Cargo Preferences for U.S.-Flag Shipping

Long-standing U.S. policy has treated the U.S.-flag international fleet as a naval auxiliary to be available in times of war or national emergency. When the United States is involved in an extended military conflict overseas, 90% or more of military cargoes are typically carried by ship. To support the U.S. merchant marine, Congress has required that government-impelled cargo sent overseas be carried on U.S.-flag ships. Government-impelled cargo (a.k.a. preference cargo) is government-owned cargo, such as military supplies and food aid, and any cargo that is somehow financed by the federal government, such as by the Export-Import Bank. While export shipments account for the vast bulk of government-impelled cargo, in 2008 Congress extended the law to require that state and local governments and private entities importing goods with federal financial assistance ship at least 50% of such cargo in U.S.-flag vessels. Regulations to implement that requirement have not been issued. This book explains the motivation behind cargo preference law, discusses issues concerning the cost-effectiveness of the program, reviews attempts to apply cargo preference to the nations oil trade, and identifies several disparate bills reflecting wide disagreement on the future direction of cargo preference policy. The book also examines cargo preference for food aids (CPFA) impact on food aid shipping cost and U.S. agencies implementation of CPFA requirements, and the extent to which the implementation of CPFA requirements contributes to sufficient sealift capacity.