December 16, 2025 • 46 mins
Geopolitical tensions, a fractured regulatory landscape and shifting trade patterns are reshaping the maritime industry in ways not seen in decades. In this episode of the Talking Transports podcast, maritime historian and former merchant mariner, Sal Mercogliano, joins Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to break down the forces redefining global shipping. Mercogliano discusses the risks surrounding the Red Sea and Suez Canal, the rise of the shadow fleet and the challenges facing the IMO’s ambitious decarbonization goals. He also examines US shipbuilding ambitions, Jones Act reform and the critical role of the Merchant Marine in national security. Mercogliano shares insights from his seafaring career, his academic work and his popular YouTube channel, offering a wide-angle perspective on the future of maritime trade.
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Episode Transcript
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Speaker 1 (00:07):
Hi everyone, this is Lee Clasgow when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Clasgow, Senior Free Transportation logistic Chandles at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. A quick public service announcement
before we dive in. Your support is instrumental to keep
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(00:29):
we need your support, so please, if you enjoy the podcast,
share it, like it and leave a comment. Also, if
you have ideas, feedback, or just want to talk transports,
I'm always happy to connect. You can find me on
the Bloomberg terminal, LinkedIn, or on x at Logistics. Lee,
I'm very excited to have Sal Macagliano as our guest today.
Sal is a maritime historian, educator, and former merchant mariner
(00:50):
who serves as chair of the Department of History, Criminal Justice,
and Political Science at Ampbell University in North Carolina, where
he's a professor special in maritime history and Security. A
nineteen eighty nine graduate of Sunni Maritime College with a
BS in Marine Transportation and a Merchant Marine deck Officer license.
(01:13):
He sailed with the US Navy's Military Sealift Command, including
as third mate on USNS Comfort during the Persian Gulf War.
He earned a masters in maritime history and notical Archaeology
from East Carolina University and a PhD in Military and
Naval history from the University of Alabama. He's also an
(01:33):
adjunct professor at the US Merchant Marine Academy. He's widely
recognized for his expertise. He hosts the popular YouTube channel
What's going On with Shipping and that has over five
hundred and seventy thousand subscribers. Sal welcome to Talking Transports.
Thank you so much for joining.
Speaker 2 (01:52):
Us, Lee, I appreciate you having me on. It's always
a pleasure to be with Bloomberg.
Speaker 3 (01:56):
You know.
Speaker 1 (01:56):
I stumbled upon your channel a couple of months ago,
and I think it's great resource to learn more about
the shipping industry and not just you know, commercial shipping.
You cover all things that's on the water, and I
really wanted to have you as a guest, So thank
you so much for.
Speaker 3 (02:12):
Taking the time.
Speaker 2 (02:13):
Oh, I appreciate that. It's nice to say.
Speaker 1 (02:15):
So, you know, you're an educator pontificator. So could you
just talk about, you know, from your vantage point, what
is the state of the maritime industry.
Speaker 2 (02:24):
Well, I mean, maritime industry is in obviously a lot
of flux. I mean when you look at it, and
this is one of the things I love about talking
about it is it's a little bit of everything. So
if we look at global trade, for example, we've never
seen global trade at a higher level. I mean, we're
seeing more goods moved around the world at a faster
and greater rate than ever before. I always talk about
this issue of volume and velocity, so we're moving stuff
(02:47):
a lot. At the same time, we have a lot
of issues associating with the maritime industry. We've got geopolitical threats,
environmental threats, we were seeing issues dealing with specifics in
national issues, for example, the United States trying to get
shipbuilding back up and running. We're seeing, you know, confrontations
(03:09):
on the high seas. We had the Houthis in the
in the Red Sea. We've got the United States now
down the Caribbean. We've got issues in the Black Sea,
and then the Baltic you know what was for a
long time a very kind of calm, nice, steady pace
across the Blue Ocean now is definitely becoming a much
more controversial and kind of kind of an issue that's
more ever present in the news than ever before. We're
(03:31):
also seeing some very high visibility accidents happen. Even though
shipping is much safer than it has been in the past,
losing a lot less ships, the accidents that are happening
tend to be much larger and bigger than ever before.
Speaker 3 (03:45):
And so, you know, you listened a lot of things
that are going on.
Speaker 1 (03:49):
What is the most consequential consequential for the industry?
Speaker 3 (03:53):
Is it the geopolitical risk?
Speaker 1 (03:54):
Is it you know, the US more protectionists policies against trade.
Speaker 3 (04:01):
In your view, what is it that's really a focus?
Speaker 2 (04:05):
I think the big one right now is I'm kind
of split on this one, but I think geopolitical is
the biggest one right now because that is one you
can't really plan for. And in lots of times, what
we've seen is these unexpected issues happen geopolitically. You know
the appearance of the hu Thi for example, and all
the hoothy have been around for a long time and
they had attack ships in the past. No one expected
(04:26):
the scope and scale of what we saw happen in
the diversion that that has caused, and I think too,
you know, the other one is really the reappearance or
the reawakening in the United States of the importance of
commercial shipping and what that means with a renewed shipbuilding
emphasis in the United States and an emphasis on trying
to once again maybe provide some regulation oversight of US
(04:49):
trade into it. President Trump was just named, you know,
one of the most important influencers in shipping today, and
I don't think that was a positive issue. I think
it's because of the impact he has with their everything's
from tariffs to you know, directing programs against China's and
China and their massive expanse of shipbuilding and ship control.
Speaker 1 (05:10):
Right, and so let's talk a little bit about the
Red Sea and the Sewis Canal kind of from your
you know, your opinion, that's really that's what we're asking here.
When do you think the Sewis Canal is going to
be freely open for all ships to traverse?
Speaker 2 (05:26):
Well, I mean, you know, we've seen it kind of
stop and start here. You know, obviously we had the
hoothy start back in October of twenty twenty three. Then
you know, in kind of spring of twenty twenty four,
it looked like things were going to reopen back up,
but then in the summertime we saw two very kind
of nasty attacks by the Houthie against ships the Eternity
Sea and another vessel excapes me all of a sudden,
(05:47):
but very very kind of big attacks which result in
the death of some merchant mariners. I think shipping is
poised to come back into the Red Sea as soon
as those war risk insurance levels go down and it
becomes cost effective. We'll see it happen. But understand, return
to the Red Sea is going to be a very
disruptive element because it's going to involve several months of
(06:08):
resetting global shipping. If all of a sudden we stop
the diversions around Africa and we start funneling ships through
the Suez, we're going to see congestion hit the ports
in Europe and Asia. At the same time, I think
shipping is very much concerned about this. Again, what we're
talking about is the higher end ships, the bigger value vessels,
the container ships, car carriers, those who are the most
(06:31):
expensive to ensure going through But I think what we'll
see is very much what we saw on the flip side.
When we see one carrier pulled out, we saw them
all pull out. I think when we see one carrier
make the decision to go back in and resume normal,
the others will follow suit. Right now, CMACGM is doing
it on a small basis. They've been doing it a
small basis throughout this period of time. But I think
(06:53):
when you see the likes of Mariskan Hophog, all of
a sudden trigger, we're back, everyone's going to come running
back in. And so we can get ready for a
while three months while everything kind of settles back in again,
assuming there's not another disruption.
Speaker 1 (07:06):
And do you think that the global response to Huthis
has been appropriate or do you think that, you know,
countries should have done more to dissuade them to attack
commercial ships.
Speaker 2 (07:20):
I think the global response to the Huthis was exactly
what I thought it was going to be because most
countries don't, especially the United States, don't understand commercial shipping.
They really don't. Their opinion was we're going to go
in with a large military force, We're going to provide coverage,
and therefore commercial shipping will sail, you know, behind our
shield of naval vessels. They don't understand that risk associated
(07:43):
with commercial ships isn't isn't the same as risk associated
with navy ships. And commercial ships had an alternative route.
They had an alternative route that in ways was cheaper
for them to go because of the war risk insurance,
and they took it. And I don't think the US
ever understood quite correctly that just providing that you know,
shield of navy vessels would bring the shipping back in.
(08:06):
They had to do more. And I think this is
a big failure because one of the things that I
think failed with the Hoothi's was the ability to bring
not just military force against them and leverage, but also
political and economic which would have been using other mechanisms
against them, you know, leverage against Iran, leverage against the Houthi's,
ability to get weapons into that area. I think it
(08:28):
was a It was a tactical success for the US Navy.
They'll talk the idea that their missile defense was great. However,
it was a strategic and operational failure for them, and
I don't think they've quite appreciated that level.
Speaker 3 (08:41):
Yet.
Speaker 2 (08:42):
Again, they don't quite understand the commercial dimension as much
as they understand the military dimension, and they came at
it like very many military problems. Here's a nail, we'll
use a hammer to it, when in truth they needed
to use other mechanisms and tools.
Speaker 3 (08:57):
And you know, let's put you on the spot.
Speaker 1 (08:59):
But if you could like give your thoughts on when
do you think these higher value ships, you know, the
large container vessels and the rod rows. You know, when
do you think they go back to use this Suez
or you talk, do you think it's first quarter, second quarter,
third quarter, fourth quarter, twenty twenty seven, Like when do
you think that they're because I know, you know you
(09:20):
mentioned that insurance rates have to go down for them
to use it, But when do you think that's going
to happen?
Speaker 2 (09:26):
Everything is really predicated on the situation in Gaza, I mean,
because that is the Houthis argument is the Hooties are
in line with that. So if ceasefire holds a place,
if we see a successful resolution of that, then what
I envision what we start seeing is ships coming from
Europe to Asia through the canal. We still may see
the Asia to Europe route using the southern route, because
(09:49):
that's the higher value vessels. Those are the ones that
will have the largest cargo on them, there'll be the
higher insurance value. I think what we can expect to
see is start seeing some of the smaller vessels start
coming through more frequent, starting in the beginning of twenty
twenty six. And as those vessels start coming through, and
if you look at the trend line right now, we're
seeing an uptick. We're seeing the number of ships coming
(10:10):
through increasing and as a gradual steady I don't think
what you will see lee is the big kind of
you know, spike up that we saw on the flip
side with the spike down. I think it's going to
be a gradual kind of improvement and as that situation stabilize,
we'll start seeing the ships go through. Obviously, what nobody
wants and the shipping companies don't want to see as
(10:31):
a twenty four thousand TU ship go through there and
get hit because that is a billion dollar investment right there,
and the insurance payout for that is massive. This is
that risk that the shipping company see. It's not just
the loss of a potential ship, but it's the future
voyages of that ship that they would be out and
that's the big issue. Plus we're starting ready to see
(10:52):
a scrapping start to take place with vessels. Again, one
of the things that going through the Suez will do
is free up a lot of tonnage that's now excess,
and so as that becomes available, we'll start seeing that go.
