Biden’s Shipping Agency Nominee Could Prove Crucial To US Climate Change Plans
In the upcoming months, there will be around 4000 appointments for the Biden-Harris team to make, 1212 of which will require a Senate confirmation.
One of the less prominent roles is that of the US Shipping Administrator within the Department of Transportation (a role known as the US Maritime Administrator or MARAD).
This position has historically been overlooked, but may prove to be a critical appointment in order for the Biden-Harris team to succeed with their climate change plans.
With the global coronavirus pandemic likely to continue for many more months, and airlines around the world grounded, it has been the global shipping fleets that have kept goods and food supplies flowing into countries around the world. However, this has not been without their own problems, even if global shipping carries 90% of world trade.
The US Department of Transportation has an annual budget of $70 billion, oversees 55,000 employees, and has six key transportation agencies that includes the Federal Aviation Administration, Federal Railroad Administration, Maritime Administration, Highways Administration, as well as organizations that look at Highway Traffic Safety and Federal Transit.
The Maritime Administrator will be a crucial appointment. Here is why.
Shipping lagging behind other sectors
Global shipping is one of the planet’s biggest emitters of harmful greenhouse gases, such as carbon dioxide. If it was a country, global shipping would be the sixth largest in the world, bigger than France and Germany.
However, compared to other major transport sectors (e.g., road and air), it has lagged behind both in terms of research, innovation and transformation toward a low carbon growth path, even though such technologies exist today.
Transforming global shipping is critical for the planet to meet climate objectives, and strong maritime leadership from the US is required.
A leapfrog opportunity for the US
At the same time, it is an opportunity for the US to regain a global leadership position in global shipping. At the turn of last century, the US had some of the largest commercial fleets in the world.
Cornelius Vanderbilt became one of the richest Americans in the 19th century through a shipping revolution that saw steamships spread across the country.
Around the world, the Delano family made their fortune through large international shipping interests in Asia, and a grandson, Franklin Delano Roosevelt, often seen as one of the most prominent US Presidents (including spending 7 years as Assistant Secretary of the Navy).
However, by the 21st century, US shipping is a shadow of its former past, with the largest shipbuilders now in South Korea, Japan and China, and the new electric revolution in shipping being driven elsewhere around the world, such as the Scandinavian countries.
The biggest shipping lines in the world are primarily Japanese (MOL, K Line, NYK Line), Chinese (COSCO), Danish (Maersk), French (CMA-CGM), Germany (Hapag-Lloyd), and other large European based shipping companies such as Mediterranean Shipping Company.
However, due to the US Navy, the United States still retains a ‘Tier A’ seat on the UN Shipping Agency, the International Maritime Organization, but has not exerted much influence in recent years to upgrade global shipping safety or environmental standards.
As the world moves toward a century of low carbon growth, there will be more change in global shipping in the next decade than the previous century combined.
This is an opportunity for the US to take a global leadership position, in the same way that many entrepreneurs like Elon Musk were able to with the electric vehicle revolution. The aviation industry is also being disrupted with emerging new drone technologies and companies that emerged from US universities supported by US venture capital investments, and are taking on the traditional large manufacturers.
Greater autonomous capabilities are just another layer to add to the electrification of the vessel fleet.
Health and race dimension
This transformation of US shipping also has an important health and race component. Most of the worst pollution hotspots in the United States are around ports, and many of these ports have large concentrations of Black and Hispanic communities.
Some of the most prominent examples include the Ports of Oakland, Los Angeles, New Jersey, Baltimore, Savannah Georgia, Houston, Charleston, Stockton.
Poor health statistics among these communities are directly linked to oversight of the US maritime (shipping) sector. Transformation of this sector offers an opportunity to revitalize these communities, both in terms of human health and economically.
Around 70% of the US’ carbon dioxide emissions originate from cities, and 70% of this comes from trucks (road freight transport).
Shipping has the opportunity to emits one tenth the greenhouse emissions of trucks and one hundredth that of aviation. So it is critical that the US starts shifting both long haul and distribution deliveries from road and air, toward rail and ships.
However, just shifting freight from road and air to ships is not enough.
Shipping currently burns some of the most polluting and harmful types of fuels, causing major health issues to hundreds of thousands, and up to 90,000 premature deaths a year around the world.
The residual fuels from the oil refining process produces excessive amounts of carbon dioxide and high sulfur, and the industry has been historically slow to reform itself (even with controversial low sulfur fuels). These pollutants lead to many respiratory illnesses such as higher incidences of asthma around port cities.
Further inland, the US waterway network have been historically underinvested in, and need a major overhaul, which could be radically upgraded with new cleaner, safer electric and autonomous vessel infrastructure.
