MARAD 2003 1 

U.S. Department of Transportation 

Maritime Administration 

 MARAD 2003 
MARAD 2003 2 
MARAD 2003 3 

Letter from the 

Administrator 

 

Industry Overview 

 

National Security 

 

Commercial Mobility 

 

Global Connectivity 

 

Environmental Stewardship 

 

Organizational Excellence 

 

Index 

 

Table 14 

 

Financial Statements 

 

Notes to Financial 

Statements 

 

Appendix 

 

Maritime Administration 

Organizational Chart 

 

 

 

 

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 4 

 

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Table of Contents
MARAD 2003 4 
MARAD 2003 5 

The Maritime Administration (MARAD) is the 

Department of Transportation's lead agency in 

all matters relating to waterborne transportation, 

both domestic and international. This Annual 

Report outlines an active year for MARAD, and 

shows how well it met its strategic objectives, 

and how they align with the strategic objectives 

of the Department of Transportation. 

MARAD plays an important role in national security in assuring sufficient sealift capability and 

a vital merchant marine. This report outlines the 

success of the Ready Reserve Force fleet, which 

is owned and maintained by MARAD, and of 

the sealift programs involving the U.S.-flag 

commercial fleet. The report also shows the 

success of MARAD's programs and initiatives 

for training and tracking merchant mariners. 

MARAD's role in commercial mobility is to promote and facilitate a United States maritime 

transportation system, and this Annual Report 

outlines the agency's work in developing Short 

Sea Shipping, and promoting the use of waterborne transportation to alleviate congestion in 

the overall transportation system. MARAD's 

efforts in this area emphasize the development 

of active industry-government cooperatives and 

partnerships, and this report summarizes some of 

this work. 

MARAD directly supports the Department of 

Transportation's Global Connectivity strategic 

objective through its international activities, operation of the Cargo Preference program, development of better techniques for cargo handling, 

and efforts to improve intermodal efficiency. 

MARAD's role in environmental stewardship 

includes the responsible disposal of obsolete 

ships, development of technologies to treat ballast water, examination of new means to reduce 

air emissions from marine sources, and the use 

of environmentally sound management techniques at its fleet sites and at the U.S. Merchant 

Marine Academy. 

This report also outlines how MARAD has advanced the President's Management Agenda, by 

developing detailed strategic plans, integrating 

business strategies, conducting competitive 

sourcing, and expanding electronic government. 

MARAD is unusual among government agencies in that it has an advocacy role for industry, 

specifically the maritime industry. Therefore, 

we have included in this report short summaries 

of important aspects of the U.S. and global maritime industries to put MARAD's activities in 

context. Also, while MARAD has no discrete 

budget to promote the Department's safety strategic objective, there are several instances where 

its programs do serve to promote safety: notably 

the training of municipal firefighters in its fire 

school, the safety training afforded the workers 

at our fleet sites, and our development of specialized training under the Maritime Transportation Security Act. 

This Annual Report for the Maritime Administration for Fiscal Year 2003, which ended September 30, 2003, is submitted to Congress in 

accordance with Section 208 of the Merchant 

Marine Act of 1936, as amended. 

Captain William G. Schubert 

Maritime Administrator 

To Congress and Our Partners, 

Customers, and Employees

Capt. William G. Schubert 

Maritime Administrator 

Annual Report 2003 
MARAD 2003 6 
MARAD 2003 1 

Mission of the U.S. Maritime Administration

To strengthen the U.S. maritime transportation system - including 

infrastructure, industry and labor - to meet the economic and 

security needs of the Nation. 
MARAD 2003 2 

The U.S. marine transportation industry 

serves the needs of both foreign and domestic commerce. It comprises companies that 

carry freight or passengers on the open seas 

or inland waterways, offer towing services, 

charter vessels, operate canals and terminals, 

and develop offshore oil resources. 

In 2002, the last year for which data is available, U.S. waterborne commerce amounted 

to 2.1 billion metric tons. International commerce accounted for 56 percent of the total, 

up from 52 percent 5 years earlier. The increase is due largely to a 10 percent increase 

in petroleum imports, and a 13 percent decline in coastwise petroleum shipments. Oil 

and other primary commodities (coal, 

chemicals, crude materials and farm products) accounted for 90 percent of U.S. waterborne commerce (Exhibit 1). Trade in manufactured goods accounted for only 10 percent of U.S. waterborne commerce in 2002, 

but such trade has doubled in absolute terms 

over the last 10 years. Imports accounted 

for virtually all of the increase. 

As of year-end 2002, there were about 

48,000 vessels active in U.S. foreign and 

domestic trades. Of these, 6,114 were 

oceangoing vessels (10,000+ DWT). In addition to the oceangoing fleets, there were 

216 (47 U.S-flag) bulk vessels active in U.S. 

Great Lakes trades, and about 41,590 

smaller U.S.-flag vessels: tugs, barges, offshore supply vessels, and ferries, active in 

U.S. inland and coastal trades. 

Of the 6,114 oceangoing vessels active in 

U.S. trades, 485 were owned by U.S. companies. Of these, 221 were registered under 

the U.S.-flag. Forty-seven of the 221 U.S.-

flag vessels were employed exclusively in 

U.S. foreign trades as participants in the 

Maritime Security Program with the balance 

employed primarily in U.S. domestic and/or 

cargo preference trades. In 2002, the U.S.-

flag oceangoing fleet carried only 2 percent 

of U.S. foreign trade. 

At the end of 2002, the value of the U.S. 

owned fleet (capital stock) was about $49 

billion with an average age of 17 years. Average fleet age should fall over the next 5 

years with the attrition and/or replacement 

of 25+ year-old vessels. U.S. companies 

have ordered a significant number of new 

vessels from domestic and foreign shipyards. These include: twelve double-hull 

crude carriers (six for U.S. coastal trades); 

eleven double-hull product carriers for U.S. 

foreign trades; thirteen double-hull ATB’s 

(articulated tug/tank barge units) which will 

replace aging product tankers in U.S. coastal 

trades; eleven bulk carriers for U.S. foreign 

trades; twelve high-speed ferries, and fiftyfive offshore service vessels. 

As of year-end 2002, 58 percent, or 187 vessels of the U.S.-owned tanker fleet were 

equipped with double-hulls. Assuming new 

double-hull tank vessels replace existing single-hull vessels, 70 percent of the U.S.- 

Exhibit 1 

U.S. Waterborne Commerce, 2002 

(Million Metric Tons)

Int l. Oil 607

29%

Int l. Mf gs. 158

7%

Int l. Primary 

Product s 430

20%

Domest ic Oil 316

15%

Domest ic Mf gs. 54

3%

Domest ic Primary 

Product s 556

26%

Source: U.S. Army Corps of Engineers 
MARAD 2003 3 

owned tanker fleet will have double-hulls by 

year-end 2005. 

Investments in new vessels are being driven 

by customer needs and many are tied to long 

term customer commitments. Such arrangements integrate marine transportation into 

production and distribution processes, improve service to the customers and stabilize 

carriers’ earnings. 

The recent volatility in U. S. payments for 

marine transportation earnings (payments) 

can be traced largely to the impact of 

changes in oil prices on oil stocks and the 

demand for tank vessel services (Exhibit 2). 

In 2000 and 2001, oil companies rebuilt depleted stocks, contributing to a surge in petroleum trades and tank-vessel earnings. 

From 1999 to 2001, average spot earnings 

for tankers increased from $12,000 per day 

to $28,000 per day. By 2002, average earnings had fallen to $16,000 per day. 

 

In 2002, payments to U.S. companies for 

marine transportation services, the industry’s 

contribution to Gross Domestic Product 

(GDP), amounted to $15.2 billion. To generate the 2002 GDP, the industry employed 

about 52 thousand workers. 

In contrast, payments to foreign companies 

for ocean transportation services in U.S. foreign trade (a factor in the Balance of Payments) amounted to $18.6 billion in 2002. 

The growth of these payments over the last 5 

years has been about three times the growth 

of payments to U.S. companies, reflecting 

the increasing share of foreign trade in U.S. 

waterborne commerce. 

U.S. Payments for Marine Transportation 

Services,

 1993 to 2002

6

11

16

21

1998 1999 2000 2001 2002

Years

$ Bil. 

Payments to U.S. Companies (GDP)

Payments to Foreign Companies

Exhibit 2 

Source: Bureau of Economic Analysis 
MARAD 2003 4 

Department of Transportation Strategic Objective: Security. 

 Balance homeland and national security transportation requirements with 

the mobility needs of the Nation for personal travel and commerce. 

Maritime Administration Strategic Objective: National Security. 

 Assure that sufficient sealift capability and intermodal transportation infrastructure exist to support vital homeland and national security interests. 

The Maritime Administration's Ready Reserve Force Ship 

Cape Orlando sails through San Francisco Bay on its return 

from Operation Iraqi Freedom 
MARAD 2003 5 

Maritime Administration programs played 

an important role in assuring sufficient sealift and port/ intermodal capacity to support 

national security interests during the conflict 

in Iraq. Eighty-four percent of cargo moved 

in Operation Iraqi Freedom, approximately 

16.9 million square feet, was carried aboard 

U.S.-flag vessels and moved through eleven 

of the fourteen strategic ports. Over 7,600 

mariners sailed aboard various ships in support of the effort, including almost 3,900 

commercial mariners, and nearly 3,800 civil 

service mariners. This successful execution 

was made possible by close cooperation 

among MARAD, ship managers, maritime 

labor unions, the National Port Readiness 

Network (NPRN) signatories, and the Military Sealift Command. Thirty-five of the 

participating vessels were commercial ships 

enrolled in MARAD's Maritime Security 

Program. Forty vessels were from the 

Ready Reserve Force, which alone carried 

nearly 22 percent of the military cargo for 

Operation Iraqi Freedom. 

The Ready Reserve Force (RRF) is MARAD's premier, government-owned, sealift 

readiness program. The RRF is a fleet of 

militarily useful ships, maintained in a reserve status in the event that the Department 

of Defense needs these ships to support the 

rapid, massive movement of military supplies and troops for a military exercise or 

large-scale conflict. The ships are activated 

for such use by the Department of Defense, 

and they are managed by commercial companies and crewed by civilian merchant 

mariners. Most of the ships activated for 

Operation Iraqi Freedom were kept in reduced operating status, with partial crews 

keeping the ships repaired and ready for activation. 

Four RRF ships were already serving with 

the Afloat Prepositioning Program. Activations of other RRF ships began in October of 

2002, and reached a peak in January of 

2003, when 27 ships were activated during a 

two-week period. All of the ships kept in a 

reduced operating status were activated 

within their readiness timeline. Two ships 

had to be put on an adjusted timeline; these 

two had been kept without any crew members on board and were in shipyards undergoing major machinery overhauls when activated. Although they did not meet their 

readiness timelines, those two ships also 

loaded military materiel at strategic ports 

and sailed toward the Eastern Mediterranean 

meeting the operational requirements. 

Sealift Support for Operation Enduring Freedom / Operation Iraqi Freedom

Photo courtesy Stars & Stripes 

The Ready Reserve Force Ship Cape Victory offloads its 

 military cargo in Kuwait, March 2003. 
MARAD 2003 6 

Most of the activated RRF ships were initially deployed to the Eastern Mediterranean. When it became apparent that Turkey 

would not allow these ships to discharge in 

its ports, the vessels began transiting the 

Suez Canal in late March 2003, and 

discharged their cargo in Kuwait. Most of 

the vessels were activated for a single voyage and returned to their outport location or 

Reserve Fleet sites upon final cargo discharge. However, several of the vessels 

were slated for additional voyages. By the 

end of Fiscal Year 2003, seven RRF ships 

were still on active duty. 

More information on the activations of RRF 

ships for Operation Iraqi Freedom is available at www.marad.dot.gov/programs/

rrf.html. 

The 1,400 Merchant Mariners who served 

on the RRF ships were all volunteers for this 

mission. All crew members received smallpox and anthrax inoculations, with excellent 

support of the Military Sealift Command's 

headquarters medical teams and full cooperation from U.S. maritime unions. Mariners were also trained in various force protection measures including the use of chemical, biological, and radiological detection 

protective equipment. As the ships returned 

to the United States, MARAD issued Merchant Marine Expeditionary Medal Certificates to 7,684 commercial and civil service 

mariners who participated in OIF. Each returning RRF ship was welcomed with a 

ceremony in which the medals were presented to the officers and crew. 

A Department of Transportation (DOT) performance measure and goal for most of MARAD’s national security activities in FY 

2003 was the availability of 94 percent of 

Department of Defense (DOD) required 

shipping capacity, complete with crews, 

within mobilization guidelines. The actual 

result was 96 percent. The increase was due 

to the improved availability of a greater percentage of ships from the RRF. 

The RRF's exemplary activation record is 

due to its sound and systematic conditioning 

program. While ship managers are responsible for the overall material condition and 

readiness of the assigned ship, the RRF program requires regular sea trials as well as 

dock trials and drydockings. During FY 

2003, MARAD conducted 18 sea trials, 

most of which were 72 hours long. Sea trials not only prove the condition of the ship, 

Strategic Mobility 

FY 2003 Performance Measure 

Availability of Department of 

Defense-required shipping 

within timelines 

Goal: 94 percent 

Actual result: 96 percent 

GOAL EXCEEDED 

Ready Reserve Force 

FY 2003 Performance Measures 

On-time activation 

Goal: 100 percent 

Actual result: 100 percent 

GOAL MET 

Ships fully capable while under 

Military Sealift Command 

operational control 

Goal: 90 percent 

Actual Result: 98.5 percent 

GOAL EXCEEDED 
MARAD 2003 7 

but also provide a training opportunity for 

the merchant mariner crews and permit RRF 

management companies to observe crew 

performance. 

Turbo Activations are a rigorous test of ship 

readiness. Turbo Activations are initiated by 

the Department of Defense without prior 

notice or planning. In FY 2003, there were 

four separate Turbo Activations involving 

seven RRF vessels. All of these were completed successfully within the vessels' assigned readiness status. A list of recent 

Turbo Activations and their results is available at www.marad.dot.gov/programs/

rrf.html. 

National Defense Reserve Fleet (NDRF) 

MARAD owns and maintains the National 

Defense Reserve Fleet (NDRF), which contains vessels that can be activated to support 

cargo movement requirements during national emergencies. The RRF is one component of the NDRF; other ships may be operated infrequently, and many are prepared for 

long-term storage in a preserved condition. 

The NDRF program was started after World 

War II when the Merchant Ships Sales Act 

of 1946 was enacted. As of September 30, 

2003, there were 297 vessels in the NDRF, 

of which 68 were in the RRF, 72 in longterm storage (retention), and 132 ready for 

disposal or being prepared for disposal (nonretention). An additional 25 vessels, owned 

by other government agencies, were also 

maintained at NDRF facilities on a costreimbursable basis. There are three anchorages where most of the vessels are maintained. As of September 30, 2003, the 

James River Reserve Fleet at Fort Eustis, 

VA, held 93 ships; the Beaumont Reserve 

Fleet at Beaumont, TX, held 43, and the Suisun Bay Reserve Fleet, at Benicia, CA, held 

92. 

A short history of the NDRF, and a table 

showing numbers of ships each year 

throughout its history, may be found at 

www.marad.dot.gov/programs/rrf.html. 

Maritime Heritage 

MARAD is authorized to provide obsolete 

parts and equipment from NDRF ships to 

help preserve the operational or historical 

character of U.S. memorial ships. Longterm loans of historical artifacts for public 

display are also made available to worthy 

organizations. In the past, special legislation 

allowed donation of vessels for specific historical purposes. This year a request was 

made to Congress, in the 2004 DOD authorization bill, to authorized memorial groups 

interested in obtaining ships to apply directly to MARAD. This will replace the 

current practice of specialized legislation for 

donations. 

Training Availability 

NDRF vessels are made available to various 

groups for training purposes. For example, 

ships in the Reserve Fleet anchorages have 

been used for Vessel Boarding Search and 

Seizure training that involves law enforcement and ship interdiction exercises by the 

Navy, Marines, and Coast Guard. In FY 

2003, the anchored NDRF vessels supported 

14 training events for 27 days involving 

1,922 individuals. RRF vessels were utilized as training platforms for a variety of 

organizations such as USCG Marine Safety 

Office and Naval Cargo Handling Battalions. In FY 2002, NDRF ships supported 70 

training events for 119 days involving 2,503 

individuals. 

Information on Installations and Logistics 

for the NDRF Real Property is located at 

www.marad.dot.gov/programs/rrf.html. 
MARAD 2003 8 

Voluntary Intermodal Sealift Agreement 

(VISA) 

The Voluntary Intermodal Sealift Agreement (VISA) program is the DOD’s principal commercial sealift readiness program. It 

provides DOD with assured access to commercial intermodal capacity to move ammunition and sustainment cargo. This capacity 

can also supplement U.S. Goverment-owned/controlled/chartered capacity 

used for initial deployment or “surge” of 

unit equipment. 

The objective of the program is to maximize 

DOD’s access to the multibillion-dollar, 

state-of-the-art, U.S. commercial intermodal 

transportation system to serve America in 

peace and war while minimizing disruption 

to commercial operations. VISA has three 

activation stages. Each stage adds additional 

capacity commitments. VISA activation is 

time-phased to streamline the availability of 

capacity to coincide with DOD requirements. 

An important element of the VISA program 

is the Joint Planning Advisory Group 

(JPAG). During JPAG meetings, Government, industry and maritime labor identify 

and discuss DOD’s requirements, recommend concepts of operations to meet requirements, test and exercise program arrangements, and comply with antitrust requirements for pooling/teaming arrangements. In FY 2003 MARAD and the U.S. 

Transportation Command held JPAG meetings in December, January, and April. At 

these meetings, participants were briefed on 

a variety of topics including the VISA activation process, manpower and sealift requirements and Force Protection issues that 

might be necessary to support efforts in Operation Iraqi Freedom (OIF). As a result of 

these meetings Government and industry 

were well prepared to support U.S. troops in 

Iraq. 

Although DOD did not activate VISA for 

OIF, there was substantial participation of 

VISA carriers (on an individual charter basis) in moving equipment and supplies to 

support this effort. Eleven (11) VISA ships 

were chartered by the Military Sealift Command, and 37 VISA ships provided liner service to the Military Traffic Management 

Command. Over 76 percent of the Maritime 

Security Program fleet (35 vessels) participated. 

More than 75 percent of available militarily 

useful capacity is committed to the VISA 

program. VISA companies commit specific 

vessel capacity, intermodal equipment, and 

management services. As a condition for 

receiving Government financial support, 

Maritime Security Program (MSP) participants are required to enroll 100 percent of 

their MSP vessel capacity and a comparable 

mix of intermodal resources and services to 

the VISA program. All VISA participants 

receive priority consideration for the award 

of DOD peacetime cargoes. As of September 30, 2003, there were 56 VISA participants. VISA participants are listed at 

www.marad.dot.gov/programs/rrf.html

Maritime Security Program (MSP) 

The Maritime Security Program (MSP) is a 

subset of the VISA program. While all 

VISA participants commit specific vessel 

capacity, intermodal equipment, and management services, only those which are also 

in MSP are required to enroll 100 percent of 

their capacity, plus a comparable mix of intermodal resources and services. In other 

words, VISA participants commit part of 

their capacity to be available; those which 

are also MSP participants must commit all. 
MARAD 2003 9 

More than 75 percent of available military 

useful dry-cargo capacity in the U.S.-flag 

commercial fleet is committed to the VISA 

program. Of that, more than 70 percent is 

provided by MSP.

 

The MSP program was established under the 

Maritime Security Act of 1996, and provides 

approximately $100 million in funding annually for up to 47 vessels to partially offset 

higher operating costs under U.S. registry. 

The program helps the United States retain 

an active U.S.-flag merchant fleet comprising modern, efficient, and militarily useful 

commercial dry cargo vessels that can support national security requirements and 

maintain a competitive U.S.-flag presence in 

international commerce. Over 115,000 

20-foot equivalent units (TEUs) and one 

million square feet of capacity committed 

for DOD use. As of September 30, 2003, 12 

MSP carriers were receiving MSP payments 

for 47 vessels. A complete list of MSP vessels and operators is available at 

www.marad.dot.gov/programs/rrf.html. 

The MSP fleet employs a labor base of 

skilled and loyal American seafarers who 

are available to crew the U.S. Government-owned strategic sealift fleet, as well as 

the U.S. commercial fleet, both in peace and 

war. The MSP payments to modern ocean 

car-riers allows MARAD/ DOD to have 

ready access to a robust maritime presence 

valued at more than $9 billion. 

During FY 2003, the MSP fleet was upgraded through the substitution of six modern and efficient vessels for six older vessels. Most of the replacement vessels were 

larger, resulting in net capacity increase of 

7,000 TEUs. 

An important element of the MSP is the reflagging of new and more efficient vessels to 

U.S. registry. A total of 18 modern commercial liner vessels, average age less than 

four years old, have been reflagged to U.S. 

registry and are currently participating in the 

MSP. In addition, four other vessels (less 

than three years old) that previously flew 

foreign flags converted to U.S.-flag vessels. 

These re-flagging applications received U.S. 

Coast Guard expedited approval based on 

MARAD’s determination that the vessels 

would be eligible for the MSP. 

A MARAD FY 2003 performance measure 

and goal for the combined VISA/MSP programs was the availability of 165,000 

Twenty-foot Equivalent Units (TEUs) of 

commercial sealift capacity for DOD use in 

times of emergency. The actual FY 2003 

result was 174,584 TEUs. This amount 

represents the aggregate cargo capacity for 

all ships enrolled in the VISA program, including all ships enrolled in MSP. 

War Risk Insurance 

MARAD administers the standby emergency War Risk Insurance Program. The 

program encourages the continued flow of 

U.S. foreign commerce during periods when 

commercial insurance cannot be obtained on 

reasonable terms and conditions. It 

protects vessel operators and seafarers 

against losses resulting from war or warlike 

actions. 