But what I envision is a phase and probably around
first quarter, second quarter, we start seeing the smaller sized
vessels anywhere from six thousand to twelve thousand tu probably
(11:12):
start coming through on a regular basis, and once they
get a track record of that, we'll start seeing the
larger vessels, the ultra larger container ships and bigger ships
start coming through that way.
Speaker 1 (11:23):
Another geopolitical issue. I guess we're not issue as topic
within shipping. It's the shadow fleet as it really it's
to tankers. Yeah, you know there's a bunch of countries
that the US and other countries have sanctions on, whether
it's Trussian oil or Venezuelan and oil or Anian oil.
Kind of what are you seeing there with the shadow fleet?
(11:46):
When do you think do you think what happens to
the shadow fleet when these shank saying if these sanctions
can get lifted, especially on Russia because that's like the
first place.
Speaker 2 (11:55):
Yeah, I think the shadow fleet, for me, is one
of the biggest dangers out there right now for ship
because I tend to use a phrase called the parallel fleet,
because these ships are operating outside the bounds of normal shipping.
They're not going to the typical registries, they're not using
the twelve big P and I Protection Indemnity Club insurances,
and they're not being classified or the regular classification agency.
(12:19):
So they're operating in this really kind of parallel to
the commercial fleet that's out there, and that raises danger.
If you look at the ship that the US just sees,
the motor tanker Skipper, you know, here's a ship with
no registry, no insurance that we know of, not classified,
and you know, you're running around with a one point
eight million barrels of fuel on a ship that has
no protection whatsoever. We know last time the ship was
(12:40):
inspected was twenty nineteen, and so the shadow fleet really
raises a lot of threats on the world oceans. I mean,
if something happens to a ship like this, who pays
for the cleanup? Who protects the crew? We saw this
in the collision just earlier this year when Frontline had
a collision with a vessel coming out of the Straits
of Horror Moves. You know, it was a shadow fleet vessel.
There was no one there to provide the insurance protection.
(13:01):
We're seeing it right now in the Black Sea with
the attacks on the former Gambian flag vessels. So the
shadow fleet is a dangerous thing. Now they're using it,
you know, Russia and Venezuela Iran use it to circumvent
sanctions against them. What I get concerned about is even
if sanctions are lifted, we still may see the resurrection
of this shadow fleet exist operating outside the bounds because
(13:24):
they're not coming into ports. They're doing ship to ship
transfers at sea, so that keeps them out of port
state control. They don't have to be inspected, and you know,
it provides a really cheap operation for vessels. This is
the danger. We create this second fleet out there that
really does not have any oversight by international authorities or
national authorities. And I think that's a big concern.
Speaker 1 (13:46):
And they tend to be really like kind of you
alluded to. They tend to be really old chips, right, Yeah.
Speaker 2 (13:51):
I average what we see is ships over fifteen years
of age. If they are registered, they're in you know,
what I would call true flags of convenience. Basically, you're
paying money for a flag and there's no oversight by
the company. They may not have insurance at all on them,
and you know, there's no classification society that's doing that,
you know, third party check to ensure the vessels are
(14:13):
meeting their standards. And this is a danger to the
crews that are working on these ships, and more importantly,
they're dangerous to the world's oceans and everyone who adjoins them.
And I think this is a major concern. It's something
I think the International Maritime Organization has got to get
stronger about. You know, back in the day when we
had flags of conveniences, you know, we fix those. We
set up international regulations, We set up port state control
(14:35):
so that when ships come in no matter regardless of
what country you are, you can be inspected. These ships
now are operating outside those bounds, and this creates a
very dangerous proposition for the movement of goods around the
planet and the danger to the environment.
Speaker 1 (14:51):
Who polices that is that just the individual sovereign militaries
that they're responsible for policing the shadow fleet if they
come across well.
Speaker 2 (15:01):
I mean the way you police vessels in general is
when they come into your ports, you do that port
state control. So I mean that the concept was you
were bringing the ships into port and they were being inspected.
Didn't matter what flag you were, you were being you know,
if you come to the United States, you're getting port
state control. So about one out of very eight nine
ships come in you know, gets bordered by the coast
Guard and they get an inspection. The problem with with
(15:22):
what we're seeing right now is these shadow fleets don't
come in the countries where they get inspected, or they
don't even come into countries at all, and you know
they're operating out international war. Is the argument with grabbing Skipper.
One of the reasons that there's a lot of discussion
about is what is the authority to grab that ship.
A stateless ship operating on the ocean, you know, should
not be allowed to operate. And we've seen this. We've
(15:44):
seen this highlighted the in the Baltic with the ships
that are sailing to and from Russia with the Baltic States, Finland, Sweden, Germany,
Norway or all Denmark are all talking about. This is
these ships don't have registry. There's a big push on Turkey,
for example, to ensure that ship sailing up into the
Black Sea have registry and insurance. Like these three vessels
that got attacked by Ukraine, they were flying Gambian flags,
(16:08):
but Gambia had purged them from their registry, so the
ships were not and now we see the issue with
one of them stranded off the coast of Bulgaria right now.
Speaker 3 (16:18):
You mentioned the IMO earlier.
Speaker 1 (16:20):
The IMO has some free I would call ambitious emission
goals by I think twenty fifty.
Speaker 3 (16:27):
They want to get to the zero.
Speaker 1 (16:29):
What are your thoughts on that, Like, is that something
that is achievable and if it is achievable, how is
the industry going to reach those goals?
Speaker 2 (16:39):
Yeah, the IMO, you know, the net zero framework is really,
I would argue, laudable. I mean, it's really something they're
trying to do. They're trying to reduce the carbon footprint
of shipping around the world. Now, on the flip side
of that, I will say that, you know, per Ton,
the shipping industry is the cleanest method to move cargo
around the world. And what's interesting about how the IMO
(17:00):
is doing is they're putting this onus, on the shipowners
and the shipyards to create these new methods. And what
you have right now is a very kind of innovative
period where they're trying a little bit of everything to
achieve these goals. And so what we're seeing is hydrogen,
we're seeing ammonia, we're seeing looquified natural gas, you name it.
(17:20):
Everything that's possible is being tried. The problem is, I
don't think many people will understand a couple of key issues.
Regardless number one, costs. I mean, all that cost to
build ships is being transferred over to the freight rates,
and this is one of the reasons why we're seeing
escalations in that second, the goals being set by IMO
our need to be I would argue that they're very fast.
(17:44):
And while it doesn't sound very fast, do you talk
talking about twenty thirty, twenty forty, twenty fifty and that
sounds like a long time service life of a ship
is ten to twenty years, it's twenty twenty five. If
I want to invest in a new ship today, I'm
going to get that ship in one to two years,
and I'm going to get fifteen to twenty years out
of that ship. If the rules are by twenty forty,
I have to reach a certain level of carbon emission.
(18:07):
Do I want to pay for that ship right now?
Because I'm not sure that ship is going to be
viable after twenty forty, and so it shifts a huge
amount of onus onto the ship ship owners. I think
we need to have a more rationalistic look at this
where we're phasing in the technologies and we're ramping down
our carbon emissions. Because right now the net winners of
(18:30):
this are going to be the ship repair and shipbuilding nations,
which is Japan, China and Korea. They see this as
a great boon because this is going to ensure vessel
replacement over the years. I think IMO has got a
lot of things on their plate. The US opposition to
net zero framework was you know, I was one who
(18:51):
sat there and said that Monday of that event that
happened when the vote, I said, on Monday, this is
going to pass. And yet by Thursday it got tabled
for a year because the US was able to leverage
a lot of political clout to get that change. So
I think IMO has got to look at how they're
initiating this and maybe ramp it down or phase down
the transition. I think we still need to keep going
(19:13):
that way, but I'm not sure if they can get
the full amount in the timeframe they're talking about now.
Speaker 1 (19:19):
Yeah, And also on emissions, there's like it seems like
there's a patchwork of regulations and by country and by regions,
it seems also you need some sort of you know,
a global regulations like the IMO is doing for emissions
because you know, like I think Europe has one, you know,
the United States has a different one. So that patchwork
(19:41):
makes it for pretty confusing for people that are involved
in chipping.
Speaker 2 (19:45):
It is, I mean. And one of the reasons like,
for example, you may want to see ships still sailing
around Africa for example, is because the Mediterranean is an
environmental control area. Now, so when you go into the
Mediterranean you have to burn a certain you know fuel,
going around Africa you don't, So you know, what is
the cost benefit analysis of that. The other factor that
doesn't get talked about anywhere near enough, in my opinion,
(20:07):
is the education and the training for the ship's crews
for these new fuels. Ammonia is the fuel that I
have the most concern about because ammonia is the greatest
carbon you know, reducer because it doesn't use carbon at all.
You burn ammonia and there's no carbon emission whatsoever. However,
ammonia on a ship is one of the most dangerous
(20:27):
substance I could think about having sailed ships and having
dealt with with with these issues. An ammonia leak on
the ship is almost impossible to deal with. We see
those on ships carrying containers with refrigeration things like that,
but a engine plant using ammonia is extremely dangerous. How
are we training these crews? What are we doing for
safety features on board these ships? Because again, you know,
(20:50):
it's great to have the net zero I'm all for that,
but we need to ensure that we have the trained
personnel and the safety in place to help them. We're
seeing a lot of ship fire in you know, with
lithium ion batteries on board ships right now. What happens
when we start getting these variable new technologies of fuel
on board They can create a lot of problems and
you know, do we have the infrastructure in place to
(21:12):
deal with them? In ports for example?
Speaker 1 (21:15):
And dumb question, why is the ammonia more dangerous than
the other fuels.
Speaker 2 (21:19):
Well, ammonia is corrosive. It it actually starts corrupting the pipes.
And so when you have a leak from ammonia, I
mean even you know, if you don you know, protective gear,
it starts to break it down and it creates an
explosive atmosphere. And you know, all fuels have this problem.
Diesel fuel has a problem. Everyone has it. But again
(21:40):
it's a new challenge. Not only that you have to
set up the bunkering facilities. One of the big one
of the big problems we saw on the net zero
framework extension out for a year is that a lot
of the proponents of these alternative fuels needed to show
the demand for those fuels so that fueling companies and
production facilities would ramp up those was bunkering capacity so
(22:01):
that you know, hey, we can refuel these vessels. You
can you know, run on ammonia all you want if
you don't have ammonia fuel to do it. That's the problem.
We saw that with electric cars in the United States
when there wasn't enough charging stations. It's gonna be the
same thing with ships, especially when you send ships on diversions,
for example around South Africa. And now all of a sudden,
you need liquefied natural gas or ammonia or whatever fuel.
