Annual Review & Outlook 2013: National Ports and Waterways Initiative, University of New Orleans

Asaf AsharCoastal shipping refers to container and trailer services routed along the U.S. Atlantic, Gulf and Pacific coasts. All attempts to provide such services have failed. The most recent failed effort, despite a generous grant, was SeaBridge, between Port Manatee, Fla., and Brownsville, Texas. In contrast to the United States, coastal shipping in North Europe has operated successfully for many years. Regardless of past failures, the prospects of U.S. coastal shipping have been exhaustively studied, focusing on the question whether a European-like system is viable in the U.S.

A study, “Comparison of U.S. and Foreign-Flag Operating Cost,” by the Maritime Administration, September 2011, seemed to provide an answer, indicating the cost of operating a Jones Act ship is 2.7 times higher than its foreign-flag equivalent. This study, however, did not specifically relate to ships involved in coastal trades and (it seems so) mainly used non-European foreign ships for comparison. Hence, its relevance to the question at stake is limited.

The question was more specifically addressed by three additional studies: America’s Marine Highway Report to Congress, Maritime Administration, April 2011; “Can Marine Highway Deliver?” Congressional Research Service, January 2011; and Marine Highways System Evaluation Model, Center for Commercial Deployment of Transportation Technology, January 2012. These studies, again, blamed the excessively high cost of the Jones Act, suggesting a need for federal support, either direct (due to savings in external costs) or indirect (by military participation in capital and operating costs). However, the studies noted that even with this support, the prospects of coastal shipping appeared unpromising.

This gives rise to a more fundamental question of whether a limited waiver of Jones Act could profoundly change these prospects. Specifically, whether coastal services based on: foreign-built ships; functional U.S. manning; salaries paid in coastal services of bulk cargoes; dedicated, domestic terminals; and, finally exemption from the Harbor Maintenance Tax is viable. A positive answer should challenge the maritime community to find a way to pursue such a waiver that, because there are no coastal services, does not harm existing Jones Act operators. A negative answer should settle the question or, at least, thwart spending public money on further studies.

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