VISA/MSP 

FY 2003 Performance Measure 

Goal: 165,000 TEUs for DOD 

use in time of emergency 

Actual result: 174,500 TEUs 

GOAL EXCEEDED 
MARAD 2003 10 

As of September 30, 2003, the War Risk Revolving Fund (fund) asset total was approximately $37,600,000. The fund earned 

$1,800,000 in investment income. Program 

expenses for FY 2003 totaled $46,500. 

As of September 30, 2003, there were 364 

binders on vessels and barges providing eligibility for hull, protection and indemnity, 

and second seamen’s war risk insurance. No 

binders related to MARAD’s standby war 

risk cargo insurance and builder’s risk insurance programs have been issued. All binders are effective for 30 days following an 

automatic termination of commercial insurance. 

Statutory authority covering the Title XII 

War Risk Insurance Program was extended 

5 years, to June 30, 2005 by Public Law 

106-65. As a result of the terrorist activities 

of September 11th, 2001, MARAD activated 

the Title XII program at the request of the 

Department of Defense. MARAD has written war risk insurance on 6 vessels in conjunction with Operation Enduring Freedom, 

and on 98 in conjunction with Operation 

Iraqi Freedom. MARAD issued over 290 

policies covering over $9 billion in values 

and limits since the post-9/11 activation. 

Port Readiness 

Fourteen commercial ports are designated as 

strategic ports by DOD and the National 

Shipping Authority, which is the national 

defense arm of MARAD. 

MARAD has an extensive program to facilitate the availability of port facilities and services, one which ensures the movement of 

military forces securely and efficiently 

through the U.S. 

During OIF, 11 of the 14 strategic commercial ports handled deployment military 

cargo. A DOT transportation system in a 

way that minimizes disruption to commercial operations. 

FY 2003 performance measure and goal for 

MARAD’s strategic port readiness activities 

was the availability of militarily preferred 

facilities at 92 percent of the strategic ports 

on 48 hours notice. The actual result was 86 

percent, as two ports could not meet the criteria. 

PORT SECURITY 

MARAD's port security activities directly 

support the DOT objective of balancing 

homeland and national security transportation requirements with the mobility needs of 

the Nation for personal travel and commerce. 

Maritime Transportation Security Act 

The Maritime Transportation Security Act of 

2002 (MTSA) created new statutory requirements for MARAD in port security: 

• Assisting the U.S. Coast Guard (USCG) 

in conducting foreign port assessments; 

• Designing and conducting foreign port 

training to address deficiencies identified 

in foreign port assessments; 

• Developing standards and curricula to 

train and certify maritime security professionals; 

• Administering a grant program, currently 

funded by the Transportation Security 

Administration, to enhance U.S. port and 

facility security to implement Area Maritime Transportation Security Plans; and 

• Updating MARAD's Port Security National Planning Guide. 

In April 2003, the Secretary of Transportation delegated to the Maritime Administrator 

the authority to implement Section 109 of 
MARAD 2003 11 

the MTSA. Section 109 requires the Secretary, not later than six months after the date 

of enactment, to develop standards and curricula to allow for the training and certification of maritime security professionals. 

MTSA– Specialized Training 

At the request of the Maritime Administrator, the U.S. Merchant Marine Academy 

(USMMA) developed the standards and curriculum and prepared a Report to Congress, 

as required by MTSA. The report, Maritime 

Security Act of 2002: Section 109 Implementation, A Report to Congress contains 

standards and curricula for U.S. maritime 

security training. The report is available on 

the MARAD web site at: http://

www.marad.dot.gov/publications/

security.htm. 

As a result of the USMMA's work in preparing this report, the International Maritime 

Organization (IMO) gave the United States 

the responsibility for development of the 

highly respected IMO model courses for 

Ship Security Officer, Company Security 

Officer, and Port Facility Security Officer 

under the provisions of the International 

Ship and Port Facility Security Code. 

This project, undertaken by the USMMA 

jointly with the Government of India's Directorate General of Shipping, was completed on September 2, 2003. The model 

courses were published in September, 2003 

by the IMO for use by training providers, 

carriers, and others worldwide. Additional 

information is available on the IMO web site 

at: http://www.imo.org/Newsroom/

mainframe.asp?topic_id=753&doc_id=2661. 

The development of a national system of 

certification and course approval for the 

education and training of U.S. maritime security personnel is being led by MARAD, in 

coordination with the Coast Guard, as part 

of MARAD's responsibility under Section 

109 of the MTSA. 

MTSA– International Conventions 

MTSA, the new security amendments to the 

International Convention for the Safety of 

Life at Sea 1974 (SOLAS), and its complementary International Ship and Port Facility 

Security Code (ISPS) strengthen and add 

additional protective layers of defense to 

U.S. port security. MTSA is designed to 

protect the nation's ports and waterways 

from a terrorist attack and requires area 

maritime security committees, and security 

plans for facilities and vessels that may be 

involved in a transportation security incident. ISPS is the first multilateral ship and 

port security standard ever created. Implementation is scheduled for 2004, and requires all nations to develop port and ship 

security plans. 

During FY 2003, MARAD aggressively 

supported development of the new maritime 

security initiative to improve seafarer identification. In particular, agency senior staff 

worked intensively on a “fast track” initiative by the International Labor Organization 

(ILO) for a new convention on seafarer identity documents. This new convention was 

adopted in Geneva at the International Labor 

Conference in June 2003. It replaces ILO’s 

Seafarers’ Identity Convention, 1958 (ILO 

108), and there are expectations it will be 

ratified by the national governments, particularly those concerned with shipping. 

Biometric standards for international seafarer credentialing are included. 

Port Security Grants 

MARAD has played a key role in the startup 

and administration of the Port Security 

Grants. More than $336 million has been 
MARAD 2003 12 

awarded through FY 2003 for competitive 

grants to critical national seaports to finance 

the cost of enhancing facility and operational security. The first round of Port Security Grants, which MARAD administered, 

was announced in FY 2002, awarding $92 

million for 143 projects. 

A second round of Port Security Grants was 

announced on January 14, 2003. This round 

was similar to the initial round of grants, but 

with the Transportation Security Administration (TSA) administering the grant program with substantial support from MARAD. Over $996 million in grant requests 

were received, containing 1,112 security 

projects. On June 12, 2003, Secretary of 

Homeland Security Tom Ridge announced 

the distribution of $169 million in Port Security Grants (Round 2) for 392 projects. An 

additional 84 projects from the Port Security 

Grant application pool were funded with 

$75 million made available through the Office of Domestic Preparedness. 

The third round of Port Security Grants was 

announced on July 21, 2003, based on the 

seaport security provisions contained in the 

FY 2002 Supplemental Appropriation, 

which appropriated $104 million for grants. 

The grant announcement generated over 

$987 million in grant requests, containing 

1,042 port security projects. Grants awarded 

in the third round totaled $179 million. 

MARAD organized a unique grant program 

with a web-based system to manage proposals, beginning with the first round and continuing through the third. Using this system, 

applicants were able to submit their grant 

applications electronically. The system also 

allowed the entire evaluation process to be 

conducted on the web. The evaluation process electronically linked all five MARAD 

region offices and 47 USCG Captain-of-thePort offices with MARAD, USCG, and TSA 

headquarters staffs. MARAD regional offices worked with regional offices of the 

other agencies in performing the field-level 

evaluations of grant applications. Even after 

the grants are awarded, the web-based system continues to play a key role in monitoring and administering each grant’s progress. 

NATO Planning Board for Ocean Shipping (PBOS) Participation 

MARAD is the focal point for the U.S. participation in the work of the North Atlantic 

Treaty Organization (NATO) Planning 

Board for Ocean Shipping (PBOS). PBOS 

develops and maintains plans for civil shipping support to the Alliance in crisis and 

war, including advice to NATO military authorities on the planning and execution of 

NATO military deployments, and serves as 

the NATO focal point for advice and assistance on the protection of civilian maritime 

assets against acts of terrorism. 

In FY 2003, PBOS developed proposals for 

a NATO Hub System for utilization of commercial vessels for strategic sealift and a 

PBOS Market Advisory Panel to facilitate 

the military’s access to information on the 

commercial shipping market. 

PBOS, through the PBOS Secretary in 

Washington, DC, and in conjunction with its 

industry shipping experts, has assisted 

NATO military planners by providing information and advice on the availability and 

use of commercial shipping to support “real 

world” operations.

Foreign Transfers 

Under Section 9 of the Shipping Act of 

1916, as amended, MARAD approved the 

transfer of 32 ships of 1,000 gross tons and 

over to foreign ownership and/or registry 

during fiscal year 2003. Thirteen privately 
MARAD 2003 13 

owned vessels were sold for scrapping 

abroad. 

MARAD's approval of the transfer of vessels 3,000 gross tons and over to foreign 

ownership and/or registry are subject to the 

terms and conditions of 46 CFR Part 221. 

As such, the vessels require MARAD approval for any subsequent transfer of ownership and/or registry and are required to remain available for U.S. Government requisitioning, if needed. At year's end, there were 

a total of 151 vessels subject to these terms, 

32 of which were approved for subsequent 

transfer of ownership and/or registry during 

the year. 

User charges for processing applications for 

foreign transfers and similar actions totaled 

$24,600 in this reporting period, including 

fees filed pursuant to contracts reflecting the 

terms and conditions stipulated in 46 CFR 

Part 221. 

Details of activities under Section 9 of the 

Shipping Act, 1916, as amended, may be 

found at www.marad.dot.gov/

programs.html. 

MERCHANT MARINER AVAILABILITY 

Mariner Availability 

An essential component of ensuring sufficient sea lift is making sure there are enough 

qualified mariners available to sail the necessary ships. During the fiscal year, there 

was a significant strain placed upon the 

available U.S. pool of merchant mariners as 

the effort to crew the emergency shipping 

needed for OIF was successfully executed. 

Under the provisions of the Maritime Security Act of 1996, merchant mariners have reemployment rights similar to those given 

military reservists. This was the first conflict in which those rights became an issue. 

MARAD granted certification for reemployment rights to two mariners, and processed inquiries from over 50 individuals 

and organizations. 

MARAD also continued working with the 

U.S. Coast Guard, maritime labor unions, 

and industry to assess the effect of evolving 

Standards of Training, Certification, and 

Watchkeeping (STCW). These are now required certifications for mariners in international trade. 

U. S. Merchant Mariner Tracking and 

Survey 

MARAD continued the development of a 

U.S. Merchant Mariner Tracking System. 

This new system will allow MARAD and its 

partners to maintain accurate and up-to-date 

information on mariner qualifications and 

will enhance our ability to crew the Government's vessels in the critically short timeframes required during an activation. An 

Internet-based component will allow mariners to update contact information in a 

timely manner. 

The 2002 Mariner Survey was a follow-up 

to the first survey of merchant mariners conducted during 2001. The 2001 Mariner Survey was a concentrated effort to get feedback on key readiness issues. The major 

focus of the 2002 survey effort was to update and expand information on key readiness and training issues. Of those who completed the survey, findings show that the majority of mariners: 

• Would volunteer for a national defense 

mission; 

• Are working in the industry and sailing 

or at tempting to sail on ocean-going 

vessels; 

• Are planning to serve at sea in the future, 

and have or intend to obtain a Standards 
MARAD 2003 14 

of Training Certification and Watchkeeping STCW 95 certificate; and 

• Would be willing to serve three or more 

tours and could report in nine days or 

less. 

Merchant Marine Reserve 

The Merchant Marine Reserve (MMR), U.S. 

Naval Reserve, program consists of Naval 

Reserve officers who are also licensed merchant marine officers. MMR members have 

a unique relationship with MARAD because 

of its defense-related responsibilities. 

Members of the MMR program provided 

critical support during OIF. Reservists 

served standing watch in the Crisis Management Centers, training over 1,400 individuals in Chemical, Biological, and Radiological Defense, as Port Representatives, and 

assisting with the activation of the Ready 

Reserve Force. 

MARAD is also pursuing the establishment 

of a civilian mariner reserve program. Such 

a program would alleviate potential shortages and provide a means to assure access to 

mariners in the event of a national emergency. The projected program would use 

the existing structure of the U .S. Maritime 

Service (USMS). Members would be activated for two weeks of training each year on 

government vessels.

Mariner Employment: Great Lakes 

The Great Lakes Region Office continues to 

produce and update a “U.S. Great Lakes 

Merchant Seaman Employment Fact Sheet” 

to serve both U.S. vessel fleets and potential 

mariners. It provides a specific listing of 

companies conducting direct hiring and unions representing mariners in the Great 

Lakes waterway system. Company and union web sites along with a supplemental directory of Great Lakes informational web 

sites are included to aid present and potential 

mariners. This information is posted on the 

MARAD web site, www.marad.dot.gov/

programs/rrf.html. 

Maritime Training and Education 

MARAD vigorously supports maritime 

training and education through the U.S. 

Merchant Marine Academy, its support of 

six state maritime academies, and several 

outreach and continuing education programs. 

U.S. Merchant Marine Academy (USMMA) 

MARAD operates the U.S. Merchant Marine 

Academy at Kings Point, NY, to educate 

young men and women for service in the 

American merchant marine, in the U.S. 

Armed Forces, and in the Nation’s intermodal transportation system. 

Graduates receive Bachelor of Science degrees and U.S. Coast Guard (USCG) licenses as deck or engineering officers, and 

commissions in the U.S. Naval Reserve or 

another uniformed service. MARAD owns 

and operates USMMA's primary training 

ship. 

As a key component of our national security 

effort, Academy graduates incur an eightyear U.S. Naval Reserve commitment 

Mariner Availability 

FY 2003 Performance Measures 

Availability of mariners required to crew commercial / sealift ships in time of emergency 

Goal: 100 percent 

Actual result: 105 percent 

GOAL EXCEEDED 
MARAD 2003 15 

(unless they are accepted in another uniformed service) that obligates them to serve 

in time of war or national emergency. The 

critical maritime skills developed with their 

military training significantly increases our 

Nation’s defense readiness. 

Academy graduates are required to obtain a 

merchant marine officer’s license in order to 

graduate from the Academy, and to maintain 

the license for at least six years. The graduates are also committed to a five-year maritime employment service obligation. This 

maritime service obligation may be satisfied 

in the merchant marine as an officer aboard 

U.S. merchant ships, or in shoreside maritime or intermodal transportation industry 

positions if afloat employment is not available, and with the permission of the Maritime Administrator. Active military duty in 

the U.S. Armed Forces or service with the 

National Oceanic and Atmospheric Administration also satisfies the obligation. 

The Class of 2003, which graduated on June 

23, 2003, comprised 110 third mates and 90 

third assistant engineers. The 22 women 

graduates in 2003 brought to 457 the total 

number of female graduates since the first 

co-educational graduating class in 1978. 

Within three months after graduation, about 

65 percent of the 173 graduates had obtained 

employment in the maritime and transportation industry, afloat and ashore, or were 

serving on active military duty. That percentage in creases to nearly 95 percent 

within six months after graduation. 

Deferred graduates totaled 25 and two 

graduates were foreign students. More information may be obtained at www.

usmma.edu.

Global Maritime Transportation School 

Specialized Graduate-level courses for industry, government, and defense professionals are available at the Global Maritime 

Transportation School (GMATS), located on 

the Kings Point campus, USMMA. One 

course offered by GMATS is MARAD's National Sealift Training Program, which 44 

senior deck and engineer officers completed 

in FY 2003. The purpose of the program is 

to improve U.S.-flag strategic sealift support 

capability, improve maritime security, and 

reduce vulnerability to piracy and hostage 

threats. The course of study integrates communications, maritime security, and sealift 

readiness training, drawing from lessons 

Swearing-in at the U.S. Merchant Marine Academy 

at Kings Point, New York 
MARAD 2003 16 

learned from the September 2001 attack on 

the World Trade Center and from Operations Desert Shield/Desert Storm, Uphold 

Democracy, and Restore Hope. 

State Maritime Schools/Schoolship Program 

MARAD provides assistance to six State 

maritime academies to train merchant marine officers pursuant to the Maritime Education and Training Act of 1980. They are: 

• California Maritime Academy, Vallejo, 

CA; 

• Great Lakes Maritime Academy, Traverse City, MI; 

• Maine Maritime Academy, Castine, ME; 

• Massachusetts Maritime Academy, Buzzards Bay, MA; 

• State University of New York Maritime 

College, Fort Schuyler, NY; and 

• Texas Maritime Academy, Galveston, 

TX. 

State maritime academy cadets who participate in the Student Incentive Payment Program receive $3,000 annually, for a maximum of four years with satisfactory performance, to offset school costs. 

Participating cadets have these obligations: 

 

● To complete the academy’s course of 

 instruction; 

• To graduate from the State academy, cadets must pass the USCG examination 

for a license as an officer in the U.S. 

merchant marine, and 

• Maintain that license for at least six 

years from the date of graduation; 

• To apply for and accept, if offered, an 

appointment as a commissioned officer 

in an armed force reserve component, 

and serve for at least six years from the 

date of graduation; and 

• To maintain employment in the maritime 

industry for at least three years from the 

date of graduation. 

MARAD provides training vessels to all six 

State maritime academies for use in at-sea 

training and as seagoing laboratories. The 

vessels provide cadets practical knowledge 

of the operations on board vessels, and are 

part of MARAD’s assistance to the academies to train highly qualified licensed officers. 

The Massachusetts Maritime Academy received the most recently commissioned MARAD training vessel, the Training Ship Enterprise, in May 2003. This ship, the former 

Cape Bon, was converted at MARAD expense. It arrived at the Academy's Buzzard's 

Bay campus in April, 2003, and was formally commissioned on National Maritime 

Day, May 22, 2003. 

The Texas Maritime Academy and its 

training ship made news during FY 2003. 

See MARAD Update article on page 19. 

Maritime Education and Training Outreach 

MARAD developed an initiative with primary schools, secondary schools and preundergraduate programs to support increased interest in careers afloat and in shipyard employment. This project aggressively 

promotes primary and secondary student interest in maritime careers. 

For example, MARAD is actively participating with the U.S. Navy’s Military Sealift 

Command, maritime industry partners and 

regional and local school districts to add 

maritime careers and training to middle and 

high school programs. The Mar Vista program in San Diego, CA, has been particularly successful, and provides an excellent 

model for other schools to emulate; nearly 

thirty of their pilot program graduates have 
MARAD 2003 17 

taken permanent high seas jobs. Another 

similar project was recently started by the 

Philadelphia School District and is called the 

Maritime Academy Charter High School. 

Ship Operations Cooperative Program 

MARAD leads the Ship Operations Cooperative Program (SOCP) an industrygovernment partnership that addresses issues 

affecting the maritime industry. One issue it 

addressed in FY 2003 is the lack of awareness among young people about employment and career opportunities in the maritime industry. The MARAD/SOCP Mariner 

Recruitment Working Group embarked on a 

campaign to raise awareness, producing 

print and electronic promotional material, 

and participating in a variety of forums to 

disseminate information about maritime career paths, educational institutions, and potential resources in order to attract young 

people to the maritime industry; especially 

to afloat positions. 

The Working Group produced a brochure 

titled “A Future with Adventure”, and a 30-

second Public Service Announcement titled 

“A Career Afloat,” which won the American 

Advertising Federation’s “Addy” award as 

Best PSA. SOCP also launched a newly designed web page titled “A Career Afloat: 

Gateway to the Future,” and co-sponsored, 

with the Propeller Club of the United States, 

the Adopt-A-Ship project (targeting 5th - 8th 

grade students), and initiated discussions 

with the public and private sector on mariner 

and shipyard apprentice programs. 

Research, Development, and 

Demonstration 

While MARAD receives no direct funding 

for research and development, its expertise 

makes it desirable as a strategic partner for 

other federal, state, and local government 

agencies and portions of the private sector. 

MARAD maintained and expanded its position in the area of National Security by assisting the Department of Defense (DOD) 

through the professional naval architectural 

and marine engineering services it rendered 

to the Navy in connection with the DODfunded National Shipbuilding Research Program/Advanced Shipbuilding Enterprise. 

Using DOD funds, MARAD allocated substantial time to the DOD-funded Integrated 

Computerized Deployment System 

(ICODES) on behalf of the Military Traffic 

Management Command, the U.S. Army, 

U.S. Navy, and U.S. Marine Corps. MARAD worked closely with an office of the 

Chief of Naval Operations, and the Office of 

Naval Research Laboratory at Carderock, 

Maryland, in developing concepts for fast 

sealift and littoral combat ships. 

The Maritime Administration (MARAD) 

provides training in fighting ship, barge, and 

dockside fires to a range of personnel who 

may have to deal with such fires. MARAD 

offers basic and advanced firefighting 

through its fire school in Swanton, Ohio. In 

FY 2003, the MARAD Fire Training Center 

trained over 450 of students in these courses. 

Combined basic/advanced training – 282 

Fire Training Center 
MARAD 2003 18 

(149 Coast Guard and 133 merchant mariners) STCW basic training – 51 

Municipal (includes port security outreach, 

local municipal fire fighters, and ToledoLucas County Port Authority Police and Fire 

Team) – 131 

In August 2003, instructors from the MARAD Fire Training Center traveled to Duluth, Minnesota, to educate local municipal 

fire departments in the proper response to a 

portside fire aboard ship. The training is an 

initiative by MARAD to increase awareness 

of landside responders to the important and 

unique differences of fighting a shipboard 

fire. Nearly 80 municipal fire responders 

from departments in Duluth, Two Harbors, 

and Superior, Wisconsin, attended the program over a three-day period. A morning 

session indoctrinated fire fighters to the special considerations and hazards of quelling a 

shipboard fire at a municipal dock. 

