pricing continuing to 

be clearly independent? These are the type of things that we’re 

monitoring on a very close basis to make sure—— 

The CHAIRMAN. And as you monitor, what do you do then with 

all the data you’re collecting? Because it’s continuous. So do you 

issue orders? Do you react to it? What do you do with it all then? 

Chairman KHOURI. Well, as long as we continue to see every indicia of an open, free, and competitive marketplace, then there is 

nothing for us to do. It is if we start seeing—for instance, right 

now, there is overcapacity in all of the trades. If we started seeing 

a rise in rates that didn’t make any sense as to the larger capacity 

overhang, then we would say something is not right here, we would 

go in and do more strict investigation—— 

The CHAIRMAN. You could investigate and ask questions. OK. 

Chairman KHOURI. And let me emphasize, we have not seen 

that. 

The CHAIRMAN. Great. Thank you. 

Chairman KHOURI. So thank you. 

The CHAIRMAN. Commissioner Dye, with few exceptions, the 

United States has been, I think, pretty slow to adopt autonomous 

technologies at our port terminals. And this is in contrast to ports 

such as Rotterdam and also Sydney’s Patrick Terminal, which I 

was fortunate to visit last year. Given your work to enhance supply 

chain efficiency, do you think that the autonomous infrastructure 

technologies at our nation’s ports would contribute to faster freight 

flows and have less bottlenecks? 

Ms. DYE. Yes. Thank you, Chairman Fischer. Businesses all over 

the world are moving to digitize their businesses. I just finished a 

book called ‘‘Data-ism,’’ which describes this move. Suddenly technology has caught up with the ability for us to aggregate data. And 

I was fortunate enough to get a briefing of the new Maersk system 

using IBM blockchain, and that’s just one of the moves by our 

ocean carriers to move forward in digitizing their supply chain 

business. 

More and more of our ports are moving, as you know, to appointment systems to try to control the supply chain obstacles at the 

gates. It’s expensive. And so, company-by-company, they’re making 

their decisions based upon their ability to invest. 

We see our project as being able to hook up to each port’s information infrastructure. We wouldn’t compete with their technologies, and they would continue to offer those sorts of systems on 

their own, and compete on those for business. So I think all of this 

has moved to the maritime industry finally, and it’s a very good 

sign. Thank you. 

The CHAIRMAN. Thank you very much. 

Senator Booker. 

Senator BOOKER. Thank you very much. Appreciate that. I literally just went on my Amazon and pulled up that book. Thank 

you for the recommendation. 

And, Mr. Cordero, just in case I forget, I want to just say publicly 

how much we appreciate your service to our country. I know this 

is going to be your last Senate hearing, or at least in this capacity, 

and I’m very grateful for your service. 

Mr. CORDERO. Thank you, Senator. 

29 

Senator BOOKER. And Rear Admiral Helis, I’m really—your testimony was very thorough, both written and—so I would like to drill 

down a little bit deeper obviously on the issues of sexual harassment. I’m grateful for your commitment to dealing with this issue. 

Let’s just jump right to the issue of culture change that you 

talked about, which I think is one of the challenges that we have. 

We still have a problem, not only with the data that you’re collecting about the existence of sexual harassment, but even the 

issue of people feeling comfortable enough to report that. And 

you’ve implemented a lot of changes to try to address reporting. 

I want to know, what kind of sort of responses are you getting 

from students? What are the changes that you think that are creating a more open environment? And then ultimately that 2017 report that you mentioned in your testimony, do we need to do anything as a Congress to support the resources you might need for 

any report issues that need to be implemented? 

Admiral HELIS. Senator Booker, thank you for the question. To 

the last, we’re appreciative of the support that the Congress is providing us in dealing with this very important issue. 

In terms of the culture change and how people are taking to it, 

I mentioned we sent a team to the Air Force Academy in February 

for an all academy conference on culture change to address the 

problem. That was a staff and faculty event. When they returned, 

they began organizing into a committee for developing a culture 

change plan. They received many midshipmen volunteering to step 

into it. So we have some senior—rising senior midshipmen who are 

involved. They are involved in socializing the plan and the ideas 

amongst the regiment, and we’re getting good feedback, good participation, from the midshipmen. 

The focus of the culture plan I would put into two areas. One is 

institutional pride and the second is treating everyone with dignity 

and respect, which would go along with being an institution in 

which we have pride. The challenge is that the behaviors are in a 

way tolerated, and that’s why you don’t see the reporting, you see 

instances of shunning or ostracism of reporters, of victims who report. The evidence so far, early it’s anecdotal, but this year, this 

academic year, we’ve seen an uptick in restricted reports, which 

are the confidential reports, and so that we’re able to provide the 

victims better services and have a better handle on some description of what the events are. We have also had two unrestricted reports this year, which have allowed us to investigate, and I’ve administered appropriate discipline based upon those reports. And 

those are the first unrestricted or open reports we’ve received since 

2014. 

So I think in terms of reporting, again, early, but the early evidence is in the last several months, the attention we’ve given to the 

issue, the attention we’ve addressed to culture, and about taking 

care of your classmates, your teammates, your shipmates, when 

they become victims seems to be taking hold. And, again, two unrestricted reports where the victims felt confident that they could 

come forward and report and be treated fairly and that we deal 

with the incident. And I can say from speaking with both of the 

victims, there are folks around them who are providing them support—— 

30 

Senator BOOKER. I’m going to have to cut you off there. 

Admiral HELIS.—classmates, teammates, coaches, members of 

their chain of command. So I think, again, early and anecdotal, but 

positive. 

Senator BOOKER. OK. And I obviously look forward to hearing 

more as it develops. Just real quick on the accreditation challenges 

that you’ve had. I know you have a final report coming out in July. 

Do you anticipate needing more resources from Congress to deal 

with the accreditation issues? 

Admiral HELIS. Senator, at this point, I would say the biggest— 

and again appreciation to Congress—is the progressive lifting of 

the financial restrictions that were imposed on the Academy about 

10 years ago in lifting some of the continuing resolution, some in 

the full Fiscal Year 2017 budget, that has restored most of our— 

the normal financial operations to the Academy, the Federal agencies, and all. And that has been very critical in our dealings with 

Middle States because one of their concerns was the Academy having sufficient responsibility and control over processes. 

I can’t say what the official report is going to say. I can say that 

the Commissioner’s visiting team told us that they found significant and substantial progress in all areas for which we were found 

falling short a year ago, and that those appear sustainable, we’re 

moving in the right direction. So I was confident a year ago that 

we would meet the full reaccreditation requirements within time, 

and after the initial visit and the progress that our team at the 

Academy, working also with the Maritime Administration, DOT, 

and the support from the Congress, I am extremely confident now 

that we will make the reaccreditation. 