(22:22):
It is set up in you know, in Durban or
Cape Town, South Africa, where it doesn't exist right now.
Speaker 1 (22:29):
So you mentioned shipbuilding nations earlier, China, Japan, and South Korea. Obviously,
the Trump administration has been pretty vocal about, I guess,
reviving the shipbuilding industry here in the United States. Do
you think that is something that's feasible?
Speaker 3 (22:45):
You know, what has to happen for that to come
to fruition.
Speaker 2 (22:49):
I think it's feasible. I mean, I think it's a
tough task. You know, I would have loved this start
of a forty years ago. You know, it's it's always
that issue, you know, I think you know, so, first off,
you know, we kind of outsourced our commercial ship building
in the eighties. We made this conscious decision to kind of, well,
we'll outsource commercial shipbuilding. We'll end the subsidy program that
(23:10):
had existed since the nineteen thirties, because hey, commercial shipbuilding
was being done in Europe, in Korea and Japan and
their allies, and we were good with that. We had
no problem with that whatsoever. And in truth, most people
don't care, you know, how their T shirts are delivered
to target. It doesn't matter if it's on an American
ship or a Korean, Japanese, or Chinese built ship. However,
(23:32):
what we've seen recently is that that number is changing.
You know, you look at the past two years, from
twenty twenty two to twenty twenty four, China has grown
in terms of its number. You know, they were building
five percent of the world ships in nineteen ninety nine.
Last year they built fifty one percent. And you know,
in those two years up to twenty twenty four, they
increased sixteen percent. That's the same number that Japan and
(23:54):
Korea dropped. And so what we're seeing is Japan actually
mean China becoming really the shipbuilder. We forecast for twenty
twenty five they'll be somewhere in the range of sixty
percent of the world ships they're building. And what makes
China perceived as a threat by the United States is
that they're not just a shipbuilder. They do kind of
all aspects of shipping. They build the containers, they lease
(24:17):
the containers, they do the chassis, they do ship repair.
They're one of the largest groups that are out there
as merchant mariners, controlling ports, the ship cranes, repair, you
name it. They just they seem to be doing everything
to really kind of control all aspects of shipping. And
so the US wants to get it started. It's a
very tough thing for the US to get started because
(24:38):
what we did is we turned our shipbuilding industry in
the United States into a one customer service, and that's
the US Navy. And so all the private yards are
building for the US Navy largely, and you know, to
try to change the mentality because building Navy ships, not
just technically, but also I would argue Philoso is different
(25:01):
than building commercial ships. You don't build a Navy ship
and sit there and say, okay, here's the plans, start
building it, because the Navy will tinker and toy with
it the entire time. Commercial companies like build me twenty tankers,
and the shipyards like, I'm going to build them, and
this is the way they're going to come out and
here you go. So they've got to change that. So
what we see right now going on in the United
States is these partnerships that are being developed with foreign
(25:23):
shipping companies. So the most obvious one is Hanua in Philadelphia,
where we're seeing Hanwah bringing in the technology that they
use in the Korean shipyards and also some of that
philosophy over to it. And it's going to be an
uphill challenge. It's a really tough one. I've you know,
I'm very optimistic that this is the biggest reform I've
(25:44):
seen in ocean shipping and shipbuilding in my entire life.
At the same time, we're not seeing anything really measurable yet.
I think the US has got to get ships reflagged
into the US fleet. There's got to be cargo provided
for those ships, and they've got to start getting contracts
signed to start cutting steel. And unfortunately, you know, we're
(26:05):
coming up into a year of the Trump administration, we
quite have not quite seen that yet. You know, the
Maritime Administrator hasn't been you know, confirmed. There's two gaps
at the Federal Maritime Commission. The leadership at the US
Merchant Marine was gutted, Merchant Marine Academy was gutted. We
don't have the Maritime Action Plan as required by the
Executive Order on shipbuilding. So a lot of very big
(26:29):
pronouncements and goals, but we haven't seen a lot of
developments yet, and so, like me, I think everybody's waiting
to see what happens.
Speaker 1 (26:39):
And so, you know, obviously for the Jones Act chips,
the ships have to be made here in the US.
A lot of people debate about whether the Jones Act
is fine as it is, if it needs to be changed,
or it needs to be scrapped altogether. What are your
thoughts in the Jones Act?
Speaker 2 (26:56):
Well, Lee, I talk about the Jones Act quite a bit,
and for everybody, the Jones Act is specifically in this case,
section twenty seven of the Mercharinact in nineteen twenty it
says that if you want to move cargo between two
US ports, you've got to be on a US owned,
US flagged, US built, US crewed ships. And what's funny
to me about the Jones Act is there's two views
in the Jones Act. There are those who are one
hundred percent for it and those who are hundred percent
(27:18):
against it. And never will the two take a step
off their mountaintop for fear that the other one will
pounce on them. I'm not an advocate. I number one,
I don't think the Jones Act should be repealed because
I think there's other provisions of the jones AC that
are really important that we don't ever talk about. But
more importantly, we need to reform it. There needs to
be a discussion about maritime reform. And I think the
(27:40):
way we build ships today in twenty twenty five is
different than the way we built ships forty years ago,
let alone, you know one hundred and five years ago.
Shipyards are assembly points. We bring parts and components in
from not just nationally but internationally. Why why would we
not want the best you know, propellers in the world,
which come from Germany, you know, to be on our ships.
(28:01):
You know, starting up a facility to start building propellers
in the United States would be a massive uptick. It
would be a huge cost to do that. Why not
use some of those facilities? Excuse me, but still have
you know, the assembly and a large number of the
work being done here in the United States. I think
we need to have that issue. You know, Hanwa has
been talking about this. Let's start a production of ten tankers.
(28:24):
We build three of them in the Korean yard, and
then we take that same design, same capability, and start
it in the US yard and we build the other
seven here. But all ten of them would fit under
a kind of a Jones Act requirement, so that we
can start that process. You know, prime the pump is
the phrase I keep hearing all the time, and we're
seeing this. Crowley was able to bring in a LNG carrier,
(28:47):
liquefied natural gas carrier that was built overseas through a
loophole in the nineteen ninety six Coast Guard authorization. So
we can do this, we can, we can make some changes.
I mean, there's no reason we shouldn't do it, especially
in key are areas. I would argue where it's going
to take time for the US to build up a
domestic industry liquefied natural gas tankers, perfect example, It's going
(29:08):
to take years to build that industry up in the
United States. In the meantime, US is the largest LNG
export in the world. Why can't we be bringing Alaska
l G down to California for example? Should be done.
We should be firing up shipbuilding on the Great Lakes.
We have Two years ago we built the first Great
Lakes freighter up on the Great Lakes, American Great Lakes
Freighter in forty years. Just had the fiftieth anniversary of
(29:31):
the loss of Edmund Fitzgerald. We should were replacing all
those ships up there. You know one mode of I
forget what it is of iron ore and a Great
Lakes Carrier builds thousands of cars. It's like, why are
we not updating that fleet up there? We should be
working on that. So we should have a discussion about
Jones act. I am not one who says you can't
talk about anything, But then again, I'm a tenured professor,
(29:51):
and I can say these things.
Speaker 1 (29:53):
Speaking of tenured professor, you know, as an adjunct professor
at the US Merchant Marine Academy, A can just give
a little background about what is that institution? And B
can you just talk about what you focus on with
your students there? And then you know, where do these
students once they graduate, what do they do for her profession?
Speaker 2 (30:15):
Sure, so I'm an adjunct at the merch Marine Academy.
I teach a graduate level course in their Masters of
Marine Engineering on Maritime industry policy. And I've been doing
that since two thousand and eight. So there is the
US Federal Merchant Marine Academy at Kingspoint in New York.
I've been around since nineteen forty three. And then there
are six state maritime academies kind of scattered around the
United States California, Texas, Michigan, Maine, Massachusetts, and the finest
(30:39):
of them all the New York Maritime I'm a graduate off.
And those institutions produce graduates that have licenses to operate
in the US merch Marine, either a third mate which
is a deck officer license, or a third assistant engineer,
which is an engineering license. And the Merchant Marine Academy,
I think is unique. It's a federal academy, the same
(31:00):
as King's excuse me, the same as West Point, the
same as Annapolis, the Army and Navy, which we just
had the game the other day. But what it does
is it creates officers for an industry. Makes it very unique.
Was created during the midst of World War Two. It's
the only academy, by the way, that has a battle
standard because it's it's cadets actually died during World War two,
(31:22):
so one hundred and forty three I think it is
died in World War two. So it's a unique institution.
I think the maritime schools provide really the bedrock for
our maritime industry. These are people who don't just sail ships.
They go into different aspects of the industry. They go
into shipbuilding, they go into the ship operations, they go
(31:42):
into the business side of this. And one of the
things that I think that has the potential for the
United States to come back as a big shipbuilder is technology.
If you look at the history of the United States,
what is allowed the United States in the past to
become major in the maritime field has been technology innovations,
whether it's the Baltimore schooner, the clipper ship, the use
(32:05):
of oil as a fuel in World War One, prefabrication
during World War Two, containerization, super tankers, all American innovations,
and right now we're on the precipice of that. Use
of AI in ship design and technology, use of adaptive
technology in ship construction, and the potential of new power sources,
(32:26):
if we want to talk about it. One of the
most innovative power sources we can potentially put on ships
small modular reactors, nuclear reactors. And so I think schools
like King's Point, along with the state maritime academies, should
be the kind of the breeding grounds. These should be
the places we are dumping money into because one of
(32:46):
the things we can get out of them. Are these
technological innovations that come out. It's always funny all those schools,
if you ever look at their return the studies on them,
they have the best return on investment of any of
the schools. Whatever you pay to go to college there,
although the King's point is free, you'll see that the
end result out of those academies is some of the
(33:07):
highest starting salaries and maintaining salaries for any college graduates.
I pull it down from my UNEs institution because I
teach it a very small private college. But besides that,
everybody else does pretty well economically great.
Speaker 1 (33:23):
And then you know, could you also, you know, when
we did the intro earlier, you know I mentioned that
you're part of at one time, the Military Sealift Command.
Most people have no idea what the heck that is,
So could you educate us and tell us what that
is and has it fit into the Navy?
Speaker 2 (33:42):
Sure? So, US Navy's Military Sealift Command has been around
since nineteen forty nine under a different name. But what
most people don't understand is that one out of five
ships in the US Navy, so about about sixty ships
out of three hundred are crewed and operated by civilian
merchant mariners. The Military Sealift Command is the largest employer
layer of merchant mariners in the United States. About five
(34:04):
thousand of them are directly hired by the merchant by
the Military Sealift Command and about a thousand are contracted.
