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 U.S. military equipment 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.
Sixty ships get millions from the government for hauling tanks, Humvees, fuel, munitions and other supplies across the seas. The vast majority of the ships — at least 45 — fly the U.S. 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 U.S. 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 single ship in the program. “It’s effectively shut out American companies.”
Many American-owned shippers, 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 shippers, who often have lower operating costs.
Nonetheless, Shapiro has started a campaign to challenge the program and give U.S. shippers a bigger role. His charges have angered some fellow shippers, who accuse him of trying to boost his own business, but they have also caught the ear of his home-state lawmaker, Sen. Charles Schumer, D-N.Y.
While their parent companies may be in Europe and Asia, shippers in the program boast a strong American presence, both commercially and politically.
They have large U.S. subsidiaries that run their operations here, employing more than 2,000 U.S. merchant marines to sail ships and a number of retired U.S. military officers to run their operations here and sit on their boards.
The shippers 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.
The program began in 1996, growing out of the Persian Gulf War five years earlier. The U.S. had to rely on nearly 300 foreign-flagged ships during the war, leading to the realization that the U.S.-flagged maritime fleet — which boasted some 2,000 ships in the World War II era — was essentially disappearing from international waters.
“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.