February 9, 2010
All U.S.-flag ships in international commerce would have to be built in the United States if language approved July 9 by the Senate Commerce, Science and Transportation Committee becomes law.
Shippers of government-impelled cargo such as food aid, project or military cargo that require U.S. flag vessels for transport would likely incur higher rates. Experts said it would be impossible to calculate how much, but owners would have to recover the higher relative cost of building a ship in the U.S.
The change — spelled out in five words — also would affect carriers in the Maritime Security Program, which requires U.S. flag vessels, but allows the re-flagging of foreign-built ships.
The Maritime Administration Authorization Act of 2010 calls for an amendment to the language in Title 46, Sec. 50101 of the U.S. Code, which covers policies and objectives for the U.S. merchant marine.
The law states that for the national defense and development of import and export foreign commerce, the merchant marine should "provide shipping service essential for maintaining the flow of the waterborne domestic and foreign commerce at all times."
To do that, the law says ships should be capable of being part of navy auxiliary fleet, and be U.S. owned and operated. It continues, the fleet should be "composed of the best-equipped, safest, and most suitable types of vessels and manned with a trained and efficient citizen personnel."
The Senate bill would add "constructed in the United States" after "vessels" in the last clause.
The Jones Act already requires U.S.-built ships in trades to Hawaii, Alaska, Puerto Rico and Guam, the Marad bill goes farther. U.S. flag operators in foreign trades now have the option of re-flagging foreign-built ships.
Joe Cox, president of the Chamber of Shipping of America, estimated that 200 of some 800 vessels owned by chamber members are U.S. built. The chamber is made up of U.S. shipping companies, overseas and Jones Act, which operate under mix of U.S. and foreign flags.
Cox said a company would have to make the business case to replace a foreign-built ship with a U.S.-built one.
"A company would have to run the numbers. 'How much income are we getting from this trade? How much would it cost us to replace our ship with a U.S.-built ship? Does it make economic sense?'" Cox said. "This bill could have unintended consequences."
Officials at the Commerce Committee did not return an inquiry for comment. The bill still requires full Senate approval. Marad's authorization has not been taken up by the House.
Contact R.G. Edmonson at bedmonson@joc.com.
In either case, the Jones Act can be a tough legal issue. For more information on how it affects workers and other maritime law information, please visit my site - http://www.maritimeaccidentattorney.com/. We are happy to answer any questions you may have.
The Senate Bill is not a change in policy, but just a technical correction to adjust the recodification of Section 101 of the Merchant Marine Act of 1936 to the original language of that Act which is quoted below. It does not mandate that all U.S. flag ships must be built in the U.S.
AN ACT (Merchant Marine Act of 1936)
To further the development and maintenance of an adequate and well-balanced American merchant marine, to promote the commerce of the United States, to aid in the national defense, to repeal certain former legislation, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
TITLE I -- DECLARATION OF POLICY
SECTION 101. It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine
(a) sufficient to carry its domestic water-borne commerce and a substantial portion of the water-borne export and import foreign commerce of the United States and to provide shipping service on all routes essential for maintaining the flow of such domestic and foreign water-borne commerce at all times
(b) capable of serving as a naval and military auxiliary in time of war or national emergency,
(c) owned and operated under the United States flag by citizens of the United States insofar as may be practicable, and
(d) composed of the best-equipped, safest, and most suitable types of vessels, constructed in the United States and manned with a trained and efficient citizen personnel. It is hereby declared to be the policy of the United States to foster the development and encourage the maintenance of such a merchant marine.
This is another attempt by the Democrats to pay back the Unions and try to ensure re-election. US shipyards haven't been globally competitive and won't be - they are too expensive and too slow in the time it takes to build the ships. How many Jones Act ships have been built in the last 10 years? How many 35 year old ships are plying the Jones Act trades today and why? the why is simple, no one can afford to pay $150. Million for a 3000 TEU ship; and to consider run it competitively in non-Jones Act trades?? Matson has gotten away with it with a small service to Hawaii then China and back, but in the real competitive world? It won't pass the Senate (let's hope!)
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