1920 Jones Act and its current implications
A critical review of international carrier limitations by Jones Act
Hua, Li
Embry Riddle Aeronautical University Student
LGMT 636 Transportation Management
William (Bill) Christensen, Ph. D.
February 20, 2022
In the 1920s the Jones act which is often referred to as the Merchant Marine Act was passed. This sweeping legislation enforced three broad functions. It required that U.S. intra or inter-national vessels stay modernized and maintained, ready for emergency federal use if ever called upon. It afforded seamen the ability to bring injury claims against their employer in state and federal court. Lastly, the Act mandated that domestic maritime trade be performed by U.S. flagged ships with a majority of the employees being U.S. Citizens. (Cornell, n.d.). This paper will focus on the impact of this 1920’s act on international carriers and will explore whether the law continues to serve its purpose.
The amount of international waterborne commerce at United State ports had grown nearly 50% between 1990 and 2014. Looking at internal waterways, the number of foreign ships importing goods has continued to increase at waterways such as the Mississippi and Colombia River (Novack et al., 2019). The question arises whether the Jones Act serves the economic interest of the U.S. by limiting foreign international carriers from servicing domestic deliveries.
One argument is that the count of valuable US flagged vessels has continued to decline despite the Jones Act, to a count of less than 200 US flagged ‘useable’ vessels and that the seamen per ship improperly trained to respond to a national emergency (Pagel, 2019). This argument lacks historical awareness and is selective in the class/size of vessels ready for service. In 2001 after the 9/11 attacks the merchant marine mobilized Jones Act private vessel companies and rescued hundreds of thousands of people who were trapped in lower Manhattan (Doyle, 2017). Additionally, the total number of US vessels has increased from 40,082 to 44,500 between 2014 and 2020, meaning that certain types of US flagged vessels have increased (USACE, 2022).
A Jones Act practical effect on non-U.S. companies is that it cuts down on the number of terminals and support services they maintain in internal U.S. Waterways. Also, a non-U.S. vessel from an Asian continent country delivering to the west coast of the US will be ineligible for delivering goods to Hawaii or Alaska on a return trip. This scenario would be deemed a domestic delivery in accordance with the Jones Act. This might force non-U.S. vessels to raise delivery prices impacting U.S consumers, as its only remaining option is to deliver from the U.S. West coast to another country.
An argument to repeal the Jones Act is that by allowing these foreign-flagged ships to perform domestic deliveries, the cost to consumer and the foreign-flagged carrier would be reduced across the board. This argument has detractors. By opening the gates for a foreign-flagged vessel to delivery domestically, arguably, the vessel would be subject to U.S. tax laws, labor laws, and employee protection laws (Beason et al., 2015). Currently foreign-flagged vessels delivering to the U.S. enjoy their nation of origin’s labor cost advantages. U.S. crew costs are 4.5 times that of most foreign flagged vessels and account for nearly 80% in the prices difference of U.S. and foreign flagged operator delivery costs.
If the Jones Act were to be repealed, the labor & tax implications coupled with highway competition could keep most domestic operations with U.S. flagged vessels.
Works Cited
Beason, S., Conner, D., Milonas, N., & Ruge, M. (2015). Myth and conjecture? the "cost" of the jones act. Journal of Maritime Law and Commerce, 46(1), 23.
Cornell Law School. (n.d.). Jones Act. Legal Information Institute. https://www.law.cornell.edu/wex/jones_act
Doyle, P. (2017 October 10). The importance of vibrant U.S. Merchant Marine. The Maritime Executive. https://www.maritime-executive.com/editorials/the-importance-of-a-vibrant-us-merchant-marine
Novack, R. A., Suzuki, Y., Gibson, B. J., Coyle, J. J. (2019). Transportation: A Global Supply Chain Perspective. Cengage
Pagel, J., Brannon, I., & Kashian, R. (2019). Jones act: Protectionist policy in the twenty-first century. Maritime Economics & Logistics, 21(4), 439-463. https://doi.org/10.1057/s41278-019-00123-9
U.S. Army Corps of Engineers. (2022 January 19). Waterborne Transportation Lines of the United States. National Summaries. (1) table 4. https://usace.contentdm.oclc.org/digital/collection/p16021coll2/id/7441.
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