Boarding and walk-through of the Great 

Lakes freighter the John Sherwin, provided a 

realistic view of a vessel’s various components and the ship’s own fire suppression 

system. 
MARAD 2003 19 

Maritime Administration www.marad.dot.gov 

Department of Transportation 

Training on the TEXAS CLIPPER II 

Heroic Rescue at Sea, Surprise Visit by 

Former President George Bush, and 

Appearances on National Television 

While on their annual summer training voyage this year, the cadets and crew of the TEXAS 

CLIPPER II, Texas Maritime Academy's 394-foot training ship operated by Texas A&M University 

at Galveston and owned by the Maritime Administration, received more than a learning experience; they actually participated in a lifesaving rescue at sea. 

On Sunday, June 1, the TEXAS CLIPPER II received a radio call from the U.S. Coast Guard that a 

sailing vessel was in distress. The TEXAS CLIPPER II was approximately 30 miles south of the 

sailing vessel, "Joy," a 30-foot sailboat crewed by three Charleston, SC, college students. The 

"Joy" was disabled and adrift in 10- to 12-foot seas and gale force winds. The men on the "Joy" 

had activated their global positioning radio beacon, causing an alert to sound in the U.S. Coast 

Guard Rescue Coordination Center in Miami, FL. The U.S. Coast Guard then requested the 

crew of the TEXAS CLIPPER II to divert from their trip to Boston, MA, to rescue the three men. 

The crew responded enthusiastically and rescued the three who survived their misadventure in 

good condition. 

If the successful rescue at sea wasn't enough action for the cadets and crew of the TEXAS 

CLIPPER II this summer, former President George Bush made a surprise visit aboard the training vessel when it passed off the coast of Maine on June 16. The TEXAS CLIPPER II made history that day as the first U.S. training ship ever to have a former President of the United States 

aboard. 

On Monday, July 14, when the TEXAS CLIPPER II was in New York City, cadets appeared on 

NBC's Today, ABC's Good Morning America, and CBS's The Early Show. 
MARAD 2003 20 
MARAD 2003 21 

Department of Transportation Strategic Objective: Mobility. 

Advance accessible, efficient, intermodal transportation for the movement of people and goods. 

MARAD Strategic Objective: Commercial Mobility 

Promote and facilitate a United States maritime transportation system that improves the safe and 

efficient movement of goods and people.
MARAD 2003 22 

SHORT SEA SHIPPING 

Water transportation, especially along our 

coasts and inland waterways, is a sensible, 

economical, and environmentally friendly 

solution to many of our growing congestion 

problems. Short Sea Shipping is commercial waterborne transportation that does not 

transit an ocean. It is an alternative form of 

commercial transportation that utilizes 

inland and coastal waterways to move commercial freight from major domestic ports to 

its destination. 

The Maritime Administration (MARAD) is 

engaged in a Short Sea Shipping Initiative, 

exploring the use of public system incentives, vessel financing and construction, and 

customer requirements.

Major programs under the initiative pursued 

during FY 2003 include the following: 

Short Sea Shipping Cooperative Program 

(SCOOP) 

MARAD did the preliminary work to form a 

government-industry cooperative to advance 

Short Sea Shipping concepts at the request 

of maritime industry stakeholders. The 

model for this cooperative is the Cargo Handling Cooperative Program (CHCP), also 

formed by MARAD. Many operators see 

opportunities to test new methods or technologies to improve national mobility and 

global connectivity, but do not have the individual resources to develop pilot programs. 

At the end of FY 03, plans were in place for 

an official launch of the program, with an 

anticipated 19 charter members and 5 associate members. 

Support for the I-95 Coalition 

The I-95 coalition is a regional partnership 

of major public and private transportation 

agencies, and industry associations serving 

the Northeastern portion of the United States 

from Maine to Virginia. With congestion an 

ongoing concern, the Coalition has sought to 

explore modal alternatives with the Maritime Administration. In 2003, the Coalition’s Executive Board approved a joint proposal for a grant of funding to MARAD to 

study short sea shipping freight alternatives, 

along the I-95 corridor. 

Support for a Memorandum of 

Cooperation among the United States, 

Canada and Mexico for advancing Short 

Sea Shipping. 

Border crossings continue to be plagued by 

congestion. Canada, Mexico and the United 

States have begun to work to share Short 

Sea Shipping technology and information to 

facilitate global connectivity and mobility, 

an Initial Memorandum of Cooperation with 

Canada was signed in July of 2003; plans 

were in place to extend the agreement to 

Mexico in November. 

Support for the Gulf of Mexico States 

Accord (GOMSA) for Advancing Short 

Sea Shipping. GOMSA is a Regional organization of the eleven Mexican and U.S. 

States that border the Gulf of Mexico. MARAD has been working with GOMSA on 

providing solutions to cross border congestion and transportation alternatives that can 

improve the economies of the region. MARAD had scheduled for November 2003 the 

signing of a Memorandum of Cooperation 

with GOMSA and its associated private sector partnership for the purpose of assisting 

them with a forthcoming study to inventory 

the intermodal capabilities of the region. 

MARAD looks forward to a growing and 

productive relationship with GOMSA. 
MARAD 2003 23 

Connecticut / U.S. Short Sea Pilot 

Program. The concept of Short Sea Shipping, through extensive MARAD promotion, is beginning to catch the eye of state 

governments as a method for easing traffic 

congestion. For example, The State of Connecticut this year (2004) will allocate over 

$1.5 million in the establishment of a container on barge service between Bridgeport, 

CT and New York, NY. When fully implemented, the system is expected to take more 

than 41,600 tractor-trailers off of the highway per year. MARAD has been promoting 

these initiatives and will continue to promote the use of water as a transportation enhancement. 

MARINE TRANSPORTATION SYSTEM 

The Marine Transportation System (MTS) 

includes all of America's coastal and inland 

waterways, more than 300 public and private 

ports, a network of navigable channels, pipelines, vessels, marine terminals, intermodal 

connections, and associated management 

and safety information systems. MARAD 

continued its support of the MTS with participation in the Marine Transportation System National Advisory Council (MTSNAC) 

and its government interagency counterpart, 

the Interagency Committee on the Marine 

Transportation System (ICMTS). MARAD 

chairs the ICMTS. 

MTSNAC, which advises the secretary of 

Transportation on critical MTS issues, met 

to finalize its SEA-21 (Sea Transportation 

Efficiency Act of the 21st Century) report to 

the Secretary. MTSNAC will continue to 

advise the Secretary of progress on prioritized issues. It will also study, as directed 

by the Secretary, issues of national importance that affect the marine transportation 

system. It will identify the public and private efforts needed to achieve strategic results and create a partnership to execute 

agreed-upon action items. 

Due to their contacts in the private sector, 

MARAD’s regional offices are actively involved in the regional and local coordinating 

bodies associated with the MTSNAC. The 

five regional groups – one each in the South 

Atlantic and Central Regions and three in 

the Western Region – work on regional challenges and provide critical input on forthcoming national policies. 

Some of the other MARAD activities in support of the Marine Transportation System in 

2003 included: 

• Partnering with the National Ports and 

Waterways Institute (NPWI) in a collaborative study of the commercial and 

technical feasibility of an expanded 

coastal shipping system on the East 

Coast, including a demonstration phase 

to test limited high-speed coastal service 

between a few selected East Coast ports. 

• Working with the ports of Tacoma, Seattle, and Portland to improve the flow of 

commerce and reduce congestion by developing a rail-based regional distribution center. 

MARAD assisted a wide range of national, 

regional, and local transportation planning 

groups in considering water transportation 

needs as part of their transportation planning 

processes. Specific organizations and potential initiatives included: 

• Coastwise Coalition: innovative approaches to increase the use of coastal 

shipping; 

• National Waterways Conference 

(NWC): Local and regional water transportation planning; 
MARAD 2003 24 

• American Association of State Highway 

and Transportation Officials 

(AASHTO): Review alternative transportation modes to help reduce road congestion; 

• Gulf/Rivers Intermodal Partnership 

(GRIP): Increase use of coastal shipping 

in the U.S. Gulf states to reduce road 

congestion, improve air quality, and promote commerce in that region; and 

• Delaware Valley Regional Planning 

Commission: Demonstrate water alternatives to road and rail, which can reduce 

road congestion, improve air quality, and 

spur more international commerce development in the Delaware Valley region. 

The Heartland Intermodal Partnership 

(HIP)

In June 2003, MARAD led the formation of 

the Heartland Intermodal Partnership (HIP), 

a coalition of senior public and private sector professionals from across the 24-states of 

the nation’s heartland. Its mission is to support economic competitiveness of the region’s business, industry and labor by improving intermodal transportation. HIP's 

executive committee includes state departments of transportation, public planning organizations, railroads, trucking companies, 

ports, and barge and river interests, as well 

as representatives from MARAD and other 

DOT agencies. 

The nation’s Heartland extends from the 

Great Lakes to the Gulf of Mexico. In addition to a complex network of highways and 

rail lines, the region has most of the nation’s 

inland waterways, half of its largest deepwater ports, and most of the major shallowwater ports. 

HIP chose as its first priorities better understanding of the region’s economy and transportation systems – rail, truck and maritime 

– and identifying the region’s strengths and 

weaknesses. This review will include market segments, physical infrastructure, and 

policy. 

Inland Waterways Intermodal 

Cooperative Program (IWICP) 

In 2001, MARAD established the IWICP to 

assist the nation's inland waterway intermodal transport system providers in promoting 

innovations in cargo handling and new technologies. 

With MARAD acting as a catalyst, a core 

group was formed representing port authorities, private companies, barge lines, and 

trade organizations involved in doing business on the inland waterways. 

The Cooperative has agreed to focus its efforts on initiating a Container-On-Barge (CO-B) pilot service. 

The Cooperative has identified a number of 

scenarios that this pilot service could take, 

including: 

• A major shipper, working with an ocean 

carrier, a terminal, and a barge operator, 

develops both the service and the pricing; 

• A major ocean carrier delivers containers 

to and from foreign ports that have destinations and origins in the U.S. and transfers these containers to barges to and 

from U.S. inland waterways using a CO-B service; 

• A third-party logistics provider, working 

 with all the necessary modal providers, 

 assembles the components for an inte

 grated "end-to-end" intermodal service; 

 and 

• A consortium of modal providers establishing a regularly scheduled C-O-B service between selected points along the 

inland waterway system. 
MARAD 2003 25 

The next steps are: (1) create an information 

program for both the economic and environmental benefits of using inland barge transport; (2) conduct an inventory of shallowdraft inland port and terminal infrastructure; 

and (3) perform a market analysis of freight 

data for both domestic and international 

cargo shipments that would potentially 

benefit from for a C-O-B service. 

Port of Anchorage 

MARAD is working with the Port of Anchorage, Alaska as part of an innovative 

partnership to assist in the expansion of intermodal facilities at the port. 

Collectively these intermodal improvements 

are referred to as the Port of Anchorage Expansion Project. The project is being undertaken to expand the facilities without severely impacting the surrounding natural 

environment. Not only will the depth of the 

channel increase to 45 feet but, with the use 

of dredged materials, the wharf face will be 

moved seaward several hundred yards. One 

of the major focuses of the project is to update and improve the intermodal connections 

that interface with the port. The road and 

rail portion of the project is centered around 

creating a more effective and efficient ondock rail system for the movement of containerized cargo inland from the port as well 

as improving the truck gates that are used 

for more local traffic. Anchorage, 1 a premier after cruise destinations of the travel 

industry, is building better facilities including a new ferry terminal which will be more 

attractive to cruise ship passengers. As container-on-barge becomes more widely used, 

the Port of Anchorage Expansion Project 

North Terminal phase will include a barge 

terminal that will be well equipped to handle 

specialized type of cargo operation. 

In addition to the major upgrades on commercial mobility, the Port of Anchorage project is also important for national security 

purposes, as Anchorage is a strategic port, 

used for the deployment of a Stryker Brigade and other military units in Alaska. 

The 501st Airborne deployed to Afghanistan 

from the Port of Anchorage. 

Port of Anchorage Expansion Project 
MARAD 2003 26 

Small Vessel Waiver Program 

The Passenger Vessel Services Act requires 

that all vessels in passenger commerce in the 

U.S. be built in the United States. However, 

due to growing popularity of the near shore 

sport fishing and sight seeing business several small business owners petitioned Congress for a change in the law to allow small 

foreign built vessels into this trade. Consequently, Public Law 105-383 Title V was 

passed allowing MARAD to issue a waiver 

of the U.S. build requirement for foreign 

built vessels to carry 12 passengers or less, 

as long as MARAD determines no harm will 

come to an existing operator or shipyard. 

MARAD issues approximately 150 waivers 

per year. 

Inland Waterways Research Project 

In FY 2003, at the initiative of the Maritime 

Administrator, MARAD began a project to 

bring all of the available research studies on 

the inland waterways together into one electronic forum. In June of 2003 the Administrator launched the web site, http://

www.marad.dot.gov/iwrp/index_main.html, 

which contains a searchable database with 

more than 400 items of reference. A sign-up 

system is being developed whereby researchers can be alerted when new items enter the system. 

Deepwater Port Act of 1974 

The Deepwater Port Act of 1974, as 

amended (the Act) provides for the authorization and regulation of the location, ownership, construction, and operation of deepwater ports in waters beyond the territorial limits of the United States. In 2002, the Act 

was amended to include the importation, 

transportation and production of liquefied 

natural gas (LNG). The authority to issue, 

transfer, amend or reinstate a license for the 

construction of a deepwater port has been 

delegated by the Secretary of Transportation 

to MARAD. 

During FY 2003, Port Pelican, LLC, (Port 

Pelican) an affiliate of Chevron Texaco Corporation, filed an application to operate an 

offshore facility to receive, store, and regasify LNG, and a pipeline to transport this 

natural gas to existing offshore gasgathering stations. This application is the 

first application to be processed by MARAD. The Port Pelican project is expected 

to provide significant volumes of natural 

gas to the nation’s gas distribution market, 

improving the efficiency and flexibility of 

the existing pipeline infrastructure and providing supply diversification. 

Public Port Financing 

MARAD continues to monitor and maintain 

an extensive database of U.S. port financial 

data (covering 1978-2002) that permits indepth analyses of the financial aspects of the 

port industry. In cooperation with the 

American Association of Port Authorities’ 

Finance Committee, MARAD published in 

April 2003 the Public Port Finance Survey. 

The FY 2002 report (most recent year of 

available statistics) is scheduled to be published in FY 2004. The survey is updated 

annually. 

Prototype Mooring Buoy 

MARAD recently provided funding to cooperatively design and test a prototype mooring buoy on the Mississippi River. The prototype mooring buoy, which will be used 

near locks and dams on the inland river system to stage tows closer to the locks to increase the system efficiency, is being implemented as a part of the Mississippi River 

Navigation Study. The study was conducted 

jointly by the U.S. Army Corps of 
MARAD 2003 27 

Engineers, the River Industry Action Committee, and MARAD. It was scheduled to be 

completed in late autumn, 2003. 

Capital Construction Fund 

The Capital Construction Fund (CCF) Program was established under the Merchant 

Marine Act of 1970. It assists operators in 

accumulating capital to build, acquire, and 

reconstruct vessels through the deferral of 

Federal income taxes on certain deposits. 

The CCF Program enables operators to build 

vessels for the U.S.-foreign trade, Great 

Lakes, and the noncontiguous domestic 

trade such as between the West Coast and 

Hawaii. It aids in the construction, 

reconstruction or acquisition of a wide variety of vessels, including containerships, 

tankers, bulk carriers, tugs, barges, supply 

vessels, ferries, and passenger vessels. During calendar year 2003, $558.3 million was 

deposited into these accounts. Since the 

program was initiated in 1971, fundholders 

have deposited $8.5 billion in CCF accounts, 

and withdrawn $6.1 billion for modernization and expansion of the U.S. merchant marine. As of September 30, 2002, approximately 122 companies were parties to CCF 

agreements. 

Construction Reserve Fund 

Like the CCF, the Construction Reserve 

Fund (CRF) encourages upgrading of the 

American-flag fleet. The program allows 

eligible parties to defer taxation of capital 

gains on the sale or other disposition of a 

vessel if net proceeds are placed in a CRF 

and reinvested in a new vessel within three 

years. 

The CRF is used predominantly by owners 

of vessels operating in coastwise trades, the 

inland waterways, and other trades not eligible for the CCF program. Its benefits are 

not as broad as those of the CCF. The number of companies with active CRF balances 

increased from 22 to 23 during FY 2002. 

The total monies on deposit increased to 

$87.4 million. 

Title XI Loan Guarantee Program 

The primary purpose of the Title XI Program is to promote the growth and modernization of the U.S. merchant marine and U.S. 

shipyards. Title XI authorizes the U.S. Government to guarantee the repayment of debt 

obligations, including unpaid interest, obtained in the private sector by 

(1) U.S. or foreign shipowners for the 

purpose of financing or refinancing either U.S.-flag vessels or eligible export 

vessels constructed, reconstructed, or 

reconditioned in U.S. shipyards, and (2) 

U.S. shipyards for the purpose of financing advanced ship building technology 

and modern shipbuilding technology of a 

privately owned general shipyard facility 

located in the U.S. 

The Title XI Program is administered by the 

Secretary of Transportation through MARAD. 

MARAD’s Title XI Program permits guarantees in an amount not to exceed 87.5 percent of the actual cost of projects eligible for 

financing. Some eligible projects are limited 

to 75 percent of actual cost. The maximum 

guarantee period is 25 years. 

Title XI Activities, FY 2003 

MARAD issued three Title XI commitments 

to guarantee obligations for five vessels being constructed at shipyards in the United 

States. Those three commitments were for 

the following vessel types: one ferry, two 
MARAD 2003 28 

offshore drill rigs and two containerships. 

These commitments were for an aggregate 

amount of $345,356,000. 

MARAD closed on six commitments to 

guarantee obligations covering the financing, in part, of 13 vessels: two double hull 

tank barges, five ferries, two containerships, 

one cruise vessel, one dry dock reconstruction, and two offshore drill rigs. These 

six commitments were for an aggregate 

amount of $304,651,000. In addition, MARAD closed on 13 Title XI vessel deliveries, 

three extensions of maturity of loans, two 

assumptions of Title XI debt by vessel buyers, three debt restructures, and four conversions of financing to fixed interest rate. 

MARAD litigated issues in five bankruptcies relating to nine Title XI companies, and 

conducted four vessel foreclosures and one 

shipyard foreclosure. 

As of September 30, 2003, Title XI guarantees totaling $3.9 billion were outstanding, 

and Title XI applications totaling over $1.5 

billion were pending for approval of Title XI 

financing. Additional information on MARAD’s Title XI Program can be found at the 

Program’s web site at http://www.marad.

dot.gov/TitleXI. 

During FY 2003, both the Department of 

Transportation Inspector General and the 

General Accounting Office conducted rigorous audits of the management of the Title XI 

program. 

As a result of these audits, MARAD is in the 

process of implementing stringent program 

management reforms including stricter adherence to standard financial tests and more 

detailed financial monitoring. MARAD will 

also require an external review of any Title 

XI application by an independent financial 

advisor. 

On January 16, 2003, MARAD held an auction and foreclosed on the real and personal 

property comprising the shipyard previously 

owned by Massachusetts Heavy Industries, 

Inc. and MHI Shipbuilding, LLC 

(collectively MHI) and received approximately $12 million in proceeds. 

Two unsuccessful bidders attempted to enjoin the transfer of the real and personal 

property and to set aside the auction itself. 

The United States Court for the District of 

Massachusetts denied their motion for a preliminary injunction. The case is still pending. In addition, the former general contractor of MHI has brought two suits against 

MARAD, alleging in one that the contractor 

has priority lien rights of about $3 million in 

the proceeds of the auction and, in the other, 

that MARAD entered into an implied contract with the contractor and is responsible 

for the debts of MHI under the contract. In a 

fourth MHI-related case, MARAD seeks the 

award of approximately $233,000 in excess 

proceeds resulting from a foreclosure by another lender of land surrounding the former 

shipyard. 

MARAD participated in the resolution of 

litigation associated with the construction of 

two drilling rigs for Petrodrill Four, Ltd. and 

Petrodrill Five, Ltd. (Petrodrill). MARAD 

guaranteed Title XI financing for Petrodrill 

in the amount of $341.8 million for the construction of two drilling rigs that are now 

being completed by Cianbro, Inc. in Maine. 

Construction of these rigs initially began at 

shipyards in Mississippi and Texas owned 

by Friede Goldman Halter, Inc. and related 

entities (the Halter Shipyards), which filed 

for reorganization under Chapter 11 of the 

Bankruptcy Code in April, 2001. Halter 

Shipyards vigorously asserted claims and 

liens against the rigs after filing for bankruptcy relief. In August 2003, MARAD 

joined Petrodrill in a settlement with Halter 
MARAD 2003 29 

Shipyards pursuant to which no money was 

paid by any of the parties. MARAD and 

Petrodrill released their construction 

damage claims against the Halter Shipyard, 

and Halter Shipyards released its claims 

against Petrodrill and the rigs. 

In foreclosure litigation concerning the vessel Trident Crusader, the first priority of 

MARAD's ship mortgage was upheld by the 

District Court in a contest with two parties 

alleging that they held senior liens. The case 

is being appealed to the Fifth Circuit Court 

of Appeals by one of the losing parties. 

Title XI and Other Insurance Compliance 

MARAD monitors the contractual requirements for marine insurance coverage placed 

in the commercial market on all existing Title XI vessels on which MARAD holds the 

mortgage, together with Government-owned 

vessels on charter to private operators. 

One aspect of this compliance is to assure 

that the American marine insurance market 

has the opportunity to compete for placement of marine insurance on these vessels. 

MARAD approved marine hull and machinery insurance during FY 03, with 37 percent 

being placed in the American market and 63 

percent being placed in the foreign insurance 

markets. This compares with 40 percent 

American market placement for hull and 

machinery insurance in FY 02. A table containing this information is available at http://

marad.dot.gov/publications/AnnualReport/

Annual%2002/Web_Ready.pdf. 

