Maritime administration: actions needed to improve monitoring of freight preferences

What the GAO found

Federal “cargo preference” laws, regulations, and policies require that when federally owned or funded cargo is shipped overseas, certain percentages of that cargo be carried on U.S. registered vessels (vessels flying the American flag). The Maritime Administration (MARAD), within the Department of Transportation, monitors federal agency cargo volumes to calculate the percentage shipped on U.S. flag vessels. However, MARAD has not made this data public since 2013. According to data received by MARAD, total freight volumes government-wide in fiscal year 2020 were 27% lower than in fiscal year 2012, and volumes under the American flag were 36% lower (see figure). MARAD no longer communicates the data because a 2008 law abolished the legal reporting obligation; however, the removal of this requirement does not prevent MARAD from releasing the data. Without a public report from MARAD, Congress and others lack visibility into federal agency cargo shipments, including the quantities shipped on U.S.-flagged vessels. Public reporting would also provide an important measure of accountability to monitor federal agencies’ shipping activities against their freight preference requirements.

Data Received by MARAD on Freight Volumes from Federal Agencies, Including Tonnage of US and Foreign Flagged Vessels, Fiscal Years 2012 to 2020

MARAD has taken steps to identify potential instances of non-compliance with freight preference requirements and has worked with federal agencies and contractors to encourage compliance. However, MARAD did not take enforcement action. For example, MARAD notified federal agencies and contractors of potential contract violations and encouraged the shipment of additional cargo on US-flagged vessels. However, according to MARAD officials, MARAD has not taken any enforcement action, in part because it has not developed the regulations necessary to take such action. MARAD has not developed regulations primarily because of difficulties in reaching consensus with other agencies on how to implement freight preference requirements. Without taking steps to assess options for developing regulations that achieve a sought-after consensus with agencies, MARAD will continue to lack the tools necessary to oversee and enforce agency compliance with freight preference requirements.

Why GAO Did This Study

The freight preference requirements are intended to support the US flag shipping industry. The requirements are designed to ensure that industry has, among other things, enough ships and trained sailors to supplement the cargo-carrying capacity of military vessels in times of war or national emergency.

This statement addresses: (1) the extent to which MARAD has monitored and reported on agencies’ compliance with the Freight Preference Requirements and (2) MARAD’s efforts to enforce the Freight Preference Requirements, among other goals.

This statement is based on GAO Report GAO-22-105160, September 12, 2022. For this report, GAO reviewed relevant federal laws, regulations, and policies; reviewed freight preference data for fiscal years 2012 to 2020; and interviewed MARAD officials.

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