1. Introducing the Jones Act
This Explainer seeks to offer a greater understanding of the Service provider Marine Act of 1920, referred to as the Jones Act. This regulation was handed with the perfect of intentions and has been a staple of the American political panorama for over 100 years. It has additionally created many unintended penalties, challenges, and issues, suggesting a necessity for substantial legislative reform on this space.
2. A Abstract of the Jones Act
The Jones Act was signed into regulation on June 5, 1920, by President Woodrow Wilson. The aim of this regulation was easy sufficient: “the promotion and upkeep of the American service provider marine.” The spirit of the regulation, nevertheless, was not to guard these jobs for home employees. It was to “guarantee enough home shipbuilding capability and a prepared provide of ships and service provider mariners that may function an auxiliary in instances of struggle or different nationwide emergencies.”
To perform this aim, the Act stipulates that every one ships transporting items between US ports meet 4 situations:
- Be American-made.
- All main elements (hull and superstructure) have to be made within the US and the vessel’s precise meeting have to be fully accomplished within the US.
- Be American-crewed
- All officers on deck and at the very least 75 p.c of the crew have to be US residents.
- Be American-owned
- 75 p.c of the possession stake have to be by US residents or by US firms which can be managed by US residents.
- Be American-flagged
- All vessels have to be registered within the US and should fly a US flag. They have to additionally comply with all regulatory necessities of the US and be topic to inspection by the US.
This regulation was handed with the perfect of intentions, and should have been warranted within the instant time period attributable to World Warfare I, the Warfare’s extension all through the Atlantic, and German assaults on American delivery from 1917 onwards. The long-lasting outcomes of this regulation, nevertheless, can solely be described as “disastrous.” It neither promotes the home service provider marine trade nor bolsters nationwide protection.
Due to the restrictions on the home delivery trade — particularly, the protections from overseas competitors — the price of delivery items domestically skyrocketed. Some estimates discover that the Jones Act will increase delivery prices dramatically over the going price for worldwide delivery. Estimates range on the precise determine.
The US Division of Transportation acknowledged this in 2020, citing its personal earlier report: the price of working a Jones-Act-compliant vessel was at the very least double in comparison with non-Jones-Act-compliant vessels. In 2020, the nonpartisan Congressional Analysis Service, citing quite a few research, calculated “the value of a US-built tanker is estimated to be about 4 instances the worldwide value of an identical vessel, whereas a US-built container ship could price 5 instances the worldwide value.” That corresponds to earlier analysis: a 2011 examine by the US Maritime Administration (MARAD) discovered “the common working price of a US-flagged ship was 2.7 instances larger than a foreign-flag ship,” a value differential MARAD predicted would improve.
3. Unintended Penalties: The Standing of the US Shipbuilding Business Immediately
Counter to the targets of the Jones Act, elevating the price of home sea-shipping to such a level has inspired home producers to search out different technique of transporting their wares. In an excessive case, cows from Hawaii are steadily shipped by air as a result of it’s cheaper than delivery them by water. By lowering demand, excessive delivery prices really cut back the variety of domestically produced ships, the home shipbuilding services, jobs within the shipbuilding trade, and the variety of certified mariners out there to crew Jones-Act-compliant ships.
Reasonably than nurturing an abundance of ships and mariners standing able to bolster naval operations, the Jones Act has produced the other: shortages of each. In 2017, the Maritime Workforce Working Group reported a deficit of 1,839 mariners for a “sustained sealift,” which means “sustained wartime efforts.” Even this estimate assumes that every one at the moment “actively crusing and certified mariners with limitless credentials out there to crew… [were] out there and prepared to sail.” At a 2023 listening to earlier than the Division of Transportation, Ann Phillips, then the Maritime Administrator, famous that for the reason that 2017 examine, “globally standardized credentialing necessities” and “the COVID-19 pandemic” have each “negatively impacted mariner retention.” Whereas she didn’t present new figures for the deficit, one can solely surmise that the state of affairs has gotten worse, not higher.
The sobering unintended penalties of the Jones Act go additional. At a 2013 listening to earlier than the Home Subcommittee on Coast Guard and Maritime Transportation, the Subcommittee’s employees reported as “Background” that between 1983 and 2013, at the very least 300 shipyards closed, leaving simply 4 remaining open as we speak.