And what they do is they fill key roles. In
case of Military Sealift Command, all the auxiliary vessels, the
underway replenishment ships, the tankers that refuel ships at sea,
the ones that bring ammunition and stores to them are
(34:24):
all crewed by these civilian merchant mariners. And at the
same time they also operate ships for the Afloat Prepositioning
Program that have ammunition and equipment forward deployed. In time
of war, we activate this reserve fleet that's stationed along
the coast of the United States, about fifty to sixty vessels.
Those are crewed by merchant mariners. And I think one
(34:45):
of the things that the US kind of forgot was
there's kind of this very symbiotic relationship between the commercial
industry and the military side of shipping. And unfortunately, what
the US tried to do after World War Two has
created its own kind of little military merchant which is
military seal of command, but they failed to realize they
need that commercial side too that kind of back it up,
(35:06):
and what we've seen recently is a lot of problems
with this sector. So for example, in twenty nineteen, there
was a huge test of the reserve fleet and this fleet,
which should have had an eighty five percent readiness, only
clocked in at forty percent, which meant that the combatant
commanders overseas could not count on seal of ships bringing
(35:26):
them the equipment and supplies they needed in time of war.
So we addressed the readiness of the ships, and what
we're seeing is this program underway right now to replace
some of the older ships in the fleet. The average
age of ships and the reserve fleet are like forty
four years old, and so they're trying to replace them.
The other issue they have is the number of merchant mariners.
While MSc pays very well, the problem is their government
(35:49):
employees many of them, and their leave policy is terrible,
and so this has created a big problem. During COVID,
there was issues with how they were treated, and what
we've seen recently just last year was seventeen ships laid
up because of the lack of cruise This is a
substantial problem. There is a concern that there's not going
to be enough merchant mariners to man the ships to
(36:11):
sustaining the US Navy and the Department of Defense in
time of war. And that's being addressed now. It hasn't
been resolved yet, but it's being looked at.
Speaker 1 (36:20):
And you know, the Trump administration, you know, we can
argue a lot of things, but not to be political
here at all. What do you think they're doing that
is that's great for the shipping industry? And what do
you think they're doing that is really hurting the shipping
industry in your opinion?
Speaker 2 (36:41):
I think on anything, no, no, no, I think on okay,
what are they doing? The help is they bring attention
to it. I mean there's a lot of visibility, more
on shipping than ever before. I think Secretary Duffy has
put focus on shipping. You see him for example, the
US merch Marine Academy. I love the US Merchant Marine
academ even though I'm a graduate of one of its rivals,
(37:02):
but it has been neglected. I mean it has been
just criminally neglected. I'm talking about the fact that we
had midshipmen living there in dorms without heat and hot
water for a while. It's just decayed. And in many
ways it was a microcosm of the US merchant marine.
So I mean there's a tension now being drawn to that.
I think, you know, the fact that we've had more
(37:23):
legislation and proposals come out than in any previous administration
is significant. I think again the executive Order, the Ships Act,
which is being co sponsored by Senators Kelly and Young,
you know, bipartisan support across the ways. I think that's
really important. I think it's great to see that. On
the negative side, here you have the Trump administration arguing
(37:46):
that we want to see the expansion of US shipping.
Yet one of the very first things they did was
killed the wind industry, which is going to be a
major factor for US shipbuilding because the wind industry needed
support vessels off the coast, and the US was timed
to build many of these ships, which are very large ships. Actually,
you know, people tend to think these are small ships.
They're not. They're very large ships. And that industry was
(38:09):
going to be a big kind of boom to kind
of really jumpstart the shipbuilding and the maritime industry. And
now you literally have ships lied up along the coast
and all of a sudden, what is going to be
that is not happening. Same time, we had people like
Rudel Saude, the head of CMA CGM, come to the
United States offered a reflag twenty ships into the US registry.
(38:32):
He did, he reflagged the CMA CGM Phoenix, but that's
been it. We haven't seen the other ships come in
and so, you know, the big issue is follow up.
My biggest criticism right now is leadership. Who is in
charge of directing this we don't have Ahead of the
Maritime administration, we don't have We're missing two of the
five commissioners on the Federal Maritime Commission. There's no Deputy
(38:56):
Secretary in the Navy for shipbuilding right now who is
eating this. You know, under the Maritime Action Plan and
the ships Actor's supposed to be a maritime you know,
shipping advisor created that has not been done. So I
think one of the biggest problems right now is leadership.
A lot of talk, but but again action is what
(39:17):
you need to see. And we're already coming into the
you know, second year of a Trump administration that by
all accounts will be a lame duck within another year.
Speaker 1 (39:27):
So when you just to you know, we're kind of
coming up at the end of our time here.
Speaker 3 (39:32):
You know.
Speaker 1 (39:33):
I'm always curious to hear how people, you know, first
get into an industry. What made you decide to focus
on the maritime industry when you were thinking about college.
Speaker 2 (39:43):
I initially wanted to go in the navy. That was
my big goal was it was to go into the Navy.
But uh, I got into the US Naval Academy, but
then they told me my eyesight at the time I
had glasses, I couldn't sail ships like I would be restricted,
and so I wanted to go to see I grew
up in the South a Long Island. My dad had
a fishing boat. We used to go off shore and
(40:03):
I used to see the ships coming in out of
New York and I was like, man, I just want
to go on those and I don't know where they're going,
but that's what I want to do, and that's that's fortunite.
Had a friend who was going to State University of
New York Maritime College, and I got in there and
it's been really great. I mean, I got to sail
for years. I got to work ashore. I met my
(40:24):
wife while on a ship, so and then when I
came ashore. You know, I was always interested in history,
and what was really interested about was the history of
my industry, and there really wasn't a lot written about it,
and I was like, man, this is you know, And
so that has been kind of my research project. I
did my doctoral dissertation on the kind of the intersection
between commercial shipping and national defense. And then in twenty
(40:46):
twenty one I started the YouTube channel Whenever Given decided
to take a right turn in the in the Suez
Canal and for six days pinched fifteen percent of global trade.
Speaker 1 (40:55):
Yeah, you know, you mentioned there aren't a lot of
books out there, but you know, since you've got into
the industry, I guess some have been written. Do you
have a favorite book about either the shipping industry military?
Just giving your background or leadership.
Speaker 2 (41:11):
I'll give you two books right with the bad the history.
One I love is a book written by a good
friend of mine, Lincoln Pain, called Sea and Civilization, which
is a maritime history of the world. He jokes that
the history of the world is maritime, so it's kind
of redundant to put maritime in front of it. But
it is a great it's a world history through the
maritime prism. I just used that book in my world
(41:32):
maritime history course. And the other book I always love
is Mark Levinson's The Box. I think, to me that's
one of the best books out there because I live
in North Carolina, about fifty miles from where Malcolm McClain
was born in Maxton, North Carolina. And you know, the
greatest innovator in global shipping was a truck driver. And
I think that, to me is probably the best image
(41:54):
of that because sometimes we get so focused on the
ships and you know what they're involved, but in truth,
all the ships do is connect us from shore to shore.
That's all we use ships for, is to connect us
from one point to another. And it took a truck
driver to sit there and say there's got to be
a better way to move cargo than the way we're
doing it piece by piece, and then some of it
kind of he didn't come up with an idea where
(42:15):
in nineteen fifty six the Ideal X. I always argue,
he's the Elon Musk of his day. You know, Elon's
got SpaceX. He had Ideal X and Ideal X sales
out of Newark with fifty eight containers on board, and
today we're running ships with twenty four twenty five thousand
containers on board. I don't think McClain. Maybe he did,
but I don't think he quite realized what he was
unleashing when he did that. You know, over was now
(42:39):
sixty years ago, seven years ago, almost right.
Speaker 1 (42:43):
And then I'm just curious if you, you know, because
you spent a lot of your career on the on
the water, on the seas, what is your favorite thing
about being on a ship for a long time and
what is your least favorite thing?
Speaker 2 (42:54):
So my every thing on a ship was always the
idea that man, you could just sit there and read.
It was always great for me because it was one
of the things I every time I go on a
ship back in the time when I was saying, we
didn't quite have the kindles and everything, so bring some
books and it was always great and for me, it
gave me the time to do it. And I love
going to places. I love visiting and seeing places. And
I was fortunate at the time that when we would
(43:14):
pull in, you could stay there for a little bit
of time and actually see things. A lot of mariners
don't get that opportunity anymore. A lot of a lot
of stea fares these days are you pull in the
port and you know, ships make money salling, they don't
make money in port, and so they're always kind of
really on on on the dogs coming in.
Speaker 3 (43:30):
You know.
Speaker 2 (43:30):
The downward side was really the life on board because
you're really you're really secluded, You're really cut off. I
mean you leave shore and you are really cut off.
Today it's getting better with things like Starlink. You know,
mariners are more connected than ever before, which is good.
I mean we have tracking of ships, we can see things.
But at the same time too, I would argue that
that one of the big drawbacks of shipping is trying
(43:54):
to get people educated in what happens. We have basically
walled off shipping and one of the reasons I started
to my channel was to really expose people to global shipping.
Most people don't see it. You know, when you create
a you know, we move the ships from the piers
along Manhattan over to Newark, and nobody wants to go
to Newark, so I mean nobody sees the ship, so
it's just you know, all the way over there, and
(44:15):
so it becomes very isolated. And you know, it takes
events like ever Given Dolly, you know, the Hoho thy
to remind people. It's like, hey, you know when when
when commerce gets cut off it impacts you. There there
are direct impacts. I remember when I transitioned the channel
from talking about ever Given to the supply chain crisis.
That for me was the moment, because all of a sudden,
this was impacting everybody, and I think making that awareness
(44:39):
and plus, as you well know, probably you know, when
you talk to people within an industry, they don't have
the ability many times to talk to people outside the industry.
They're very much have a dialogue, they have a lingo,
They have a language that doesn't promote them from really
explaining things they love, acronyms they love, They assume you
know everything. And and myself, as an educat, I'm used
(45:00):
to providing very complex targets and topics and breaking them down.
So that's what I kind of try to do.
Speaker 1 (45:07):
All right, Great, well, sal thank you so much for
your time and insight to really really enjoy the conversation.
Speaker 3 (45:12):
So thanks so much.
Speaker 1 (45:14):
I appreciate having me, and you know, for anyone that's listening.
If you want to learn more about the shipping industry,
I would heavily suggest Sal's YouTube channel What's going On
with Shipping So it's a wealth of knowledge and insights,
so definitely check it out. And I also want to
thank you for tuning in to Talking Transports. This will
be our final episode.
Speaker 3 (45:35):
Of the year.
