I always appreciate the opportunity to speak before the Propeller Club and in particular, the Port of Washington, DC. We are in especially exciting times at the Maritime Administration.

Two years ago when I first addressed this Propeller Club, I mentioned that our industry would not make any progress unless we improved our ability to work together. The recent early reauthorization of the Maritime Security Program is an example of the kind of success we can have when we build the cooperation our industry needs. We simply could not have been successful without the joint efforts of our US-flag carriers, maritime labor, Congress, and the Bush Administration. Another recent success shared between government and industry, was the signing of the Bilateral Maritime Agreement with China. While these successes are significant, we have much more to do to strengthen our maritime industry as a whole.

That is why the greatest honor that could possibly be given to me is the honor of being selected by President Bush and Secretary Mineta to be the Maritime Administrator.

Last week at the Maritime Trades Department meeting, Secretary Mineta offered a vision for the future of the nation’s marine transportation system and its integration into our national transportation network. Further, he emphasized the Bush Administration’s support for the three pillars of national maritime policy: the Maritime Security Program, Cargo Preference and the Jones Act.

The Secretary also reaffirmed his, and my, commitment to push for an examination of the tax burdens on our maritime industry and on our mariners, with the goal of improving the ability of our vessels and crews to compete internationally. I know that is welcome news to many of you who are working on tax proposals to help your businesses compete and grow.

As I have said many times before, it is wonderful to work for a Secretary who truly appreciates the maritime industry. Many of you know that directly and have heard the Secretary talk about a SEA-21 initiative. In fact, some of you actively assisted in developing the SEA-21 concept through membership on the Secretary’s Marine Transportation System National Advisory Council.

What is noteworthy today is the attention and dedication the Department is exhibiting towards a SEA-21 initiative.

The last time we took comprehensive action to address U.S.-flag shipping and U.S. shipbuilding was when President Nixon signed into law the Merchant Marine Act of 1970.

And the last time we took comprehensive action to address the Marine Transportation System was never. Really, we are not talking about unfinished business, but rather new business for our nation.

The Marine Transportation System, our merchant marine, and our shipbuilding industry face significant challenges:

• America’s port and freight system is increasingly operating at the limits of its capacity.

• To add to that challenge, U.S. foreign trade and freight volumes at our ports are expected to double by 2020.

• These same ports now face new and important security requirements – but these costs have diverted funds away from investment in port infrastructure.

• In 2009, the Port of Singapore alone will have more container capacity than our entire port system today.

• Our oceangoing U.S.-flag merchant fleet is a third of what it was over thirty years ago when I began sailing in the 1970s. In 1970, privately-owned oceangoing domestic and foreign trade vessels numbered at 793. In 1980, the number was 578 and the number is 236 today.

• Only 10 new oceangoing commercial vessels are on the books in U.S. shipyards today. In 1975, there were 77.

And as if the volume and security challenges were not enough, 17 Federal agencies in six, separate cabinet-level Departments participate in maritime decision-making. In the past, this has lead to an inefficient patchwork of unconnected laws, policies, and programs.

These challenges have not passed without notice. In just the last few years, there have been numerous reports and studies on the Marine Transportation System – from the Department, from our MTSNAC, from the U.S. Chamber of Commerce, from the GAO, and from National Academies of Science. All reports and studies agree on the magnitude and urgency of the problem.

This is precisely why Secretary Mineta called for a comprehensive Marine Transportation System/maritime industry initiative – a full scale review of current policies and recommendations that will seek to increase the competitive standing of our marine transportation system and our Nation’s maritime industry.

Just as TEA-21 and AIR-21 were essential in transforming our surface and aviation transportation modes, the SEA-21 initiative we envision will complement these efforts that we know today as SAFE TEA and VISION 100.

This review – now underway and involving the efforts of MARAD and the Office of the Secretary – emphasizes the need to integrate all our transportation modes.

It emphasizes leadership and coordination within the Department and across the Federal government.

It also recognizes that responsibility for the Marine Transportation System is as much local and private sector as it is Federal and public sector. This means the Federal government’s role must be one of coordination – not control.

It recognizes that we must balance the necessity of homeland security with the necessity for the most efficient flow of commerce.

That review recognizes that the impending capacity crunch just around the corner at our ports and intermodal connectors is so great that local government or private-sector sources cannot meet these challenges alone.

And short sea shipping, my favorite topic, is a major part of this review. As we progress with this initiative, I will be looking to the Short Sea Shipping Cooperative program that we started last year for overall guidance and support from our industry partners.

Our review will emphasize partnership across the modes at each level of government – with private-sector partners every step of the way. The merchant marine has already demonstrated partnerships with the Maritime Security Program and the Voluntary Intermodal Sealift Agreement. Since 1997, the merchant marine has been fully integrated into defense planning and force projection. DOT and DOD have worked together and with the industry to transform defense logistics while keeping a commercial U.S.-flag fleet in international trade.

When President Bush signed into law a new, expanded MSP in November, it reflected the Administration’s recognition of the role of the merchant marine and confidence in the its future. That commitment continues, and this review reflects the President’s commitment and the Secretary’s commitment to invest in a competitive economy. As Secretary Mineta said last week, we know we cannot have a first-rate economy with a second-rate transportation system.

And I am here today, on behalf of the President and the Secretary, to make clear that maritime transportation, every one of its components, is essential to the future of our economy and vitally important to all of us at the Department of Transportation.

Thank you, again, for inviting me here today and for allowing me to share these thoughts with you. I look forward to continuing our work together.

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