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1920 Jones Act needs an update, and so does the Jones Act fleet

By Jonathan Helton

America’s federal Jones Act is previous and in dire want of an replace. Oceangoing U.S. ships crusing below the auspices of the Jones Act fleet are in the same situation. 

Now 101 years previous, the Jones Act technically is Section 27 of the Merchant Marine Act of 1920, and requires that each one ships transporting items between U.S. ports be U.S. flagged and constructed, and largely owned and crewed by Americans.

Its intent was to make sure nationwide safety by defending America’s maritime trade from international competitors. By virtually any measure, nonetheless, the regulation has been a failure. 

U.S. shipyards able to constructing giant oceangoing industrial ships have dwindled from 30 in 1953 to simply 4 as of November 2021, and oceangoing Jones Act ships have declined in quantity from 257 in 1980 to simply 96,1 lower than 1% of all industrial oceangoing vessels worldwide.2 

Worse — from an effectivity, price and security perspective — Jones Act ships are, on common, considerably older than most of their worldwide counterparts, except oil tankers, which common 13.47 years previous versus 18.87 internationally.3 The distinction is basically as a result of latest buildup of Jones Act tankers for the Gulf Coast-East Coast market, the place the shortage of pipeline capability has necessitated the usage of ships. The Oil Pollution Act of 1990’s double-hulled tanker mandate has additionally contributed to the decrease age of Jones Act-qualified oil tankers.4

Even although these U.S. oil tankers are comparatively younger, there aren’t a lot of them — not sufficient to correctly provide the East Coast’s demand for oil, at the very least. As the Colonial Pipeline hack in May 2021 demonstrated, oil corporations merely wouldn’t have sufficient choices for transporting oil, and the one short-term treatment to supply further delivery capability after the hack was for President Joe Biden to briefly waive the Jones Act.5

Meanwhile, all of America’s oceangoing roll-on/roll-off ships, containerships and cargo ships are undoubtedly outpacing their worldwide counterparts in age. Jones Act container ships, for instance, common 21.61 years previous, versus the worldwide common of 12.34. In Hawaii, the containerships operated by the 2 most important Jones Act carriers, Matson and Pasha, common 16.5 and 41.25 years previous, respectively.6

In the Great Lakes, the Jones Act fleet is in even worse form. Until the launch of the Mark W. Barker earlier this yr, no giant ship had been added to the Great Lakes fleet since 1983. 

“Put another way” stated Jones Act analyst Colin Grabow, “the last time the Great Lakes fleet saw a new ship was the same year Michael Jackson unveiled the moonwalk and the first cellphone was released for commercial use.”7

Internationally, many ships are scrapped between the ages of 15 and 20.8 The common scrapping age for basic cargo ships is 35.4; the common age of Jones Act basic cargo ships presently is 36.8.9

In previous years, the Jones Act fleet additionally included dry bulk carriers, however not anymore. The final one, the Texas Enterprise, was scrapped earlier this yr on the age of 40.10

Even when a number of Jones Act dry bulkers existed, the relative lack of those ships and their excessive prices proved an issue for U.S. companies, resembling livestock producers in North Carolina, who opted to import corn from Brazil as a substitute of delivery it from the U.S. heartland.11

One purpose for the elevated prices of older ships is that they’ve larger upkeep and restore prices.12 They are also extra carbon-intensive than just lately constructed ships.13 The U.S. Government Accountability Office famous in 2013 that “older vessels burn fuel faster and less efficiently compared to newer vessels, and the age of some of the Jones Act carriers’ vessels has contributed to increasing fuel costs.”14

But previous ships aren’t simply inefficient. They’re additionally harmful. 

For instance, in 2015, the El Faro, a 40-year-old Jones Act containership, sank en path to Puerto Rico when it sailed right into a hurricane. But the storm wasn’t the one drawback the ship encountered. Economist Thomas Grennes famous that “the Coast Guard and the National Transportation Safety Board … found multiple factors that contributed to the sinking and loss of lives, but both agencies identified factors related to the age of the ship.”15

Former crew members advised CNN that “the chief cook’s room was constantly leaking water” and that “the El Faro … needed a death certificate. It was a rust bucket.”16

Grennes additionally stated educational analysis has discovered that the older the ship, the extra doubtless it’s to be concerned in an accident. In reality, the Marshall Islands, a typical flag of comfort registry, doesn’t permit ships greater than 20 years previous in its registry — “unless owners provide additional information about the safety of the older ships.”17

Jones Act carriers, in the meantime, generally maintain their ships on the water properly previous the 40-year-old age of the El Faro. The final 12 Jones Act bluewater ships that had been offered for scrap, for instance, had a mean age of 41.9 years. The newest ship scrapped, Matson’s Lihue, was a decrepit 50 years previous — virtually half as previous because the Jones Act itself.18

By distinction, the common age of the most important fleet on the earth, owned by delivery big Maersk Line of Denmark, was simply 9 years previous in 2017. With the corporate’s acquisition that yr of German-owned Hamburg Süd, that common really improved, since Hamburg Süd’s ships averaged solely 6 years previous.19

The aged Jones Act fleet is a pure consequence of the regulation’s U.S.-build requirement, which is problematic as a result of Jones Act oceangoing ships price between 4 and 5 occasions as a lot to assemble as their worldwide counterparts. This encourages ship house owners to maintain their vessels in service so long as potential.20

Both the Congressional Research Service and the Government Accountability Office have confirmed that the construct requirement delays the acquisition of newer ships.21