Innovation 

MARAD maintained and strengthened its 

position as an advocate of the development 

of new, innovative designs, and subsequent 

U.S. construction, of state-of-the-art specialty vessels. In this regard, most of the 

effort was focused on partnering with the 

National Science Foundation (NSF) in the 

design and development of a new and innovative polar exploration and icebreaking 

vessel. The Polar Research Vessel design 

team visited the Finnish Maritime Administration and its icebreaker BOTNICA, and 

the Swedish Maritime Administration's icebreaker ODEN. Likewise, MARAD continued to work with the Department of Commerce (DOC) in the design and construction 

of a new class of Fisheries Survey Vessels 

(FSV). 

This work as technical consultant to other 

government departments and agencies spans 

several of the DOT/MARAD strategic goals. 

In FY 2003, MARAD became more involved at the international level in the promulgation and adoption of international, consensus shipbuilding standards. Such standards may help “level the playing field” for 

U.S. shipbuilding interests. It should be 

noted that, currently, foreign shipbuilding 

competition is able to use building standards 

less demanding than those used by U.S. 

shipbuilders. MARAD’s efforts to define 

internationally sanctioned standards adopted 

and mandated for use by all shipbuilding 

nations, will remove an element of unfair 

competition will be removed from the international marketplace. 
MARAD 2003 30 

Department of Transportation Strategic Objective: Global Connectivity. 

Facilitate a more efficient domestic and global transportation system that 

enables economic growth and development.
MARAD 2003 31 

“ Such therefore are the advantages of water carriage, it is natural that the first improvements of art and industry should be 

made where this convenience opens the 

whole world for a market to the produce of 

every sort of labor.” 

Adam Smith 

‘Enquiry Into The Wealth of Nations’ 1776

In 2002, U.S. oceanborne trade: imports, 

exports and domestic ocean shipments, 

amounted to 1.3 billion metric tons, down 

slightly from the year before (Exhibit 1). 

Recent changes of petroleum stocks in the 

trade were due largely to the depletion 

(1999) and their rebuilding (2000-2001) . 

From 1998 to 2002 the import share of U.S. 

oceanborne trade rose from 57 percent to 62 

percent while the domestic share, which is 

reserved for U.S.-flag vessels, fell from 18 

percent to 15 percent. The change in composition was due largely to substitution of 

imports for domestic shipments in the petroleum trades (See Waterborne Commerce of 

the United States at http://www.iwr.usace.

army.mil/ndc for detailed U.S. oceanborne 

commerce data). Over this period, petroleum 

imports increased by 10 percent (52 million 

metric tons) while domestic ocean shipments 

fell by 15 percent (21 million metric tons). 

In 2002, 6,114 oceangoing vessels or 44 percent of the active world fleet were employed 

in U.S. oceanborne trades. These vessels, 

made 56,596 calls at U.S. ports, or 10 percent of worldwide port calls. Both trade volumes and vessel calls measure ocean transportation services. Of the U.S. port calls, 31 

percent were by tankers, 30 percent were by 

containerships, 20 percent were by dry bulk 

carriers and 10 percent were by ro-ro (rollon/roll-off) vessels (See Vessel Calls at U.S. 

Ports, 2002 at http://www.marad.dot.gov/

marad_statistics for active fleets and detailed 

U.S. port call data). 

Tankers. From 1998 to 2002, tanker calls at 

U.S. ports increased by 3 percent. In 2002, 

58 percent (10,045) of the tanker calls at 

U.S. ports were by double hull tankers, up 

from 37 percent (6,255) 4 years earlier. For 

the period 1998 to 2002, double-hull tanker 

calls increased by 61 percent while singlehull tanker calls declined by 31 percent. 

Containerships. As larger containerships 

enter the U.S. trade, the average number of 

calls per containership continues to fall. In 

terms of TEU’s (twenty-foot equivalent 

units), the average size of containerships 

(per call) increased by 21 percent to 3,020 

TEU’s. From 1998 to 2002, containership 

calls at U.S. ports increased by 8 percent. 

Dry Bulk Carriers. A 42 percent decline in 

U.S. coal exports contributed to a 12 percent decline in dry bulk vessel calls at U.S. 

ports since 1998. The primary impact was 

on South Atlantic ports which had a 34 percent decline in dry bulk calls. 

 

U.S. Oceanborne Trade and Vessel 

Calls at U.S. Ports

0.0

0.5

1.0

1.5

2.0

1998 1999 2000 2001 2002

Year

Bil. 

Metric 

Tons

0

15

30

45

60

75

000 Calls

Imports Exports Domestic Ocean Vessel Calls

Sources: MARAD, Vessel Calls at U.S. Ports; 2002; 

U.S. Army Corps of Engineers, Waterborne 

Commerce of the United States 

Exhibit 1 
MARAD 2003 32 

Ro-Ro’s/Vehicle Carriers. From 1998 to 

2002, ro-ro calls at U.S. ports increased by 

33 percent. Vehicle carriers accounted for 

about 85 percent of the increase, reflecting a 

52 percent increase in U.S. vehicle imports, 

and a movement to just-in-time delivery 

schedules which require higher call frequencies. 

Capacity. Vessel capacity calling at U.S. 

ports (calls x vessel DWT) increased by 6 

percent from 1998 to 2002. Over this period 

the number of calls increased by only 1 percent, but average vessel size (per call) increased by 5 percent. Average vessel size 

increased for all vessel types with the largest 

increases for containerships (16 percent) and 

double-hull tankers (10 percent). 

In 2002, the average size (per call) of 

commercial vessels calling at U.S. ports was 

17 percent larger than vessels calling at all 

ports worldwide. Containerships, ro-ro vessels and tankers in U.S. trades were 33 percent, 17 percent and 6 percent larger than 

their worldwide counterparts. The difference was due largely to a scarcity of U.S. 

feeder and short-sea services. These services, which use smaller vessels than linehaul services, are common in intra-European 

and intra-Asia trades. 

Dry bulk carriers calling at U.S. ports were 

12 percent smaller than those calling at all 

ports worldwide. Grains, which are generally shipped on smaller vessels than other 

major bulk cargoes (coal and ores), accounted for 53 percent of U.S. major bulk 

trades, compared to only 20 percent of 

worldwide major bulk trades. 

U.S.-flag. In 2002, U.S.-flag vessels carried 

16 percent (219 million metric tons) of U.S. 

oceanborne trade, including imports, exports, and domestic ocean shipments. This 

was down from 19 percent (252 million metric tons) in 1998. The domestic ocean trades 

accounted for 31 of the 33 million metric ton 

decline. 

In 2002, 221 U.S.-flag vessels were active in 

U.S. oceanborne trades, down from 256 vessels in 1998. These vessels accounted for 

7,513 U.S. port calls, down from 8,650 calls 

four years earlier. The decline was primarily 

in the tanker and containership segments as 

25+ year old domestic vessels were removed 

from service. 

FINANCIAL APPROVALS 

To promote and facilitate a U.S. maritime 

transportation system that improves the efficient movement of goods, MARAD provides financial and cost analyses and advice, 

internally and externally. 

This is a broad function that ranges from 

financial reviews of MARAD program applicants, analyses of U.S. and foreign-flag 

vessels operation to internal management 

control reviews. For example, MARAD can 

provide the daily operating cost report for a 

U.S. flag vessel, showing what it costs to 

operate a ship under the U.S. flag. Some of 

this information is available on request to 

members of the public; more is available to 

members of Congress and other government 

entities. As another example, MARAD also 

provides cost analysis to the General Accounting Office on the basis for the Maritime Security Program (MSP), and does its 

own analyses of applicants for marine hull 

insurance and for MSP operators. 

MARAD also completed an extensive study 

of the crewing on foreign-flag vessels entering U.S. ports. 

The study Foreign-Flag Crewing Practices

was published and distributed to interested 

persons and organizations worldwide. The 

study details the crew nationalities and sizes 
MARAD 2003 33 

of the various cargo-carrying vessels types 

serving the U.S. markets. Over 10,000 crew 

lists from more than 3,700 vessels calling at 

selected U.S. ports during 2000 were analyzed for the study. The report highlights 

the small number of national crews and the 

high concentration of crews from low-cost 

crewing centers on vessels calling at U.S. 

ports. 

CARGO PREFERENCE 

Due to higher U.S. construction, maintenance, environmental, and safety standards, 

it almost always costs more to operate U.S.-

flag vessels than it does to operate foreignflag ships. There is limited direct U.S. government assistance through the Maritime 

Security Program (MSP) to help support the 

U.S. liner fleet. The primary form of assistance to all U.S.-flag vessel types (liner, 

bulker, tanker) is provided under cargo preference laws. 

Since 1904 the Congress has enacted a series 

of cargo preference laws to provide economic incentives to U. S.-flag shipowners. 

The cargo subsidies offset the higher operating costs and help to keep their ships under 

U.S. registry. Those laws require exporters 

and importers to use U.S.-flag vessels to 

transport any government-impelled oceanborne cargoes. MARAD is tasked with ensuring that cargo preference compliance is 

achieved by Federal Government agencies 

and their contractors. Major programs include humanitarian aid shipments provided 

by the U.S. Department of Agriculture 

(USDA) and U.S. Agency for International 

Development (AID); Iraqi humanitarian relief; commodities financed by the ExportImport Bank (Eximbank); and other civilian 

agencies such as Foreign Military Sales 

(FMS), and Department of Defense (DOD) 

cargoes shipped on commercial ocean carriers. Information on cargo preference laws 

and regulations may be viewed at http://

www.marad.dot.gov/offices/

cargo_pref.html. 

MARAD is also charged with promoting the 

use of U.S.-flag vessels by monitoring bilateral agreements, and identifying discriminatory or potentially discriminatory trade practices against U.S.-flag vessels. To promote 

the use of U.S.-flag vessels, MARAD in FY 

2003 developed a new web site, http://

www.marad.dot.gov/usflag. The information 

on this web site makes it easier for exporters, importers, and government agencies to 

find U.S.-flag ships to transport cargo to or 

from foreign nations. 

MARAD's Office of Cargo Preference 

monitors compliance with laws set forth in 

the following statutes: 

• The Cargo Preference Act of 1954; 

• The Military Cargo Preference Act of 

1904; 

• The Maritime Security Act of 1996; 

• Public Resolution 17 of the 73rd Congress; and 

• P.L. 105-383, which deals with substandard vessels and their owners or operators. 

MARAD is required to report to Congress 

on compliance with those laws. The Department of Transportation is responsible for 

financing certain activities outlined in the 

Food Security Act of 1985. MARAD also 

administers measures instituted by a "side 

letter" agreement involving the U.S. Agency 

for International Development (AID) and the 

Government of Israel, referred to as the Israeli Cash Transfer. 

Cargo Preference Act of 1954 (P.L. 83-

664), as amended, requires that at least 50 

percent of the gross tonnage of all Government-impelled cargo be transported on privately owned, U.S.-flag commercial vessels 
MARAD 2003 34 

to the extent such vessels are available at 

fair and reasonable rates. In 1985, Congress 

raised the minimum requirement to 75 percent for certain agricultural cargoes, primarily U.S. food aid donations. Cargo transported under this act includes agricultural 

cargo, which is also governed by the Agricultural Act of 1949 and the Food for Progress Act of 1985. 

Statistics for preference cargo in humanitarian food aid are kept on a Cargo Preference 

Year (CPY) basis. The 2002-2003 CPY ran 

from April 1, 2002-March 31, 2003. During 

that period, a total 5,385,835 metric tons of 

humanitarian food aid commodities were 

exported. More than 75 percent of this, or 

4,061,512 metric tons, was transported on 

U.S.-flag vessels. This is a decrease in total 

tonnage from the 5,905,155 metric tons that 

was shipped during the 2001-2002 CPY. 

MARAD attributes this decrease to the drop 

in shipments for trade and development assistance. Wheat was the primary commodity 

shipped during the year. Liner type vessels 

transported 33.3 percent of the food 

aid cargoes. Tankers and bulk carriers carried 11.5 percent and 55.2 percent, respectively. Statistics for preference cargo, broken down by sections of the Agricultural Act 

of 1949, are available at http://

www.marad.dot.gov/offices/CAPOS%

20Reports. 

During the 2002-2003 CPY, agricultural 

cargo preference laws generated 24,653,000 

in revenue for U.S.-flag vessel owners. Furthermore, agricultural cargo preference laws 

employed a total of 113 U.S.-flag vessels. 

MARAD estimates these 113 vessels trading 

in agricultural cargoes created 14,238 merchant marine jobs and a larger amount of 

maritime and transportation-related jobs 

shoreside. These 113 U.S.-flag vessels carry 

agricultural, military, project, and commercial cargoes. MARAD estimates that most 

of the 113 participating vessels would 

probably not be U.S. flag without the revenues generated by cargo preference cargos. 

The cargo preference laws result in meeting 

the National Security objective by assuring 

that sufficient sealift capability and intermodal transportation infrastructure exist to support vital homeland and national security 

interests. These laws meet this objective 

with the assured sealift capability and 

sustenance of 113 U.S.-flag vessels and an 

estimated 14,238 positions for U.S. merchant mariners that are vital to national security. All U.S.-flag vessels that carry preference cargoes participate in the Voluntary 

Intermodal Sealift Agreement (VISA) program, which was discussed in the National 

Security section of this report. 

In accordance with President George W. 

Bush’s Management Agenda for making 

government more focused on citizens and 

results, and to meet the public’s growing 

demand, MARAD modified its humanitarian 

food aid web site to make information available on a weekly basis. The information, 

which appears at http://www.marad.dot.gov/

offices/CAPOS%20Reports, shows all U.S. 

food aid shipped out of the United States, 

which program sponsored the shipment, to 

which country it went, and what type of vessel carried it. The site is part of the agency’s 

ongoing electronic efforts to facilitate compliance with the cargo preference laws. 

Strategic Petroleum Reserve. The Cargo 

Preference Act of 1954 contains a measure 

applying to the Strategic Petroleum Reserve. 

The Strategic Petroleum Reserve is the 

United States' emergency oil stockpile, and 

it is the largest emergency petroleum supply 

in the world. The reserve stores crude oil in 

underground salt caverns at four sites along 

the Gulf of Mexico. The program is 
MARAD 2003 35 

administered by the Department of Energy, 

which is required to transport at least 50 percent of the oil on U.S.-flag tankers. Compliance is monitored on a cumulative basis, and 

in CY 2003 the program ran at a deficit level 

of 43 percent. This is a smaller deficit than 

the CY 2002 level, which was 45 percent. 

Defense Security Cooperation Agency. The 

Defense Security Cooperation Agency 

(DSCA) is the sponsoring agency in the Department of Defense for items purchased 

through Foreign Military Financing and 

grant transfers such as those under Section 

516 of the Foreign Assistance Act of 1961, 

as amended. The Cargo Preference Act of 

1954 requires that at least 50 percent of the 

oceanborne cargoes generated under these 

programs be transported in U.S.-flag vessels. 

However, DSCA's policy, which is consistent with its long-standing support for the 

U.S. merchant marine, is that 100 percent of 

such cargoes should be carried on U.S.-flag 

vessels. 

The Military Cargo Preference Act of 

1904 requires all items procured for or 

owned by U.S. military departments and defense agencies be carried exclusively (100 

percent) on U.S.-flag vessels as long as capacity is available at reasonable rates. Program efforts concentrate on meetings and 

discussions aimed at meeting the Nation's 

defense needs while complying with U.S.-

flag statute requirements. 

The majority of military dry cargo is booked 

on commercial U.S.-flag vessels by the Surface Deployment and Distribution Command (SDDC). Rates and services provided 

by commercial ocean liner carriers constitute 

their transportation contracts with SDDC. 

The Military Sealift Command (MSC) negotiates charter fixtures for carriage on available commercial vessels when military cargo 

cannot be transported by liner vessel. Such 

circumstances are usually due to the physical nature of the cargo, or a cargo volume 

exceeding the liner capacity to be shipped as 

one lot. MARAD receives volume and revenue figures from SDDC and MSC that are 

incorporated into MARAD's annual cargo 

preference reports. 

MARAD has also been receiving quarterly 

reports from SDDC on the movement of 

shipments of personal effects, plus other 

data on the movement of privately owned 

vehicles. However, cargo that is moved by 

DOD contractors using commercial corporate traffic departments or third party providers frequently moves without data being 

reported to either DOD or MARAD. Consequently the tonnage and revenue data from 

commercial sources may be less than complete. DOD and MARAD are working to 

correct this problem. DOD and MARAD are 

working to correct this problem via a negotiated Memorandum of Understanding 

(MOU) that will allow DOD to provide the 

ocean revenue and tonnage by vessel flag of 

registry to MARAD. DOD is working with 

its technical programmers to determine the 

best source and method of capturing and extracting such data. 

Under DOD acquisition regulations, 

(DFARS clause 252.247-7023(b)(2)(ii)(B)) 

cargo preference does not apply to subcontractors providing commercial items when 

there is no value added and when ocean 

transportation is not the purpose of the 

contract. Therefore, there may be no requirement for tonnage or revenue to be reported for some DOD commercial shipments. There are three exceptions to the 

subcontractor rule: (1) the contractor does 

not add value to the items; (2) the items are 

commissary or exchange items transported 

outside the DTS under specified conditions; 

and (3) the items being shipped are in direct 

support of U.S. military contingency opera-
MARAD 2003 36 

tions or exercises or forces deployed in humanitarian or peace-keeping operations. For 

instance, contingency operations in Afghanistan and Iraq, Operation Enduring Freedom 

and Operation Iraqi Freedom, are two 

examples of commercial items requiring carriage on board U.S.-flag ships. MARAD 

has made exceptions for commercial cargo 

a focal point with shippers to ensure adherence to cargo preference regulations. Further information can be obtained by contacting MARAD at 1-800-9US-FLAG or via 

email at cargo.marad@marad.dot.gov. 

The Maritime Security Act of 1996 Section 17 of the 1996 Act permits Great Lakes 

ports to participate in the handling of P.L. 

480 Title II humanitarian food aid packaged 

commodities awarded on a lowest landed 

cost basis without reference to vessel flag. 

The law allows these ports to act as bridgeports, providing containerized loading and 

unloading services, even though the cargo 

may actually be put on a vessel at another 

U.S. port, and thus provides port intermodal 

operations during the winter months when 

the Great Lakes are closed to vessel traffic. 

 

The implementation of this legislation has 

resulted in a significant augmentation of 

food aid cargo movements out of the Great 

Lakes ports. The primary beneficiaries are 

the Port of Chicago and to a lesser extent the 

Port of Milwaukee. For the 2002-2003 

CPY, approximately 159,639 metric tons of 

food aid cargo transited via the Great Lakes 

ports. The first year of MSA Section 17 implementation was for the 1998-1999 CPY 

when approximately 30,327 metric tons of 

food aid cargo transited the Great Lakes 

ports. This intermodal movement of U.S. 

food aid is an altered revival of a previous 

program in the Great Lakes. 

MARAD attributes this significant increase 

to the industry response to this legislation. 

Transportation organizations invested assets 

in the Great Lakes ports to meet the legislation's requirements. This resulted in the increased amounts of food aid transiting the 

region, which, in turn, strengthened the U.S. 

maritime transportation system including the 

infrastructure and industry in the Great 

Lakes. 

Public Resolution (PR) 17 of the 73rd 

Congress requires that all cargoes generated 

by Eximbank, or a similar instrumentality of 

the government, be shipped on U.S.-flag 

vessels, unless a waiver is granted. Waiver 

procedure policy is set forth on MARAD’s 

web site located at http://www.marad.

dot.gov/cargo_pref.html. Also included on 

this site is a list of U.S.-flag carriers, U.S.-

flag vessels, and U.S.-flag services. Requests for non-availability waivers for project cargoes have decreased since MARAD 

published revised policy procedures for 

granting waivers in the Federal Register. 

Another web site allows electronic paperless 

filing of reports about Eximbank cargoes 

(http://www.exim.gov/tools/claims/

claim.htnk). 

P.L. 105-383 established that substandard 

vessels and vessels operated by owners or 

charterers of substandard vessels are prohibited from the carriage of Governmentimpelled cargo for up to one year after such 

determination has been published electronically. The Secretary of Transportation has 

delegated enforcement authority to MARAD. A discussion of this issue is included 

on MARAD’s cargo preference web site, 

including active links to the U.S. Coast 

Guard’s listing of vessels, owners, and operators prohibited from carrying Government-impelled cargo. The easy availability 

of this information has resulted in increased 

industry awareness and use. 
MARAD 2003 37 

Detailed statistics on the shipping activities 

of Federal agencies, independent entities, 

and Government corporations may be 

viewed at http://www.marad.dot.gov/

marad_statistics/index.html. Statistics are 

maintained on a calendar year (CY) or fiscal 

year (FY) or cargo preference year (CPY) 

basis, dependent upon program requirements. 

Food Security Act of 1985 amended sections of the Merchant Marine Act of 1936 

and established a minimum tonnage for agricultural products exported as governmentimpelled cargo, and established the Ocean 

Freight Differential Program. 

Minimum Tonnage 

The "minimum tonnage" for agricultural 

products required for FY 2003 was 

4,868,485 metric tons. This minimum tonnage calculation was done as set out in 46 

App. U.S.C. 1241g. The total for products 

subject to the act exceeded the "minimum 

tonnage" by 517,350 metric tons in FY 

2003. 

Ocean Freight Differential 

The Food Security Act of 1985 increased 

the required percentage for U.S.-flag carriage from 50 to 75 percent of gross tonnage 

shipped for certain food aid programs. 

Ocean freight differential is the difference 

between the cost of shipping cargo on a 

U.S.-flag vessel as compared with shipping 

the same cargo on a foreign-flag vessel. The 

Department of Transportation is responsible 

for financing this ocean freight differential 

resulting from the application of the increased U.S.-flag portion. MARAD reimburses the U.S. Department of Agriculture 

(USDA) for its share of such costs above 50 

percent of the gross tonnage, for ocean 

transportation only. 

