Bring Back the American-flagged Ship

Keystone Shipping’s ShenandoahThe demise of the American-flagged ship is often forgotten, though many of us who are saddened by it can also be heartened that a bit of it survives. Barely.

We tend to forget that American shipping has largely disappeared, as a result of a number of factors including general American business incompetence, complete corporate disinterest, bureaucratic restrictions and oppressive union rules that create hardships. In the face of these barriers, foreign-flagged carriers not only operate more cheaply, but operate with fewer restrictions and with the support of their government, which rightly sees their value.

Today, there is still some American-flagged shipping. Because of cabotage laws, only American flagged ships can carry goods between American-flagged ports. These laws, codified under the 1920 Jones Act, keep foreign ships out of the American trade. Like these laws or not, they are here to stay, though recent Justice Department prosecution will keep some pricing in line.

While American shipping has disappeared almost everywhere else, shipping brands like Matson, Sea-Land and American President Lines are the chief carriers of cargo between the U.S. and Guam, Puerto Rico, the U.S. Virgin Islands and Hawaii.

Pirates create opportunity

But the re-emergence of pirates has created an opportunity for the American-flagged vessel. Because the international waters have been safe over the last 50 years, the issue of protecting ships has not been an issue. Just this week, a senior defense official said that he was finding it hard to protect all the different ships off of Somalia and the western coast of Africa. The US navy said shipping firms were partly to blame for the hijackings. Vice Admiral Bill Gortney, commander of the combined maritime forces, told London’s Guardian that they had ignored advice to stay about 250 miles away from the coast or had failed to employ security guards on board.

We are stunned that there is a problem with this. How lame of the U.S. Navy. But if the United States feels it cannot protect all shipping, how about that it gives escorted protection to American flagged ships? After all, American flagged ships pay extra taxes and incur extra bureaucratic costs to be American flagged. While there is no harm in protecting other ships too, and that is the collective job of all the navies of the civilized world, the added assurance of Navy protection would not only be a shot in the arm to the American-flagged fleet, but would severely reduce insurance costs, and even up the field a bit.

Here are some of the best known American shipping brands, all members of the American Maritime Congress. Most don’t go to the Gulf, but some do:

  • Alaska Tanker Company operates ships for BP Amoco, Conoco Philips and Exxon Mobil in Alaska.
  • American President Lines is one of the nation’s greatest names in shipping. It is owned by Neptune Orient (NTOLY), and based in Singapore, though they have kept the American-flagged component, APL, as its own entity and brand. APL operates not only American-flagged shipping between U.S. destinations, but operates trans-Atlantic and trans-Pacific service.
  • Horizon Lines is a terribly forgettable name (NYSE: HRZ), but the company’s roots are from Malcolm McLean’s creation of container shipping and the shipping line Sea-Land, founded  in 1956 with the vessel Ideal-X that left Port Newark, N.J., for Houston in 1956. The company has recently had a mega-scandal, with their top executives pleading guilty to criminal price fixing, and tarnishing what was a great shipping legacy. Perhaps the time is now to switch back to the Sea-Land brand. The PR Newswire release said Oct. 1 that: “four individuals have agreed to plead guilty for their involvement in a conspiracy to eliminate competition and raise prices for moving freight between the Continental U.S. and Puerto Rico. A fifth shipping executive has agreed to plead guilty to destroying evidence of the shipping conspiracy.” 
  • Interlake Steamship Company, with its way-cool orange and black striped funnels, dates from 1883 with the founding of Picklands Mather & Company and transports Commodities in the Great Lakes. www.interlake-steamship.com
  • Norwegian Cruise Lines operates the NCL America program in Hawaii, currently the nation’s only major American flag cruise ships.
  • Crowley Maritime dates from 1892 and operates a large number of American flag operations, including petroleum barges, as well as logistics and consulting. For instance, in Jacksonville, Florida it takes cars from the mainland to the Commonwealth of Puerto Rico.
  • We love Bala Cynwyd, Penn.-based Keystone Shipping, which dates from 1909 and its founding by Charles Kurz. The company does Great Lakes shipping, as well as Military Sealift Command work, as well as builds ships, including the Prince William Sound. Its handsome yellow and blue burgees, with CK on them, harkens back to an earlier era of family-owned shipping.
  • International Shipholding Inc. (www.intship.com) operates Waterman Steamship Corporation, Central Gulf Lines and Forest Lines under the International Shipholding banner. International Shipholding has innovative roll-on/roll-off services and over two dozen vessels and over 700 barges. International Shipholding even operates an innovative rail-car connection between Texas and Mexico.
  • Led by Philip Shapiro, Liberty Maritime (www.libertymar.com) operates dry bulk ships.
  • Maersk Line Limited is the Norfolk, Virginia based subsidiary of A.P. Moller/Maersk. It took over Sea-Land, though unfortunately the Sea-Land brand was dropped. It stinks to have a foreign brand on an American flagged ship.
  • Matson Navigation, founded in 1882, is another great American flagged shipping brand. It is the top carrier of freight between the West Coast and Hawaii, Guam and Mid-Pacific, and is a subsidiary of Honolulu-based Alexander & Baldwin, Inc. (NYSE: AXB). See www.matson.com

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