Speaker 1 (45:35):
I want to thank all of you, our listeners, our guests,
and supporters for making this another great season of conversations
across the great logistics and transportation world. Wishing all of
you a safe and RESTful holiday season and a happy,
healthy start to the new year. I look forward to
reconnecting with you in twenty twenty six with more insights, conversations,
(45:57):
and industry perspective. Until then, happy holidays and thanks for
Talking TRANSPORTSM
Hi everyone, this is Lee Clasgow when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Clasgow, Senior Free Transportation logistic Chandles at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. A quick public service announcement
before we dive in. Your support is instrumental to keep
bringing great guests and conversations to you, our listeners, and
(00:29):
we need your support, so please, if you enjoy the podcast,
share it, like it and leave a comment. Also, if
you have ideas, feedback, or just want to talk transports,
I'm always happy to connect. You can find me on
the Bloomberg terminal, LinkedIn, or on x at Logistics. Lee,
I'm very excited to have Sal Macagliano as our guest today.
Sal is a maritime historian, educator, and former merchant mariner
(00:50):
who serves as chair of the Department of History, Criminal Justice,
and Political Science at Ampbell University in North Carolina, where
he's a professor special in maritime history and Security. A
nineteen eighty nine graduate of Sunni Maritime College with a
BS in Marine Transportation and a Merchant Marine deck Officer license.
(01:13):
He sailed with the US Navy's Military Sealift Command, including
as third mate on USNS Comfort during the Persian Gulf War.
He earned a masters in maritime history and notical Archaeology
from East Carolina University and a PhD in Military and
Naval history from the University of Alabama. He's also an
(01:33):
adjunct professor at the US Merchant Marine Academy. He's widely
recognized for his expertise. He hosts the popular YouTube channel
What's going On with Shipping and that has over five
hundred and seventy thousand subscribers. Sal welcome to Talking Transports.
Thank you so much for joining.
Speaker 2 (01:52):
Us, Lee, I appreciate you having me on. It's always
a pleasure to be with Bloomberg.
Speaker 3 (01:56):
You know.
Speaker 1 (01:56):
I stumbled upon your channel a couple of months ago,
and I think it's great resource to learn more about
the shipping industry and not just you know, commercial shipping.
You cover all things that's on the water, and I
really wanted to have you as a guest, So thank
you so much for.
Speaker 3 (02:12):
Taking the time.
Speaker 2 (02:13):
Oh, I appreciate that. It's nice to say.
Speaker 1 (02:15):
So, you know, you're an educator pontificator. So could you
just talk about, you know, from your vantage point, what
is the state of the maritime industry.
Speaker 2 (02:24):
Well, I mean, maritime industry is in obviously a lot
of flux. I mean when you look at it, and
this is one of the things I love about talking
about it is it's a little bit of everything. So
if we look at global trade, for example, we've never
seen global trade at a higher level. I mean, we're
seeing more goods moved around the world at a faster
and greater rate than ever before. I always talk about
this issue of volume and velocity, so we're moving stuff
(02:47):
a lot. At the same time, we have a lot
of issues associating with the maritime industry. We've got geopolitical threats,
environmental threats, we were seeing issues dealing with specifics in
national issues, for example, the United States trying to get
shipbuilding back up and running. We're seeing, you know, confrontations
(03:09):
on the high seas. We had the Houthis in the
in the Red Sea. We've got the United States now
down the Caribbean. We've got issues in the Black Sea,
and then the Baltic you know what was for a
long time a very kind of calm, nice, steady pace
across the Blue Ocean now is definitely becoming a much
more controversial and kind of kind of an issue that's
more ever present in the news than ever before. We're
(03:31):
also seeing some very high visibility accidents happen. Even though
shipping is much safer than it has been in the past,
losing a lot less ships, the accidents that are happening
tend to be much larger and bigger than ever before.
Speaker 3 (03:45):
And so, you know, you listened a lot of things
that are going on.
Speaker 1 (03:49):
What is the most consequential consequential for the industry?
Speaker 3 (03:53):
Is it the geopolitical risk?
Speaker 1 (03:54):
Is it you know, the US more protectionists policies against trade.
Speaker 3 (04:01):
In your view, what is it that's really a focus?
Speaker 2 (04:05):
I think the big one right now is I'm kind
of split on this one, but I think geopolitical is
the biggest one right now because that is one you
can't really plan for. And in lots of times, what
we've seen is these unexpected issues happen geopolitically. You know
the appearance of the hu Thi for example, and all
the hoothy have been around for a long time and
they had attack ships in the past. No one expected
(04:26):
the scope and scale of what we saw happen in
the diversion that that has caused, and I think too,
you know, the other one is really the reappearance or
the reawakening in the United States of the importance of
commercial shipping and what that means with a renewed shipbuilding
emphasis in the United States and an emphasis on trying
to once again maybe provide some regulation oversight of US
(04:49):
trade into it. President Trump was just named, you know,
one of the most important influencers in shipping today, and
I don't think that was a positive issue. I think
it's because of the impact he has with their everything's
from tariffs to you know, directing programs against China's and
China and their massive expanse of shipbuilding and ship control.
Speaker 1 (05:10):
Right, and so let's talk a little bit about the
Red Sea and the Sewis Canal kind of from your
you know, your opinion, that's really that's what we're asking here.
When do you think the Sewis Canal is going to
be freely open for all ships to traverse?
Speaker 2 (05:26):
Well, I mean, you know, we've seen it kind of
stop and start here. You know, obviously we had the
hoothy start back in October of twenty twenty three. Then
you know, in kind of spring of twenty twenty four,
it looked like things were going to reopen back up,
but then in the summertime we saw two very kind
of nasty attacks by the Houthie against ships the Eternity
Sea and another vessel excapes me all of a sudden,
(05:47):
but very very kind of big attacks which result in
the death of some merchant mariners. I think shipping is
poised to come back into the Red Sea as soon
as those war risk insurance levels go down and it
becomes cost effective. We'll see it happen. But understand, return
to the Red Sea is going to be a very
disruptive element because it's going to involve several months of
(06:08):
resetting global shipping. If all of a sudden we stop
the diversions around Africa and we start funneling ships through
the Suez, we're going to see congestion hit the ports
in Europe and Asia. At the same time, I think
shipping is very much concerned about this. Again, what we're
talking about is the higher end ships, the bigger value vessels,
the container ships, car carriers, those who are the most
(06:31):
expensive to ensure going through But I think what we'll
see is very much what we saw on the flip side.
When we see one carrier pulled out, we saw them
all pull out. I think when we see one carrier
make the decision to go back in and resume normal,
the others will follow suit. Right now, CMACGM is doing
it on a small basis. They've been doing it a
small basis throughout this period of time. But I think
(06:53):
when you see the likes of Mariskan Hophog, all of
a sudden trigger, we're back, everyone's going to come running
back in. And so we can get ready for a
while three months while everything kind of settles back in again,
assuming there's not another disruption.
Speaker 1 (07:06):
And do you think that the global response to Huthis
has been appropriate or do you think that, you know,
countries should have done more to dissuade them to attack
commercial ships.
Speaker 2 (07:20):
I think the global response to the Huthis was exactly
what I thought it was going to be because most
countries don't, especially the United States, don't understand commercial shipping.
They really don't. Their opinion was we're going to go
in with a large military force, We're going to provide coverage,
and therefore commercial shipping will sail, you know, behind our
shield of naval vessels. They don't understand that risk associated
(07:43):
with commercial ships isn't isn't the same as risk associated
with navy ships. And commercial ships had an alternative route.
They had an alternative route that in ways was cheaper
for them to go because of the war risk insurance,
and they took it. And I don't think the US
ever understood quite correctly that just providing that you know,
shield of navy vessels would bring the shipping back in.
(08:06):
They had to do more. And I think this is
a big failure because one of the things that I
think failed with the Hoothi's was the ability to bring
not just military force against them and leverage, but also
political and economic which would have been using other mechanisms
against them, you know, leverage against Iran, leverage against the Houthi's,
ability to get weapons into that area. I think it
(08:28):
was a It was a tactical success for the US Navy.
They'll talk the idea that their missile defense was great. However,
it was a strategic and operational failure for them, and
I don't think they've quite appreciated that level.
Speaker 3 (08:41):
Yet.
Speaker 2 (08:42):
Again, they don't quite understand the commercial dimension as much
as they understand the military dimension, and they came at
it like very many military problems. Here's a nail, we'll
use a hammer to it, when in truth they needed
to use other mechanisms and tools.
Speaker 3 (08:57):
And you know, let's put you on the spot.
Speaker 1 (08:59):
But if you could like give your thoughts on when
do you think these higher value ships, you know, the
large container vessels and the rod rows. You know, when
do you think they go back to use this Suez
or you talk, do you think it's first quarter, second quarter,
third quarter, fourth quarter, twenty twenty seven, Like when do
you think that they're because I know, you know you
(09:20):
mentioned that insurance rates have to go down for them
to use it, But when do you think that's going
to happen?
Speaker 2 (09:26):
Everything is really predicated on the situation in Gaza, I mean,
because that is the Houthis argument is the Hooties are
in line with that. So if ceasefire holds a place,
if we see a successful resolution of that, then what
I envision what we start seeing is ships coming from
Europe to Asia through the canal. We still may see
the Asia to Europe route using the southern route, because
(09:49):
that's the higher value vessels. Those are the ones that
will have the largest cargo on them, there'll be the
higher insurance value. I think what we can expect to
see is start seeing some of the smaller vessels start
coming through more frequent, starting in the beginning of twenty
twenty six. And as those vessels start coming through, and
if you look at the trend line right now, we're
seeing an uptick. We're seeing the number of ships coming
(10:10):
through increasing and as a gradual steady I don't think
what you will see lee is the big kind of
you know, spike up that we saw on the flip
side with the spike down. I think it's going to
be a gradual kind of improvement and as that situation stabilize,
we'll start seeing the ships go through. Obviously, what nobody
wants and the shipping companies don't want to see as
(10:31):
a twenty four thousand TU ship go through there and
get hit because that is a billion dollar investment right there,
and the insurance payout for that is massive. This is
that risk that the shipping company see. It's not just
the loss of a potential ship, but it's the future
voyages of that ship that they would be out and
that's the big issue. Plus we're starting ready to see
(10:52):
a scrapping start to take place with vessels. Again, one
of the things that going through the Suez will do
is free up a lot of tonnage that's now excess,
and so as that becomes available, we'll start seeing that go.
But what I envision is a phase and probably around
first quarter, second quarter, we start seeing the smaller sized
vessels anywhere from six thousand to twelve thousand tu probably
(11:12):
start coming through on a regular basis, and once they
get a track record of that, we'll start seeing the
larger vessels, the ultra larger container ships and bigger ships
start coming through that way.
