American Carriers Are Left Behind in Cargo Program

Joshua Bright for The New York Times

The Maersk Missouri in Elizabeth, N.J., in August.

WASHINGTON — It began in the mid-1990s as a way to boost America's vanishing international shipping business. But an obscure program to subsidize the shipment of United States military cargo around the world has become something quite different: a $2 billion operation that, paradoxically, is dominated by a handful of shipping giants, all owned overseas.

Uli Seit for The New York Times

Philip J. Shapiro, who wants more American ships, apparently including his own, to be part of a program that moves military cargo.

Sixty ships get millions from the government for hauling tanks, Humvees, fuel, munitions and other equipment across the seas. The vast majority of the ships — at least 45 — fly the American flag but are owned by foreign parent companies like Maersk, a Danish shipping company that commands almost half the fleet, records show.

With government financing up for renewal in Congress for another decade, the program's foreign flavor has set off a debate about its future and, more broadly, about the volatile issue of foreign ownership in American industry.

"Somewhere along the way, the purpose of this program has gone off track," said Philip J. Shapiro, who owns a Long Island shipping company with a lone ship in the program. "It's effectively shut out American companies."

Many American-owned carriers, without the capital to build the enormous modern tankers and container ships hauling the cargo, or the revenues to run them, have simply been unable to compete with foreign carriers, who often have lower operating costs.

Nonetheless, Mr. Shapiro has started a campaign to challenge the program and give American carriers a bigger role. His charges have angered some fellow carriers, who accuse him of trying to boost his own business, but they have also caught the ear of his home state lawmaker Senator Charles E. Schumer, Democrat of New York.

While their parent companies may be in Europe and Asia, carriers in the program boast a strong American presence, both commercially and politically.

They have large American subsidiaries that run their operations here, employing more than 2,000 American merchant mariners to sail ships and a number of retired United States military officers to run their operations here and sit on their boards.

The carriers have also hired some of Washington's best-known lobbyists, like J. Dennis Hastert, the former House speaker, to plead their case to the government. Executives and industry groups, meanwhile, have donated hundreds of thousands of dollars to Congressional candidates, many of them longtime supporters of the program.

Even the ship names have an American feel. Maersk, the Danish conglomerate, has named most of its ships in the program after American states, sailing the Maersk Missouri, the Maersk Carolina and many others under the American flag. APL Marine, owned by a Singapore conglomerate, prefers former presidents, like the President Truman and the President Polk.

Retired Gen. John W. Handy of the Air Force, appointed in June as president of Fidelio, a New Jersey-based shipping arm of Wallenius Wilhelmsen of Norway, said he feels dual allegiances to the military and to the American-flagged ships he runs.

"I would not be doing what I do unless I believed passionately in the U.S.-flagged fleet," he said in a telephone interview.

While his top bosses are in Norway, he said, "I don't feel intimidated or at all controlled by them, but they clearly are the owners, no doubt about that."

Administration and Congressional supporters say the program, which provides both routine transportation of military cargo and a backup war fleet in times of emergency, has proved a financial boon and a national security asset.

The program began in 1996, growing out of the Persian Gulf war five years earlier. The United States had to rely on nearly 300 foreign-flagged ships during the war, leading to the realization that the American-flagged maritime fleet — which boasted some 2,000 ships in the World War II era — was essentially disappearing from international waters.

In contrast, more than 90 percent of military cargo in and out of Afghanistan and Iraq since 2009 has traveled on American commercial ships under the program, officials said, and the United States has become less dependent on foreign-flagged ships.

"I can't imagine wanting to kill a program recognized as so valuable to the economic security and the national security of this country," said Albert J. Herberger, a retired vice admiral who helped create the program and now works as an industry adviser.

To avoid foreign interference, carriers owned by overseas companies must demonstrate that their American operations are controlled by American citizens.

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