In FY 2003, USDA submitted to MARAD 

“incremental” invoices for fiscal years 1998, 

1999, 2000, 2001, 2002, and 2003. The 

$113.4 million paid for those invoices is a 

larger sum than would usually be paid for 

OFD obligations in one year. 

The Food Security Act of 1985 also requires 

additional ocean freight differential payments to be reimbursed by the Secretary of 

Transportation. This additional reimbursement has been termed "Excess 20%" and is 

applicable under the following conditions: if 

total obligations incurred by USDA for 

ocean freight and ocean freight differential 

on exports of agricultural commodities and 

products under certain agricultural programs 

exceed 20 percent of the value of the commodities exported under these programs, 

then MARAD must reimburse USDA for 

any excess. Some years there is no "Excess 

20%”. 

The funds paid to USDA for ocean freight 

differential can be circulated back into the 

applicable programs. The U.S. Agency for 

International Development, for example, 

recirculates its receipts back into its Emergency and Private Assistance Program for 

procurement of additional commodities and 

freight. 

Israeli Cash Transfer 

Under a “side letter” agreement, the Government of Israel and AID have agreed that a 

portion of the bulk grain shipments generated by the Israeli Cash Transfer Program 

for fiscal year 2003 would be transported on 

U.S.-flag vessels. The agreement required 

that 444,444 tons of grain move on U.S.-flag 

vessels. MARAD’s records indicate that for 

FY 2003 the full 444,444 tons were carried. 
MARAD 2003 38 

Since FY 1979, U.S.-flag vessels had received 800,000 tons annually regardless of 

the funding level, which ranged from $785 

million to $1.2 billion. In 1999 the Governments of Israel and the United States signed 

an agreement reducing the $1.2 billion funding by $120 million per year until the funds 

reach zero. Half of the reduction is transferred to military purchases. Funding for the 

FY 2004 program again has been reduced, 

which will further reduce the U.S.-flag tonnage to approximately 333,000 tons. 

FAIR AND REASONABLE GUIDELINE 

RATES 

Under the Cargo Preference program, MARAD is responsible for providing shipper 

agencies with guidance on whether an offered rate is fair and reasonable. Ship operators filed vessel costs for 124 vessels with 

MARAD under this program. The total consisted of 54 ocean going self-propelled 

vessels, 32 oceangoing barges, and 38 tugboats. In FY 2003, MARAD calculated 254 

fair and reasonable guideline rates for 2.9 

million metric tons of Government-impelled 

cargoes. 

MARAD and the cargo preference operators 

are increasing their use of electronic communications. Electronic communications 

assist us in providing more timely and accurate fair and reasonable guideline rate determinations. As a result in an increasing complex cargo movement environment, MARAD was able to maintain a 92 percent 24- 

hour turnaround time in FY 2003 for guideline rate determinations. 

Fair and reasonable guideline rates serve as 

a ceiling on market freight rates in periods 

of high demand for US flag vessels. During 

FY 2003, the offered freight rate exceeded 

the fair and reasonable guideline rates and 

the ship operators lowered their offered 

freight rate to the fair and reasonable guideline rate on 51 occasions, saving the U.S. 

Government $7.3 million. 

CARGO HANDLING COOPERATIVE 

PROGRAM (CHCP) 

The MARAD-sponsored CHCP worked 

with the Center for the Commercial Deployment of Transportation Technology to complete its Seal Technology and Process (STP) 

Program in 2003. The goal of the STP Program is to increase freight transportation security, make trade through ports and across 

borders more efficient, and reduce port congestion. This program included review, selection, testing, and evaluation of radio frequency identification (RFID) seals for marine freight containers. The program was 

accomplished to support ongoing and proposed container security initiatives. The 

first step in the program was to review the 

RFID seal industry and determine which 

seals were commercially available. Four 

seals that are commercially available were 

selected for further evaluation and testing. 

The initial testing involved laboratory work 

to determine baseline communication performance. The lab work included testing in 

free space and on a typical marine container. 

The seals were then tested in three different 

field environments: a container moving 

through a marine terminal gate, a container 

moving on an open highway, and attached to 

containers to simulate movement on railcars. 

From these tests the CHCP was able to reach 

a number of conclusions: 

• Seal technology is relatively mature and 

can be used to increase efficiency and 

security of intermodal freight systems 

now; 

• There exists a wide variation of design 

features among available seals; and 
MARAD 2003 39 

• There are a number of trade-off issues. 

The purpose of the Program was not to select a winner or loser seal technologies. The 

goal was to develop a technical baseline to 

assist government and industry stakeholders 

to select seal design parameters and functions for security, operations, and economic 

requirements. The testing provided performance data about existing design and 

how this may affect deployment of the devices. It was also found that although the 

technology can act as one layer of container 

security, the devices by themselves are only 

a partial solution in the problem of container 

security. 

INTERNATIONAL AGREEMENTS 

AND INITIATIVES 

Maritime Administrator Initials New 

Maritime Pact with China 

During FY 2003, MARAD conducted extensive negotiations with Chinese authorities 

aimed at achieving a new bilateral maritime 

agreement. Topics discussed during the negotiations included branch offices, vessel 

agency, full service logistics operations, 

confidential service contracts and the Controlled Carrier Act. The new agreement was 

initialed during FY 2003. Once signed and 

implemented, it will accomplish key goals 

for both sides: U.S. companies will enjoy 

broad new rights in doing business in China, 

and MARAD will support petitions before 

the Federal Maritime Commission requesting improved flexibility, as controlled carriers, to change freight rates in U.S. trades. A 

separate Memorandum of Consultations describes steps that each side would take to 

implement the agreement and also addresses 

consular affairs matters involving crewmember visas and port entry requirements. 

Contacts with Russia 

During fiscal year 2003, MARAD met with 

officials from the Russian Ministry of Transport to exchange information on developments in maritime transport, including maritime safety and security; to review implementation of the U.S./Russia bilateral maritime agreement; to discuss prospects for 

cooperation in international organizations 

and student exchange and training at the 

U.S. Merchant Marine Academy at Kings 

Point, New York.

Organization for Economic Cooperation 

and Development (OECD)

The Maritime Administration chairs the Organization for Economic Cooperation and 

Development’s (OECD) Maritime Transport 

Committee (MTC). The MTC is the only 

international forum that looks at the maritime sector from both policy and economic 

perspectives. 

Following the events of September 11, 2001, 

the MTC identified key areas that would 

contribute to a secure transport network, 

without impeding the flow of trade or people, or placing unnecessary economic burdens on governments and industry. This resulted in the publishing of the MTC report 

“Security in Maritime Transport: Risk Factors and Economic Impact,” in September 

2003. The report explores the possible economic repercussions of a terrorist attack involving maritime transport as well as the 

cost implications of security measures. 

Maritime Services in the World Trade 

Organization (WTO). During FY 2003, 

trade officials from over 140 countries met 

in an effort to complete the latest WTO trade 

negotiating round, known as the Doha 
MARAD 2003 40 

Round, by the January 5, 2005 deadline 

agreed to by trade ministers. The round began in November 2001, in Doha, Qatar. 

MARAD continued to provide technical 

support to the negotiations. However, during a ministerial meeting that was held in 

Cancun, Mexico, negotiators hit a fundamental impasse on agricultural supports and 

textiles. 

Free Trade Agreement Negotiations. 

MARAD participated in negotiations led by 

the U.S Trade Representative (USTR) on a 

number of bilateral and regional free trade 

agreements. Free Trade Agreements 

(FTA's) with Chile and Singapore were 

signed by the President and approved by 

Congress during FY 2003. MARAD took 

an active involvement in on-going negotiations of FTA's with Australia and Morocco 

and the regional Central American Free 

Trade Agreement (CAFTA), which includes 

the countries of Cost Rica, El Sal-vador, 

Guatemala, Honduras, and Nicaragua. MARAD's chief objective in this process was to 

ensure that U.S. maritime laws and regulations are not adversely affected by these 

agreements. 

DOT Africa Initiative. MARAD continues 

its assistance to the port sector in Nigeria. 

This is accomplished through the Office of 

the Secretary of Transportation with funding 

from the U.S. Agency for International Development and in conjunction with the 

World Bank. The principal focus in the port 

sector is on promoting the privatization of 

port operations with emphasis on the international container terminals. Toward this 

end, a visit by a group of Nigerian maritime 

officials to Vera Cruz, Mexico, is planned 

for the first quarter of 2004 so they may observe first hand the effect of privatization of 

container terminals in that port. 

Other Activities. Representatives from the 

Global Maritime and Transportation School 

(GMATS), a continuing education center 

associated with the U.S. Merchant Marine 

Academy in Kings Point, NY, continued 

their efforts to train Cape Verde students at 

GMATS. The U.S. Department of State is 

reviewing GMATS' Cape Verde proposals 

in order to obtain government funding for 

the training program. Also, MARAD continued to assist the Government of Cape 

Verde in finding ways to expand its domestic passenger fleets, coast guard, and seafarer employment opportunities. 

The Maritime Administration provided the 

administrative oversight on maritime transport to the Circumpolar Infrastructure Task 

Force (CITF) as a result of a FY 2002 U.S. 

Department of Transportation grant (FAA 

Contract DTDA04-01-C-20124). The CITF 

brings together government and industry experts to review transportation and communications issues of particular significance for 

circumpolar infrastructure. A key goal of 

the CITF is to identify opportunities for international cooperation to advance circumpolar infrastructure in aviation, maritime, 

land and telecommunication linkages.

INTERMODAL INITIATIVES 

Agile Port Initiative. MARAD is undertaking the role of coordinator and catalyst for 

activities that review the physical design, 

business processes, and operational characteristics that will increase the velocity of 

cargo moving through ports or terminals 

compared to current practices. This exercise 

is termed Agile Port and is at the heart of 

how cargo will move in the future. As part 

of an active investigation into the potential 

application of the Agile Port concept, MARAD is looking at such cargoes as bulk, 
MARAD 2003 41 

break-bulk, and neo-bulk, in addition to 

containerized cargo. In order to complete a 

useful Agile Port design, MARAD will also 

look into the interface that Agile Port will 

have with current and future ship design and 

cargo handling technologies. 

An Agile Port is made up of several components. Each of these components is essential 

to the overall movement of intermodal 

freight. The components include the marine 

terminal, an inland intermodal center, a connecting corridor, and a data management 

system. MARAD is working with several 

entities that are demonstrating elements of 

the system that will be used to test and demonstrate an entire Agile Port. 

Fisheries. In 2003, MARAD is responsible 

for implementation of the American Fisheries Act of 1998. This legislation increased 

the level of U.S. citizen ownership and control required for a vessel to be eligible for 

documentation by the U.S. Coast Guard with 

a fishery endorsement. In addition, subsequent legislation set out the requirements for 

lenders to meet in order to perfect a first preferred mortgage on such vessels. 

There is a universe of about 300 such vessels for which detailed information must be 

submitted by the vessel owner and analyzed 

by MARAD. 

MARAD published a final rule on Requirements to Document U.S. Flag Fishing Industry Vessels of 100 Feet or Greater in Registered Length and to Hold a Preferred Mortgage on Such Vessels. Section 2202 of the 

Supplemental Appropriations Act, 2001, 

amended the American Fisheries Act (AFA). 

Section 2202 implemented new statutory 

requirements for the owners of Fishing Vessels, Fish Processing Vessels and Fish Tender Vessels of 100 feet or greater in registered length. It also amended the requirements to hold a Preferred Mortgage on such 

Fishing Industry Vessels, and made other 

minor amendments to the regulations to address issues that arose during the early 

stages of MARAD's implementation of the 

new AFA regulations. 

The Great Lakes Waterways 

Management Forum. This is a U.S. and 

Canada cross-border organization. MARAD 

was a founding member of this group, which 

was created in 1999, and is composed of 26 

government and private sector agencies and 

organizations. MARAD is a partner in the 

new Security Committee of the Forum. The 

security committee agreed on emergency 

contact numbers and printed this information 

on placards and magnets for posting on transiting vessels on the Lakes. Other committees consist of Outreach, Advanced Technology for Navigation, Communications, and 

Ballast Water. 

International Maritime Labor Standards. 

Significant progress was made in FY 2003 

toward creation of a single and coherent 

document, consolidating and updating the 

many maritime Conventions and Recommendations of the International Labor Organization (ILO) into a consensus-based 

standard targeted to attract wide ratification 

by governments. MARAD continued to 

work with two special ILO Working Groups 

that met three times during this period in 

Geneva, Switzerland. The meetings are tripartite in nature, which means 

equal participation by Governments, Shipowners, and Seafarers. 

The structure of the proposed document is 

similar to the International Maritime Organization’s 1978 Standards of Training, 

Certification and Watchkeeping, as amended 

in 1995 (STCW). STCW encompasses mandatory principles and standards, and nonmandatory guidance. A primary goal of this 
MARAD 2003 42 

initiative is that national administrations will 

be able to ratify the document with little or 

no change to domestic maritime labor mandates. ILO tripartite conferences to consider 

adoption are planned in 2004 and 2005. 

MARAD Advisories 

MARAD Advisories rapidly disseminate 

Department of Homeland Security information on Government policy, threat assessment levels to the U.S. flag fleet, safety issues pertaining to vessel operations, and 

other timely maritime matters. MARAD 

routinely issues advisories to ship operators 

and other U.S. maritime interests via Internet e-mail. MARAD Advisories are also 

published by the National Imagery and Mapping Agency (NIMA) in its weekly "Notice 

to Mariners." As of the publication date of 

this report, NIMA was scheduled to change 

its name to the National GeospatialIntelligence Agency (NGA) early in FY 

2004. 

Depending on the importance of the MARAD Advisory, NGA will re-broadcast the 

Advisory directly to ships as a Broadcast 

Warning. MARAD also posts MARAD Advisories on its web site at 

www.marad.dot.gov/headlines/advisories, 

making them more accessible to the shipping industry and the public. 

Operating-Differential Subsidy 

MARAD is required by Congress to report 

on the disbursements under the Operating 

Differential Subsidy Program, which has 

been phased out except for small residual 

payments. All voyages under this program 

ceased with the termination of the final ODS 

contract on September 18, 2001. Final payments to operators were concluded during 

FY 2003. 

The only outstanding ODS liabilities are related to possible subsidy claims under the 

ODS contracts for payments made for asbestos-related diseases incurred by seafarers 

when serving on subsidized vessels. The 

obligation of the government regarding such 

claims is not time restricted and when presented for payment, claims will be reviewed, 

audited, and satisfied as appropriate. During 

FY 2003, one payment of $80,858 was 

made. 

Originally developed for use in the ODS 

program, a wage subsidy index is computed 

annually from data provided by the Bureau 

of Labor Statistics. It is now used as a 

measure of change in employment costs by 

various industry and business representatives to assist in forecasting cost trends in 

the industry. 

SHIP OPERATIONS COOPERATIVE 

PROGRAM 

MARAD leads the Ship Operations Cooperative Program (SOCP) which works to 

promote and facilitate a transportation system that improves the safe and efficient 

movement of goods and people. The SOCP 

is a cost-shared government/industry/labor 

partnership whose objective is to improve 

competitiveness, ship safety, productivity, 

profitability, training, environmental responsiveness, and quality of ship operations. 

Currently there are 45 members that include 

commercial ship owners/operators, government organizations, educational institutions, 

labor organizations, researchers, classification societies, and others. 

With the implementation of the 1995 

Amendments to the International Convention on the Standards of Training, Certification, and Watchkeeping (STCW), SOCP has 

focused on helping members to understand 

and meet STCW requirements. It is engaged 
MARAD 2003 43 

in a number of projects that assist member 

organizations in complying with the 1995 

revisions. Projects have included the production of training videos, use of nontraditional training methods, evaluation of 

PC based training simulators, and the development of a training resources database. 

SOCP has been involved in testing Alternate 

Watch Schedules (AWS), and the potential 

for diminished performance based on the 

traditional three-watch schedule. An SOCP 

member company volunteered its ship, and 

the Master and three deck officers to test 

AWS. At the conclusion of the test period, 

AWS benefits were identified and the participating company expressed a desire to 

continue using the system. Additionally, 

SOCP members have actively participated in 

a number of DOT conferences as they relate 

to safety, i.e. “Partnering for Transportation 

Safety: Operator Fatigue Management” and 

the “National Transportation Safety Conference.” Most recently SOCP, in cooperation 

with the USCG, is working to coordinate 

crew endurance management training 

courses for personnel interested in its possible implementation. 

Over the past few years, SOCP and MARAD have been working the mariner recruitment and retention issues. Results of this 

effort have been described in the National 

Security section of this report. 

The SOCP produces a bi-monthly newsletter 

disseminated to the maritime industry and 

hosts a web site at http://www.socp.org that 

contains useful information for its members 

and the maritime industry. 
MARAD 2003 44 

Department of Transportation Strategic Objective: Environmental Stewardship: 

Promote transportation solutions that enhance communities and protect the natural and 

built environment. 

Maritime Administration Strategic Objective: Environment 

Promote maritime and intermodal transportation solutions that enhance environmental 

stewardship. 

The Marine Fiddler is towed from the James River Reserve 

Fleet for disposal at Bay Bridge Enterprises in Chesapeake, 

Virginia, under the terms of a contract reached in Fiscal Year 

2003. 
MARAD 2003 45 

SHIP DISPOSAL 

The Maritime Administration (MARAD) 

serves as the U.S. government's disposal 

agent for obsolete merchant-type vessels of 

1,500 gross tons or more, as well as for noncombatant ships that have served 

in military operations. In recent years, the 

options for domestic scrapping and disposal 

have been limited. Disposal by overseas 

scrapping was halted in 1994 due to the 

presence of hazardous substances such as 

asbestos and polychlorinated biphenyls 

(PCBs) on the ships. As a result, the backlog of ships in the National Defense Reserve 

Fleet (NDRF) awaiting disposal had increased to over 130 vessels by the beginning 

of Fiscal Year (FY) 2003. 

In FY 2003, MARAD's Ship Disposal Program received a direct appropriation for the 

first time. A FY 2003 performance measure 

and goal for the Ship Disposal Program was 

the removal of four (4) obsolete, nonretention vessels from MARAD’s NDRF 

sites. The actual number of vessels removed 

from the NDRF in 2003 was two; however, 

contracts were awarded for the disposal of 

26 vessels in FY 2003. Most of the vessel 

removals resulting from the FY 2003 contract awards will take place in FY 2004. 

A contract for 13 of the 26 ships awarded 

involved the export of ships for recycling in 

the United Kingdom (UK). This contract 

was challenged in a United States District 

Court by two environmental groups -- the 

Basel Action Network (BAN) and the Sierra 

Club. The challenge resulted in a temporary 

restraining order which allows the export of 

only four of the 13 ships, pending a full 

hearing scheduled to take place in FY 2004. 

This challenge has delayed the removal of 

nine high priority ships from the fleet site, 

and the ultimate ruling may have negative 

impact on MARAD’s Ship Disposal 

Program -- the ability to expedite the removal of aging high priority ships from fleet 

anchorages which are considered environmentally sensitive. 

Despite the legal challenges and domestic 

industry opposition to the export of obsolete 

ships, an aggressive program pursuing all 

feasible disposal oppositions continued in 

2003. The 26 vessels awarded for disposal 

in 2003 are the most awarded since 1993, 

which reverses a trend of growth in the number of obsolete ships in MARAD’s custody. 

MARAD’s actions in 2003 have laid the 

foundation for cost-effective accelerated 

ship disposal through interagency initiatives. 

For the first time since 1994, the industry 

has responded to requests for innovative 

proposals and the export of obsolete ships. 

Excluding the 26 ships involved in the FY 

2003 contract awards, there is an existing 

backlog of 105 obsolete vessels awaiting 

disposal in MARAD’s three fleet sites, with 

approximately 45 additional vessels projected to be added to MARAD’s fleets over 

the next three years. 

Also, in FY 2003, MARAD continued to 

pursue several initiatives to focus on costeffective and environmentally sensitive disposal alternatives to domestic scrapping for 

obsolete vessels in the NDRF. Two initiatives involve multi-agency workgroups exploring the establishment of responsible 

measures/procedures that hopefully will lead 

to the export of ships for foreign recycling, 

and the development of national bestmanagement practices for preparing ships 

for use as artificial reefs. 

MARAD's Vessel Artificial Reefing Initiative, established in February 2002, is working with the Environmental Protection 

Agency and numerous other stakeholder 

agencies to develop best-management 
MARAD 2003 46 

practices, which are expected to be completed in FY 2004. MARAD is also working with Basel Convention countries, the 

International Maritime Organization, and the 

International Labor Organization to develop 

a worldwide program for environmentally 

responsible and sustainable ship disposal. 

FEATURE: Surviving Hurricane Isabel 

The environmental challenges involved in 

the custody of obsolete ships can be enormous. Ships awaiting disposal are exposed 

to the forces of nature, and are thus vulnerable to damage or deterioration, which may 

in turn result in a spill of fuel oil or other 

environmentally threatening substance. 

Few forces of nature are more powerful than 

a hurricane, and hurricanes and tropical 

storms pose an enormous threat to vulnerable ships. In September, 1999, Tropical 

Storm Floyd caused two thirds of the 

roughly 100 vessels moored at MARAD’s 

James River Reserve Fleet (JRRF) to break 

their moorings and drag anchors. More than 

65 MARAD vessels were scattered across 

the James River anchorage. (See Figure 1) 

Although no oil leaked and no vessels were 

sunk in the main shipping channel as a result 

of Tropical Storm Floyd, MARAD saw the 

havoc Floyd wrought as a clear warning that 

environmental protective measures had to be 

instituted. 

Since 1999, MARAD has worked with the 

U.S. Coast Guard and the Commonwealth of 

Virginia to put a detailed emergency response plan in place, and to improve the anchor system holding the ships in place. The 

challenge to any anchor system is that the 

bottom of the James River is composed of 

primarily loose silt and mud. Traditional 

ships' anchors, such as those of ships at the James River Reserve Fleet after 

Hurricane Floyd , 1999. 

