A strange law

We were a different country in 1920. That was when we passed the Merchant Marine or Jones Act, which requires all cargo shipped between American ports to be carried on US-flagged vessels that are assembled entirely in America, and that have some of their major components manufactured in the US. These ships must be at least 75% owned and crewed by Americans. And if a US-flagged ship needs to be repaired overseas, the US charges a 50% tax on the price. of 1920

Relatively independent organizations such as the World Economic Forum or the OECD thinks this law is ridiculous. It has also resulted in damaging our competitiveness, one example of which is the cost of shipbuilding and shipping operations in the US. American-built coastal-size container ships are estimated to cost between $190 million and $250 million each, compared to about $30 million for foreign-made equivalents. And because Jones-compliant ships are so expensive, their owners do not replace them. A ship’s economically useful life is generally considered to be about 20 years, but more than 65% of the Jones fleet is over 30 years old, making it inefficient and even dangerous. And we don't build too many ships; we built less than one million gross tons of ships between 2014 and 2016, South Korea and China produced a combined 140 million tons.

Operating costs of US-flagged ships are almost three times higher than those of foreign vessels. Crewing costs on American ships are reported to be about five times greater. And whereas transporting crude oil from the Gulf Coast to the US Northeast on a Jones-compliant ship costs $5 to $6 per barrel, it costs only $2 per barrel to carry crude from the Gulf Coast to Eastern Canada on a foreign-flagged vessel.

And it's bad for the environment. Only 2% of US domestic freight is carried by water, compared to 40% in Europe. By pushing companies to use land-based transport, the Jones Act increases costs for US firms, raises prices for consumers, and causes more congestion on the country’s highways. Moreover, truck, rail, and air transport produce up to 145 times more carbon dioxide emissions than cargo ships do.