Speaker 1 (11:23):
Another geopolitical issue. I guess we're not issue as topic
within shipping. It's the shadow fleet as it really it's
to tankers. Yeah, you know there's a bunch of countries
that the US and other countries have sanctions on, whether
it's Trussian oil or Venezuelan and oil or Anian oil.
Kind of what are you seeing there with the shadow fleet?
(11:46):
When do you think do you think what happens to
the shadow fleet when these shank saying if these sanctions
can get lifted, especially on Russia because that's like the
first place.
Speaker 2 (11:55):
Yeah, I think the shadow fleet, for me, is one
of the biggest dangers out there right now for ship
because I tend to use a phrase called the parallel fleet,
because these ships are operating outside the bounds of normal shipping.
They're not going to the typical registries, they're not using
the twelve big P and I Protection Indemnity Club insurances,
and they're not being classified or the regular classification agency.
(12:19):
So they're operating in this really kind of parallel to
the commercial fleet that's out there, and that raises danger.
If you look at the ship that the US just sees,
the motor tanker Skipper, you know, here's a ship with
no registry, no insurance that we know of, not classified,
and you know, you're running around with a one point
eight million barrels of fuel on a ship that has
no protection whatsoever. We know last time the ship was
(12:40):
inspected was twenty nineteen, and so the shadow fleet really
raises a lot of threats on the world oceans. I mean,
if something happens to a ship like this, who pays
for the cleanup? Who protects the crew? We saw this
in the collision just earlier this year when Frontline had
a collision with a vessel coming out of the Straits
of Horror Moves. You know, it was a shadow fleet vessel.
There was no one there to provide the insurance protection.
(13:01):
We're seeing it right now in the Black Sea with
the attacks on the former Gambian flag vessels. So the
shadow fleet is a dangerous thing. Now they're using it,
you know, Russia and Venezuela Iran use it to circumvent
sanctions against them. What I get concerned about is even
if sanctions are lifted, we still may see the resurrection
of this shadow fleet exist operating outside the bounds because
(13:24):
they're not coming into ports. They're doing ship to ship
transfers at sea, so that keeps them out of port
state control. They don't have to be inspected, and you know,
it provides a really cheap operation for vessels. This is
the danger. We create this second fleet out there that
really does not have any oversight by international authorities or
national authorities. And I think that's a big concern.
Speaker 1 (13:46):
And they tend to be really like kind of you
alluded to. They tend to be really old chips, right, Yeah.
Speaker 2 (13:51):
I average what we see is ships over fifteen years
of age. If they are registered, they're in you know,
what I would call true flags of convenience. Basically, you're
paying money for a flag and there's no oversight by
the company. They may not have insurance at all on them,
and you know, there's no classification society that's doing that,
you know, third party check to ensure the vessels are
(14:13):
meeting their standards. And this is a danger to the
crews that are working on these ships, and more importantly,
they're dangerous to the world's oceans and everyone who adjoins them.
And I think this is a major concern. It's something
I think the International Maritime Organization has got to get
stronger about. You know, back in the day when we
had flags of conveniences, you know, we fix those. We
set up international regulations, We set up port state control
(14:35):
so that when ships come in no matter regardless of
what country you are, you can be inspected. These ships
now are operating outside those bounds, and this creates a
very dangerous proposition for the movement of goods around the
planet and the danger to the environment.
Speaker 1 (14:51):
Who polices that is that just the individual sovereign militaries
that they're responsible for policing the shadow fleet if they
come across well.
Speaker 2 (15:01):
I mean the way you police vessels in general is
when they come into your ports, you do that port
state control. So I mean that the concept was you
were bringing the ships into port and they were being inspected.
Didn't matter what flag you were, you were being you know,
if you come to the United States, you're getting port
state control. So about one out of very eight nine
ships come in you know, gets bordered by the coast
Guard and they get an inspection. The problem with with
(15:22):
what we're seeing right now is these shadow fleets don't
come in the countries where they get inspected, or they
don't even come into countries at all, and you know
they're operating out international war. Is the argument with grabbing Skipper.
One of the reasons that there's a lot of discussion
about is what is the authority to grab that ship.
A stateless ship operating on the ocean, you know, should
not be allowed to operate. And we've seen this. We've
(15:44):
seen this highlighted the in the Baltic with the ships
that are sailing to and from Russia with the Baltic States, Finland, Sweden, Germany,
Norway or all Denmark are all talking about. This is
these ships don't have registry. There's a big push on Turkey,
for example, to ensure that ship sailing up into the
Black Sea have registry and insurance. Like these three vessels
that got attacked by Ukraine, they were flying Gambian flags,
(16:08):
but Gambia had purged them from their registry, so the
ships were not and now we see the issue with
one of them stranded off the coast of Bulgaria right now.
Speaker 3 (16:18):
You mentioned the IMO earlier.
Speaker 1 (16:20):
The IMO has some free I would call ambitious emission
goals by I think twenty fifty.
Speaker 3 (16:27):
They want to get to the zero.
Speaker 1 (16:29):
What are your thoughts on that, Like, is that something
that is achievable and if it is achievable, how is
the industry going to reach those goals?
Speaker 2 (16:39):
Yeah, the IMO, you know, the net zero framework is really,
I would argue, laudable. I mean, it's really something they're
trying to do. They're trying to reduce the carbon footprint
of shipping around the world. Now, on the flip side
of that, I will say that, you know, per Ton,
the shipping industry is the cleanest method to move cargo
around the world. And what's interesting about how the IMO
(17:00):
is doing is they're putting this onus, on the shipowners
and the shipyards to create these new methods. And what
you have right now is a very kind of innovative
period where they're trying a little bit of everything to
achieve these goals. And so what we're seeing is hydrogen,
we're seeing ammonia, we're seeing looquified natural gas, you name it.
(17:20):
Everything that's possible is being tried. The problem is, I
don't think many people will understand a couple of key issues.
Regardless number one, costs. I mean, all that cost to
build ships is being transferred over to the freight rates,
and this is one of the reasons why we're seeing
escalations in that second, the goals being set by IMO
our need to be I would argue that they're very fast.
(17:44):
And while it doesn't sound very fast, do you talk
talking about twenty thirty, twenty forty, twenty fifty and that
sounds like a long time service life of a ship
is ten to twenty years, it's twenty twenty five. If
I want to invest in a new ship today, I'm
going to get that ship in one to two years,
and I'm going to get fifteen to twenty years out
of that ship. If the rules are by twenty forty,
I have to reach a certain level of carbon emission.
(18:07):
Do I want to pay for that ship right now?
Because I'm not sure that ship is going to be
viable after twenty forty, and so it shifts a huge
amount of onus onto the ship ship owners. I think
we need to have a more rationalistic look at this
where we're phasing in the technologies and we're ramping down
our carbon emissions. Because right now the net winners of
(18:30):
this are going to be the ship repair and shipbuilding nations,
which is Japan, China and Korea. They see this as
a great boon because this is going to ensure vessel
replacement over the years. I think IMO has got a
lot of things on their plate. The US opposition to
net zero framework was you know, I was one who
(18:51):
sat there and said that Monday of that event that
happened when the vote, I said, on Monday, this is
going to pass. And yet by Thursday it got tabled
for a year because the US was able to leverage
a lot of political clout to get that change. So
I think IMO has got to look at how they're
initiating this and maybe ramp it down or phase down
the transition. I think we still need to keep going
(19:13):
that way, but I'm not sure if they can get
the full amount in the timeframe they're talking about now.
Speaker 1 (19:19):
Yeah, And also on emissions, there's like it seems like
there's a patchwork of regulations and by country and by regions,
it seems also you need some sort of you know,
a global regulations like the IMO is doing for emissions
because you know, like I think Europe has one, you know,
the United States has a different one. So that patchwork
(19:41):
makes it for pretty confusing for people that are involved
in chipping.
Speaker 2 (19:45):
It is, I mean. And one of the reasons like,
for example, you may want to see ships still sailing
around Africa for example, is because the Mediterranean is an
environmental control area. Now, so when you go into the
Mediterranean you have to burn a certain you know fuel,
going around Africa you don't, So you know, what is
the cost benefit analysis of that. The other factor that
doesn't get talked about anywhere near enough, in my opinion,
(20:07):
is the education and the training for the ship's crews
for these new fuels. Ammonia is the fuel that I
have the most concern about because ammonia is the greatest
carbon you know, reducer because it doesn't use carbon at all.
You burn ammonia and there's no carbon emission whatsoever. However,
ammonia on a ship is one of the most dangerous
(20:27):
substance I could think about having sailed ships and having
dealt with with with these issues. An ammonia leak on
the ship is almost impossible to deal with. We see
those on ships carrying containers with refrigeration things like that,
but a engine plant using ammonia is extremely dangerous. How
are we training these crews? What are we doing for
safety features on board these ships? Because again, you know,
(20:50):
it's great to have the net zero I'm all for that,
but we need to ensure that we have the trained
personnel and the safety in place to help them. We're
seeing a lot of ship fire in you know, with
lithium ion batteries on board ships right now. What happens
when we start getting these variable new technologies of fuel
on board They can create a lot of problems and
you know, do we have the infrastructure in place to
(21:12):
deal with them? In ports for example?
Speaker 1 (21:15):
And dumb question, why is the ammonia more dangerous than
the other fuels.
Speaker 2 (21:19):
Well, ammonia is corrosive. It it actually starts corrupting the pipes.
And so when you have a leak from ammonia, I
mean even you know, if you don you know, protective gear,
it starts to break it down and it creates an
explosive atmosphere. And you know, all fuels have this problem.
Diesel fuel has a problem. Everyone has it. But again
(21:40):
it's a new challenge. Not only that you have to
set up the bunkering facilities. One of the big one
of the big problems we saw on the net zero
framework extension out for a year is that a lot
of the proponents of these alternative fuels needed to show
the demand for those fuels so that fueling companies and
production facilities would ramp up those was bunkering capacity so
(22:01):
that you know, hey, we can refuel these vessels. You
can you know, run on ammonia all you want if
you don't have ammonia fuel to do it. That's the problem.
We saw that with electric cars in the United States
when there wasn't enough charging stations. It's gonna be the
same thing with ships, especially when you send ships on diversions,
for example around South Africa. And now all of a sudden,
you need liquefied natural gas or ammonia or whatever fuel.
(22:22):
It is set up in you know, in Durban or
Cape Town, South Africa, where it doesn't exist right now.
Speaker 1 (22:29):
So you mentioned shipbuilding nations earlier, China, Japan, and South Korea. Obviously,
the Trump administration has been pretty vocal about, I guess,
reviving the shipbuilding industry here in the United States. Do
you think that is something that's feasible?