The results of all of this has been a large decline within the capacities of the US shipbuilding trade. In a 2019 assertion earlier than the Home Subcommittee on Coast Guard and Maritime Transportation, Mark Buzby, the Administrator of the Maritime Administration of the US Division of Transportation, testified: “Within the case of enormous self-propelled oceangoing vessels, U.S. shipyards nonetheless lack the dimensions, expertise, and the massive quantity ‘sequence constructing’ order books wanted to compete successfully with shipyards in different international locations.”
In comparison with different international locations, the US has clearly fallen behind. A 2025 report from the US Commerce Consultant states that “as we speak, the US ranks nineteenth on the planet in industrial shipbuilding, and we construct fewer than 5 ships annually, whereas the [People’s Republic of China] is constructing greater than 1,700 ships. In 1975, the USA ranked primary, and we had been constructing greater than 70 ships a 12 months.”
4. A World With out the Jones Act
One place to begin for such reform can be to ask the next query: what would the world of American delivery and ship-building appear like within the absence of the Jones Act?
First, it’s helpful to put some groundwork for what this world appears to be like like with the Jones Act. Transport from, for instance, Alaska to California could be accomplished in one in all two methods. The primary is through the use of a ship in compliance with the Jones Act. The second is through the use of a authorized workaround. The Jones Act applies to ships shifting straight between two American ports, however not if a ship stops at a overseas port between two US ports. Many ships leaving Alaska briefly cease in British Columbia earlier than heading to California, simply to keep away from having to adjust to the Act.
A extra well-known instance of a method of circumventing the Jones Act was the Bayside Canadian Railway, a 200-foot railway inbuilt New Brunswick, Canada, that was used to benefit from an exemption for items shipped “by rail” in Canada. By unloading the cargo, driving it 100 ft by practice, after which pushing it again 100 ft earlier than loading it once more, huge quantities of cash may very well be saved. The US Division of Justice obtained a tip about this in August 2021 and, after a “months-long courtroom battle,” the US District Courtroom for Alaska dominated that the Bayside Canadian Railway was not compliant with the Jones Act; it did, nevertheless, waive the fines imposed by the US Customs and Border Safety Company. That it took the courtroom months to render a ruling is telling.
In a 2023 evaluation, Scott Lincicome argued that US highways are extra congested, significantly these alongside the coasts, than they in any other case can be due to the excessive prices of home delivery by sea. Transport inside the USA, even alongside the coasts, is primarily accomplished with vans on the highway, thus placing extra site visitors on the highway and pressure on infrastructure than there would in any other case be.
At current, the US Virgin Islands, American Samoa, and the Northern Mariana Islands are all exempt from the Jones Act, which means that ships coming into their ports, no matter their port of origin, can dock there regardless of the place the ship was constructed, the place it’s registered, or who crews it. The exemptions create huge comparative financial savings for these islands.
In 1999, for instance, the Authorities Accountability Workplace launched a examine describing the prices of delivery Alaskan North Slope Oil to numerous locations. To ship oil to the Gulf Coast area of the USA, it took 41 days at sea and value $7.15 per barrel. By comparability, delivery the oil from the identical place in Alaska to the Virgin Islands took 84 days at sea (which concerned going round Cape Horn in South America) and value a mere $2.35 per barrel. Whereas many elements decide the price of delivery a barrel of oil, the exemption to the Jones Act is enjoying a big function in reducing the price of oil to the Virgin Islands in comparison with different areas within the space.
The Jones Act has a protracted historical past of being waived underneath extraordinary circumstances, having been waived at the very least 39 instances since its inception for various lengths of time and functions. In September 2022, a foreign-flagged tanker delivery diesel gasoline from Texas to Europe was rerouted to Puerto Rico in response to Hurricane Fiona and the devastation that was wrought upon the island. Sadly, the tanker needed to wait offshore for a number of days earlier than receiving permission to dock and ship the diesel gasoline that folks desperately wanted. The Jones Act was waived once more the very subsequent month, permitting shippers to fulfill the “distinctive and pressing want for liquefied pure gasoline in Puerto Rico.”
September 2017 proved to be a chaotic month for the Jones Act. It was waived three separate instances with regard to totally different territories and merchandise, in response to Hurricanes Harvey, Irma, and Maria. The waiver for Puerto Rico was solely granted after appreciable drama, with the Division of Homeland Safety initially refusing to take action, earlier than ultimately capitulating to widespread public outcry.