Figure 1 

James River Reserve Fleet after 

Hurricane Isabel, 2003. 

Figure 2 

Figure 3 
MARAD 2003 47 

JRRF, were designed primarily for anchoring ships in sand or gravel which generate a 

higher holding power. As a result of research, MARAD entered into a multi-year 

interagency support agreement with the Naval Facilities and Engineering Command 

(NAVFAC) to design and install a high 

holding power “plate anchor” system at the 

JRRF to better withstand future hurricanes. 

(See Figures 1-3)

The new plate anchor system underwent a 

serious test on September 18, 2003, when 

Hurricane Isabel roared up the James River. 

Winds were estimated in excess of 85 MPH 

with an accompanying storm surge of more 

than 6 feet. This powerful storm caused 

widespread damage and flooding across the 

entire Hampton Roads area. A group of 

JRRF employees remained on station during 

the storm; in fact, several spent the night on 

a tugboat on the river. They provided instant assessments to the Region Office, 

which passed them on to MARAD headquarters. 

The plate anchor system held firm. While 

there were several breaks of mooring wires, 

and several ships shifted positions within 

their nests, there was not the widespread disruption to the anchorage seen during Tropical Storm Floyd, which was a less powerful 

storm. There was no oil spilled, nor was 

there blockage of the shipping channel as a 

result of Hurricane Isabel. 

There was significant flooding of the shoreside facilities, damage to the main pier and 

to the electrical power supply system, but 

the possible dangers to navigation and the 

environment were successfully avoided. 

Ready Reserve Force (RRF) 

Environmental Program 

Although the "public vessel status" of the 

Ready Reserve Force (RRF) exempts the 

ships from compliance with the Oil Pollution Act of 1990, MARAD takes its environmental stewardship role seriously, and maintains a United States Coast Guard approved 

Vessel Response Plan for all RRF tankers 

and a Shipboard Oil Pollution Emergency 

Plan for all RRF non-tankers. In addition, 

MARAD also maintains an Emergency Response Plan and Tactical Response Plan at 

the three National Defense Reserve Fleet 

(NDRF) sites. 

MARAD pursues a very aggressive oil spill 

prevention and containment policy. This 

policy requires oil spill containment booms 

at all outport sites to be in place around each 

individual RRF vessel or nest of vessels 

whenever physically possible or otherwise 

positioned adjacent to the vessel and readily 

deployable if an oil spill occurs. MARAD 

has oil spill kits aboard all its vessels, although such kits are required only on tankers. 

MARAD carries on a very proactive marine 

oil spill training program that includes a 24 

hour “Initial Responder” training course that 

is mandatory for all staff appointed Qualified Individuals and the senior licensed ROS 

RRF crew members (Chief Mate, Chief Engineer and 1st Assistant Engineer). Soon we 

will provide the follow-up annual 8 hour refresher training to those who have been certified in the 24 hour training curriculum so 

that they continue to maintain their certification. The training is in complete compliance 

with OSHA statutory certification requirements. 

Environment and Marine Transportation 

As maritime trade expands and increases the 

strain on the land transportation system, so 

will the potential impacts that maritime 

transportation has on the environment. 
MARAD 2003 48 

There are two particularly critical environmental impacts associated with the Marine 

Transportation System: one is the combination of air emissions and energy consumption, and the other is the introduction of 

aquatic nuisance species, particularly in ballast water. 

Air Emissions and Clean Energy. To address 

air pollutant emissions from marine vessels, 

MARAD has continued partnerships with 

governmental agencies, academia, and industry that have focused on fostering research and applying emission reduction 

technologies. 

In 2003, MARAD initiated two research 

projects supported through the Department 

of Transportation's Center for Climate 

Change and Environmental Forecasting, to 

develop a current vessel emission inventory 

and assess large diesel engine retrofit emission reduction technologies. In addition, 

MARAD procured a Geographic Information System (GIS) that will ultimately provide detailed, applied spatial analyses of 

emission concerns and scenarios related to 

short sea shipping and landside congestion. 

Aquatic Nuisance Species. Invasive species 

introductions are increasing both in frequency and in the extent of damage they 

cause to the Nation’s marine transportation 

system, the human and natural environment, 

and the nation’s economy. 

MARAD has addressed this complex issue 

by developing the Federal Ballast Water 

Demonstration Project (FedBal), which involves several Federal and private stakeholders that provide a seamless process to 

test and develop ballast water treatment systems. This three-phased approach is being 

designed to move technology testing from 

the lab to stationary ships and ultimately to 

commercially operating vessels. 

In FY 2003 two ballast water treatment technologies were tested aboard MARAD vessels, with both receiving funding from the 

MARAD, National Oceanic Atmospheric 

Administration, and the United States Fish 

and Wildlife Service. The technologies consist of a system that uses a combination of 

filtration and frequency sonic contact reactor 

with ozone injection. The test phase was 

successfully completed in late October and 

the system is expected to be tested onboard a 

commercial vessel with the assistance of the 

Ship Operating Cooperative Program 

(SOCP) participants. 

The second system, which combines filtration, ultraviolet radiation, and biocides completed the second phase of testing onboard a 

MARAD ship in December. The University 

of Maryland and its partner Hyde Marine are 

expected to move to commercial vessel tests 

with a private company in FY 2004. 

Marine Transportation Industry Outreach. 

MARAD continues to publish its quarterly 

Report on Port and Shipping Safety and Environmental Protection (reports 66-69 during FY 2003). These reports summarize activities at the international and national levels concerning safety and environmental 

protection matters related to ports and shipping. Of particular importance are the summaries of activities of the IMO. Report copies can be found at the following Internet 

addresses: http://www.marad.dot.gov, http://

www.marad.dot.gov/nmrec, and http://

www.marad.dot.gov. 

Shipbuilding and the Environment. MARAD assures that its Title XI loan guarantee 

projects for building ships and improving 

shipyards are in compliance with applicable 

environmental requirements. Moreover, 

MARAD has made significant strides in establishing itself as a leading and coordinating force in research, development and 
MARAD 2003 49 

demonstration in the critical areas of environmentally efficient marine propulsion systems. This important work has been carried 

on by significant funding and in-kind contributions from at least three dozen other partners from the federal, state and local governments, private sector and academia. In addition, MARAD is represented on the interagency DOT team exploring the potential of 

hydrogen as an alternative, clean fuel. 

Through these activities, MARAD is the recognized leader in the investigation, demonstration and promotion of energy efficient, 

propulsion systems. 

Dredging. MARAD addresses dredging and 

dredged-material-management issues related 

to impacts to national ports and harbors 

through active participation on the National 

Dredging Team (NDT) and Regional Dredging Teams. The new Action Agenda for the 

NDT focuses on four main areas: beneficial 

uses of dredged material, sediment management, emerging issues, and strengthening 

regional teams. Federal agencies participating on the NDT are the Army Corps of Engineers, the Environmental Protection Agency, 

the National Oceanic and Atmospheric Administration, MARAD, the Fish and Wildlife 

Service, and the Coast Guard. 

Environmental Stewardship. MARAD continues to protect the environment by ensuring that its facilities, ships, and programs are 

in compliance with environmental laws, 

regulations, orders, and treaties. This is accomplished by conducting internal environmental compliance audits of facilities and 

ships that enable the Agency to take significant steps toward improving facility and 

vessel environmental compliance, while enhancing environmental stewardship in our 

communities. Since 1992, MARAD has conducted two separate rounds of multi-media 

environmental compliance audits. 

Deficiencies identified in the audits were 

budgeted and corrected. MARAD continued 

conducting of environmental audits with a 

third round of that began in FY 1999 and 

was completed in FY 2002. There were no 

deficiencies found at any of the MARAD 

facilities. 

Since 1992, MARAD has conducted two 

separate rounds of multi-media environmental compliance audits. Deficiencies 

identified in the audits were budgeted and 

corrected. MARAD continued conducting 

of environmental audits with a third round of 

that began in FY 1999 and was completed in 

FY 2002. There were no deficiencies found 

at any of the MARAD facilities. 

As a result of these reviews, MARAD has 

dramatically increased facility compliance 

and its environmental stewardship initiatives. In all fleet facilities, the amounts of 

toxic chemicals were below EPA reporting 

thresholds. MARAD successfully completed several key environmental projects 

including aboveground and underground 

storage tank removal. 

The MARAD-operated USMMA has dramatically increased its use of environmentally friendly landscaping in an effort to reduce runoff into the Long Island Sound. 

MARAD is actively reducing the use of selected hazardous substances at all facilities 

each year, so that by December 31, 2006, 

there will be an overall reduction of 50 percent. 

This year, MARAD launched the pilot phase 

of a multi-year program to develop and integrate a robust environmental management 

system into its programs and activities. The 

pilot phase of the project will focus on MARAD fleet sites and EMS training for appropriate agency personnel. At the conclusion 
MARAD 2003 50 

of the pilot phase of the project, MARAD 

will expand the application of EMS through 

other agency programs. 
MARAD 2003 51 

The Maritime Administration’s 

Sir Ernest Shackleton 

Leadership Award 

Department of Transportation and Maritime Administration Objective: 

Organizational Excellence. Advance the President’s Management 

Agenda 
MARAD 2003 52 

New Maritime Administration (MARAD) 

Strategic Plan for 2003 - 2008. In September 2003, MARAD completed development 

of a new strategic plan covering the years 

2003-2008. This strategic plan specifically 

spells out MARAD's mission, its expected 

achievements, and the strategies and actions 

that the agency will pursue in fulfilling our 

public mandate into people. The new plan is 

available on line at the MARAD web site 

http://www.marad.dot.gov. 

PRESIDENTS’ MANAGEMENT 

AGENDA 

Budget and Performance Integration 

Initiative 

MARAD continues to make progress in implementing the President's budget and performance integration initiative. In keeping 

with direction from the Department of 

Transportation (DOT) and the Office of 

Management and Budget, during FY 2003 

MARAD produced an integrated performance budget request for FY 2005. FY 2003 

also marked the first year that MARAD developed a budget request as a component of 

DOT’s appropriation bill. Although MARAD has been an operating administration 

of DOT for more than 22 years, MARAD's 

budget request previously was included in 

the Commerce, Justice, State and the Judiciary Appropriation Act. With the creation of 

the Department of Homeland Security in FY 

2003, Congress shifted the jurisdiction for 

MARAD's budget request to the new Transportation, Treasury, and Independent Agencies Subcommittee of the House Appropriations Committee. 

MARAD conducted annual and quarterly 

performance reviews of programs during FY 

2003. The focus of the 2003 reviews was 

the development of 34 potential new performance measures. Use of these new measures will strengthen MARAD's performance 

discussions in budget requests and also help 

to demonstrate the link between MARAD's 

programs and the achievement of its strategic objectives and outcomes. MARAD also 

began to explore creation of efficiency 

measures due to the impending use of the 

Office of Management and Budget's Program Assessment Rating Tool in the FY 

2006 budget process. 

MARAD began a managerial cost accounting effort in 2003. This effort is designed to 

tie our accounting data to our resource requests and performance results. The effort 

is scheduled for completion by July 2004. 

Integrating Business Strategies and 

Contracts 

During FY 2003, MARAD continued developing business strategies and contracts that 

support the accomplishment of its missions 

and the President’s Management Agenda. 

Major accomplishments during the year include the following: 

• Provided key contracting support for the 

 activation of 40 surge sealift vessels of 

 the Ready Reserve Force (RRF) in direct 

 support of Operations Enduring Freedom 

 and Iraqi Freedom and the war on terror

 ism;

• Designed and deployed an upgraded version of the all-electronic, web-based Egrant system that MARAD pioneered in 

2002 to facilitate its award of 77 grants 

totaling $92 million to secure the Nation’s port facilities. The Transportation 

Security Administration accepted responsibility for the updated system in 

early 2003, and used it to award 199 additional grants totaling $170 million in 

June, 2003; 

• Completed a major Office of Management and Budget Circular A-76 cost-
MARAD 2003 53 

comparison study of approximately 195 

full-time positions at the three National 

Defense Reserve Fleet sites. The study 

represents the biggest block of commercial-type work in MARAD’s job inventory and gives MARAD a “green” status 

under the President’s competitivesourcing scorecard. The process culminated on September 10, 2003, with the 

selection of the government’s Most Efficient Organization (MEO) offer, which 

meant those functions would not be outsourced. 

• Negotiated and awarded seven contracts 

to scrap 25 environmentally at-risk vessels. These contracts represent a significant step toward meeting congressional 

mandates and achieving one of DOT’s 

high priorities – responsible disposal of 

obsolete vessels; 

• Awarded, using electronic commerce 

methods, over $419 million through 

more than 3,200 separate contract actions, in direct support of the President’s 

E-Government initiative; 

• Entered into an innovative business partnership with the Port of Anchorage, 

Alaska, to complete a major renovation 

of that port over 10 years; and 

• Continued the effective, ongoing administration of major contracts, including but 

not limited to, operation and maintenance of the RRF, logistics support to 

the RRF, information technology support 

for the agency, and food service, janitorial service and sewage treatment at the 

U. S. Merchant Marine Academy. 

Human Capital 

MARAD's employment totaled 855 at the 

end of FY 2003. In 2003, MARAD hired a 

total of 30 employees; 60 percent of the new 

hires were females and 30 percent were minority employees. There were 27 retirements alone in FY 2003. 

During the fiscal year, MARAD developed a 

number of initiatives which supported the 

President’s Management Agenda’s Human 

Capital Goal. The agency has developed an 

external recruitment, leadership planning, 

and succession planning strategy to increase 

the participation of minorities, women, and 

persons with disabilities in managerial and 

executive ranks. 

Two Career Opportunities Training Agreement Program (COTA), formerly Upward 

Mobility, positions were established. No 

positions were advertised under MARAD's 

Career Enhancement Program or the Department's Rotational Assignment Program. 

Sixty-two applications were approved for 

tuition assistance through the MARAD Tuition Assistance Program. 

MARAD employees received the following 

awards: three received the Secretary's Silver 

Medal, one received the Excellence Award, 

one received the EEO/Affirmative Action 

Award, and one received the Volunteerism/

Community Service Award. In addition, 18 

MARAD employees, as a group, received 

the Secretary's Team Award and 183 MARAD employees received the Partnering for 

Excellence Award. Fourteen employees received the Maritime Administrator's Bronze 

Medal Award, and one employee received 

MARAD's EEO Award in recognition of 

and appreciation for contributions made toward the furtherance of Equal Employment 

Opportunity. 

MARAD's one-year pilot of its restructured 

Mentoring Program, Working to Achieve 

Your Vision of Excellence and Success 

(WAVES) was a success. Twenty-six students graduated and there is enthusiastic 

support for this mentoring program. The 

program is continuing with another class of 

eight students. 
MARAD 2003 54 

MARAD also developed two internal employee communications tools--the quarterly 

newsletter TIDES (Tips and Ideas on Diversity and EEO Strategies), the monthly newsletter “EBBs EEO Bits and Bites”, and “It 

All Begins With You”, a program that encourages employees to share their ideas and 

suggestions for improving the organization 

and encourage cultural changes. 

Expanded Electronic Government 

This year MARAD's information technology 

focus has been on information systems security (INFOSEC) and Enterprise Architecture 

(EA). Several upgrades have been made to 

the network that afford MARAD greater 

protection against hackers, viruses, and other 

security breaches. All MARAD sites have 

intrusion detection and prevention capabilities, including firewall and spyware protection. 

MARAD also performed risk assessments 

and certification and accreditation work on 

major systems that will continue into the 

next year. All MARAD employees have 

received information systems security training. MARAD has worked closely with the 

Office of the Secretary of Transportation 

(OST) to implement a Continuity of Operations Plan (COOP) for critical information 

technology functions, including e-mail and 

Ready Reserve Force (RRF) applications. 

An enterprise architecture document was 

produced that outlines MARAD’s current 

business and technical environments with 

recommendations for progressing toward a 

more integrated and productivity enhancing 

architecture. The integrated architecture 

will eliminate functionality and data redundancy in information technology systems 

while increasing user productivity and management access to data for decision making. 

MARAD has also upgraded many information technology services, including increased 

dial-in speed and Internet access, and is 

working with OST to migrate to their Virtual 

Private Network (VPN) solution to provide 

greater access from off-site locations. Additionally, Section 508 of the Americans with 

Disabilities Act compliance features were 

implemented on the top twenty web sites. 

Ready Reserve Force (RRF) offices also 

worked toward updating and improving information technology systems that support 

the RRF program. Plans begun in earlier 

fiscal years have created an Information 

Technology Program Management Office, 

which has developed a detailed plan and initial schedule milestones to see the modernization project through to full operational capability. 

Employee Safety 

MARAD maintains an active program intended to provide a safe and healthy workplace for all employees; in FY 2003, MARAD continued to up date this program. 

Full-time safety and occupational health specialists are assigned to each National Defense Reserve Fleet site and to the U.S. Merchant Marine Academy. 

Monthly occupational safety and health inspections are conducted at each work place 

and identifiable hazards are promptly remedied. Employees have received updated and 

upgraded Emergency Medical Technician 

training and instruction in the safe handling 

of possible hazards, such as flammable liquids, electrical power, and bloodborne 

pathogens. 

MARAD continues its Action Plan for the 

prevention of asbestos exposures, and continues its safety and health incentives program to lower the injury/illness lost-time 
MARAD 2003 55 

accident rates at the fleet sites. James River 

Reserve Fleet was the most recent winner of 

MARAD's Safety Trophy. 

 

Monitoring of Graduate Service 

Obligations 

Graduates of the United States Merchant 

Marine Academy and Student Incentive Payment recipients graduating from the State 

Maritime Schools are required to serve in 

the maritime industry or in the armed services. MARAD has the responsibility for 

monitoring graduate service obligations. In 

the past, the compliance reports were manually generated . 

In FY 2003, MARAD designed, tested, and 

implemented use of the Maritime Service 

Compliance System (MSCS). The new system provides an effective and efficient paperless, web-based system with a userfriendly interface that allows graduates convenience in submitting these annual reports 

or update personal information on-line. The 

MSCS also provides a greatly improved tool 

for monitoring of graduate obligation compliance and supports achievement of the egovernment initiative in the President's 

Management Agenda. 

Research, Technology, Demonstration, 

and Deployment (RTDD) Initiative 

 

MARAD, recognizing the need for more attention to maritime research and innovation, 

announced a new research focus, unveiling 

the RTDD web site (http://www.marad.

dot.gov/Research) on March 4, 2003. 

Aimed at encouraging and coordinating research and innovation in the U.S. maritime 

industry the new effort is based on the recent 

2002 report to Congress entitled Maritime 

Research and Technology Development 

(http://www.marad.dot.gov/publications). 

That study found that the investment in 

maritime industry research by the various 

U.S. Government agencies and industry entities is very low when compared with investments in the other modes of transportation. 

An internal coordinating committee was created to support the RTDD effort. Early focus was placed on bringing all components 

of the industry, academia, and other transportation partners together to share ideas, 

developments, and assessments of research 

needs and priorities. The website is a starting point for facilitating collaborative interaction and it is believed that synergistic partnerships can energize the industry. MARAD began to reach out to industry and 

other government organizations to identify 

research needs and opportunities and work 

out common interests and priorities. Initial 

discussions have taken place through MARAD's several active research Cooperatives 

and with research working groups of the National Academies' Transportation Research 

Board (TRB), the Marine Board, some individual organizations, and the Society of Naval Architects and Marine Engineers. An 

intranet site is under development to assist 

with better sharing of information and coordination of MARAD research activities. 

Customer Satisfaction 

All major MARAD programs are evaluated 

on a three-year cycle, using three forms developed by the MARAD Customer Satisfaction Committee: 

• The Customer Service Questionnaire, a 

mechanisim to evaluate perceptions of 

how MARAD conducts business, which 

is mailed out periodically. 

• The Program Performance Survey, 

which identifies areas for improvement 

in program service or product delivery 

and to monitor the overall level of customer satisfaction. This survey is sent to 
MARAD 2003 56 

customers of major MARAD programs. 

• The Conference/Exhibit Survey form, 

which is used to evaluate MARAD's performance at MARAD-sponsored and cosponsored conferences and exhibits in 

which MARAD participates. It is distributed at such conferences. 

Information using these three surveys has 

been analyzed and included in The Maritime 

Administration Customer Satisfaction Report - August 2003 report, which has been 

prepared for publication and is currently 

available on MARAD's web site (http://

www.marad.dot.gov) under the customer 

service link. 

Fifty-two percent of the respondents rated 

MARAD above average or excellent in 

meeting their needs. Forty-six percent interact with MARAD two times or less a month. 

Thirty-one percent have been customers of 

MARAD 10 years or less, while 12 percent 

have interacted with us more than 30 years. 

Thirty-seven percent cited MARAD as their 

primary supplier for maritime information 

and support. 

On specific comparison factors to other entities with which they interact, 41 percent 

rated MARAD better, while only 7 percent 

rated the agency worse. They responded 

positively about friendliness (52 percent), 

professionalism (50 percent), and willingness to work with them (48 percent). 

Four areas needing improvement were responsiveness (12 percent), timeliness (8 percent) completeness (8 percent), and willingness to work with customers (8 percent). 

However, 87 percent stated they would recommend MARAD, and all that responded 

indicated they would use MARAD services 

again. 

Legal Services and Agency Decisions 

Freedom of Information Act (FOIA). MARAD began the fiscal year with 88 carryover 

Freedom of Information Act (“FOIA”) requests for access to records, and received 

183 new requests. One hundred eighty-nine 

FOIA requests were processed during the 

fiscal year. Eighty-two requests were pending at year’s end. There were no FOIA appeals from initial decisions. 

Environmental Issues. The most significant 

set of environmental issues arose from the 

scrapping of obsolete vessels. Congress provided MARAD with funding for dismantling 

and recycling of vessels and also created a 

pilot program allowing MARAD to export 

some of these vessels for dismantling and 

recycling. Pursuant to this authority, MARAD entered into a contract for the dismantling and recycling of some of these vessels 

by an environmentally responsible contractor in the United Kingdom. 

