Maritime Administration: Actions Needed to Enhance Cargo Preference Oversight
Fast Facts
The U.S. government sends many kinds of cargo overseas, from military supplies to food for nations in need. By law, a certain percentage of that cargo must be sent on ships registered in the U.S.
We testified that the Maritime Administration (MARAD) monitors the percentage of cargo that agencies send on oceangoing ships. MARAD receives data from shippers, including cargo volumes carried by U.S. and foreign ships. But MARAD doesn't publicly report this data. As a result, Congress and industry have limited information on the shipping activities of federal agencies.
The recommendations in our related report address this and other issues.
Highlights
What GAO Found
Federal “cargo preference” laws, regulations, and policies require that when cargo owned or financed by the federal government is shipped internationally, certain percentages of that cargo be carried on vessels registered in the United States (U.S.-flag vessels). The Maritime Administration (MARAD), within the Department of Transportation, monitors federal agencies' cargo volumes to calculate the percentage shipped on U.S.-flag vessels. However, MARAD has not publicly reported these data since 2013. According to data received by MARAD, total government-wide cargo volumes in fiscal year 2020 were 27 percent lower than in fiscal year 2012, and U.S.-flag volumes were 36 percent lower (see figure). MARAD no longer reports the data because a 2008 law eliminated the statutory reporting requirement; however the elimination of this requirement does not preclude MARAD from reporting the data. Without public reporting by MARAD, Congress and others lack visibility into federal agencies' cargo shipments, including the amounts shipped on U.S.-flag vessels. Public reporting would also provide an important accountability measure to monitor federal agencies' shipping activities in relation to their cargo preference requirements.
Data Received by MARAD on Federal Agencies' Cargo Volumes, Including U.S.- and Foreign-Flag Vessels' Tonnage, Fiscal Years 2012 through 2020
MARAD has taken steps to identify potential instances of noncompliance with cargo preference requirements and collaborated with federal agencies and contractors to encourage compliance. However, MARAD has not taken enforcement actions. For example, MARAD has notified federal agencies and contractors about potential contract violations, and has encouraged shipping additional cargo on U.S.-flag vessels. However, according to MARAD officials, MARAD has not taken any enforcement actions, in part, because it has not developed regulations necessary to take such action. MARAD has not developed regulations primarily due to challenges in reaching consensus with other agencies on how to implement cargo preference requirements. Without taking steps to evaluate options for developing regulations that achieve sought-after consensus with agencies, MARAD will continue to lack the tools necessary to oversee and enforce agencies' compliance with cargo preference requirements.
Why GAO Did This Study
Cargo preference requirements are intended to support the U.S.-flag shipping industry. The requirements are designed to ensure the industry, among other things, has sufficient vessels and trained mariners to supplement the cargo-carrying capacity of military ships during times of war or national emergency.
This statement discusses: (1) the extent to which MARAD has monitored and reported on agencies' compliance with cargo preference requirements and (2) MARAD's efforts to enforce cargo preference requirements, among other objectives.
This statement is based on GAO's September 12, 2022 report GAO-22-105160. For that report, GAO reviewed relevant federal laws, regulations, and policies; reviewed cargo preference data for fiscal years 2012 through 2020; and interviewed MARAD officials.
Recommendations
GAO recommended that MARAD: (1) publicly report, on an annual basis, the cargo preference data it receives and (2) take steps to develop regulations to oversee and enforce cargo preference requirements. DOT concurred with GAO's recommendations.