Mailbag: Readers Respond to "Jones Act Dead at 91" in MarEx's LinkedIn Group
MarEx Readers respond to Tuesday's Editorial, "Jones Act Dead at 91" by Editor-in-Chief, Tony Munoz in The Maritime Executive's LinkedIn group.
William Kelley • A satyrical masterpiece!!
I signed on to a T-2 tanker , the William F. Humphrey, as a wiper two days out of high school in 1966. That job and that ship would not have been there lacking the presence of the Jones Act.
I remain active in the Maritime Industry today after a career at sea, many years as a shore side manager of engineering and have seen it all evolve and change.
What is left, what is strong what is right for America and its ability to move its goods and cargoes without fear of foreign intervention is still the product of the Jones Act!
Bill Kelley - USMMA 71'
Acta Non Verba!!!
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John Knight
The Jones Act is critical to the U.S. a revision perhaps disconnecting U.S. ship building and U.S. ship operating would greatly strengthen this cabotage law. If the Jones act is abandoned, then under the "savings logic" I insist airlines must also give up their stake in protectionist legislation and allow China Airlines, or Malev or any other non U.S Airline to fly between U.S cities and carry U.S Passengers and freight. The cost savings would be incredible for the consumer correct? Clearly that seems to be the only issue being focused on.
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Ron Oyer
And yet MSC allows US operators to flag in foreign built ships for their charters. Time to end the build US part of the Jones Act. Keep the cabotage provisions and always ensure theat any ships engaged in domestic trade or that matter any under the US flag employ only US mariners. This is what is holding up the short sea shipping initiatives as well as getting some new tonnage into the dwindling US flag deep sea fleet.
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John Knight • Amen Ron!
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Peter Talbot
The Jones Act isn't dead, but the American merchant marine is drifting. If cabotage protection were accompanied by US federal support for deep sea US flag fleets to compete for more than Marad work it could be sound but the American public does not understand the national security need to maintain its own merchant marine fleet in all vessel classes. China in its drive to expand maintains at least three parastatal lines and several other near parastatals to ensure it is not denied tonnage to carry its exports (its life blood). Japan and Korea business conglomerates with quasi-governmental involvement maintain multiple house carriers regardless of returns in many of the markets they serve. Europe, despite its higher operating costs in some areas continues to see state support and bailouts to maintain container liner carriers and bulk operators in many EU member states and continues to operate as charterer to many liner carriers in all trades. The common threads of these operations is that they are (a) opaque as regards many operational responsibilities; (b) opaque as to operating cost to benefits (no FASB in most operating countries and flag states) and (c) opaque as to actual ownership and corporate structure as they would be practiced in reported in North America. The business of shipping is at once capital intensive and given to overcapacity and commoditized pricing competition with too many ships likely operating at times at non-compensatory rates. The result is a business model that cannot operate in the Western equity market: no publicly traded stock company management would be able to weather even two years of stockholder meetings regardless of their ability. The answer is government sponsored building, crewing, operation and subsidization of at least two and properly three domestically quartered American flag carriers responsible to obtain and retain at least 5% market share in the markets they serve. The cost would be in the range of 20 billion dollars initially in guaranteed notes and about 1.5 billion dollars a year in raw operating subsidy. There is no "free market" in shipping. Only the US congress and certain supply-side idealogues believe tout this because of the public's lack of interest in the potential harm of the current state of affairs. And the reason for this lack is that marine shipping is always an export issue politically. Because America by and large produces low end, heavy and base commodities for ocean export it has no public support for the merchant marine segment and no public visibility for the dangers inherent in allowing all hulls calling the US to be foreign flagged and operated. Unless this underlying economic condition of declining American manufacture is reversed there will be little public pressure for public expenditures on deep ocean shipping or any related port or intermodal infrastructure commitment.
That being the case, of what use is the Jones Act cabotage or ship building protection? It only marginally protects dock and shore based jobs. It does protect a small number of masters/mates jobs and a relatively small percentage of vessel construction jobs (compared with most of our competing overseas business "partners"), but the results include likely higher haulage rates for Jones Act lanes involving Puerto Rico, Hawaii, Alaska. The likelihood is that coastwise movements would increase and more money would stay in more ports as opposed to intermodal movements or movements through near-shore transshipment ports like Freeport and Kingston without the cabotage restrictions. The new transshipment hubs for larger container vessels are not being built on American soil for the most part.
