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Monday, February 23, 2015

The Jones Act’s Costly Impact

The Jones Act, also known as the Merchant Marine Act of 1920, requires that vessels used for domestic shipping must be built in the United States, owned by U.S. citizens, and at least 75 percent crewed by U.S. citizens.

U.S. law allows shippers to transport goods domestically on cars, trucks, aircraft, or rail cars built in other countries. Just not ships.
Costly Impact

According to the Congressional Research Service, the purchase price for U.S.-built tankers is about four times the price of foreign-built tankers.

According to the World Economic Forum, the ban on letting foreign ships trans-ship cargo between U.S. ports costs the U.S. economy $200 million per year.

According to the Federal Reserve Bank of New York, shipping a 20-foot container of household and commercial goods from the East Coast to Puerto Rico on a Jones Act ship costs twice as much as shipping the same goods to the nearby Dominican Republic.

9 comments:

Anonymous said...

$200 million per year?
Why would anyone worry about such a small sum? That's a lot less than Obama spends on vacations and golf balls.

Why was the law enacted in the first place? To protect the U.S. from foreign competition. Is it still needed?

Anonymous said...

Great Law! Glad we have it. It looks like it could be expanded, though.

Anonymous said...

Yes, it is still needed. Not only to protect our economy, but have you seen some of these foreign tankers? Most wouldn't be considered seaworthy. Lack of maintenance abounds on foreign flagged ships.

Anonymous said...

Let me guess and say the foreign boats can be built at a much lower cost because they aren't burdened by unions and needless government red tape.

Anonymous said...

11:53 - you got it! They could build to the same standards less expensively - without the unions.

When the law was enacted, it may have been necessary - and we didn't have the same sense of safety standards that we have now....meanwhile, the unions continue to burden our business processes with excess costs - that have already been shown to be excessive!

Anonymous said...

I cannot name one cruise line that has a single ship that is flying the American flag.

Anonymous said...

1251-Cruise lines do not transport important cargo.

Anonymous said...

The Jones Act only applies to Ships that go from 1 American port to another American port. Say from New York to Baltimore. This is why cruise ships don't go between US ports. So if a ship leaves China and goes to Los Angeles it would have to off load all its cargo there. If it was to go to San Francisco after LA it would have to make a stop in Mexico before it could do so. This is why the act is costly. It would be cheaper to ship from LA to San Fran by ship instead of by truck.

Anonymous said...

12:52, Norwegian Cruise Line owns a ship that is registered in this country and cruises the Hawaiian Islands. It was sort of an accident, though. They bought a half built hull from a shipyard in Mississippi and had it finished there, hired an all American crew and jumped through all the requisite hoops.