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Mar. 17, 2014

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GOVERNMENT WATCH 18 THE JOURNAL OF COMMERCE www.joc.com MARCH 17.2014 By Mark Szakonyi of what comes in and goes out of this country is on a U.S.-flag ship. SZAKONYI: The second symposium would be focused more on the domestic side. Is that short-sea? JAENICHEN: It's a combination. It's inland rivers, it's waterways, it's Great Lakes, it's ports and it's coastwise Jones Act. SZAKONYI: Do you have any idea when that will take place? JAENICHEN: We're actually looking in the April timeframe. SZAKONYI: You mentioned that the rela- tively easier part is creating a national maritime strategy, which the House Coast Guard bill already called for. In terms of actually implementing it, what do you see as some of the major challenges? JAENICHEN: Well, you know, part of it has to be we need to make the U.S.-flag that's operating in international trade more com- petitive with foreign flag. There's a price differential just in operating a U.S.-flag, versus a foreign flag, for a number of rea- sons. And we need to try to see if there's a way that we can adjust that delta. The bottom line is we have to iden- tify cargo opportunities for U.S.-flag, and there's a lot of different ways to get there. One of the shippers who attended the National Maritime Symposium actually offered a comment I thought was pretty important to the overall way we look at cargo. He said, "Hey, don't make me put my stuff on U.S.-flag ships. Make me want to." And so that's a combination of, do you get better service if you're on U.S.-flag? Do you have tax incentives to put it on U.S.- flag? Those are the kinds of things that you need to take a look at. SZAKONYI: There's a feeling in the commu- nity that the time clock is starting to run out for the Merchant Marine. What's being done before the so-called buzzer hits? JAENICHEN: One of the things we talked about is clearly there is a sense of urgency. My prin- cipal concern is the number of mariners that are in what I would call the "qualified pool." We have a fleet of federal government-owned reserve ships that provide sealift capacity for (the Department of Defense). A large portion of those ships are owned by the Maritime Administration, and a portion is owned by the DOD and Military Sealift Command. But they're in reserve status. If you were to activate all of those ves- sels, the mariner pool that's required is fairly extensive. And we're at the point now, in terms of the number of jobs, with- out a U.S.-flag ship to sail on, these folks don't have a place to maintain their calls to be able to upgrade their licenses and do those kinds of things. And so we need to make sure we're focusing on that. Because today, we're at the point where if we were to activate the entire ready reserve fleet to support a DOD operation, whether that's an armed conflict, whether that's a human- itarian assistance and disaster response, there's a lot of different ways you could activate them. You could only do it sus - tained for about six to eight months. That particular problem is the one that's somewhat urgent. But ... you need to create cargo opportunities. There are some — what I would call short-term — things we will start working on right away, and then there are some longer-term things we need to address. You mentioned short-sea shipping, or what we refer to as American marine highways. Those are programs where a pub- lic-private partnership is required in some cases to get them off the ground because the assets that are involved are somewhat costly and they're very long-life assets. SZAKONYI: Any idea on when the Senate will give a final vote on your nomination? JAENICHEN: Not a clue. It's above my pay grade. JOC Contact Mark Szakonyi at mszakonyi@joc.com and follow him on Twitter: @Szakonyi_JOC. 100 PERCENT OFF THE MARK Homeland Security won't meet July deadline for 100 percent scanning of import containers THE U.S. DEPARTMENT of Homeland Secu- rity has until July to meet a federal mandate requiring all U.S.-bound containers to be scanned at nearly 750 foreign ports, and it's not going to make the deadline. Instead, Congress likely will grant the agency an extension as it did in 2012, when it gave the DHS two more years to meet the mandate called for through the SAFE Port Act, according to sources familiar with the issue. Even though the DHS has previously said the mandate is "neither the most efficient nor cost-effective approach to securing our global supply chain," the mandate isn't likely to go away. That's despite major industry groups, includ- ing the World Shipping Council and the National Retail Federation, arguing the mandate would increase the cost of ship- ping and deliver little to no benefit. "I would hope Congress would repeal the mandate and finally realize it's unat- tainable," said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation. But there is still a group in Congress — led by Sen. Edward Markey, D-Mass., and Rep. Jerry Nadler, D-N.Y. — that isn't satisfied with roughly 5 percent of import containers being scanned and won't give up on the man- date called for in 2007. Besides, it's easier for Congress to kick the can down the road via an

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