Let’s hope Congress doesn’t delay in reforming the home construct requirement of the Jones Act, for the sake of financial freedom, effectivity and security.
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Jonathan Helton is a analysis affiliate with the Grassroot Institute of Hawaii.
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  1. The Decline of U.S. Shipbuilding,” Shipbuilding History, up to date Jan. 21, 2016; Colin Grabow and Inu Manak, “The Jones Act at 100: Time to Make This Protectionist Law History,” Cato Institute, June 11, 2020; Josh Mason and Jonathan Helton, “Five myths about the Jones Act,” Grassroot Institute of Hawaii Policy Brief, Nov. 2021, pp. 8-9.
  2. Merchant Fleets of the World Privately-Owned, Oceangoing Merchant Vessels of 1,000 Gross Tons and Over as of January 1, 2016,” U.S. Maritime Administration, Jan. 1, 2016.
  3. United States‐Flag Privately‐Owned Merchant Fleet Report Oceangoing, Self‐Propelled Vessels of 1,000 Gross Tons and Above that Carry Cargo from Port to Port,” U.S. Maritime Administration, July 20, 2021; and Jan Hoffmann, “Decarbonizing maritime transport: Estimating fleet renewal trends based on ship scrapping patterns,”UNCTAD, Feb. 25, 2020.
  4. See: John Frittelli, “Shipping Under the Jones Act: Legislative and Regulatory Background,” Congressional Research Service, Nov. 21, 2019, p. 15, footnote 70; see additionally John Gallager, “Watchdog: Lifting crude oil export ban dealt blow to Jones Act tankers,” FreightWaves, Nov. 20, 2020; and John Frittelli et al., “U.S. Rail Transportation of Crude Oil: Background and Issues for Congress,” Congressional Research Service, Dec. 4, 2014, p. 9.
  5. Charles Kennedy, “East Coast Fuel Supply Hampered By Tanker Shortage,” Oilprice.com, May 13, 2021.
  6. United States‐Flag Privately‐Owned Merchant Fleet Report Oceangoing, Self‐Propelled Vessels of 1,000 Gross Tons and Above that Carry Cargo from Port to Port,” U.S. Maritime Administration. The 16.25 quantity applies to solely the containerships Matson deploys in its Hawaii service; the common age of the corporate’s whole Jones Act containership fleet is 20.14 years previous. Pasha Hawaii operates no containerships outdoors its Hawaii routes, so 41.25 is the common age for its whole containership fleet. The knowledge may be retrieved from the U.S. Maritime Administration in Excel type right here.
  7. Colin Grabow, “Aging U.S. Great Lakes Fleet Another Example of Protectionist Failure,” Cato Institute, Nov. 2, 2021.
  8. John Frittelli, “The Coast Guard’s Need for Experienced Marine Safety Personnel,” Congressional Research Service, Sept. 19, 2019, p. 2
  9. Jan Hoffmann, “Decarbonizing maritime transport: Estimating fleet renewal trends based on ship scrapping patterns”; “Merchant Fleets of the World Privately-Owned, Oceangoing Merchant Vessels of 1,000 Gross Tons and Over as of January 1, 2016,” Maritime Administration.
  10. United States Flag Privately‐Owned Merchant Fleet Oceangoing, Self‐Propelled, Vessels of 1,000 Gross Tons and Above that Carry Cargo from Port to Port, Summary of Changes from 2016 Onward,” Maritime Administration, July 20, 2021, p. 9.
  11. Michael Hansen, “Jones Act Opposition from the Carolinas,” Grassroot Institute of Hawaii, Aug. 21, 2015.
  12. Lixian Fan, Sijie Zhang, and Jingbo Yin, “Structural Analysis of Shipping Fleet Capacity,” Journal of Advanced Transportation, Sept. 12, 2018.
  13. Haifeng Wang and Nic Lutsey, “Long-term Potential for Increased Shipping Efficiency Through the Adoption of Industry-leading Practices,” International Council on Clean Transportation, July 2013, p. 16; Gary Wollenhaupt, “Study says ships are less fuel efficient; operational evidence differs,” Professional Mariner, July 30, 2015.
  14. Puerto Rico Characteristics of the Island’s Maritime Trade and Potential Effects of Modifying the Jones Act,” U.S. Government Accountability Office, March 2013, p. 15.
  15. Thomas Grennes, “Sacrificing Safety Is an Unintended Consequence of the Jones Act,” Mercatus Center, March 21, 2018.
  16. Steve Almasy and Yasmin Khorram, “El Faro had leaks, holes, other structural issues, former crew members say,” CNN, Oct. 9, 2015.
  17. Thomas Grennes, “Sacrificing Safety Is an Unintended Consequence of the Jones Act.”
  18. United States Flag Privately‐Owned Merchant Fleet Oceangoing, Self‐Propelled, Vessels of 1,000 Gross Tons and Above that Carry Cargo from Port to Port, Summary of Changes from 2016 Onward,” U.S. Maritime Administration, p. 8.
  19. World’s Largest Containership Fleet Is Here,” Offshore Energy, Dec. 13, 2017.
  20. Jonathan Helton, “The Jones Act: 100 years of failed protectionism,” Grassroot Institute of Hawaii, June 5, 2020.
  21. John Frittelli, “The Coast Guard’s Need for Experienced Marine Safety Personnel,” p. 2; “Puerto Rico Characteristics of the Island’s Maritime Trade and Potential Effects of Modifying the Jones Act,” p. 16.

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