Senator BOOKER. Thank you, sir. I just want to be respectful of 

Senator Wicker. 

Admiral HELIS. Right. I understand, sir. 

The CHAIRMAN. Thank you, Senator. 

Senator Wicker. 

STATEMENT OF HON. ROGER F. WICKER, 

U.S. SENATOR FROM MISSISSIPPI 

Senator WICKER. Superintendent Helis, I have a letter here from 

Paul Doell, National President of the American Maritime Officers, 

dated May 8, 2017. I ask unanimous consent that it be admitted 

into the record at this point. 

The CHAIRMAN. Without objection. 

[The information referred to follows:] 

AMERICAN MARITIME OFFICERS

Dania Beach, FL, May 8, 2017 

Hon. DEB FISCHER, 

Chairman, 

Subcommittee on Surface 

Transportation, Merchant Marine, 

Infrastructure, Safety and Security, 

Washington, DC. 

Hon. CORY BOOKER, 

Ranking Member, 

Subcommittee on Surface 

Transportation, Merchant Marine, 

Infrastructure, Safety and Security, 

Washington, DC. 

Dear Senators Fisher and Booker: 

On behalf of the private sector U.S. merchant marine officers I am privileged to 

represent, I welcome this opportunity to comment on the prevention of sexual abuse 

and sexual harassment at the venerable U.S. Merchant Marine Academy at Kings 

Point, N.Y. This is an increasingly important issue with extensive implications— 

31 

U.S. national security among them—and I am pleased to provide relevant perspective. 

Since June 2016, the Maritime Administration has on several public and private 

occasions discussed its strategy to curb sexual assault, harassment and abuse on the 

USMMA campus. MARAD has focused heavily on an ongoing reform strategy to assist victims, deter offenses and improve a USMMA ‘‘culture’’ said to encourage inappropriate or even illegal behavior. 

We appreciate the intent, and we support completely. We do not abide such conduct within our membership ranks, and we support constructive measures to create 

safe, comfortable living and learning environments for USMMA cadets. 

However, we are troubled by the persistent underlying premise driving this effort. 

MARAD has for nearly asserted that sexual assault, abuse and harassment are routine at sea in the commercial U.S. merchant fleet, that USMMA Midshipmen are 

influenced and corrupted by the alleged actions of the career mariners they work 

with while training aboard ship, and that these students return to USMMA believing that sexual misconduct is accepted and even expected on campus. 

This dubious, deficient argument was used by the Department of Transportation 

in June 2016 to justify suspension of hands-on ‘‘Sea Year’’ training of USMMA Midshipmen in their sophomore and junior years. 

In a senseless twist just weeks later, DOT exempted government ships from Sea 

Year suspension—USMMA Midshipmen were placed in the MARAD, Military Sealift Command and National Oceanic and Atmospheric Administration vessel fleets. 

It is difficult to reconcile the official rationale behind Sea Year suspension with 

the lack of conclusive evidence supporting it. 

It is also difficult to align MARAD’s position with our direct experience representing seagoing professionals licensed and vetted by the U.S. Coast Guard, including many USMMA alumni serving on both commercial and government vessels. 

In American Maritime Officers, there were no known cases of sexual assault and 

only one documented case of sexual harassment in at least the last 20 years—and, 

in the latter example, the proven offender was expelled from our union. 

Moreover, U.S. shipping companies have strict, longstanding ‘‘zero tolerance’’ sexual assault and harassment policies, which are supported fully by the seagoing 

unions these companies employ. What makes this specific point especially noteworthy in this context is an industry consensus that the need to invoke these policies is rare. 

Nor can the Sea Year suspension exemption carved out for government vessels be 

squared logically with the fact that many of the mariners employed on these vessels 

had worked previously in the commercial fleet said by MARAD to provide safe harbor for sexual predators. If a merchant mariner is inclined to sexual misconduct 

aboard a ship operating in domestic or international trade, is this mariner also inclined to restrain harmful impulse and check personal proclivity at the gangway 

when he boards a government vessel. 

Ironically, the only known current or at least recent case of sexual assault at sea 

under the U.S. flag involved civil service Military Sealift Command employees on 

an MSC ship assigned to the Diego Garcia outpost in the Indian Ocean. 

Today’s commercial U.S. merchant mariner workforce is comprised typically of decent, hones, responsible, well-trained and hard-working men and women of strong 

character. Because they live where they work during long rotations at sea, they are 

essentially ‘‘family,’’ and they treat each other accordingly. 

These merchant mariners have no patience for anyone among them whose behavior compromises morale or threatens the safe and efficient operation of the vessel. 

Each of these mariners is aware that professional misconduct of any kind can cost 

them not only their credentials and careers, but also their families and friendships. 

Despite these qualities and the values they reflect, mariners must now endure having been stigmatized unjustly as morally unfit for work at sea. 

These merchant mariners are also the first to ‘‘turn to’’ for strategic sealift and 

other military support services in defense emergencies, both for surge shipping and 

longer term delivery of combat equipment and day-to-day supplies to U.S. Armed 

Forces overseas. But their numbers are falling quickly in direct proportion to the 

unabated decline of the privately owned and operated commercial U.S. merchant 

fleet, which delivered 95 percent of defense cargoes to the war zones during Operations Enduring Freedom in Afghanistan and Operation Iraqi Freedom under the 

Maritime Security Program. 

USMMA—the only Federal service academy with its own battle standard—is a reliable source of qualified, reliable mariners, and any interruption of training on campus or at sea would seal off this pipeline and aggravate the mariner shortage that 

jeopardizes U.S. mobilization capabilities. 

32 

In our view, the scandal here is not widespread sexual misconduct at sea in the 

commercial U.S. merchant fleet, but the unfair, fabricated perception of it. Just as 

there is no specific, verifiable data from within the commercial U.S. merchant fleet 

to support MARAD’s assertions, there is no evidence to support the official argument that government vessels are safer physically and emotionally for USMMA 

midshipmen. Under thee circumstances, we cannot help but be skeptical of official 

motives. 

Nevertheless, we are relieved to know that Sea Year at USMMA has been reinstated at a gradual rate as it applies to the private sector American merchant fleet. 

But we remain frustrated by the approach taken by MARAD, and by the casual way 

in which the collective reputation of American merchant mariners was tarnished. 

