UTC Overseas Expert Proposes New Marad Rules to Stimulate U.S. Job Growth in International Project Cargo/Freight Logistics Industry

Alan Favicchio, Projects Director for Houston-based UTC Overseas, Inc.’s Project Division, is proposing a change in MARAD (U.S. Maritime Administration) rules to encourage the training and hiring of a badly needed new generation of U.S. personnel for the international freight-forwarding and project cargo industry. Favicchio, who has over four decades of industry experience, delivered his proposals at the 7th annual S.U.N.Y. Maritime Conference on Cutting-Edge Issues in Shipping, February 2, 2012, in the Bronx, NY.

Favicchio suggested a modification of MARAD’s existing Compensatory Waiver (CW) Process as a way to promote new career opportunities for graduates of the U.S. Merchant Marine Academy and the nation’s six State maritime academies, while also speeding and simplifying the waiver review and approval process.

Under present law (46 U.S.C. 55304), Favicchio notes, project cargoes being financed by the U.S. Export-Import Bank must be transported aboard U.S.-flag vessels. The purpose of the statue is to help maintain both a U.S.-flag merchant fleet and the cadre of licensed and skilled mariners available to crew such vessels when needed for the economic and defense security of the nation.

When a borrower, prior to a decision to seek EX-IM Bank financing, or in honest error, moves a cargo on a non-U.S. flag vessel for which a waiver is necessary to meet subsequent EX-IM financing, the borrower may obtain a Compensatory Waiver from MARAD by agreeing to make equivalent-revenue future shipments of non-Ex-Im cargoes on U.S. vessels, documented with monthly records.

Under Favicchio’s plan, Compensatory Waivers could also be granted if:

• EPC (Engineer/Procure/Construct) companies, shippers, or freight forwarders who are under contract to the borrower for that specfic project, had hired or would hire one or more qualified U.S. citizen licensed maritime graduates within an agreed period of time prior to approval of a CW; and/or
• The foreign-flag carrier/fleet owner/steamship line could prove they had hired or would hire one or more U.S. citizen licensed graduates within an agreed period of time; and/or
• Such hirings could be combined with the shipment of an agreed amount of commercial cargoes on U.S.-flag vessels within an agreed period of time.
• Under the proposed changes, documentation of qualified hiring would require copies of employment agreements, resumes, college transcripts and proof of graduation from an approved U.S. Maritime academy or university.

Favicchio argues that the new waiver procedure would encourage the hiring of licensed U.S. citizen mariners, and speed review and processing procedures for Compensatory Waivers. Further, monthly follow-up reports, called for under existing waiver procedures, could be ameliorated.

“Encouraging the hiring of maritime academy graduates in our industry is a win-win solution,” he argues. “Their maritime and engineering training concentrates on just the skill sets we need, both at sea and ashore. These skills are especially critical in the years ahead, given the continuing growth in global trade, and the globalization of manufacturing, distribution and processing.”

Favicchio’s remarks opened the daylong Cutting-Edge Issues in Shipping forum at S.U.N.Y.’s Bronx campus. He is one of six experts presenting at the 7th Annual event.

The program also included a luncheon keynote address by Matt Doherty, Chartering Manager for Genco Ship Management, LLC, New York, NY. Doherty, a S.U.N.Y. Maritime graduate, is responsible for all chartering activities of the company’s fleet of 60-plus bulk carriers.

In subsequent discussion, Margaret J. Vaughan, Traffic Logistics/Export Compliance Manager at Mustang Engineering, L.P. said, “This proposed revision to the Compensatory Waivers merits serious consideration.

UTC Overseas, Inc.’s Project Division has established an internationally recognized leadership position in global project cargo and freight forwarding. The company operates offices throughout North America and in South America, Europe (including Eastern Europe and the Balkans), Asia and Australia. It opened its own office in Shanghai in 2006, Denmark in 2007, Canada in 2008, Eastern Europe and Australia in 2009, and will open in Russia and Azerbaijan in the near term.