The truth rarely spoken is that the national interest would be better served by maintaining a viable deep ocean merchant marine more than by cabotage protection and shipbuilding subsidy.
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Tony Munoz
Thanks Bill for understanding my editorial was satire on Escopeta Oil breaking the law--
As an editor I tried to let people know that Escopeta had moved the rig from Houston to Vancouver, BC on a Chinese ship--But the people in Cook Inlet wanted the oil and gas that will come from this rig--therefore they were cheering it on.
Clark, I am absolutely upset about the Jones Act getting its hat handed to it, so I went with the Obituary in satire.
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Tony Simkus
There is no doubt that every country should plan for its preservation, and that access to shipping is vital. There is equally no doubt that the U.S. laws and regulations on the safety and staffing of its domestic fleet place it at a commercial disadvantage when compared to the alternatives. BUT... item one trumps item two.
heck... if we weren't so worried (and rightly so) about borrowing 40 cents of every dollar spent by the government, this would be one of those things that would be called a "loss leader". We would just pay the difference. Pretty soon, however, every dollar will be scrutinized, or at least need to be.
6 hours ago
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Clark Dodge
Aloha Tony Munoz. Then I guess I read it right and I was making my point as well for those who did not get the message. Instead of working to make things better to many just want to toss out the baby with the water. This is a great topic and it all depends on what gives a person grey hair. Many times they just fail to see the big picture and there is more to the Jones Act than just crews or where a ship is built. I have seen the results of the low bid and many other things that make up a ship and all that supports it. I was hoping to just get people to see more than just the ship. Thanks for the reply.
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Dear Sir
I have read with interest "Jones Act Dead at 91"
If the Spartan 1 was carried to Vancouver, British Columbia, as noted, no Jones Act vessel was required as these cabotage laws govern carriage of cargoes between US ports, and Vancouver BC is in Canada. If the transport was between a US port in the US GoM and an Alaskan port, you are correct in saying that the employment of a Chinese flagged vessel violates the Jones Act.
However, the issue is moot, as there is no US flag, much less a Jones Act compliant, submersible lift vessel of the type operated by Dutch and Chinese owners. There is no demand for such a vessel in US waters, and even if there were, the cost of construction in a US yard of such a highly specialized vessel, if one could be found, would be prohibitive, well in excess of the cost in a foreign yard.
With respect to the larger picture of a Jones Act fleet we must look at the reasons for the near demise of our merchant marine and the ever growing demands for its' repeal.
I preface my remarks in this regard by saying that I have spent a considerable portion of my shipping career building, operating, chartering, and recycling Jones Act vessels and have long been a chauvinistic champion of domestic industry and production.
The facts are that the Jones Act tankers built in recent years -- in NASSCO and Aker, Philadelphia -- despite being off-the-shelf Korean designs, cost, according to some informed estimates, three times the cost in Korea. The announced price for Aframax class tankers Exxon wishes to build in Philadelphia, also a Korean design, is $200 million per copy, although the same vessel in the yard of origin has a price tag of slightly above $50 million.
Moreover, all of the recently built vessels are fitted with foreign built diesel main engines as we do not have the infrastructure to build these here even under license.
The most damaging aspect of the retention of Jones Act, as currently formulated, is the inability of experienced, competent, and responsible companies to undertake MARAD's Marine Highway program and establish sorely needed RoRo or other vessel services to carry containers coastwise and relieve highway congestion, air pollution, and fuel consumption. The cost of construction of suitable vessels domestically is prohibitive
The idea of allowing foreign built vessels for these trades which will come under US flag, employ US seafarers, and pay US taxes is one to be looked at carefully.
Waivers granted recently for carriage of crude from the Strategic Reserve in non-US flag vessels was occasioned by the absence in the Jones Act fleet of large, crude carrying vessels; most of the Jones Act ships and tug/barge units are trading with clean cargoes and are too small for the contemplated voyages
Jonathan FEFFER
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