Our hope now is that USMMA commencements will not be delayed and that enrollment at the Academy will not decline. 

I ask respectfully that you include this letter in the official record of your hearing 

on Maritime Transportation: Opportunities and Challenges for the Maritime Administration and Federal Maritime Commission. 

Thank you for your time and attention. 

Sincerely, 

PAUL DOELL, 

National President, 

American Maritime Officers. 

Senator WICKER. Mr. Superintendent, following up on the line of 

questioning about sexual assault and the Sea Year stand-down last 

year, in this letter here, the officers aboard the commercial vessels 

object to the suggestion that the stand-down was somehow because 

a major portion of the sexual assault problem stemmed from the 

Sea Year program aboard commercial vessels. So I want to point 

out what they tell us in the letter. 

In the commercial vessels, according to this letter, there were no 

known cases of sexual assault and only one documented case of 

sexual harassment in at least the last 20 years, and in that case, 

the proven offender was expelled from the union. 

The letter also points out that the only known case of sexual harassment at sea was aboard a government-owned vessel. And so I 

would like for you to comment about that. And did you mean to 

suggest last year when you announced the stand-down that the 

problem in sexual assault was aboard the commercial vessels? Because I have data here that only 4 percent of midshipmen at the 

Academy indicated they had experienced unwanted sexual contact, 

and of that 4 percent, 73 percent indicated that the location of that 

was on Academy grounds. 

So what is your response to that, Admiral? 

Admiral HELIS. Senator, thank you for the question. My response 

to that was the intention was not at all to signal in any way that 

the majority of seafarers and mariners engage in sexual harassment or sexual assault. That was not the message. That never has 

been the message. 

Senator WICKER. Well, that wasn’t the allegation. The question 

is that the majority of the assault was taking place during the Sea 

Year, and I think the facts are to the contrary. 

Admiral HELIS. Senator, I think I would say that whether or not 

the majority of the assaults occur at sea, one is too many, one is 

too many. And we say zero tolerance, we mean zero. And what our 

data told us was that a disproportionate—midshipmen spend a 

quarter of their time at sea, and our data told us and continues to 

tell us that a disproportionate number of the events occurs during 

the Sea Year during maritime duty. 

33 

Senator WICKER. So you dispute the preliminary 2015 and 2016 

Service Academy Gender Relations Survey, which says that 73 percent occurred on Academy grounds. You dispute that, sir? 

Admiral HELIS. Senator, I say that that’s accurate, but that still 

puts over a quarter of the incidents off campus. 

Senator WICKER. But isn’t that contrary to what you just testified? 

Admiral HELIS. Senator, I can also say that the 2016 final data 

results show that over a third of the incidents were reported by 

midshipmen to have occurred during maritime duty, and that will 

be in our final report to Congress, which right now is in the staffing process. But—go ahead, Senator. 

Senator WICKER. Well, it seems to me that the facts are coming 

out at this hearing that most of the problem occurred on Academy 

grounds, and yet your response was to stop the Sea Year, and that 

seems disproportionate to me. And so I would associate myself with 

the comments of these American Maritime Officers. And perhaps 

you would like to expand further on the record. 

But let me, in the 20 seconds I have left, we are told that midshipmen are being threatened with disenrollment because they 

haven’t been able, because of your policies, to do the Sea Year. And 

so can you guarantee that no midshipmen will be prevented from 

graduating or be disenrolled or be otherwise negatively affected by 

their inability to acquire days at sea or complete their Sea Year? 

Admiral HELIS. Senator, that’s a great question, and it has been 

of great concern to us. And right now, we are extraordinarily confident that none of our midshipmen in the two class years, the 

classes of 2018 and 2019, who were affected by the stand-down, 

will be delayed from graduation due to a lack of sea days. 

As far as the projects go, there have been no cases of midshipmen who have been disenrolled or disciplined in any way for 

failure to complete Sea Year projects due to either shortage of days 

or the vessels that they were on, for example, not having the equipment they could have to do the project. If there was a case where 

they were unable to perform the projects due to either days or, 

again, equipment on the vessel is a common occurrence that occurred before the stand-down, those projects are simply delayed, 

deferred, until their next sailing. 

Senator WICKER. I hope that’s correct. Let me ask you just briefly—and I’m imposing on the time—did the accreditation problem 

catch you by surprise? 

Admiral HELIS. Senator, the points that the accreditation team 

pointed out were not a surprise to us, that we were laboring under 

restrictions that were imposed on our financial management, on 

human resources, on procurement, was not a secret to anybody. It 

was just—— 

Senator WICKER. You know, I’m on your Board, and I just hadn’t 

heard that. It is interesting to me that this would not have been 

mentioned to the Board, that we could expect this coming down the 

pike. 

Admiral HELIS. Senator, I think we were surprised that we were 

found in noncompliance on as many of the standards we were, that 

was a surprise, but we were not surprised when we looked at the 

reasons, the factual justification, a lack of controls and governance 

34 

being a key part of it. That was not a surprise. We knew we had 

difficulties with that. That was in our self-study. It had been in advisory board reports in previous years. So that components of it 

that they highlighted, you know, that we did not have the normal 

authorities expected of an institution of higher education, did not 

surprise us. 

Senator WICKER. Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator Wicker. 

Senator Young. 

STATEMENT OF HON. TODD YOUNG, 

U.S. SENATOR FROM INDIANA 

Senator YOUNG. Thank you, Madam Chair. 

As a graduate of one of one our Nation’s service academies, I 

take the issue of sexual assault at the academies quite seriously. 

And it’s clear we have to strive to eradicate instances of sexual assault and harassment from the academies. 

Admiral Helis, Director Szabat, I’m pleased you both recognize 

the gravity of this situation. I’m also thankful to my colleagues, 

who have given due attention in this hearing, and it’s clear they 

also take this matter very seriously. 

In prior years, in the National Defense Authorization Act, Congress worked to enact certain sexual assault provisions. As this 

committee works on reauthorization bills, I would urge you both to 

dialogue with us to communicate further authorities you believe 

necessary to rectify this issue. 

Director Szabat, in your testimony, you referenced the independent cultural audit that DOT completed in December of last 

year proposing six key action steps for the Academy to take. And 

I would like you to just give us an update on implementation of 

those recommendations, please. 

Mr. SZABAT. Thank you, Senator. With your permission, I’ll touch 

on the recommendation that focused mostly on the Maritime Administration. Admiral Helis will talk about the recommendations 

that focused on what the Academy’s actions have to be. 

Senator YOUNG. Certainly. Proceed. 