Litigation ensued in both the United States 

and the United Kingdom. Four of the NDRF 

vessels were allowed to proceed to the 

United Kingdom. Further hearings were set 

for the spring of 2004 on the remaining vessels governed by the U.K. contract. 

AUDITS 

In FY 2003 the Department of Transportation’s (DOT’s) Office of Inspector General 

(OIG) and the General Accounting Office 

(GAO) started audit work or submitted principal final reports on MARAD activities as 

follows: 
MARAD 2003 57 

OIG 

“Financial Statements FY 2003 – 

DOT” (Work Underway – Project No. 

03F3016F000, Notification Letter Dated: 

November 13, 2002) File 10-311 

“Use of Contract Audit Services – 

DOT” (Work Underway – Project No. 

03F3009F000, Notification Letter Dated: 

February 4, 2003) File 10-312 

“Rulemaking Tracking System – 

DOT” (Work Underway – Project No. 

03F3013F000, Notification Letter Dated: 

March 3, 2003) File 10-313 

“Inactive Obligations in DOT” (Work Underway – Project No. 03F3021F000, Notification Letter Dated: April 10, 2003) File 10-

314 

“Policy and Procedures for Locating Federal 

Facilities in Rural Areas” (Final OIG Audit 

Report #SC-2003-088, Dated: September 

26, 2003) File 10-316 

“Computer Security of Delphi Financial 

Management System” (Final OIG Audit Report #FI-2003-094, Dated: September 30, 

2003) File 10-317 

“Information Security Program – 

DOT” (Final OIG Audit Report #FI-2003-

086, Dated: September 25, 2003) File 10-

318 

GAO 

“CIVIL PENALTIES: Agencies Unable to 

Fully Adjust Penalties for Inflation Under 

Current Law” (Final GAO Report #GAO03-409, Dated: March 14, 2003) File 11-392 

“ELECTRONIC GOVERNMENT: Progress 

in Promoting Adoption of Smart Card Technology” (Final GAO Report #GAO-03-144, 

Dated: January 3, 2003) File 11-395 

“MARITIME ADMINISTRATION: Weaknesses Identified in Management of the Title 

XI Loan Guarantee Program” (Final GAO 

Report #GAO-03-657, Dated: June 30, 

2003) File 11-396 

“PERFORMANCE AND ACCOUNTABILITY: Reported Agency Actions and Plans to 

Address 2001 Management Challenges and 

Program Risk”(Final GAO Report #GAO03-225, Dated: October 31, 2002) File 11-

397 

“BUILDING SECURITY: Security Responsibilities for Federally Owned and Leased 

Facilities”(Final GAO Report #GAO-03-8, 

Dated: October 31, 2002) File 11-402 

“Options for Enhancing Freight Transportation” (Work Underway – Job Code 544058 - 

Notification Letter Dated: October 18, 2002) 

File 11-403 

“Enterprise Architecture Maturity” (Work 

Underway – Job Code 310248 - Notification 

Letter Dated: October 31, 2002) File 11-404 

“FREEDOM OF INFORMATION ACT: 

Agency Views on Changes Resulting from 

New Administration Policy” (Final GAO 

Report #GAO-03-981, Dated: September 3, 

2003) File 11-405 

“Alaska Native Village Flooding”(Work 

Underway – Job Code 360300 - Notification 

Letter Dated: January 14, 2003) File 11-406 

“Innovative Financing and Private Investment in Surface Transportation Projects” (Work Underway – Job Code 544063 

- Notification Letter Dated: January 17, 

2003) File 11-407 
MARAD 2003 58 

“Major Management Challenges and Program Risk” (Final GAO Report #GAO-03-

108, Dated: January 30, 2003) File 11-408 

“TRANSPORTATION SECURITY: Federal Action Needed to Help Address Security Challenges” (Final GAO Report #GAO03-843, Dated: June 30, 2003) File 11-409 

“10 Year GPRA Retrospective” (Work Underway – Job Code 450181 - Notification 

Letter Dated: March 21, 2003) File 11-410 

“Purchase Card Management” (Work Underway – Job Code 120232 - Notification 

Letter Dated: January 8, 2003) File 11-411 

“Selected E-Government Collaboration Efforts” (Work Underway – Job Code 310359 

- Notification Letter Dated: May 7, 2003) 

File 11-413 

“Information Technology (IT) Training 

Practices of Federal Agencies” (Work Underway – Job Code 310446 - Notification 

Letter Dated: May 15, 2003) File 11-414 

“Propane Price Volatility” (Work Underway 

– Job Code 360217 - Notification Letter 

Dated: June 12, 2003) File 11-415 

“Federal Data Mining” (Work Underway – 

Job Code 310366 - Notification Letter 

Dated: May 23, 2003) File 11-416 

“Issues in Intermodal Transportation System 

Development” (Engagement Code CA001 - 

Notification Letter Dated: June 20, 2003) 

File 11-418 

“Implementation of the Maritime Transportation Security Act of 2002” (Work Underway – Job Code 440226 - Notification Letter 

Dated: July 26, 2003) File 11-419 

“Department of Energy’s LaboratoryDirected R&D Program” (Work Underway – 

Job Code 360368 - Notification Letter 

Dated: August 4, 2003) File 11-420 

“The Passenger Vessel Services Act” (Work 

Underway – Job Code 544080 - Notification 

Letter Dated: August 4, 2003) File 11-421 

Letter Dated: September 9, 2003) File 11-

422 

“Transportation Security R&D Questionnaire” (Work Underway – Job Code 540068 

- Notification Fication Letter Dated: September 9, 2003) File 11-422. 
MARAD 2003 59 

Report to Congress 

The Department of Defense Authorization Act for 2001, Public Law 106-398, contains the following 

section on a report to be submitted to the Congress. 

SEC. 3506. 

REPORTING OF ADMINISTERED AND OVERSIGHT FUNDS. 

The Maritime Administration, in its annual report to the Congress under section 208 of the 

Merchant Marine Act, 1936 (46 U.S.C. App. 1118), and in its annual budget estimate submitted to the Congress, shall state separately the amount, source, intended use, and nature 

of any funds (other than funds appropriated to the Administration or to the Secretary of 

Transportation for use by the Administration) administered, or subject to oversight, by the 

Administration. 

The Maritime Administration (MARAD) receives funding from other Federal agencies primarily 

through reimbursable agreements. Funding from outside MARAD is placed in four accounts. 

The largest reimbursement to MARAD is transferred by the Department of the Navy for MARAD's operation, maintenance and management of the National Defense Reserve Fleet (NDRF) Ready Reserve 

Force (RRF). Most of this funding is placed in the Vessel Operations Revolving Fund (VORF) account. 

This account covers all non-salary costs associated with maintaining the RRF/NDRF. In 2003, the Department of the Navy transferred $20 million for disposal of obsolete vessels in VORF. Funds in the amount 

of $225 million for the deployment and operation of Operation Iraqi Freedom were also transferred to 

VORF. 

The funds transferred into the Operations and Training account come from approximately 40 reimbursable 

agreements from other Federal agencies for a variety of purposes. The largest ongoing reimbursable tran 

action into this account comes from the Navy and provides funding for the salary and administrative support costs for the RRF and the NDRF maintenance personnel. 

The funds deposited into the Special Studies Account originate from the sale of customized data products 

to the public. These customized data products are generated from the MARAD/U.S. Army Corps of Engineers U.S. Foreign Waterborne Transportation Statistics. The specialized data products consist of U.S. 

trade, vessel, cargo and related data and include economic analyses and in-depth market assessments of 

the major marine industry segments. MARAD charges customers a fee to recover the cost of producing 

these special reports and studies. 

The funds deposited into the Gifts and Bequests account are provided by the U.S. Merchant Marine Academy Alumni Association. The Association provides donated funds to assist the Academy, the regiment of 

Midshipmen and faculty in meeting the mission of the Academy. The funds support the music, arts, morale, athletics, and chapel programs. 

The report that begins on the following page includes actual reimbursement authority for FY 2003, and 

reimbursement authority through the first quarter of FY 2004. 
MARAD 2003 60 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

Fiscal Year 2003 

Funds are Credited in Vessel Operating Revolving Fund (VORF)

Fund Source Intended Use Amount

U.S. Department of the Navy CHESAPEAKE Operation, quarterly funding, war $8,622,850 

(Anacostia Annex) bonus/overhaul. 

U.S. Department of the Navy GOPHER STATE, Iraqi Freedom Operation $8,704,750 

(Anacostia Annex) 

U.S. Department of the Navy PETERSBURG operation hire/misc./security $10,480,620 

(Anacostia Annex) 

U.S. Department of the Navy CAPE JACOB, fouth quarter funding, security $13,396,598 

(Anacostia Annex) 

U.S. Department of the Navy CAPE HENRY, emergency sustainment $2,005,000 

(Anacostia Annex) 

U.S. Department of the Navy Continuation of no notice activation-TURBO 02-04 $428,000 

(Anacostia Annex) 

U.S. Department of the Navy CAPE GIBSON or CAPE GIRARDEAU - Cart rig $2,500 

(Anacostia Annex) team training 

U.S. Department of the Navy National Defense Sealift Fund for activation/deacti- $700,000 

(Anacostia Annex) vation of CAPE JOHNSON AND CAPE JOHN 

U.S. Department of the Navy National Defense Sealift Fund for operation of $4,460,000 

(Anacostia Annex) CAPE JOHN and CAPE JOHNSON 

U.S. Department of the Navy CAPE GIBSON, Operation Iraqi Freedom $878,735 

(Anacostia Annex) 

U.S. Department of the Navy CAPE JACOBS dry docking $300,000 

(Anacostia Annex) 

U.S. Department of the Navy Equipment installations and upgrades for TAVB $170,000 

(Anacostia Annex) 

U.S. Department of the Navy Support of travel costs incurred by MARAD $4,100 

(Anacostia Annex) personnel for semi-annual condition inspection 

U.S. Department of the Navy GOPHER STATE, deactivation/drydock $4,000,000 

(Anacostia Annex) 

U.S. Department of the Navy USS GEM STATE for training $6,000 

(Anacostia Annex) 

U.S. Department of the Navy RRF/NDRF operating and maintenance costs $198,269,186 

(Anacostia Annex) 

U.S. Department of the Navy CAPE JOHNSON (cleaning of holds) $5,140 

(Anacostia Annex) 

U.S. Department of the Navy CAPE WRIGHT (fireside & waterside) $10,500 

(Anacostia Annex) 

U.S. Department of the Navy CAPE GIRARDEAU (fuel/normal wear and $2,500 

(Anacostia Annex) tear/clean-up) 

U.S. Department of the Navy CAPE TRINITY, activation/deactivation $300,000 
MARAD 2003 61 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

Fiscal Year 2003 

U.S. Department of the Navy CAPE TAYLOR, activation/deactivation 300,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE TEXAS, activation/deactivation 300,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE KNOX, activation/deactivation 300,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE KENNEDY, activation/deactivation 300,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE VICTORY, activation/deactivation 300,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE VINCENT, activation/deactivation 300,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE DOMINGO, activation/deactivation 275,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE DOUGLAS, activation/deactivation 275,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE DIAMOND, activation/deactivation 275,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE DECISION, activation/deactivation 275,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE JOHNSON, activation(charter hire) 6,138,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE JOHN (charter hire/port charges) 7,474,000

(Anacostia Annex) 

U.S. Department of the Navy TAVB reefers, Containers & USMC office and 80,000

(Anacostia Annex) medical equipment

U.S. Department of the Navy CAPE CURTIS, activation 5,229,037.45

(Anacostia Annex) 

U.S. Department of the Navy CAPE WRIGHT, activation 6,245,009.7

(Anacostia Annex) 

U.S. Department of the Navy CAPE RISE, activation/deactivation 300,000

(Anacostia Annex) 

 

U.S. Department of the Navy CAPE RACE, activation/deactivation 300,000

(Anacostia Annex) 

U.S. Department of the Navy CAPE EDMONT, activation 275,000

(Anacostia Annex) 

Naval Sea Systems Quarterly support for NDRF inactive fleet 50,500
MARAD 2003 62 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

Fiscal Year 2003 

Command (NAVSEA) maintenance 

NAVSEA US Navy Sealift R&D Technology Demo test $340,000 

 support 

NAVSEA USNS BEAVER STATE engineering review $10,000 

 

NAVSEA Funds earmarked for disposal of obsolete $20,000,000 

 NDRF ships 

NAVSEA FLICKERTAIL STATE/CORNHUSKER STATE, $400,000 

 R&D Technology demo test 

U.S. Navy-COMNAVELSF Naval Reserve training onboard CAPE GIBSON $1,551 

 

COMNAVELSF Training aboard CAPE GIRARDEAU $2,500 

 

COMNAVELSF To utilize the GEM STATE for training $700 

 

COMNAVELSF Training aboard CAPE GIRARDEAU $5,000 

 

COMNAVELSF Training aboard CAPE GIRARDEAU $2,500 

 

COMNAVELSF 

Delmar exercises to utilize FLICKERTAIL 

STATE for cargo handling training $11,400 

 

COMNAVELSF Training aboard CAPE GIRARDEAU $2,500 

 

COMNAVELSF Training aboard CAPE ALEXANDER $2,500 

 

U.S. Army Training aboard RRF vessel $1,250 

 

U.S. Army 1176th TB for use of CAPE WASHINGTON $1,250 

 for training 

U.S. Army, HECSA Annual custody of Sturgis at the James River $2,000 

 Reserve Fleet 

 

Military Sealift Command Chemical, Biological, & Radiological-Defense $46,000 

(MSC) (CBR-D) Officer Training 

MSC Removal of two steering gear hydraulic pumps $325 

 from EX-WABASH 

MSC Maintenance of EX-MOUNT HOOD/ $700 

 EX-ROANOKE/EX-WABASH 

MSC Cart Rig Team training aboard SS CAPE $2,500 

 GIRARDEAU 
MARAD 2003 63 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

Fiscal Year 2003 

 

Total Vessel Operating Revolving Fund 313,325,353.2

MSC Training aboard CAPE GIRARDEAU 3,500

 

MSC USNS KILAUEA, to support Berthing and 

utilities

60,000

 

MSC TURBO 03-04 Activation 8,770,503

 

MSC Training aboard CAPE GIRARDEAU 2,500

 

MSC Training on CAPE GIRARDEAU 2,500

 

MSC Removal and crating of items from the 173

EX-USS MOUNT HOOD

Navy Engineering Logistics Operation & maintence of a Maritime training 450,475

Office (NELO) vessel

NELO Repairs on a Maritime training vessel 1,465,000

 

 
MARAD 2003 64 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

Fiscal Year 2003 

Funds are Credited to Operations and Training (O&T)Office

Fund Source Intended Use Amount

Naval Sea Systems Salary support costs for the Inactive Fleet $799,500 

Command(NAVSEA) Maintenance

NAVSEA Program Management Support $30,000 

 

NAVSEA Salary support for R&D Technology Demo test $10,000 

 

U.S. Marine Corps Upkeep for training aboard USNS PATRIOT $10,100 

STATE

Bureau of Labor Monthly import and trade data $2,500 

Statistics (BLS) 

Bureau of Economic Waterborne Import & import statistics in calculating $18,000 

Analysis (BEA) US trade

Department of the Navy Salary support costs from the National Defense Sealift $100,000 

Anacostia Annex Fund for operation of CAPE JOHN/JOHNSON

DOT/RSPA A project to be conducted under auspices of the Center $38,000 

for Climate Change & Environmental Forecasting

Military Sealift Command Steering gear hydraulic pumps removal from $7,600 

(MSC) EX-WABASH

MSC Contribution to ship structure committee $80,000 

 

MSC Maintenance of EX-Mt HOOD/WABASH/ $44,300 

ROANOKE

MSC Removal and crating of items from the EX-USS $10,775 

MOUNT HOOD

MSC Removal and crating of items from the EX-USS $5,627 

MOUNT HOOD

Space & Naval Warfare Ship Tracking and Routing System (STARS) $150,000 

System Command 

U.S. Department of Ship Operations Cooperative Program (SOCP) $5,000 

Commerce, NOAA membership dues

National Oceanic Atmospheric Joint Ballast Water Project $290,000 

Administration (NOAA) 

DOD-U.S. Transportation Support cooperative advanced logistics R&D $100,000 

Command CCDOTT management

United States Coast Guard Develop and maintain an electronic grants system $252,000 

(USCG) for the Port Security Program

USCG Administrative support services for Internat'l standards $60,000 

org. technical advisory group (TAG)

USCG Mooring and retention of USCG vessels at SBRF $11,000 

 
MARAD 2003 65 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

Fiscal Year 2003 

Total Operations and Training (O&T) 51,937, 758

United State Coast Guard SOCP membership dues $5,000 

(USCG) 

National Science Foundation Tech. support in connection with a new Antarctic $174,500 

(NSF) Research Vessel/other related services as required

National Data Buoy Center Buoy Storage $2,744 

 

Military Traffic Managemt Support of ICODES Project $175,000 

Command (MTMC) 

MTMC Regional Agile Port Intermodal Distribution (RAPID) $2,000,000 

System

DoD-Office of Economic Port of Achorage Intermodal Expansion $5,000,000 

Adjustment 

U.S. Corps of Engineering Meeting of the Interamerican Committee on Ports $2,500 

Organization of American States in Merida, Mexico

U.S. Corps of Engineering Foreign Waterborne (regular import/export cargo/ $368,000 

vessel movements)

U.S. Army, HECSA Support of STURGIS at the James River Reserve 

Fleet

$23,000 

 

CIA Provision of services, etc from Lloyds Maritime $354,617 

Intelligence Unit

U.S. Department of the Navy Salary support costs for RRF/NDRF $37,702,814 

(Anacostia Annex) 

MARAD Title XI operating costs $4,099,181 

 

DOT/OST Information technical support services-OST Civil $6,000 

Rights

 
MARAD 2003 66 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

Fiscal Year 2003 

Fund Source Intended Use Amount

 

Gifts and Bequests Trust Fund (GF) 

 

GF USMMA 3,339,025 

 

Total Gifts and Bequests Trust Fund 

(GF)

 $3,339,025 

 

Global Maritime and Transportation 6,093,740 

 

 USMMA Global Maritime The mission of the U.S. Merchant Marine Academy is to 

 & Transportation (GMATS) offer leading-edge education and training to maritime and

 Program (Non-appropriated) transportation professionals. The GMATS program is a

 from tuition paid by trainees non-appropriated fund instrumentality" (NAFI) of the U.S.

 Merchant Marine Academy generating funds through 

 meal and lodging fees

 

Total Global Maritime and $6,093,740 

 

Special Studies, Services, and 

Projects Trust Fund (SSSP)

 70,604 

 

 U.S. Department of the The other flow of funds into MARAD that does not involve

 Army Corp of Engineers reimbursable agreements comes from the sale of data and 

 (USACE) data products, primarily from the MARAD/USACE 

 United States Foreign Waterborne Statistics (USFWTS) 

 

Total Special Studies, Services, and 

Projects Trust Fund (SSSP)

 $70,604 

 
MARAD 2003 67 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

Fiscal Year 2003 

Summary 2003

This is the total funding authority received/accepted through fiscal year 2003, and cannot exceed 

the estimated offsetting collections apportioned by the Office of Management and Budget. 

Summary 2003 

 

Total Vessel Operating Revolving Fund $313,325,353 

Total Operations & Training $51,937,758 

Total Gifts and Bequests $3,339,025 

Total GMATS $6,093,740 

Total Special Studies, Services, and Projects $70,604 

Total FY 2003 Funding Authority $374,695,876 

 

 

 
MARAD 2003 68 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

1st Quarter, Fiscal Year 2003 

Special Studies, Services, and Projects Trust Fund (SSSP)

Account Funds

are Credited to Fund Source Intended Use Amount

Gifts and Bequests Trust Fund (GF) 

 

GF USMMA (1/4 of 2003 

actual)

 $616,563 

 

Total Gifts and Bequests Trust Fund (GF) $616,563 

 

Global Maritime and Transportation 

School (GMATS)

 1,729,625 

 

GMATS USMMA Global Maritime The mission of the U.S. Merchant Marine Academy 

& Transportation (GMATS) GMATS is to offer leading-edge education and training 

Program (Non-appropriated) maritime and transportation professionals. The GMATS 

from tuition paid by trainees program is a non-appropriated fund instrumentality 

(NAFI) of the U.S. merchant Marine Academy 

funds through tuition, meal and lodging fees. 

(1/4 of 2003 actual) 

Total Global Maritime and Transportation 

School (GMATS)

$1,729,625 

 

*This amount was derived from the Income 

Statements provided by the GMATS program. 

 

figures have not been audited by an accounting 

firm

 

Special Studies, Services, and Projects Trust 

Fund 

 17,651 

 

SSSP U.S. Department of the The other flow of funds into MARAD does not involve 

Army Corp of Engineers reimbursable agreements comes from the sale of data 

(USACE) and data products, primarily from the MARAD/USACE 

produced United States Foreign Waterborne Statistics 

(USFWTS) program. (1/4 of 2003 actual) 

Total Special Studies, Services, and (SSSP) $17,651 

Projects Trust Fund 
MARAD 2003 69 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

1st Quarter, Fiscal Year 2003 

Summary 2004

This is the total funding authority received/accepted through Quarter 1 of fiscal year 2004, and cannot exceed 

the estimated offsetting collections apportioned by the Office of Management and Budget. 