In 2012, the Jones Act was waived in response to Hurricane Sandy to “instantly enable further oil tankers coming from the Gulf of Mexico to enter Northeastern ports, to offer further gasoline assets to the area.” The very subsequent day, this exemption was expanded to permit “the transportation of feedstocks, mixing elements, and components used to provide fuels.”
In 2011, an ice-breaking ship from Russia obtained a waiver of the Jones Act, permitting it to ship crucial gasoline to the remoted metropolis of Nome, Alaska.
In 2005, a waiver was granted to permit “the transportation of petroleum and refined petroleum merchandise” in response to Hurricane Katrina, which sped up the pure catastrophe restoration course of for the Gulf Coast States.
Past pure disasters, the Act has been waived in response to explicit financial situations. In 2010, it was waived to “exempt vessels used within the anchoring of oil rigs off the coast of Alaska”; in 2002, to “enable the usage of foreign-flag tanker (sic) in Jones Act commerce if building of a Jones Act-compliant tanker was delayed by uncommon circumstances”; and in 1996 for oil spill clean-up operations.
The record goes on (see Desk A-1 right here), however what every case has in widespread is that exemptions had been deemed “vital within the curiosity of nationwide protection,” which is putting on condition that the Jones Act’s said goal is to promote nationwide protection. When we have to grant exemptions to a regulation to serve that regulation’s goal, we actually must query the efficacy of the regulation itself.
Estimated financial savings from repealing the Jones Act can be huge. In 2019, the OECD projected that “an abolishment of the Act will lead to web financial positive aspects for the US, particularly for US industries depending on water transportation providers for intra-US gross sales, and the shipbuilding trade itself” (emphasis added).
A special perspective is offered by the American Maritime Partnership, which in 2018 discovered that the Jones Act has “no impression on both retail costs or the price of dwelling in Puerto Rico.” This report has been cited again and again amongst pro-Jones Act teams. However digging into the Who We Are portion of the Partnership’s web site, we discover that it’s “the broadest, deepest coalition ever assembled to signify the home maritime trade.” On the “What We Do” web page, the partnership claims to have “led the best way in telling the story of the optimistic impacts of America’s home maritime trade.” Be aware the cautious phrasing right here: the partnership exists solely to inform the optimistic impacts and eschew the damaging. A gaggle of individuals with a monetary curiosity within the Jones Act having no damaging impact on costs or the price of dwelling in Puerto Rico was capable of finding that there was no such impact; easy skepticism ought to elevate critical questions concerning the report.
5. A Name for Reform
That the Jones Act has been waived so many instances and within the identify of selling nationwide protection strongly signifies the necessity for reform. Recognizing that instant and full repeal will not be possible, this part gives three pathways towards reform — two types of selective repeals and sunsetting.
Product-Selective Repeals — Liquefied Pure Fuel
The Jones Act has been a staple of US maritime delivery guidelines and rules for over 100 years. A full repeal would create appreciable disruption to total industries, together with these past the delivery trade. Reasonably than a full repeal of the Jones Act, and consistent with the Trump Administration’s concentrate on enhancing authorities effectivity, selective repeal of sure facets of the Jones Act and reform of different Congressional statutes might obtain significant price reductions and nationwide safety positive aspects with out inflicting widespread disruption to the maritime trade.
A everlasting exemption, for instance, may very well be granted to the cargo of liquefied pure gasoline (LNG). Immediately, roughly 500 ships globally can transport LNG. None are compliant with the Jones Act. In 2011, three such ships that had been beforehand Jones Act-compliant (and misplaced their standing after being bought by overseas buyers) had been allowed by Congress to reenter the Jones Act commerce. In accordance with the Congressional Analysis Service, none did, and the ships at the moment are 45 years outdated.
Most tellingly, New England depends closely on overseas LNG, regardless of the US being one of many largest exporters of LNG on the planet. Transport restrictions as a result of Jones Act make importing cheaper than utilizing home provides. Equally, Puerto Rico imports LNG from Trinidad and Tobago as an alternative of utilizing home suppliers.