Mr. SZABAT. The single most important recommendation, the 

overwhelming recommendation, that the LMI made, the department’s study, was for the Maritime Administration to create standards for eligibility for commercial companies to be able to participate to employ and to train our midshipmen. This had been a policy that the Maritime Administration had actually proposed before 

LMI’s—the study had started. So we were in a position after the 

study was finished in December. 

In January, then Secretary Foxx told the Maritime Administration to go ahead and implement that recommendation. By February, we had those standards developed, and those standards are 

actually in my written testimony. I’m happy to talk about any of 

those in more detail that you would like to talk about. 

And since then, so from February until the present, we’ve now 

had eight different companies, both some Jones Act companies, 

some sailing international, representing over 82 percent of our prestand-down capacity, have met those standards. 

35 

And I think also from my oral testimony, what I have found most 

impressive is, to Senator Wicker’s point, that there were people in 

the industry, in fact, I would say a unanimous reaction in the industry, that they did not agree with the decision that Secretary 

Foxx made, that Secretary Foxx announced, for a Sea Year standdown. But they all took the opportunity to say, as Superintendent 

Helis has said, that even one incident is one too many. 

And rather than walking away from providing training for our 

cadets, which was our fear, 14 companies came back to us within 

2 weeks and said, ‘‘We want to find a way to work together.’’ And 

that has been the spirit that the companies and the labor unions 

have adopted in working with us going forward, which is why we’ve 

been able to get so much of the industry to be Sea Year eligible 

so quickly. And we look forward to additional companies that are 

applying to being accepted in the program as well. 

Senator YOUNG. Thank you. In my remaining 2 minutes, Rear 

Admiral, could you speak to action on those recommendations, 

please? 

Admiral HELIS. Yes, Senator, I’d be happy to. Just taking down 

some, we published in January an action plan with a substantial 

number of requirements. I’m not going to go through all of those 

for the sake of time. I would say broadly, building and aligning a 

leadership team. We’re expanding the SAPRO office. We’ve brought 

on a new director of civil rights diversity to focus on those issues 

on campus. 

As I described earlier in my testimony and in my written testimony, that we are working to develop an integrated, long-term cultural change campaign for the Academy that will enhance dignity 

and respect on the campus. We have, as Mr. Szabat has said, developed a credentialing process for companies for Sea Year for the 

safety of going out. 

And, again, I say we are making—without belaboring and going 

through the entire list, that we are making progress on all items 

on the action plan to implement the recommendations from the 

LMI study. 

Senator YOUNG. Well, thank you, Admiral and Mr. Szabat. I 

would only ask that you keep this committee duly informed of 

progress moving forward. I have no doubt that you will do so. I 

know the Chairman and Ranking Member are attentive to this 

issue as well. 

So with that, I yield back. 

The CHAIRMAN. Thank you, Senator Young. 

We’re waiting for a couple members to join us, and I’m going to 

take advantage of the wait by asking a couple other questions. 

Mr. Szabat, in your written testimony, you mentioned that 

MARAD and TRANSCOM have concerns that there are not enough 

qualified mariners to sustain the activation of the entire sealift 

fleet. You also mentioned that MARAD has convened the Maritime 

Workforce Working Group. How does MARAD hope to address this 

concern? And do you expect the working group to provide some 

meaningful solutions? 

Mr. SZABAT. Thank you for that vitally important question, Senator Fischer. Your question gets to kind of the reason for the existence of the Maritime Administration, is to ensure that our commerVerDate Nov 24 2008 13:26 Feb 26, 2018 Jkt 075679 PO 00000 Frm 00039 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\28642.TXT JACKIE
36 

cial U.S. merchant marine is large enough, is vibrant enough, to 

meet all of our national needs, for economic security, for military 

security. 

As you’ve indicated, both we and our colleagues at the U.S. 

Transportation Command, one of the component commands of the 

Department of Defense, are concerned that we no longer have 

enough mariners to meet those surge sealift needs. In order to activate all of the vessels in the sealift fleet, of which the core sealift 

is about 147 ships, commercial and military, we estimate a need of 

a little over 11,000 commercial mariners because commercial mariners crew all those vessels, both military and civilian—I’m sorry, 

and commercial. And then we need 14,000 mariners if, in fact, 

we’re going to—strike that—13,000 mariners if we’re going to sustain an activation and rotate some crews over time. 

Currently, we have just over 11,000 mariners, but one of my colleagues in the Transportation Command called, we are at the ragged edge of the ability to activate the fleet, let alone keep the fleet 

going for a long period of time. 

So we have two approaches going forward on this. One is the 

working that the NDAA required us to do, which frankly we thank 

you for. One of the issues that we have is a definition of, what is 

a mariner? What is an available mariner? That working group will 

provide valuable resource to us because it’s pulling all of the involved Federal agencies together so that we can show the walkdown from what the Coast Guard calls 200,000 mariners to what 

the GAO Report had identified at one point as 57,000 potentially 

available mariners to meet sealift requirements to the 11,000 mariners who we know currently have unlimited tonnage and unlimited 

horsepower credentials and are eligible to serve in our fleet. 

So that will be important to be able to do that walkthrough so 

we can identify exactly if, in fact, we’re missing any pools of mariners, although I don’t think that we are, but it will allow all of the 

Federal Government agencies to work together and be speaking off 

the same sheet. 

Second, we are also putting together what we’re calling ‘‘courses 

of action,’’ which are, what are the options that we have for addressing the mariner shortage? And I’ll cut off at this point in case 

anybody wants to ask that as a subsequent question. 

The CHAIRMAN. Why don’t you answer it? 

[Laughter.] 

Mr. SZABAT. I’ll take that as a question, Senator. Yes, I will answer it. Thank you for the question. 

Broadly speaking, there are three different courses of action that 

we can take. Currently, both by law and by national security directive, the U.S. Government, the U.S. military, has to rely on the 

U.S. commercial fleet, both for the vessels and for the mariners it 

needs for sealift. So if we continue to rely on that, obviously, the 

solution that we have to employ enough mariners is to increase the 

size of the U.S.-flag fleet through steps like—so, for example, in the 

Jones Act, Customs and Border Protection is looking at a letter, a 

rule through letter, that they’ve done before, which, if they change, 

would add, we estimate, about 14 ships under the U.S. flag to the 

Jones Act. 

37 

You look at cargo preference, we used to have a 75 percent requirement for domestic cargos, not military cargos, to go—of civilian cargos, not military cargos, to go on U.S.-flag. That was 

dropped in 2012 to 50 percent. If that would go back up to 75 or 

to 100 percent for civilian agencies, we’re talking about adding another 10 or 15 vessels to the U.S.-flag fleet. 