US falling behind other nations
The US has fallen behind in global shipping innovation.
At present, it is the Scandinavian nations who have been leading some of the biggest technological breakthroughs into alternative fuels and electrification of their ferry fleets.
China has also made significant progress, and is currently testing large, electric cargo ships.
With the US being a leader in electric vehicles, drone technology, and seeing large investments in renewables and energy storage battery technologies, it has been surprising why previous administrations have not attempted to stimulate a more sustainable US maritime industry through the creation of domestic demand.
Revitalizing the US waterways could also open up huge areas of the country that had been neglected over the past half century as these regions were bypassed by air cargo logistics and road freight.
Emerging from the coronavirus pandemic, it could be the stimulus needed for the US to build back better, just as the New Deal succeeded with in the 1930s following the Great Depression.
The role of the US Maritime Administrator (MARAD)
In order to co-ordinate this multi-billion dollar transformation, one Presidential appointment is critical – that of the US Maritime Administration (MARAD).
Less well known than other Federal Appointments (such as the NASA Administrator), the Maritime Administrator appointment could prove to be crucial for a first Biden-Harris term to kick start this sector that is already trying to play catch-up with the rest of the world.
Captain John Konrad founder of leading online maritime publication, gCaptain, gives five reasons why the MARAD nominee will be one of the most keenly watched appointments in US and global shipping.
What is the role of the Maritime Administrator?
Captain John Konrad: The Maritime Administrator has a lot of power that has gone unused for decades. With the right person in charge, it could be the vehicle for the US to invest in infrastructure and green energy, starting today. Under several Presidents, this seat was not filled for years.
According to law and legal precedence, dating back to the time of Alexander Hamilton, MARAD is the fourth arm of defense and has power beyond that of the pentagon, legislative and judicial branches. The MARAD administrator is not just an Under Secretary of the Department of Transportation like the Head of the Federal Aviation Administration (FAA). The administrator is Commandant of the US Merchant Service and is a Four-Star Admiral.
Technically, the administrator has powers that no other branch or service has, but these have not been exercised. Indeed, no MARAD Administrator has worn the Four-Star uniform they are entitled to wear, since the Vietnam War.
So the MARAD position will not just have to oversee the transition to a green shipping industry, but will play a crucial role for US National Security. The Maritime Administrator is responsible for elements of national defense through the US Strategic Sealift, that covers a range of responsibilities such as national preparedness, mobilization, training of the US merchant navy fleet.
As a Four Star Admiral Rank, the appointment wears a uniform and advises the Joint Chiefs, in a similar role to the Surgeon General.
The Maritime Administrator will have a critical role to play in both domestic and international shipping policy.
What are five key policy decisions that the Maritime Administrator will need to take?
There are several strategic priorities for the Biden-Harris team to set, that should then guide the new Maritime Administrator. Here are the five biggest decisions that the new MARAD Administrator will need to take in the first 100 days, in my mind.
1. Stronger federal co-ordination over the maritime industry
The Maritime Administrator needs to co-ordinate across several major US Federal Agencies. This requires the sophistication to navigate profound changes and stakeholders in the maritime industry as well as the web of relationships among other Federal Agencies.
The six big Federal Ministries and Agencies to navigate include:
• Department of Transportation. There will need to be a strategic discussion on how to rebalance cargo transportation from road and air toward shipping, and the commensurate investments in sustainable infrastructure required.
• Department of Commerce. The Federal Maritime Commission (FMC) is an independent agency established under President Kennedy that is charged with regulating US ocean commerce. Commerce has powers to enact various environmental and trade tariffs, and the US Ocean Agency, NOAA sits within Commerce, and is a crucial research partnership for the maritime sector.
• Department of State. Shipping will need to feature prominently in US Foreign Affairs. Shipping incidents were raised by Secretary Pompeo (for example the deteriorating oil tanker off the coast of Yemen that could devastate international shipping lanes). At the same time, both the Maritime Administrator and the US Department of State will need to work closely together to push forward a more sustainable global shipping industry at the UN’s International Maritime Organization, among other international venues where the US can exert its influence to bring about a greener shipping revolution.
• US Coastguard. The US Coastguard is the only federal entity with full legislative, executive and judicial power. They also have military power and strong influence of the US vote at the International Maritime Organization.
• Pentagon. As the coronavirus pandemic has revealed, the Pentagon is dependent on an effective strategic sealift. The Pentagon is the only entity with discretionary budget and bipartisan support to mobilize a large sealift operation. Hence it is important for the new Maritime Administrator to have a seat advising the Joint Chiefs of Staff.