Speaker 3 (22:45):
You know, what has to happen for that to come
to fruition.
Speaker 2 (22:49):
I think it's feasible. I mean, I think it's a
tough task. You know, I would have loved this start
of a forty years ago. You know, it's it's always
that issue, you know, I think you know, so, first off,
you know, we kind of outsourced our commercial ship building
in the eighties. We made this conscious decision to kind of, well,
we'll outsource commercial shipbuilding. We'll end the subsidy program that
(23:10):
had existed since the nineteen thirties, because hey, commercial shipbuilding
was being done in Europe, in Korea and Japan and
their allies, and we were good with that. We had
no problem with that whatsoever. And in truth, most people
don't care, you know, how their T shirts are delivered
to target. It doesn't matter if it's on an American
ship or a Korean, Japanese, or Chinese built ship. However,
(23:32):
what we've seen recently is that that number is changing.
You know, you look at the past two years, from
twenty twenty two to twenty twenty four, China has grown
in terms of its number. You know, they were building
five percent of the world ships in nineteen ninety nine.
Last year they built fifty one percent. And you know,
in those two years up to twenty twenty four, they
increased sixteen percent. That's the same number that Japan and
(23:54):
Korea dropped. And so what we're seeing is Japan actually
mean China becoming really the shipbuilder. We forecast for twenty
twenty five they'll be somewhere in the range of sixty
percent of the world ships they're building. And what makes
China perceived as a threat by the United States is
that they're not just a shipbuilder. They do kind of
all aspects of shipping. They build the containers, they lease
(24:17):
the containers, they do the chassis, they do ship repair.
They're one of the largest groups that are out there
as merchant mariners, controlling ports, the ship cranes, repair, you
name it. They just they seem to be doing everything
to really kind of control all aspects of shipping. And
so the US wants to get it started. It's a
very tough thing for the US to get started because
(24:38):
what we did is we turned our shipbuilding industry in
the United States into a one customer service, and that's
the US Navy. And so all the private yards are
building for the US Navy largely, and you know, to
try to change the mentality because building Navy ships, not
just technically, but also I would argue Philoso is different
(25:01):
than building commercial ships. You don't build a Navy ship
and sit there and say, okay, here's the plans, start
building it, because the Navy will tinker and toy with
it the entire time. Commercial companies like build me twenty tankers,
and the shipyards like, I'm going to build them, and
this is the way they're going to come out and
here you go. So they've got to change that. So
what we see right now going on in the United
States is these partnerships that are being developed with foreign
(25:23):
shipping companies. So the most obvious one is Hanua in Philadelphia,
where we're seeing Hanwah bringing in the technology that they
use in the Korean shipyards and also some of that
philosophy over to it. And it's going to be an
uphill challenge. It's a really tough one. I've you know,
I'm very optimistic that this is the biggest reform I've
(25:44):
seen in ocean shipping and shipbuilding in my entire life.
At the same time, we're not seeing anything really measurable yet.
I think the US has got to get ships reflagged
into the US fleet. There's got to be cargo provided
for those ships, and they've got to start getting contracts
signed to start cutting steel. And unfortunately, you know, we're
(26:05):
coming up into a year of the Trump administration, we
quite have not quite seen that yet. You know, the
Maritime Administrator hasn't been you know, confirmed. There's two gaps
at the Federal Maritime Commission. The leadership at the US
Merchant Marine was gutted, Merchant Marine Academy was gutted. We
don't have the Maritime Action Plan as required by the
Executive Order on shipbuilding. So a lot of very big
(26:29):
pronouncements and goals, but we haven't seen a lot of
developments yet, and so, like me, I think everybody's waiting
to see what happens.
Speaker 1 (26:39):
And so, you know, obviously for the Jones Act chips,
the ships have to be made here in the US.
A lot of people debate about whether the Jones Act
is fine as it is, if it needs to be changed,
or it needs to be scrapped altogether. What are your
thoughts in the Jones Act?
Speaker 2 (26:56):
Well, Lee, I talk about the Jones Act quite a bit,
and for everybody, the Jones Act is specifically in this case,
section twenty seven of the Mercharinact in nineteen twenty it
says that if you want to move cargo between two
US ports, you've got to be on a US owned,
US flagged, US built, US crewed ships. And what's funny
to me about the Jones Act is there's two views
in the Jones Act. There are those who are one
hundred percent for it and those who are hundred percent
(27:18):
against it. And never will the two take a step
off their mountaintop for fear that the other one will
pounce on them. I'm not an advocate. I number one,
I don't think the Jones Act should be repealed because
I think there's other provisions of the jones AC that
are really important that we don't ever talk about. But
more importantly, we need to reform it. There needs to
be a discussion about maritime reform. And I think the
(27:40):
way we build ships today in twenty twenty five is
different than the way we built ships forty years ago,
let alone, you know one hundred and five years ago.
Shipyards are assembly points. We bring parts and components in
from not just nationally but internationally. Why why would we
not want the best you know, propellers in the world,
which come from Germany, you know, to be on our ships.
(28:01):
You know, starting up a facility to start building propellers
in the United States would be a massive uptick. It
would be a huge cost to do that. Why not
use some of those facilities? Excuse me, but still have
you know, the assembly and a large number of the
work being done here in the United States. I think
we need to have that issue. You know, Hanwa has
been talking about this. Let's start a production of ten tankers.
(28:24):
We build three of them in the Korean yard, and
then we take that same design, same capability, and start
it in the US yard and we build the other
seven here. But all ten of them would fit under
a kind of a Jones Act requirement, so that we
can start that process. You know, prime the pump is
the phrase I keep hearing all the time, and we're
seeing this. Crowley was able to bring in a LNG carrier,
(28:47):
liquefied natural gas carrier that was built overseas through a
loophole in the nineteen ninety six Coast Guard authorization. So
we can do this, we can, we can make some changes.
I mean, there's no reason we shouldn't do it, especially
in key are areas. I would argue where it's going
to take time for the US to build up a
domestic industry liquefied natural gas tankers, perfect example, It's going
(29:08):
to take years to build that industry up in the
United States. In the meantime, US is the largest LNG
export in the world. Why can't we be bringing Alaska
l G down to California for example? Should be done.
We should be firing up shipbuilding on the Great Lakes.
We have Two years ago we built the first Great
Lakes freighter up on the Great Lakes, American Great Lakes
Freighter in forty years. Just had the fiftieth anniversary of
(29:31):
the loss of Edmund Fitzgerald. We should were replacing all
those ships up there. You know one mode of I
forget what it is of iron ore and a Great
Lakes Carrier builds thousands of cars. It's like, why are
we not updating that fleet up there? We should be
working on that. So we should have a discussion about
Jones act. I am not one who says you can't
talk about anything, But then again, I'm a tenured professor,
(29:51):
and I can say these things.
Speaker 1 (29:53):
Speaking of tenured professor, you know, as an adjunct professor
at the US Merchant Marine Academy, A can just give
a little background about what is that institution? And B
can you just talk about what you focus on with
your students there? And then you know, where do these
students once they graduate, what do they do for her profession?
Speaker 2 (30:15):
Sure, so I'm an adjunct at the merch Marine Academy.
I teach a graduate level course in their Masters of
Marine Engineering on Maritime industry policy. And I've been doing
that since two thousand and eight. So there is the
US Federal Merchant Marine Academy at Kingspoint in New York.
I've been around since nineteen forty three. And then there
are six state maritime academies kind of scattered around the
United States California, Texas, Michigan, Maine, Massachusetts, and the finest
(30:39):
of them all the New York Maritime I'm a graduate off.
And those institutions produce graduates that have licenses to operate
in the US merch Marine, either a third mate which
is a deck officer license, or a third assistant engineer,
which is an engineering license. And the Merchant Marine Academy,
I think is unique. It's a federal academy, the same
(31:00):
as King's excuse me, the same as West Point, the
same as Annapolis, the Army and Navy, which we just
had the game the other day. But what it does
is it creates officers for an industry. Makes it very unique.
Was created during the midst of World War Two. It's
the only academy, by the way, that has a battle
standard because it's it's cadets actually died during World War two,
(31:22):
so one hundred and forty three I think it is
died in World War two. So it's a unique institution.
I think the maritime schools provide really the bedrock for
our maritime industry. These are people who don't just sail ships.
They go into different aspects of the industry. They go
into shipbuilding, they go into the ship operations, they go
(31:42):
into the business side of this. And one of the
things that I think that has the potential for the
United States to come back as a big shipbuilder is technology.
If you look at the history of the United States,
what is allowed the United States in the past to
become major in the maritime field has been technology innovations,
whether it's the Baltimore schooner, the clipper ship, the use
(32:05):
of oil as a fuel in World War One, prefabrication
during World War Two, containerization, super tankers, all American innovations,
and right now we're on the precipice of that. Use
of AI in ship design and technology, use of adaptive
technology in ship construction, and the potential of new power sources,
(32:26):
if we want to talk about it. One of the
most innovative power sources we can potentially put on ships
small modular reactors, nuclear reactors. And so I think schools
like King's Point, along with the state maritime academies, should
be the kind of the breeding grounds. These should be
the places we are dumping money into because one of
(32:46):
the things we can get out of them. Are these
technological innovations that come out. It's always funny all those schools,
if you ever look at their return the studies on them,
they have the best return on investment of any of
the schools. Whatever you pay to go to college there,
although the King's point is free, you'll see that the
end result out of those academies is some of the
(33:07):
highest starting salaries and maintaining salaries for any college graduates.
I pull it down from my UNEs institution because I
teach it a very small private college. But besides that,
everybody else does pretty well economically great.
Speaker 1 (33:23):
And then you know, could you also, you know, when
we did the intro earlier, you know I mentioned that
you're part of at one time, the Military Sealift Command.
Most people have no idea what the heck that is,
So could you educate us and tell us what that
is and has it fit into the Navy?
Speaker 2 (33:42):
Sure? So, US Navy's Military Sealift Command has been around
since nineteen forty nine under a different name. But what
most people don't understand is that one out of five
ships in the US Navy, so about about sixty ships
out of three hundred are crewed and operated by civilian
merchant mariners. The Military Sealift Command is the largest employer
layer of merchant mariners in the United States. About five
(34:04):
thousand of them are directly hired by the merchant by
the Military Sealift Command and about a thousand are contracted.
And what they do is they fill key roles. In
case of Military Sealift Command, all the auxiliary vessels, the
underway replenishment ships, the tankers that refuel ships at sea,
the ones that bring ammunition and stores to them are
(34:24):
all crewed by these civilian merchant mariners. And at the
same time they also operate ships for the Afloat Prepositioning
Program that have ammunition and equipment forward deployed. In time
of war, we activate this reserve fleet that's stationed along
the coast of the United States, about fifty to sixty vessels.