And then the most blunt force but expensive way of doing it, of 

course, would be to expand something like the Maritime Security 

Program, which currently provides stipends to 60 vessels specifically for their military value, that you could expand the number of 

ships in a program like that and offer stipends to sail under the 

U.S. flag because of the mariners that they employ and the value 

of those mariners for our sealift experience. 

So that’s the way that we can continue to meet what the law requires now and get to what we estimate to be about 45 extra vessels we would need to have sailing under the U.S. flag to meet our 

sealift requirements. 

The CHAIRMAN. Thank you very much. 

Ranking Member Booker, do you have questions? 

Senator BOOKER. I do. Thank you for the opportunity, Chairperson. 

Just again, Honorable Cordero, you’re almost done, so I’m going 

to grill you a little bit if you don’t mind, especially because I’m very 

jealous of your hair, sir. 

[Laughter.] 

Senator BOOKER. So this consolidation issue, clearly you mentioned it, and I would like to just ask you very bluntly, how do 

these consolidation alliances impact portions of our freight network? Is this something that you think we should be greatly concerned about? And particularly for me in a port state, what impact 

does this specifically have on ports and port shippers? 

Mr. CORDERO. Well, I think at this point, as I indicated in my 

testimony, Senator, I support the alliance model. In terms of what 

impacts down the line they may have that are positive or negative, 

I think my answer at this point, and has been, the jury is still out. 

And for that matter, that’s why I believe that it’s extremely—it’s 

of paramount importance to have a well-funded FMC, as Chairman 

Khouri has indicated, and Commissioner Dye. Our primary responsibility is to monitor these agreements and these alliances, and I 

think part of that monitoring is going to have those answers down 

the line. 

So I think my answer is we don’t know. I do believe that, again, 

eventually they will create cost inefficiencies, and I think ports will 

adjust with regard to what’s coming down the line in terms of these 

three alliances. And I think the major ports that we have, the containerized ports, at this point, part of what we’ve done as a country 

is to continue investment in infrastructure in these ports, and 

we’re going to continue to do so. 

Senator BOOKER. So on that note, you would say, and I guess the 

other two commissioners, TIGER grants are urgently important in 

terms of the quality of our ports? 

Mr. CORDERO. In my view, absolutely, absolutely, because TIGER 

grants not only go in terms of the importance of infrastructure, but, 

you know, there has been some commentary on security. I think 

38 

our port gateways, you’re never going to have a safe, a failsafe system. Security is of utmost importance. And in the past, TIGER 

grants have been relied on by port authorities. 

And last, I think the rail system, the rail connectivity, intermodal connectivity, whether you’re on the East Coast or on the 

West Coast, is very important, and a TIGER grant can go a long 

way to help mitigate the expense of what that may be incurred by 

the marine terminal operators and our port authorities. 

Senator BOOKER. My last question then would be just on, sort of, 

the issues of just improving efficiencies. In the last Congress, we 

gave a lot of attention to congestions at our ports on the labor 

issues, and I thought that that was a—talk about proportionality, 

that was a way disproportionate sort of focus. In fact, it could be 

said to be a lot of, sort of, unintended consequences, let’s say, of 

those proposals that I saw during that time. But you guys have 

spent a lot of time, the Commission as a whole, looking at relieving 

this congestion. 

My final question would be then, what are some of the challenges? But more importantly, as was said already by Ms. Dye 

about the data, are there any specific, Mr. Cordero, parting words 

that you would say about this idea of relieving the congestion, the 

most important areas that we can focus on? Archimedes said, ‘‘Give 

me the right lever, I can change the world.’’ What’s the right lever 

there in our ports? 

Mr. CORDERO. Well, I think the parting words for me would be 

for people to review our congestion study that we released back in 

2015, and I think that outlines the various factors that cause congestion and what we should do to mitigate congestion. 

So I think, again, it takes stakeholders to, as Commissioner Dye 

has indicated in her supply chain innovation project, to get out of 

their silos, but it also is very important, extremely important, to 

remember that the more investment in infrastructure is of paramount importance to relieve congestion because, again, infrastructure at the end of the day is going to be what’s key to every gateway. 

And I think one last thing, we have to also look into, as our congestion study referenced, very specific operational issues. One that 

I, Senator, think you are familiar with, whether it’s New York-New 

Jersey, or better said, New Jersey-New York—— 

Senator BOOKER. Thank you, sir. 

[Laughter.] 

Mr. CORDERO.—or whether it’s Long Beach, LA, we have issues 

with regard to making efficiencies in terms of the equipment. You 

know, here I’m specifically making reference to chassis. That is one 

aspect of the congestion that was, outside the industry, little talked 

about, but it’s a major. Within the industry, everybody understands 

it’s a major problem. The good news is I think the FMC has done 

well to facilitate to some solution in our gateways, again whether 

you’re in the Gulf, in the East, or in the West, I mean, the parties, 

the stakeholders, are taking this serious, and I see good news 

ahead in terms of bringing solutions to these equipment problems. 

Senator BOOKER. Mr. Cordero, thank you very much. 

39 

Madam Chairman, I’m done, but I do want to—just my horrible 

admission that I did not ask a question to the person with the best 

name, Mr. Khouri. 

[Laughter.] 

The CHAIRMAN. You are shameless. 

[Laughter.] 

The CHAIRMAN. Senator Wicker. 

Senator WICKER. Back to education, Mr. Szabat. MARAD funds 

six ships that are on loan to the State Maritime Academies as 

training platforms for their students. Five of the six State Maritime Academies have stated that their ships are aging and are in 

dire need of repair. Is this true? And can you describe the current 

state of these ships? Do they need to be replaced with a more modern training vessel? 

Mr. SZABAT. Senator Wicker, thank you for that question. It’s an 

existential question from in the State Maritime Academies. Frankly, I’m surprised that only five of the six Academies indicated to 

you that they have a need—that they have an aging training ship. 

All of the ships that we provide to the State Maritime Academies 

are ships that we have in the past, the Maritime Administration 

has pulled out of our national defense reserve fleet and retrofitted 

for training. They were old when they began, and they were converted for a purpose that they were not originally intended to do. 

Several of them are already long past their original useful life. The 

oldest of the vessels and the largest of the vessels, Maritime’s Empire State, is now past its 55th birthday. 

