End of the Line for US-Owned Freight Service

January 24 (2002): International Shipholding Corp (ISC) listed its LASH ships as "assets held for disposal", the LASH ships - 28,580-grt ROBERT E. LEE, sister ships STONEWALL JACKSON and SAM HOUSTON, all built 1974. ISC, the parent company of Waterman Steamship, will sell two of the LASH vessels, with the third pending for disposal. STONEWALL JACKSON and SAM HOUSTON sail on the US-India schedule, while SAM HOUSTON is laid up. The New Orleans-based company attributed the huge loss to lower results from its US flagged LASH service caused by unplanned shipyard work early in the year and reduced cargo volume in the second half of 2001. Compounding a weak demand, the US-owned LASH vessels have to pay a different set of taxes from the foreign-owned companies. The vessels are likely to be sold for scrap or placed in the US Navy reserve fleet. Most US-flagged liner companies operating in the US are now foreign-owned. Sea-Land Service is owned by Maersk of Denmark, American President Lines is owned by Neptune Orient Lines of Singapore, Farrell Lines is owned by P&O NedLloyd of UK/Netherlands, and Lykes Lines is owned by Canadian Pacific of Canada. (emphasis and underlining added) http://www.maritimematters.com/shipnews2002a.html

THE PASSING OF A
MARITIME INDUSTRIAL POWER

About 95% of our increasing sea-borne foreign trade is carried in foreign flag ships. About 90% of the remaining commercial "American flag" ships are foreign owned. This means that more like 98% of the freight revenues paid by Americans and American companies to deliver our goods go to the foreign competition.
    What has happened to the American merchant marine is sort of a microcosmic example of what is happening to the entire American economy under globalism. Post-industrial America is a nation provided for, and dependent upon, foreign suppliers and runaway flag corporations.
     One need only to look at our growing trade deficit, our growing balance of payments deficit, and our growing national debt, to make a determination as to whether this has been good for the United States and the American people.
     Of course, the powers that be – our Washington policy makers – consistently pronounce it good, and are continuously calling for more of it.
     Before the 1980s, and the advent of globalism, the United States consistently carried a positive balance of trade and positive balance of international payments. In effect, not only did the American economy operate on a profitable basis, but we had a surplus that permitted us to be not only the most prosperous nation in the world, but the most generous in terms of foreign aid.
     We had a large merchant marine (but never as large as it should have been), which operated at a net profit to the nation, in spite of the necessary subsidies required to make it internationally competitive. In spite of the high subsidies to pay the higher costs of American mariners, shipbuilders, shipping companies, and supporting industries, all of these subsidies were returned (along with industry profits) to the American economy. Despite the "apparent" costs, it was a winning situation from every standpoint.
     With the adoption of free trade and globalism this positive international position became reversed, and the situation has continued to worsen at an accelerating rate.
     When free trade and globalism took hold, the concept of the runaway flag was legitimized and empowered. Though the merchant marine had always been threatened by the runaway flag phenomena, today it is not only shipping and maritime related industries fleeing the flag, but the very meat and potatoes of the economy itself – our entire industrial base.
     Almost all American shipping companies have either folded or sold out foreign. And now we are in the peculiar position of having almost all of our so-called "Maritime Security Fleet," which continues to be subsidized, under foreign ownership, with industry profits and the subsidies going to the foreign competition. The only thing being returned to the American economy are the declining wages of American seamen, and that relatively small potion of profits that may turn up on Wall Street for the benefit of well-heeled investors.
     The government owned and operated arm of our "merchant marine" has grown much larger than the commercial merchant marine – and, of course, it operates 100% at the public expense! So now, what passes for the American merchant marine is almost a total financial drain on the economy. And the American foreign trade maritime industry as a whole, as well as the economy itself, returns a loss rather than a profit.
     Add to these the costs of "public policy" the new and exponentially increasing costs of Homeland Security (port and ship security), and the "cost rewards" of expanding "free trade" are multiplied, and the real costs of our "cheap imported consumer goods" have taken a mega-leap. But the additional premium fails to show up at the Wal-Mart check-out counter – it comes in the form of increased public debt – with installments due every April 15th.
     Homeland Security? National security? Without our own national industrial base, our own merchant marine, and our ability to be a substantially economically independent nation, we hardly have any national security at all. No matter how great our military power, and how many weapons of mass destruction we possess, all efforts at national security tend to become hopeless. 
     Meanwhile, of course, as we have transcended into a "service" or "information based" economy, the profits for international business have greatly increased, the stock market has soared (but has suffered a few minor corrections), and the American people have been increasingly burdened with  unpayable levels of debt, both public and private.
     Scores of industries, thousands of factories, and millions of "good jobs" have simply been exported. More jobs (including so-called "knowledge worker" jobs), are being "outsourced."
     But the word is, "We've never had it so good." And, perhaps this is seemingly true. But living on credit, whether as individuals or a nation, portends a bleak and stormy future.
    Obviously, something is seriously wrong, and the price that will ultimately have to be paid in the fullness of time is not very pretty to contemplate.

WRC, 9/28/2006