Those are crewed by merchant mariners. And I think one
(34:45):
of the things that the US kind of forgot was
there's kind of this very symbiotic relationship between the commercial
industry and the military side of shipping. And unfortunately, what
the US tried to do after World War Two has
created its own kind of little military merchant which is
military seal of command, but they failed to realize they
need that commercial side too that kind of back it up,
(35:06):
and what we've seen recently is a lot of problems
with this sector. So for example, in twenty nineteen, there
was a huge test of the reserve fleet and this fleet,
which should have had an eighty five percent readiness, only
clocked in at forty percent, which meant that the combatant
commanders overseas could not count on seal of ships bringing
(35:26):
them the equipment and supplies they needed in time of war.
So we addressed the readiness of the ships, and what
we're seeing is this program underway right now to replace
some of the older ships in the fleet. The average
age of ships and the reserve fleet are like forty
four years old, and so they're trying to replace them.
The other issue they have is the number of merchant mariners.
While MSc pays very well, the problem is their government
(35:49):
employees many of them, and their leave policy is terrible,
and so this has created a big problem. During COVID,
there was issues with how they were treated, and what
we've seen recently just last year was seventeen ships laid
up because of the lack of cruise This is a
substantial problem. There is a concern that there's not going
to be enough merchant mariners to man the ships to
(36:11):
sustaining the US Navy and the Department of Defense in
time of war. And that's being addressed now. It hasn't
been resolved yet, but it's being looked at.
Speaker 1 (36:20):
And you know, the Trump administration, you know, we can
argue a lot of things, but not to be political
here at all. What do you think they're doing that
is that's great for the shipping industry? And what do
you think they're doing that is really hurting the shipping
industry in your opinion?
Speaker 2 (36:41):
I think on anything, no, no, no, I think on okay,
what are they doing? The help is they bring attention
to it. I mean there's a lot of visibility, more
on shipping than ever before. I think Secretary Duffy has
put focus on shipping. You see him for example, the
US merch Marine Academy. I love the US Merchant Marine
academ even though I'm a graduate of one of its rivals,
(37:02):
but it has been neglected. I mean it has been
just criminally neglected. I'm talking about the fact that we
had midshipmen living there in dorms without heat and hot
water for a while. It's just decayed. And in many
ways it was a microcosm of the US merchant marine.
So I mean there's a tension now being drawn to that.
I think, you know, the fact that we've had more
(37:23):
legislation and proposals come out than in any previous administration
is significant. I think again the executive Order, the Ships Act,
which is being co sponsored by Senators Kelly and Young,
you know, bipartisan support across the ways. I think that's
really important. I think it's great to see that. On
the negative side, here you have the Trump administration arguing
(37:46):
that we want to see the expansion of US shipping.
Yet one of the very first things they did was
killed the wind industry, which is going to be a
major factor for US shipbuilding because the wind industry needed
support vessels off the coast, and the US was timed
to build many of these ships, which are very large ships. Actually,
you know, people tend to think these are small ships.
They're not. They're very large ships. And that industry was
(38:09):
going to be a big kind of boom to kind
of really jumpstart the shipbuilding and the maritime industry. And
now you literally have ships lied up along the coast
and all of a sudden, what is going to be
that is not happening. Same time, we had people like
Rudel Saude, the head of CMA CGM, come to the
United States offered a reflag twenty ships into the US registry.
(38:32):
He did, he reflagged the CMA CGM Phoenix, but that's
been it. We haven't seen the other ships come in
and so, you know, the big issue is follow up.
My biggest criticism right now is leadership. Who is in
charge of directing this we don't have Ahead of the
Maritime administration, we don't have We're missing two of the
five commissioners on the Federal Maritime Commission. There's no Deputy
(38:56):
Secretary in the Navy for shipbuilding right now who is
eating this. You know, under the Maritime Action Plan and
the ships Actor's supposed to be a maritime you know,
shipping advisor created that has not been done. So I
think one of the biggest problems right now is leadership.
A lot of talk, but but again action is what
(39:17):
you need to see. And we're already coming into the
you know, second year of a Trump administration that by
all accounts will be a lame duck within another year.
Speaker 1 (39:27):
So when you just to you know, we're kind of
coming up at the end of our time here.
Speaker 3 (39:32):
You know.
Speaker 1 (39:33):
I'm always curious to hear how people, you know, first
get into an industry. What made you decide to focus
on the maritime industry when you were thinking about college.
Speaker 2 (39:43):
I initially wanted to go in the navy. That was
my big goal was it was to go into the Navy.
But uh, I got into the US Naval Academy, but
then they told me my eyesight at the time I
had glasses, I couldn't sail ships like I would be restricted,
and so I wanted to go to see I grew
up in the South a Long Island. My dad had
a fishing boat. We used to go off shore and
(40:03):
I used to see the ships coming in out of
New York and I was like, man, I just want
to go on those and I don't know where they're going,
but that's what I want to do, and that's that's fortunite.
Had a friend who was going to State University of
New York Maritime College, and I got in there and
it's been really great. I mean, I got to sail
for years. I got to work ashore. I met my
(40:24):
wife while on a ship, so and then when I
came ashore. You know, I was always interested in history,
and what was really interested about was the history of
my industry, and there really wasn't a lot written about it,
and I was like, man, this is you know, And
so that has been kind of my research project. I
did my doctoral dissertation on the kind of the intersection
between commercial shipping and national defense. And then in twenty
(40:46):
twenty one I started the YouTube channel Whenever Given decided
to take a right turn in the in the Suez
Canal and for six days pinched fifteen percent of global trade.
Speaker 1 (40:55):
Yeah, you know, you mentioned there aren't a lot of
books out there, but you know, since you've got into
the industry, I guess some have been written. Do you
have a favorite book about either the shipping industry military?
Just giving your background or leadership.
Speaker 2 (41:11):
I'll give you two books right with the bad the history.
One I love is a book written by a good
friend of mine, Lincoln Pain, called Sea and Civilization, which
is a maritime history of the world. He jokes that
the history of the world is maritime, so it's kind
of redundant to put maritime in front of it. But
it is a great it's a world history through the
maritime prism. I just used that book in my world
(41:32):
maritime history course. And the other book I always love
is Mark Levinson's The Box. I think, to me that's
one of the best books out there because I live
in North Carolina, about fifty miles from where Malcolm McClain
was born in Maxton, North Carolina. And you know, the
greatest innovator in global shipping was a truck driver. And
I think that, to me is probably the best image
(41:54):
of that because sometimes we get so focused on the
ships and you know what they're involved, but in truth,
all the ships do is connect us from shore to shore.
That's all we use ships for, is to connect us
from one point to another. And it took a truck
driver to sit there and say there's got to be
a better way to move cargo than the way we're
doing it piece by piece, and then some of it
kind of he didn't come up with an idea where
(42:15):
in nineteen fifty six the Ideal X. I always argue,
he's the Elon Musk of his day. You know, Elon's
got SpaceX. He had Ideal X and Ideal X sales
out of Newark with fifty eight containers on board, and
today we're running ships with twenty four twenty five thousand
containers on board. I don't think McClain. Maybe he did,
but I don't think he quite realized what he was
unleashing when he did that. You know, over was now
(42:39):
sixty years ago, seven years ago, almost right.
Speaker 1 (42:43):
And then I'm just curious if you, you know, because
you spent a lot of your career on the on
the water, on the seas, what is your favorite thing
about being on a ship for a long time and
what is your least favorite thing?
Speaker 2 (42:54):
So my every thing on a ship was always the
idea that man, you could just sit there and read.
It was always great for me because it was one
of the things I every time I go on a
ship back in the time when I was saying, we
didn't quite have the kindles and everything, so bring some
books and it was always great and for me, it
gave me the time to do it. And I love
going to places. I love visiting and seeing places. And
I was fortunate at the time that when we would
(43:14):
pull in, you could stay there for a little bit
of time and actually see things. A lot of mariners
don't get that opportunity anymore. A lot of a lot
of stea fares these days are you pull in the
port and you know, ships make money salling, they don't
make money in port, and so they're always kind of
really on on on the dogs coming in.
Speaker 3 (43:30):
You know.
Speaker 2 (43:30):
The downward side was really the life on board because
you're really you're really secluded, You're really cut off. I
mean you leave shore and you are really cut off.
Today it's getting better with things like Starlink. You know,
mariners are more connected than ever before, which is good.
I mean we have tracking of ships, we can see things.
But at the same time too, I would argue that
that one of the big drawbacks of shipping is trying
(43:54):
to get people educated in what happens. We have basically
walled off shipping and one of the reasons I started
to my channel was to really expose people to global shipping.
Most people don't see it. You know, when you create
a you know, we move the ships from the piers
along Manhattan over to Newark, and nobody wants to go
to Newark, so I mean nobody sees the ship, so
it's just you know, all the way over there, and
(44:15):
so it becomes very isolated. And you know, it takes
events like ever Given Dolly, you know, the Hoho thy
to remind people. It's like, hey, you know when when
when commerce gets cut off it impacts you. There there
are direct impacts. I remember when I transitioned the channel
from talking about ever Given to the supply chain crisis.
That for me was the moment, because all of a sudden,
this was impacting everybody, and I think making that awareness
(44:39):
and plus, as you well know, probably you know, when
you talk to people within an industry, they don't have
the ability many times to talk to people outside the industry.
They're very much have a dialogue, they have a lingo,
They have a language that doesn't promote them from really
explaining things they love, acronyms they love, They assume you
know everything. And and myself, as an educat, I'm used
(45:00):
to providing very complex targets and topics and breaking them down.
So that's what I kind of try to do.
Speaker 1 (45:07):
All right, Great, well, sal thank you so much for
your time and insight to really really enjoy the conversation.
Speaker 3 (45:12):
So thanks so much.
Speaker 1 (45:14):
I appreciate having me, and you know, for anyone that's listening.
If you want to learn more about the shipping industry,
I would heavily suggest Sal's YouTube channel What's going On
with Shipping So it's a wealth of knowledge and insights,
so definitely check it out. And I also want to
thank you for tuning in to Talking Transports. This will
be our final episode.
Speaker 3 (45:35):
Of the year.
Speaker 1 (45:35):
I want to thank all of you, our listeners, our guests,
and supporters for making this another great season of conversations
across the great logistics and transportation world. Wishing all of
you a safe and RESTful holiday season and a happy,
healthy start to the new year. I look forward to
reconnecting with you in twenty twenty six with more insights, conversations,
(45:57):
and industry perspective. Until then, happy holidays and thanks for
Talking TRANSPORTSM
Host
Lee Klaskow
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