So these are old ships. They’re good ships. But it is time, and 

through both direction of the Congress, but also through common 

sense, we in the Maritime Administration, working with the State 

Maritime Academies, have been looking at, what are the options to 

replace these training ships going forward? If no action is taken, 

three of the six State Maritime Academies will need replacement 

training ships by 2024. I mentioned the SUNY Maritime ship, she 

ages out in 2019. Mass Maritime loses a ship in 2024. And Texas 

Maritime is currently borrowing the training spots on the large 

ships of the other Merchant Marine—of the other Maritime Academies. 

Our own Department of Transportation’s own Beyond Traffic 

Study says going forward, there will be a shortage of mariners. 

And we’ve also identified that the bottleneck for having more mariner training is not the school size themselves, but the availability 

of the training ships. 

Senator WICKER. When do the ships go out of service? 

Mr. SZABAT. The first ship is scheduled to go out of service, if no 

action is taken, her licensing would expire in December 2019. 

Senator WICKER. Might it be unscheduled? 

Mr. SZABAT. Yes. It’s—— 

Senator WICKER. Might something occur that would cause it—— 

Mr. SZABAT. It could happen with any ship of any age, but, yes, 

the older a ship gets, the more likely it is that an incident would 

occur that would take her out of service. 

Senator WICKER. Thank you. 

The CHAIRMAN. Thank you, Senator Wicker. 

Senator Baldwin. 

40 

STATEMENT OF HON. TAMMY BALDWIN, 

U.S. SENATOR FROM WISCONSIN 

Senator BALDWIN. Thank you. I wanted to start by highlighting 

the Small Shipyard Grant program. I am glad to report that the 

omnibus spending bill doubled funding available for assistance to 

small shipyards and maritime communities in the Fiscal Year 2017 

thanks to bipartisan support for the program. And in the next 

week or two, I plan to introduce a bipartisan bill to reauthorize the 

program, and I hope that we can move the legislation through this 

committee. 

Across the nation, small shipyards build and maintain commercial workboats, government ships, and ferries in the U.S.-flag fleet. 

In this way, our small shipyards are essential in maintaining commerce in the U.S. and throughout the world. To support the shipyards, their workers, and their communities, the Small Shipyard 

Grant program provides incentives for infrastructure improvements, equipment upgrades, and worker training programs. 

Mr. Szabat, could you describe the benefit small shipyard assistance provides for workers and communities whose economies are 

tied to the maritime industry? 

Mr. SZABAT. Senator Baldwin, thank you very much for that 

question, and thank you and the Members of Congress for your efforts for the support for the Small Shipyard Grant program. As you 

say, the communities that are dependent, that have the small shipyards, and the communities that do work that support the small 

shipyards are very much dependent on this. It’s a very small but 

vital program. 

The Federal Government has very limited roles to do with shipbuilding, and for small shipyards, really this is the only opportunity that they have. The Small Shipyard Grants are normally 

only $5 million or $10 million each year when they are appropriated, and generally they are awarded in buckets of close to $1 

million. So we’re only talk about 5 to 10 people—5 to 10 companies 

will get these each year. 

It’s a fairly young program. It started in 2008, 2009, and with 

the Recovery Act. So we’ve only had roughly little over 200 yards 

nationwide that are eligible for this program. We’ve given out 170 

grants to 145 different shipyards. And these are competitive 

grants. People have to earn them. 

And one of the key components of them, which we believe makes 

them useful, is the matching requirement. By law, by the law that 

you’ve required, is they have to bring at least a 25 percent match, 

but the reality is, in order to be competitive, most of them are providing a 50 percent or more match, so bringing in local private 

funds to meet these needs. 

And so these benefits go not just to the workers in these individual shipyards, but as I mentioned also, to other companies that 

receive the work that goes in these shipyards. So, for example, two 

companies in Wisconsin that have benefited strongly from this 

work all over the country: Marine Travel Lift in Sturgeon Bay provides many of the travel lifts for small boats and small shipyards 

across the country; and Manitowoc Cranes—and I hope I’m pronouncing that correctly—which has manufacturing facilities both 

41 

there and Shady Grove, Pennsylvania. So places that are off the 

water are also benefiting from these programs as well. 

Senator BALDWIN. Sticking with you, Mr. Szabat, I want to focus 

on the Maritime Administration role addressing the need for more 

skilled workers to support and grow our Nation’s domestic maritime industry. It’s a critical issue in Wisconsin, where our shipbuilding and Great Lakes shipping interests can make significant 

contributions to the economy and the security of our state and the 

entire nation. 

Historically, the focus of the Merchant Marine Academy and federally-designated State Maritime Academies has been on training 

individuals to support international shipping and ocean-going vessels, but not our domestic shipping needs. Our nation’s community 

and technical colleges, like Northeastern Wisconsin Technical College, for example, have stepped in to provide that training, but I 

think they need greater support from the administration in order 

to meet the needs of the industry. 

So last Congress, I introduced bipartisan legislation that would 

designate and support centers of excellence for domestic maritime 

workforce training, and I plan to reintroduce the bill again soon. 

I wonder if you could describe the value that legislation to support 

developing our domestic maritime workforce would provide. 

Mr. SZABAT. Senator, thank you again both for the question, but 

also for taking action to address what is a vital concern. I’ve spoken mostly in my testimony about the military requirements, about 

the reason for the Federal academy, for having our licensed programs, is to ensure that we have unlimited credentialed-licensed 

mariners because these are the ones who are available to serve in 

our military sealift needs. But there’s an economic security component that goes along with that, one of the reasons we have the 

Jones Act and one of the reasons we have programs along the lines 

of what you are describing here. 

I would like to think that we at the Maritime Administration got 

a jump on this, it was just a couple of years ago. We established 

out of hide, unfunded, but an Office of Maritime Education and 

Training, which has the unfortunate but memorable acronym of 

MEAT, but it is specifically to address the kind of issues that 

you’re talking about. 

As always, if you’re a Federal program and you’re not funded to 

get grants or other support, so what we can do, though, is we can 

give guidance, expertise, provide—be a clearinghouse for information and national training requirements, and also help people work 

with industry to find opportunities for internships and career opportunities. This is something that we found that has actually 

been, from the work that we’ve been doing on sexual assault and 

sexual harassment with the industry’s SOCP, which is their training experts, this has been something that kind of fell out as an 

extra benefit, as we’ve required that working through them, we 

also have opportunities to identify these kind of training opportunities for workforce development elsewhere. 