Exempting LNG shipments from the Jones Act necessities would decrease power prices at a time when these financial savings are desperately wanted. Likewise, reopening cost-prohibitive home markets would encourage extra home manufacturing of LNG and power as properly, creating jobs in a sector essential to the longer term viability of the US financial system.
Geographically Selective Repeals — Alaska, Hawaii, and the Unincorporated Territories
The ports inside Alaska, Hawaii, Puerto Rico, Guam, American Samoa, the US Virgin Islands, and the Northern Mariana Islands are all legally thought-about “US soil.” Presently, the Virgin Islands, American Samoa, and the Northern Mariana Islands are all exempt from the Jones Act, however of those, solely the Virgin Islands are really exempt, as delivery routes from American Samoa and the Northern Mariana Islands virtually all undergo Hawaii earlier than occurring to the contiguous United States. As a result of they cease in Hawaii, the ships successfully should be Jones Act-compliant all through the complete journey, thereby nullifying their exemption.
As an alternative, all of those non-contiguous areas of the USA might merely be exempt fully. This is able to pose minimal nationwide safety threat, imperil just about zero ship-crewing jobs, and, by making delivery to and from their ports more cost effective, would really spur financial growth.
Taking these steps would enhance the catastrophe restoration and response in these areas immensely, as they might not have to attend days and even weeks for a waiver when catastrophe strikes. Not simply the rebuilding efforts, but in addition search and rescue operations and medical look after the wounded would transfer extra rapidly with out Jones Act impediments.
Sunsetting the Jones Act
Simply as Congress does with different laws, the Jones Act may very well be topic to sundown after a specified interval of 5 or ten years. A examine may very well be commissioned — and ideally carried out by an exterior, impartial, and non-partisan group — to systematically assess the advantages and prices of the Jones Act. From this, benchmarks for any advantages of the Jones Act may very well be offered to the home maritime delivery trade.
Within the spirit of presidency effectivity, a regulation that doesn’t clearly present advantages in extra of its prices must be modified, if not outright eradicated. If the home maritime delivery trade can not hit these benchmarks, a course of is perhaps triggered by which sure provisions of the Jones Act can be wound down.
Adjusting the Made-in-America Necessities
4 key provisions drive the Jones Act: a vessel have to be American-made, -crewed, -owned, and -flagged. Whereas these could also be smart necessities for navy vessels, they’re (at greatest) overly cumbersome in the case of industrial vessels.
A 2011 US Division of Transportation Maritime Administration report discovered that working a Jones Act-compliant vessel prices $12,600 extra per day than a “open registry” ship, with virtually 90 p.c of this improve attributable to greater crew prices. A 2022 Authorities Accountability Workplace report discovered that the extra price of working a Jones Act-compliant vessel had elevated additional, “to about $6.2 to $6.5 million [annually]” or practically $17,000 per day. To place that into perspective, the USDA estimated in 2024 that $12,600 is sufficient cash to feed a household of 4 for a complete 12 months. Rescinding the requirement that 75 p.c of the crew have to be Americans, and even simply reducing this quantity to, say, 50 p.c, would afford huge financial savings on delivery prices.
The identical may very well be stated concerning the requirement that vessels be owned by Individuals. Eradicating or reducing this requirement would encourage overseas funding in American shipbuilding. At a time when the Trump Administration is touting the elevated overseas funding throughout the nation within the automotive and semiconductor sectors, it could make sense to encourage this similar exercise in home maritime delivery.
6. Curtains for the Jones Act?
The Jones Act will rejoice its a hundred and fifth birthday this 12 months. In its present kind, the Jones Act has did not ship on its targets. It has not promoted nor even maintained the American service provider marine; as an alternative, it has lowered and undermined the American industrial capability and navy readiness. Nor has it ensured enough home shipbuilding capability or a prepared provide of ships and service provider mariners that may function auxiliaries in instances of struggle or nationwide emergencies. As an alternative, it has lowered home shipbuilding capability and decreased the availability of ships and service provider mariners.
In its present kind, the Jones Act is detrimental to nationwide safety, saddles Individuals with greater costs, and reduces the variety of good, high-paying manufacturing jobs on America’s coasts. This leaves the US at each a strategic and financial drawback.
A brand new, reformed and pared-down Jones Act would increase manufacturing jobs within the US, decrease costs for American shoppers world wide, and increase US exports. Most significantly, it could make Individuals safer by boosting naval capability.