Jaenichen Weighs in on Title XI
MARAD's Acting Maritime Administrator, Paul “Chip” Jaenichen, weighs in on Title XI
While maritime industry trends are often unexpected and rarely coincide with the Federal budget cycle, MARAD currently holds sufficient funding to support $735 million in Title XI loan guarantees and we fully intend to use it.
As a reader of Maritime Reporter & Engineering News, you’re probably familiar with Title XI shipbuilding loan guarantees and the program’s importance to the U.S. Maritime Industry. The Title XI program—administered by the Maritime Administration (MARAD)—has long provided full faith and credit loan guarantees by the Federal Government of private sector debt acquired to build vessels in U.S. shipyards. While the Title XI program’s principal objective is to promote the growth and modernization of the U.S. Merchant Marine and U.S. Shipyards, it also enables our nation to maintain a presence in our waterborne commercial and military supply chains—serving as an essential component of sound U.S. economic and security policies.
Today the program is represented in almost every maritime market segment and geographic region, and I think most maritime stakeholders recognize its value to our industry.
In a large part driven by our country’s continuing natural gas boom, the U.S. maritime industry is currently seeing robust shipbuilding activity, the most in over three decades. Over 20 large, self-propelled, oceangoing Jones Act-eligible tankers and containerships are under construction or are on-order at U.S. Shipyards and MARAD wants to ensure that the Title XI Program continues to support this trend. To that end, MARAD recently issued a Federal Register Notice to propose that the criteria used to grant Title XI loan guarantees include vessels powered by alternative energy sources like liquefied natural gas (LNGLF) (LNG) should be considered.
While maritime industry trends are often unexpected and rarely coincide with the Federal budget cycle, MARAD currently holds sufficient funding to support $735 million in Title XI loan guarantees and we fully intend to use it. And with the surge in shipbuilding we’re experiencing, MARAD is working overtime to improve our management of the program.
I’m happy to announce MARAD’s recent installation of Owen Doherty as Associate Administrator of the Title XI program.
A longtime MARAD employee (most recently as Director of our Office of Security), Owen brings a solid work ethic, decades of maritime industry experience, and a U.S. Merchant Marine Academy and Naval War College education to the Title XI program.
Our new Associate Administrator isn’t the only Title XI-related change in personnel at MARAD. We have also increased our in-house financial expertise by incorporating additional staff into the Office of Marine Financing. This includes an on-site financial analyst to assist with efforts to develop a new risk-assessment model and timeline for credit watch reports. Additionally, MARAD increased the number of firms conducting independent financial analysis (IFA) under contract with the government to ensure more industry-knowledgeable analysts are available to speed the Title XI process and provide competition for the work. This move will help us determine best practices to structure loan guarantees, and in the long term, it will save taxpayer dollars and expedite quality financial reviews.
MARAD has also been targeting aspects of the program that can be simplified and made more efficient. On this front, we have engaged the services of an external consultant to obtain an independent review of the program and help identify areas for further improvement. For example, to increase the efficiency of the review process, MARAD now requires that we receive all information before we will consider an application complete.
Having all information submitted at the outset will considerably cut down the average processing time to approve loan guarantees.
Furthering the effort to make the analysis process timelier, we now directly complete the IFA contracting process. This has already had a substantial effect on our procedures, cutting months off the time to award the IFA contract. At MARAD, we understand the importance of Title XI funds to our industry. Our recent efforts can be just the “nudge” that some fleet- and/or capacity-building initiatives need to move ahead, and they can be a major boon to both vessel owners and shipyards.
To ensure that the program continues to have a positive impact on our nation’s ships and shipyards, we are forging ahead with our evolution of the program’s management—so regardless of any potential flux in funding, applicants will be able to timely capitalize on the opportunity that Title XI offers.
(As published in the June 2014 edition of Maritime Reporter & Engineering News - http://magazines.marinelink.com/Magazines/MaritimeReporter)