The other thing that I would mention is that we have also 

reached out to many Historically Black Colleges and Universities, 

but other minority institutions, about ways of recruiting more people into a future maritime workforce and providing this kind of ecoVerDate Nov 24 2008 13:26 Feb 26, 2018 Jkt 075679 PO 00000 Frm 00045 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\28642.TXT JACKIE
42 

nomic—this kind of workforce training to them. So I think foremost 

among them, San Jacinto College in Houston, the Southeast Maritime and Transportation Center at Tidewater College in Norfolk. 

And then the last thing I would say finally is on a small scale, 

as we have surplus equipment that comes out of our national defense reserve fleet from our own schools, we can provide, as we did 

to the—we provided firefighting equipment to Owens Community 

College in Toledo, Ohio, as well as the Northwest Regional Fire 

Training Center in Michigan. 

And it would be remiss of me if I didn’t give a shout-out to one 

of our six State Maritime Academies, but the Great Lakes Maritime Academy, which does provide many of the pilots up in the 

Great Lakes. 

Senator BALDWIN. Thank you. 

The CHAIRMAN. Senator Blumenthal. 

STATEMENT OF HON. RICHARD BLUMENTHAL, 

U.S. SENATOR FROM CONNECTICUT 

Senator BLUMENTHAL. Thanks, Madam Chairman, and thanks to 

you and Senator Booker for having this hearing. Connecticut has 

three significant ports—New London, New Haven, and Bridgeport—and I have been committed to improving them and also to 

improving the kind of service that we see in those ports. And I also 

want to mention right at the outset that I know you’ve been asked 

about the Sea Year, and that the summer program is being restored, correct, Admiral Helis? 

Admiral HELIS. Yes, Senator. Starting we established a credentialing program with the Maritime Administration. The first companies were credentialed in late February. We’re now up to eight 

companies and about 82 percent of the pre-stand-down capacity. So 

midshipmen are now—the majority of midshipmen are now sailing 

commercial, and we’re beginning to, as we transition back into the 

commercial vessels by this summer, we should be back to prestand-down operations. 

Senator BLUMENTHAL. Will any of the midshipmen be in any way 

set back or in effect penalized because of the delay or the standdown? 

Admiral HELIS. No, Senator. We’ve been carefully monitoring 

their training records and using all of the platforms we have available, and we’re confident that none of the midshipmen affected in 

the classes of 2018 and 2019 will be delayed from licensing or graduation because of a shortage of sea days. If for some reason, either 

due to the equipment on the ships or just number of days they 

have been unable to complete some of their sea projects, we have 

deferred those until a subsequent sailing period. 

Senator BLUMENTHAL. I ask because I have been approached by 

some of the midshipmen and their families to ask about the consequences to their careers from this issue. And I understand what 

was done as a result of the reports of sexual harassment and appreciate the steps that you’re taking to eliminate sexual harassment at the Academy. 

Let me ask you, what—speaking generally, putting aside the 

major ports of New York and Newark, at ports the size of New 

London and Bridgeport and New Haven, what do you think are the 

43 

major steps that need to be taken? Because these are immense resources for our nation, and they’re underutilized, in my view, and 

I would be interested to give you the platform to just talk about 

what our nation should be doing. 

Mr. SZABAT. Senator, who is the question directed to? 

Senator BLUMENTHAL. Any of you who care to answer it. 

[Laughter.] 

Mr. SZABAT. I’m going to violate my own edict, which is never 

volunteer to answer a question at a hearing that you don’t have to. 

Senator BLUMENTHAL. Well, this is directed to you, so—— 

[Laughter.] 

Senator BLUMENTHAL.—you don’t have to violate your edict. 

Mr. SZABAT. OK. Well, I still stepped into it, but thank you, Senator. 

It’s a great question, and it’s one that we wrestle with. The Maritime Administration, unlike, say, our brother in the Federal Highway Administration, where in the past they had direct control over 

the roads that were built, and now they have a great involvement 

in funding the vast majority of the projects, and a great say in how 

these projects are done, ports, like freight railroads, are primarily 

privately run, privately operated, and primarily make their own decisions. And yet when you have some seminal incidents, like we 

just had with the widening, almost simultaneous widening of the 

Suez Canal and the Panama Canal, that affects the operations of 

all of the ports. 

And the question is, how do they change? Not every port is going 

to become a recipient of Panamax vessels. Every port would like to. 

And so they have to work together. And what we’ve discovered is 

that first, through our own offices within the Maritime Administration, but also through the actions of Congress, where you were kind 

enough that since 2009, a couple of key changes in the law have 

not only allowed, but required us to coordinate together and develop a national freight strategic plan, develop a national 

multimodal freight highway, that we find ourselves working together in concert with the other agencies within the Department of 

Transportation and our sister agencies, the Coast Guard, the Army 

Corps of Engineers. And we give information flows back to the 

ports about this is where the freight is going, this is what’s happening, and this is information that they can use to help inform 

their own decisions. So information is a key point. 

I think the second key point that we have, of course, as always, 

people like to come to the Federal Government for sources of funding. Before 2009, the Maritime Administration had nothing to offer 

to ports when it came to funding. But first through the TIGER 

grant program and then through FASTLANE, we now have ports 

that will come to us in consortiums of ports, local communities, or 

consortiums of ports, and say, ‘‘Here is what we propose to do. Will 

you give us the funding to make this work?’’ And like any competitive grant program, the better proposals tend to be the ones that 

get funded and move forward. 

Senator BLUMENTHAL. And they are likely to be better if they are 

the result of consortiums, that is, coming together rather than singly or solely. 

44 

Mr. SZABAT. Senator, that has been my experience. I was the 

designated Federal official responsible for the TIGER grant program when that was first established in the Recovery Act. And certainly if you look at the first several years of the TIGER grant program and the FASTLANE program now, if you wanted to look at 

indicators for success, it was how big the consortium was, and, as 

importantly, how much matching money were they willing to bring 

to the project? 

It’s the old line about ‘‘put your money where your mouth is.’’ 

That has certainly been the point, been shown to be the point, 

where we’ve talked about port projects, and especially when we 

talk about partnerships. When you have private sector operators or 

railroads or states and local governments who are willing to put 

their money in as well as the ports, that shows a strong signal for 

local commitment to the success of the project. 

Senator BLUMENTHAL. Thank you. 

Thank you very much to the entire panel for your service. And, 

Mr. Cordero, good luck in the future. I understand you’re nearing 

the end of your service, and a special thank you to you. Thank you. 

Mr. CORDERO. Yes, thank you, Senator. And thank you for the 

Committee for all your support for the maritime community. 

Senator BLUMENTHAL. Thank you. 

