WASHINGTON D.C. — Toward the end of June 2017, the Trump administration drafted an executive order forcing U.S. food aid to be shipped solely on U.S. flagged vessels. This endeavor would have been a part of President Trump’s “America First” agenda. Critics, including Senator Bob Corker (R-TN) and Tom Hart of the One Campaign, both opposed the change because it would cost U.S. taxpayers more money and allow less food to be delivered at a slower rate. In response to the outcry, Trump decided not to go forward with his executive order.
Current law requires that 50 percent of sea-based cargo shipped by the U.S. government must be transported on vessels owned by U.S. citizens or U.S.-based companies. This is known as cargo preference. When a government agency (such as USAID) prepares to ship food aid, it must first take bids. The agency must consider bids offered by U.S. flagged vessels before foreign flagged vessels. If no U.S. ships offer to take the food aid, it can leave on a foreign vessel.
There is logic in using U.S. flagged vessels to support American enterprise. Proponents suggest that shipping U.S. food aid on U.S. vessels creates jobs and increases national security. Yet, many refute these perks in debate. In reality, these regulations cost 46 percent more, leaving less money in the budget for food. Food can also take up to 14 weeks longer to arrive.
The law states that government agencies must use U.S. flagged ships as long as the rate is “fair and reasonable.” This allows shipping vessels to add a 19 percent profit to what they charge a government agency. Because cargo preference reduces competition, U.S. flagged vessels can charge this high rate. American Enterprise Institute points out that U.S. flagged vessels cannot compete commercially with foreign vessels. To make up for the loss, they charge the U.S. government more money since they have preference in the bidding process.
Furthermore, some of the largest contractors winning bids are not entirely U.S. companies. Maersk Line Limited, American President Lines and Hapag-Lloyd USA transport 45 percent of U.S. food aid. Yet, larger foreign companies own many of these companies. In 2012, when cargo preference was reduced from 75 percent to 50 percent, no U.S. vessels went out of business, nor did anyone lose a job as a result.
Proponents of cargo preference also argue that using U.S. vessels for U.S. food aid increases national security. The U.S. military supposedly does not own enough cargo-carrying ships if sudden war occurred. By maintaining U.S. flagged vessels with cargo preference, the government maintains these extra ships at its disposal. Yet, 80 percent of these ships are too old or too slow for military use, negating the national security argument.
These older ships also explain why food aid takes longer to deliver. Being old, they are slower than new vessels. They simply do not sail as fast, causing critical delays in bringing food to the starving.
Food aid reforms such as reducing the cargo preference would save U.S. taxpayers money and leave more in the budget to buy food. Furthermore, the Maritime Security Program is a successful system in place that helps the maritime industry stay afloat. Ultimately, the purpose of U.S. food aid is to feed the hungry. Simple reforms could save millions of dollars and assist more in dire need.
– Mary Katherine Crowley