Total Vessel Operating Revolving Fund $204,151,920 

Total Operations & Training $29,921,232 

Total Gifts and Bequests $616,563 

Total GMATS $1,729,625 

Total Special Studies, Services, and $17,651 

Total FY 2004 Funding Authority $236,419,340 

 
MARAD 2003 70 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

1st Quarter, Fiscal Year 2003 

Funds are Credited to Vessel Operating Revolving Fund (VORF)

Fund Source Intended Use Amount

U.S. Department of the Navy CAPE GIBSON, additional funding for continued $1,242,000 

(Anacostia Annex) Operation Iraqi Freedom (OIF)

U.S. Department of the Navy 1st qtr. - CHESAPEAKE charter hire/port expense/ $2,226,730 

(Anacostia Annex) misc. expense/security/cochin port

U.S. Department of the Navy 1st qtr. - PETERSBURG charter hire/port expense/ $2,154,630 

(Anacostia Annex) misc. expense/security

U.S. Department of the Navy 1st quarter - CAPE JACOB port expense $2,137,710 

(Anacostia Annex) 

U.S. Department of the Navy RRF/NDRF operating and maintenance costs $195,220,000 

(Anacostia Annex) 

U.S. Department of the Navy CAPE JACOB (IFO 180) $286,650 

(Anacostia Annex) 

Military Sealift Command CAPE GIRARDEAU Yard and Stay Team Training $2,500 

(MSC) 

MSC Cart Rig Team training onboard CAPE 

GIRARDEAU

$2,500 

 

U.S. Army, HECSA STURGIS-custody at the James River Reserve Fleet $3,500 

Naval Personnel Developmt. USS PIGEON overhaul $2,300 

Command (NPDC) 

U. S. Navy COMNAVELSF Training aboard CAPE GIRARDEAU $2,500 

 

U. S. Navy COMNAVELSF Training on the CAPE GIRARDEAU and GEM $8,500 

NELO STATE, DEL MONTE, Operations & Maintenance $560,000 

of a Maritime training Vessel

Naval Sea System Command CHESAPEAKE-O&M, N funds for OPDS/OUB $250,000 

(NAVSEA) alternations

NAVSEA EX-STANDLEY (CG-32) rig for tow $49,400 

USCG Semi-Annual inspection/repairs to existing Cathodic $2,000 

Protection System on the STATE OF MAINE

USCG PLANETREE and IRIS annual custody costs $1,000 

 

 

Total Vessel Operating Revolving Fund (VORF) $204,151,920
MARAD 2003 71 

Report to Congress 

Funds Administered by the Maritime Administration 

Not Appropriated to the Maritime Administration 

1st Quarter, Fiscal Year 2003 

Funds are Credited to Operations and Training (O&T)

Fund Source Intended Use Amount

Naval Sea Systems Command Support of required shipboard maintenance of $198,750 

(NAVSEA) INACTIVE vessels in NDRF

NAVSEA Provide Program Management support $30,000 

 

II Marine Expeditionary Force To upkeep VBSS ship, USNS PATRIOT STATE for $38,100 

(MEF) training

U.S. Department of Transfer funds to SOCP for membership including $5,000 

Commerce, NOAA projects and activities implementation

 

U.S. Army, HECSA STURGIS-custody at the James River Reserve Fleet $29,060 

 

National Science Foundation Support in connection with a new Antartic Research $150,000 

Vessel & other related services as required

Naval Personnel Developmt USS PIGEON overhaul $3,675 

Command (NPDC) 

National Data Buoy Center Buoy storage at Suisun Bay Reserve Fleet (SBRF) $4,873 

 

Military Traffic Managemt. Continue ship characteristics data in support of the 

Inte-

$300,000 

Command (MTMC) grate Computerized Deployment System (ICODES)

Defense Logistic Agency HQ Evaluations & assessment of projects that 

demonstrate

$25,000 

military related Agile Port Technologies

U.S. Department of the Navy Salary support costs for ships activated during $29,100,000 

(Anacostia Annex) Operation Iraqi Freedom

USCG Conducting inspection/repairs to existing Cathodic $4,150 

Protection System on the STATE OF MAINE

USCG Annual custody costs for vessels PLANETREE and $32,624 

IRIS

 

Total Operations and Training 

(O&T)

$29,921,232
MARAD 2003 72 

Table 14: ODS ACCRUALS AND OUTLAYS BY SHIPPING LINES--JANUARY 1, 1937, TO SEPTEMBER 30, 2003 

 Accruals Outlays

 _________________ __________________ 

Net Accrued LINES ODS Recapture Net Accrual ODS Accural Liability 

Aeron Marine Shipping $26,079,663 $0 $26,079,663 $26,079,663 $0 

American Banner Lines 1

 2,626,512 0 2,626,512 2,626,512 0 

American Diamond Lines 1

 185,802 28,492 157,310 157,310 0 

American Export Lines, Ltd. 2

 693,821,868 10,700,587 683,121,281 683,121,281 0 

American Mail Lines 3

 158,340,739 7,424,902 150,915,837 150,915,837 0 

American Maritime Transport 10,813,074 0 10,813,074 10,813,074 0 

American President Lines3

 1,786,443,341 17,676,493 1,768,766,848 1,765.329,763 3,437,085 

American Shipping Co. 21,220,420 0 21,220,420 21,220,420 0 

American Steamship Co. 76,462 0 76,462 76,462 0 

Aquarius Marine Co. 55,288,862 0 54,288,862 54,288,862 0 

Aries Marine Shipping 25,291,415 0 25,291,415 25,291,415 0 

Asco-Falcon II 587,268 0 587,268 587,268 0 

Atlantic & Caribbean S/N 1

 63,209 45,496 17,713 17,713 0 

Atlas Marine Co. 62,479,364 0 62,479,364 62,479,364 0 

Baltimore Steamship 1

 416,269 0 416,269 416,269 0 

Bloomfield Steamship 1

 15,588,085 2,613,688 12,974,397 12,974,397 0 

Brookville Shipping, Inc. 6,143,827 0 6,143,827 6,143,827 0 

Chestnut Shipping Co. 97,348,830 0 97,348,830 97,348,830 0 

Delta Steamship Lines 575,053,817 8,185,313 566,868,504 566,868,504 0 

Ecological Shipping Co. 4,968,943 0 4,968,943 4,968,943 0 

Equity Carriers, Inc. 1,497,110 0 1,497,110 1,497,110 0 

Farrell Lines Incorporated 775,439,460 1,855,375 773,584,085 771,858,948 1,725,137 

First American Bulk Carriers Corp. 58,257,325 0 58,257,325 55,030,812 3,226,513 

Gulf & South American Steamship 34,471,780 5,226,214 29,245,566 29,245,566 0 

Lachmar 16,148,899 0 16,148,899 16,148,899 0 

Lykes Bros. Steamship Co., Inc. 2,192,182,207 52,050,598 2,140,131,609 2,136,714,228 3,417,381 

Margate Shipping Co. 144,603.929 0 144,603,929 144,603,929 0 

Moore-McCormack Bulk Transport 137,384,014 0 137,384,014 137,384,014 0 

Moore-McCormack Lines 8

 734,212,876 17,762,445 716,450,431 716,450,431 0 

N.Y. & Cuba Mail Steamship 8,090,108 1,207,331 6,882,777 6,882,777 0 

Ocean Carriers 45,994,825 0 45,994,825 45,994,825 0 

Ocean Chemical Carriers, Inc. 31,323,821 0 31,323,821 31,323,821 0 

Ocean Chemical Transport, Inc. 34,092,353 0 34,092,353 34,092,353 0 

Oceanic Steamship5

 113,947,681 1,171,756 112,775,925 112,775,925 0 

Pacific Argentina Brazil Line 1

 7,963,936 270,701 7,693,235 7,693,235 0 

Pacific Far East Line 6

 283,693,959 23,479,204 260,214,755 260,214,755 0 

Pacific Shipping Inc. 18,840,400 0 18,840,400 18,840,400 0 

Prudential Lines4

 641,647,708 24,223,564 617,424,144 617,424,144 0 

Prudential Steamship 1

 26,352,954 1,680,796 24,672,158 24,672,158 0 

Sea Shipping 25,819,800 2,429,102 23,390,698 23,390,698 0 

Seabulk Transmarine I & II, Inc. 35,845,320 0 35,845,320 35,845,320 0 

South Atlantic Steamship1

 96,374 84,692 11,682 11,682 0 

States Steamship 231,997,100 5,110,997 226,886,103 226,886,103 0 

United States Lines7

 750,518,013 54,958,689 695,559,324 695,559,324 0 

Vulcan Carriers 29,847,656 0 29,847,656 29,847,915 0 

Waterman Steamship Corp. 462,755,673 0 462,755,673 460,289,472 2,466,201 

Worth Oil Transport 17,428,314 0 17,428,314 17,428,314 0 

 

Total Regular ODS $10,402,302,117 $238,186,435 $10,164,115,682 $10,147,607,097 $14,272,317 

Soviet Grain Programs 9

 $147,132,626 $0 $147,132,626 $147,132,626 $0 

Total ODS $10,549,434,743 $238,186,435 $10,311,248,838 $10,,295,857,547 $14,272,317

1

 No longer subsidized or combined with other subsidized lines.. 

2

 AEL was acquired by Farrell Lines, March 29, 1978. 

3

 APL merged its operations with AML's October 10, 1973. 

4

 Changed from Prudential-Grace Lines, Inc., August 1, 1974. 

5

 Purchased by Lykes Bros. Steamship Co., Inc. 

6

 Went into receivership August 2, 1978 

7 Ceased to be subsidized in November 1970, returned as a subsidizedcarrier in January 

 1981. 

8

 Purchased by United States Lines, Inc. October 1983. 

9

 No longer operative. 

10 Farrell Lines merged its operations with Argonaut, December 20, 1994. 
MARAD 2003 73 

 FINANCIAL STATEMENTS

U.S. DEPARTMENT OF TRANSPORTATION--Maritime Administration

Exhibit 1. Statement of Financial Condition

September 30, 2002 and September 30, 2003 September 30

(Dollars in Thousands) ___________________________________ 

ASSETS 2002 2003

Selected Current Assets 

 Funded Balances with Treasury: 

 Budget Funds $751,596 $ 618,293 

 Deposit Funds 10 10

751,606 618,303 

Federal Security Holdings 276,291 188,965 

Accounts Receivable: 

 Government Agencies 181,156 137,740 

 The Public 32

__________ __________ 

181,156 137,772 

Advances To: 

 Government Agencies 

 The Public 

Total Selected Current Assets $ 1,209,053 $945,040 

Loans Receivable: 

 Repayment in Dollars 470,325 433,183 

 Allowances (-) (381,570) (353,496

88,755 79,687 

Real Property and Equipment: 

 Land 3,962 3,962 

 Structures and Facilities 54,548 68,306 

 Equipment, Vessels, Inventory 300,089 1,095,783 

 Leasehold Improvements 0 0 

 358,599 1,168,051 

Total Other Assets $447,354 $1,247,738 

Total Assets $1,656,407 $2,192,778 

The notes to Financial Statements are an integral part of this statement. 
MARAD 2003 74 

FINANCIAL STATEMENTS

U.S. DEPARTMENT OF TRANSPORTATION--Maritime Administration

Exhibit 1. Statement of Financial Condition 

September 30, 2002 and September 30, 2003 September 30

___________________________________ 

LIABILITIES 2002 2003

Selected Current Liabilities (Note 2) 

 Accounts Payable (Including Funded 

 Accrued Liabilities): 

 Government Agencies $ 428,582 $ 254,526 

 The Public 278,870 42,031 

707,452 296,557 

Accrued Liabilities for Loan Guaranteed 383,993 292,740 

Unfunded Liabilities: 

 Environmental Liabilities 372,500 722,500 

 Other Liabilities 21,605 238,402 

 Federal Employee’s Benefits Payable 17,389 22,689

411,494 983,591 

Total Selected Current Liabilities 1,502,939 1,572,888 

Deposit Fund Liabilities 0 

Debt issued under borrowing Authority: 

 Borrowing from Treasury 0 0 

Other Liabilities: 

 Vessel Trade-in Allowance and Other 

 Accrued Liabilities 0 0 

Future Funding (ODS Contract Authority) 

___________ ___________ 

Total Liabilities $ 1,502,939 $ 1,572,888

Government Equity 

 Unexpended Budget Authority: 

 Unobligated 256,084 279,843 

 Undelivered Orders 239,660 273,638

495,744 553,481 

Unfinanced Budget Authority (-) 

 Unfilled Customer Orders (114,362) (128,149) 

 Contract Authority _________ _________

(114,362) (128,149) 

Invested Capital (227,914) 194,558

Total Government Equity $153,468 $619,890 

Total Liabilities and Government Equity $1,656,407 $2,192,778 
MARAD 2003 75 

 

FINANCIAL STATEMENTS

U.S. DEPARTMENT OF TRANSPORTATION--Maritime Administration 

Exhibit 2. Statement of Operations Years Ended September 30 

(Dollars in Thousands) ___________________________________ 

2002 2003

OPERATIONS OF THE MARITIME ADMINISTRATION

 Net Costs of Operating Activities 

 Reserve Fleet Programs: 

 Maintenance and Preservation $ 4,412 $ 3,229 

Direct Subsidies and National Defense Costs: 

 Operating-Differential 5,088 1,118 

 Ocean Freight Differential 54,331 114,033 

 Title XI Credit Reform Program 130,280 (31,086) 

 And Financing Fund 

 Maritime Security Program 96,192 97,053 

 Ship Disposal Program 252 

Administrative (includes Financial Assistance to State Maritime Schools, 

School ships, Student Incentive 89,286 89,730 

Other Operating Income Net of Expenes 362,672 430,468 

Net Cost of Maritime Administration $742,261 $704,797

Operations of Revolving Funds (-Income): 

Vessel Operations Revolving Fund (319,946) (4,902) 

War Risk Revolving Fund (1,958) (1,721) 

Construction Differential Fund (1,884) (2,223) 

Federal Ship Financing Fund (384) (418) 

Gifts and Bequests (97) 629 

Special Studies (3) (3)

 (324,272) (8.638) 

Net Cost of Combined Operations $417,989 $696,159 

The notes to Financial Statements are an integral part of this statement. 
MARAD 2003 76 

U.S. DEPARTMENT OF TRANSPORTATION - MARITIME ADMINISTRATION

Notes to Financial Statements 

 September 30, 2003 and September 30, 2002 

1. The preceding financial statements 

include combining assets, liabilities, income, and expenses of the Maritime 

Administration (MARAD); the Vessel 

Operations Revolving Fund, the WarRisk Insurance Revolving Fund, and the 

Federal Ship Financing Fund, Programs 

of the Federal Credit Reform Act of 

1990 and other appropriations. Fiscal 

Year 2003 & 2002 financial information 

is based on MARAD's FY 2003 & 2002 

audited financial statements required by 

the Chief Financial Officer Act. 

2. Contingent liabilities for Title XI guaranteed loans aggregated 

$3.9 billion as of September 30, 2003. 

3. There were no conditional liabilities 

for pre-launching War-Risk Builder's Insurance on September 30, 2003. 

4. The Federal Ship Financing Fund 

incurred no defaults during FY 2003. 

5. The Title XI Credit Reform Program 

incurred no defaults during FY 2003. 

6. Real Property and Equipment are 

reported net of allowances for FY 2003. 

Due to the changes to the federal accounting standards issued by the Federal Accounting Standard Advisory 

Board (FASAB), MARAD's national defense properties (e.g., vessels supporting Navy) are reported as properties on 

the FY 2003 balance sheet instead of 

expenses in FY 2002.
MARAD 2003 77 

Appendix I: MARITIME SUBSIDY OUTLAYS--1937-2003 

Fiscal Reconstruction Total Total ODS 

Year CDS CDS CDS ODS and CDS 

1936-1955 $248,320,942* $ 3,286,888 $ 251,607,830 $ 341,109,987 $ 592,717,817 

1956-1960 129,806,005 34,881,409 164,687,414 644,115,146 808,802,560 

1961 100,145,654 1,215,432 101,361,086 150,142,575 251,503,661 

1962 134,552,647 4,160,591 138,713,238 181,918,756 320,631,994 

1963 89,235,895 4,181,314 93,417,209 220,676,685 314,093,894 

1964 76,608,323 1,665,087 78,273,410 203,036,844 281,310,254 

1965 86,096,872 38,138 86,135,010 213,334,409 299,469,419 

1966 69,446,510 2,571,566 72,018,076 186,628,357 258,646,433 

1967 80,155,452 932,114 81,087,566 175,631,860 256,719,426 

1968 95,989,586 96,707 96,086,293 200,129,670 296,215,963 

1969 93,952,849 57,329 94,010,178 194,702,569 288,712,747 

1970 73,528,904 21,723,343 95,252,247 205,731,711 300,983,958 

1971 107,637,353 27,450,968 135,088,321 268,021,097 403,109,418 

1972 111,950,403 29,748,076 141,698,479 235,666,830 377,365,310 

1973 168,183,937 17,384,604 185,568,541 226,710,926 412,279,467 

1974 185,060,501 13,844,951 198,905,452 257,919,080 456,824,532 

1975 237,895,092 1,900,571 239,795,663 243,152,340 482,948,003 

1976** 233,826,424 9,886,024 243,712,448 386,433,994 630,146,442 

1977 203,479,571 15,052,072 218,531,643 343,875,521 562,407,164 

1978 148,690,842 7,318,705 156,009,547 303,193,575 459,203,122 

1979 198,518,437 2,258,492 200,776,929 300,521,683 501,298,612 

1980 262,727,122 23,527,444 265,079,866 341,368,236 606,448,102 

1981 196,446,214 11,666,978 208,113,192 334,853,670 542,966,862 

1982 140,774,519 43,710,698 184,485,217 400,689,713 585,174,930 

1983 76,991,138 7,519,881 84,511,019 368,194,331 452,705,350 

1984 13,694,523 -0- 13,694,523 384,259,674 397,954,197 

1985 4,692,013 -0- 4,692,013 351,730,642 356,422,655 

1986 (416,673) -0- (416,673) 287,760,640 287,343,867 

1987 420,700 -0- 420,700 227,426,103 227,846,803 

1988 1,236,379 -0- 1,236,679 230,188,400 231,425,079 

1989 -0- -0- -0- 212,294,812 212,294,812 

1990 -0- -0- -0- 230,971,797 230,971,797 

1991 -0- -0- -0- 217,574,038 217,574,038 

1992 -0- -0- -0- 215,650,854 215,650,854 

1993 -0- -0- -0- 215,506,822 215,506,822 

1994 -0- -0- -0- 212,972,929 212,972,929 

1995 -0- -0- -0- 199,966,581 199,966,381 

1996 -0- -0- -0- 164,687,965 164,687,965 

1997 -0- -0- -0- 121,556,425 121,556,425 

1998 -0- -0- -0- 36,671,731 36,671,731 

1999 -0- -0- -0- 16,948,560 16,948,560 

2000 -0- -0- -0- 9,998,665 9,998,665 

2001 -0- -0- -0- 7,872,861 7,872,861 

2002 -0- -0- -0- 2,941,329 2,941,329 

2003 -0- -0- -0- 1,118,134 1,118,134 

 

Total $3,569,648,434 $264,904,682 $3,834,553,116 $10,175,858,527 $14,010,411,643

 * Includes $131.5 million CDS adjustments covering the World War II period, $105.8 million equivalent to CDS allowances which

were made in connection with the Mariner Ship Construction Program, and $10.8 million for CDS in fiscal years 1954 to 1955. 

** Includes totals for FY 1976 and the Transition Quarter ending September 30, 1976. 
MARAD 2003 78 

National Maritime Day, 2003 

By the President of the United States of America 

A Proclamation 

Today, as in the past, America depends on our maritime services to help ensure our security, promote our 

prosperity, and advance the universal hope of freedom. We honor the service and proud history of our merchant mariners and also recognize their important contributions in strengthening our economy. 

For generations, merchant marines and commercial sailors have assisted in the defense of our Nation. Most 

recently, more than 5,000 merchant mariners supported Operations Enduring Freedom and Iraqi Freedom by 

serving aboard 157 ships moving essential supplies to our troops. As they continue to support our troops in 

the ongoing war on terror, their mission continues to be dangerous and difficult, and remains vital to our efforts to defend the peace. 

We also remember the vital role the Merchant Marine has played in past conflicts. More than 6,000 merchant 

mariners lost their lives during World War II, and more than 700 U.S. merchant ships were lost. Even before 

the United States declared war, merchant mariners were making perilous runs to Europe with desperately 

needed supplies. President Franklin Roosevelt, the first President to issue a proclamation honoring merchant 

mariners, wrote of their role during wartime: "They have delivered the goods when and where needed in 

every theater of operations and across every ocean in the biggest, the most difficult and dangerous transportation job ever undertaken." We are grateful for the contributions and sacrifices of America's merchant mariners before and after World War II, in Korea, Vietnam, the Persian Gulf, and around the world today. 

In addition to their efforts to support our troops, merchant marines play a vital role in moving the goods that 

we produce around the United States and throughout the world. Their work provides jobs and economic 

benefits to our country, and strengthens our economy. By operating as the eyes and ears of America at sea, 

they also help protect our homeland. 

In recognition of the importance of the U.S. Merchant Marine, the Congress, by joint resolution approved on 

May 20, 1933, as amended, has designated May 22 of each year as "National Maritime Day," and has authorized and requested that the President issue an annual proclamation calling for its appropriate observance. 

NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, do hereby proclaim 

May 22, 2003, as National Maritime Day. I call upon the people of the United States to celebrate this observance and to display the flag of the United States at their homes and in their communities. I also request that 

all ships sailing under the American flag dress ship on that day. 

IN WITNESS WHEREOF, I have hereunto set my hand this twenty-first day of May, in the year of our Lord 

two thousand three, and of the Independence of the United States of America the two hundred and twentyseventh. 

GEORGE W. BUSH 

# # # 
MARAD 2003 79 
MARAD 2003 80 
MARAD 2003 81 

Department of Transportation 

Maritime Administration 

Office of Congressional and Public Affairs 

400 7th Street, SW (Room 7219) 

Washington, DC 20590 

Phone: (202) 366-5807 

Fax: (202) 366-5063 

Email: pao.marad@marad.dot.gov 

Web Site: www.marad.dot.gov