The CHAIRMAN. Thank you, Senator. 

I also would like to thank the panel today, and best wishes to 

you, Commissioner. 

The hearing record will remain open for 2 weeks, and during this 

time, Senators are asked to submit any questions for the record. 

Upon receipt, the witnesses are requested to submit their written 

answers to the Committee as soon as possible. 

And with that, we are adjourned. 

[Whereupon, at 4 p.m., the hearing was adjourned.] 

(45) 

A P P E N D I X 

RESPONSE TO WRITTEN QUESTION SUBMITTED BY HON. TODD YOUNG TO

JOEL SZABAT

Question. Mr. Szabat, in your written testimony you state, ‘‘both the U.S. Transportation Command and MARAD are concerned that there are not enough qualified 

mariners to sustain an activation of the entire sealift fleet.’’ I understand from your 

written testimony that the Maritime Workforce Working Group will release a report 

on this issue in December 2017. In advance of this report, can you please provide 

specific recommendations for how MARAD and the Department of Defense can improve collaboration to address the issues confronting our national sealift program? 

Answer. MARAD is consulting with the U.S. Transportation Command 

(USTRANSCOM) in analyzing the mariner shortage and developing options to address it. USTRANSCOM has taken the following steps to better integrate MARAD 

into their strategic plan: 

• One of the USTRANSCOM component commands is Military Sealift Command 

(MSC). MARAD and MSC will coordinate in matters of common concerns— 

training, contracting, adequacy of supply, etc. 

• MARAD and USTRANSCOM co-chair the Voluntary Intermodal Sealift Agreement Executive Working Group that works with senior representatives from industry (both domestic and international ocean carriers) and maritime labor to 

understand carriers’ challenges and work to find common solutions that can be 

proposed by either department to strengthen sealift for national security. This 

body meets three times a year. 

• USTRANSCOM, Navy, and MARAD have been working extensively to develop 

a sealift recapitalization plan for the Nation’s aging sealift forces. 

• MARAD, with USTRANSCOM support, has been taking steps to improve mariner resilience. Such efforts have included the Military-to-Mariner initiative to 

assist departing/retiring armed service members to earn their U.S. Coast Guard 

mariner credential to allow a transition to civilian life as a merchant mariner. 

MARAD has also employed steam engineers during Ready Reserve Force ship 

activations to increase the available pool of mariners with these specialized 

skills. 

MARAD will continue to look for other opportunities while awaiting the results 

of the Maritime Workforce Working Group Report; which includes participation by 

senior USTRANSCOM (Flag-officer level) leadership. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. TAMMY BALDWIN TO

JOEL SZABAT

Since 2012, the number of foreign trading vessels has been dramatically reduced 

and 60 ships currently fill all Maritime Security Program operating agreements. 

This diminished pool of well-trained civilian mariners necessary to deploy and sustain sealift during a military conflict poses a threat to national security. 

MARAD has testified in recent years about the ability to meet sustained needs. 

Further, MARAD has testified that cargoes are key to maintain and grow a modern 

U.S.-flag fleet. 

Question 1. What impact has the 2012 reduction in cargo preference requirements 

had on the U.S.-flag fleet? Further, please describe proposals that could result in 

realistic mechanisms to grow the fleet. 

Answer. Since 2012, the number of foreign trading vessels has been dramatically 

reduced and 60 ships currently fill all Maritime Security Program operating agreements. This diminished pool of well-trained civilian mariners necessary to deploy 

and sustain sealift during a military conflict poses a threat to national security. 

MARAD has testified in recent years about the ability to meet sustained needs. FurVerDate Nov 24 2008 13:26 Feb 26, 2018 Jkt 075679 PO 00000 Frm 00049 Fmt 6601 Sfmt 6621 S:\GPO\DOCS\28642.TXT JACKIE
46 

ther, MARAD has testified that cargoes are key to maintain and grow a modern 

U.S.-flag fleet. 

Further study would be required before any recommendations could be made. The 

Administration has not yet taken any position. 

Question 2. Please describe MARAD’s enforcement of U.S.-flag fleet requirements. 

Answer. The responsibility for compliance with requirements to use U.S.-flag vessels (i.e., cargo preference) rests with the Federal programs seeking transportation 

of preference cargo. The Duncan Hunter National Defense Authorization Act for FY 

2009, P.L. 110–417 authorized MARAD to impose remedies for non-compliance by 

allowing for civil penalties of up to $25,000 per violation/per day on violators and 

authorizing MARAD to direct agencies to provide ‘‘make up cargoes.’’ MARAD also 

seeks to educate program managers on the basics of ocean freight—when and how 

it is used—and also has developed computer-based training to assist various civilian 

and military agencies’ contracting officers with these compliance requirements and 

what specifically they should require in their prime and subcontracting clauses to 

improve reporting by their contractors regarding compliance. 

MARAD determines compliance based on the regulatory requirement that programs subject to cargo preference provide MARAD with receipt of both U.S. and foreign-flag bills of lading evidencing that the at-least-50-percent threshold has been 

satisfied. Information derived from these bills of lading forms the basis of the performance metric, which in turn may lead to dialogue with agencies should the subject program be at risk of failing to meet cargo preference requirements. 

Question 3. As the Nation’s highways and other transportation systems become 

increasingly congested, ports and waterways provide an alternative for the efficient 

movement of freight. MARAD’s Marine Highway Program is meant to stimulate the 

development of new regional shipping services. Congress provided $5 million in 

FY16 and FY17 appropriations for Marine Highway Program Grants. Is this an adequate level of funding to accomplish the program’s goals? If not—what amount can 

be justified? 

Answer. At the current funding level, the Marine Highway Program Grants can 

alleviate some of the start-up capital risk associated with any new marine highway 

service venture, including new transportation services such as marine highway services for freight movement. By funding planning efforts, demonstration projects, and 

infrastructure and equipment to support new services or expand existing services, 

the Marine Highway Program can attract private marine highway service operators 

to enter this market who otherwise would not be willing to shoulder the full risk 

of this unknown market. Through the injection of existing grant funding, we can 

build new services, which in turn are offering our manufacturing base and distribution new competitive transportation options while at the same time, providing public 

benefits in the form of reduced congestion and highway maintenance costs. The 

funds appropriated in FY 2016 have been awarded to six projects that will support 

new service development in the following areas: 

• Virginia, Maryland and the District of Columbia, 

• New York and New Jersey; 

• Illinois and Missouri; and 

• within the State of Louisiana. 

MARAD is developing the Notice of Funding Opportunity for FY 2017. 

Æ 

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