• Health and Human services. Many poorer communities are needlessly sick and dying because of the way we treat our oceans. There needs to be a radical transformation in how we think about the impact of the maritime sector on coastal communities. There will also be the critical need to move toward more sustainable fuels, which could be a boost for US agricultural workers who could produce such fuels sustainably. Net zero carbon emissions means zero carbon along the entire value chain of fuels for shipping, including how they are produced. Global shipping currently faces a four way choice of sustainable fuel between ammonia, ‘green’ hydrogen, electrification, LNG. Each has respective merits and health implications, such as fuels in the power stations for electrification, tracking methane emissions in the production of LNG.
2. Digitalizing logistics
Over the next four years, there is a need for the US to fully digitalize logistics and break down the data silos that give insight in how goods are shipped across the country. The growth of major ecommerce firms like Amazon has shown how critical this data is to ensure an effective and competitive transportation infrastructure.
In healthcare, reforms have ground to a halt over ring-fenced data. Transportation (and shipping in particular), faces a similar risk with various vested interests attempting to put fences around data to obscure the damage being caused by global shipping.
Transportation is by far the biggest global pollutant on the planet, so needs to be given top priority in a new Biden-Harris administration that is serious about addressing the Climate Crisis.
However, transportation cannot be managed without the right data, and this cannot be done if that data is privately held and deemed confidential.
A new model for digitalizing logistics will be required, in many ways similar to the development of the internet’s infrastructure. This will be a key capability that the new MARAD Administrator will need to bring into the role.
3. Increasing R&D and Venture funding in maritime startups
Most of the truly breakthrough innovation in the United States has come from the intersection of university research with new venture-backed technology startups.
In order to keep this engine of innovation going, greater investments need to be made in research, development and venture funding into pioneering new technologies.
Rather than having officials pick winning technologies themselves to back, a smart investment strategy is needed. This could allow for many potential solutions to be backed by spread betting risk, and for the market to help select the winning technologies.
4. Reskill the US maritime workforce
We need to support and educate our maritime workforce by increasing support and funding for marine research schools, projects and our Federal (US Merchant Marine Academy), State and local maritime academies.
At the same time, there is significant work to be done to address systemic gender and racial barriers in the maritime sector that have remained unaddressed for too long
5. International treaties
The Maritime Administrator needs to work closely with State and become a global ambassador for the shipping sector.
The United States has led the world with several treaties on maritime pollution (e.g., Clean Water Act, Marine Mammals Protection Act, the ban on single hull oil tankers following the Exxon Valdez following OPA-90 Oil Pollution Act, Department of Interior negotiations with the shipping insurance P&I Clubs). The US experience, and this legislation could form the backbone for many countries around the world, rather than the weaker United Nations shipping laws.
The United States could have a significant diplomatic opportunity to offer to countries around the world through bilateral and multilateral treaties to bolster their maritime laws in line with the higher safety and sustainability laws of the United States.
The IMO has been criticized for undermining the Paris Agreement with emissions that actually increase, not decrease. A new Maritime Administrator needs to be able to push stronger treaties at the IMO like laws on salvage, and also support countries like Mauritius, which is still suffering the ongoing effects of a major oil spill from this summer.”
An opportunity for growth
The transformation of US Shipping will take a herculean effort, but could provide an important pillar for recovery coming out of the global coronavirus pandemic. This will be important with hundreds of thousands of seafarers stuck on vessels around the world, in what has been called a ‘Humanitarian Crisis’ by the UN Secretary General this summer.
Captain John Konrad goes on to share the opportunities presented by such a transformation.
“Green shipping is a major priority of big banks and new corporate ESG initiatives. If the US does not step up, the world will move ahead without us and the divide between the US and the other nations (especially China) will grow fast.
These issues must be a top ten priority for Biden and Harris or else the problem will not get better and will be ten times harder to address by the end of the decade.”
Konrad concludes emphatically.
“There is no green new deal without maritime. Period. New Deal Initiatives failed for decades until President Roosevelt was elected and put maritime first.
FDR was not a Washington insider. He was a local politician and an undersecretary of Navy in charge of maritime affairs. That was (and still is) a powerful combination.
So if Biden and Harris want to reunite the nation, they will not succeed without the power and might of maritime commerce and the US Navy behind them.
That’s why the Maritime Administrator seat is so important.”
Konrad also points out that there has never been a female Maritime Administrator.
Can you imagine what message it would send the world if a strong maritime leader like Dr Sylvia Earle were to put on a uniform, four stars, and sat on the Joint Chiefs of Staff. And then used the power of that position to protect the environment and aid commerce. It would be revolutionary.”
As President Elect-Joe Biden and Vice President Elect-Kalama Harris reflect on ways to make their Presidential term historic, there appear to be plenty of opportunities within the Maritime sector.