Is The Jones Act a help or hindrance to American shipping and national security?
What’s Going on With Shipping?
Nov 17, 2023
In this episode, Sal Mercogliano – maritime historian at Campbell University (@campbelledu) and former merchant mariner – discusses article posted by the Center for Maritime Strategy entitled Up for Debate: The Jones Act. In it, John McCown of the Center for Maritime Strategy and Andrew Hale of the Heritage Foundation debate is The Jones Act a help or hindrance to American shipping and national security?
#jonesact #shipping #nationalsecurity #supplychain
00:00 Introduction
03:31 John McCown Pro-Jones Act
11:22 Andrew Hale Anti-Jones Act
30:03 Solution: Dirigibles?
38:38 Conclusion
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Up for Debate: The Jones Act
https://centerformaritimestrategy.org/publications/up-for-debate-the-jones-act/
Industrial policy detectives: China’s subsidies for shipbuilding
https://tradetalkspodcast.com/podcast/194-industrial-policy-detectives-chinas-subsidies-for-shipbuilding/
Regaining U.S. Maritime Power Requires a Revolution in Shipping
https://www.heritage.org/defense/report/regaining-us-maritime-power-requires-revolution-shipping
source
China is not one to follow when it comes to ANY economics. China is COMMUNIST the government owns the land AND YOU and throws money at whatever keeps people employed. Compare with Korea, Japan and Europe. The Chinese shipyards are going to decline shortly anyways.
Ship crews can be recruited from navy veterans, and a wider pool of possible owners would allow for more buyers to keep production volumes. China is an orange, compare us to other apples.
Great look at an important topic! One possible correction: many maritime 20' and 40' containers (and some 45') make it to the interior of the U.S. and even to the other side of the country on intermodal trains. They are not restricted to near their respective Atlantic or Pacific ports.
An example would be the number of intermodal trains on BNSF Railway's southern transcontinental route. While BNSF's "Q" and "Z" trains carry 53' domestic containers and trailers and some maritime stacks, "S" trains carry all-maritime containers, and those "stackers" can carry upwards of 500 TEUs at one time, at up to 60-65 mph. (Often spotted on, e.g., Virtual Railfan's live-feed transcon camera on YouTube, located at La Plata, MO.)
I live in Alaska and I love the Jones Act. Most people here hate it because they say it would cost less to get goods here if we didn’t have it. The American ships have been dependable the 40+ years I have been here and having an interruption of goods would be bad for most Alaskans.
I’ve heard Sal say before he supports Jones Act reform in principle. But I don’t remember him ever actually making a serious argument for what kind of reform he wants. It’s going to take much more than just shifting steel sourcing requirements by a few percent to make any significant difference.
Offloading container ships 12 miles out to sea? Anyone else see a problem with that? Maybe we could have some high school & community college training for maritime jobs without having to join Navy or Coast Guard. It seems America is leaving this business up to foreign countries.
Fascinating stuff! thanks for info
13:06 You're surprised the Heritage Foundation doesn't want to have rules to protect people from being exploited? That's their mantra. Screw the poor.
Wonderful, educational contant! Wish I had found this channel much earlier. The past six months has been tremendously informative.
Question. Why was the jones act established?was it established for a reason?
The question is does U.S-built, US-crewed and US-flagged vessels still exists ? Does it benefits US consumers if the high cost of shipping from one US port to another are pass down to them ? If the US shipyard don't want to build cargo ships because it is not profitable. How does US ship cargo to Hawaii and other US oversea ports ? Ships build by US shipyard like the Janet Marie is its price. Although the exact figure has not been published, its George III sister ship—a vessel delivered last year with the exact same specifications—was revealed to cost “$225 million‐plus.” It’s a safe bet Janet Marie did not cost less. In comparison, two similarly‐sized containerships were ordered from a South Korean shipyard in 2021 for $41 million each. The vast difference ($184 million) is no anomaly, comporting with previous assessments from maritime industry observers that U.S.-built cargo ships are five times the price of those constructed abroad. The Janet Marie’s sister ship delivered last year, for example, is chock full of foreign components. A sampling of the ship’s suppliers includes the China State Shipbuilding Corporation (supplier of the ship’s provision cranes), Alfa Laval (Qingdao) Ltd. (fired exhaust gas boiler), Zhenjiang Tongzhou Propeller Co. (fixed pitch propeller), and Jiangsu Xiangsheng Heavy Industries Co. (anchors and anchor chains).
Could you give your learned opinion as to why the Vancouver Canada docks have been virtually without business for some months now? The dollar is very low which should be attractive to shipping lines but everything is being sent to the US. This is could be devastating to Canada.
It would appear to me that internal shipping's main competitor is road transport vie trucks. Would changing the rules to bring them in line with the trucking industry make the industry more competitive and therefore more sustainable?
“The longer the title – the less important the job”
This means your MORE IMPORTANT than them🤠
So the UK were the only player, then they dropped the regs, now they barely even rate.
Isn't there a lesson in there?
Plus the very valid point made by @davemurphy2020
ps- that offloading graphic idea is something from a kids magazine from the 80's
"Adam Smith would oppose the Jones Act". Apparently didn't read Smith's defense of the Navigation Acts….
Excellent commentary. My take doesn’t have anything to do with strategy, but with how to do things radically different tactically. Our brightest minds are working on “sexy” stuff like space and big tech. Putting someone with vision & engineering skills on this to de-bottleneck the system, from shipbuilding to cargo handling. If we can put tourists in space, to visiting the Titanic, then our priorities are obviously on fame rather than even money. Sigh.
Sal…I have watched your content for some time now and I want to say this might be the best content I have seen from you to date. You offer clarity and concise analysis on a complex and contentious subject and I think your view is spot on. I find it striking that, in all of the articles you cite and discuss, there is so much arm waving and so few concrete suggestions for actual change. I find this an ominous portent that seems to highlight an intellectual vacuum on a subject that is so important to a maritime nation. The new intermodalism topic is an excellent example of foolishness (and we have a LOT of this going on in so many areas) which counts on dreams and magic rather than practical analysis.
My thoughts here are focused on a process that might actually produce results and the government must be part of that (and the dreams and magic crowd unfortunately includes a lot of government organizations these days). Here goes:
1. Figure out what the goal (or goals) actually is. Do we want to "reacquire" a domestically produced percentage of global shipping? Do we want to "reacquire" an ability to build a percentage of global shipbuilding on an annual basis? Do we want to re-energize domestic water transport in the US? What is the best strategy to serve US military and domestic requirements (and they ARE requirements)? We must decide upon a set of achievable goals on an achievable timeline (no dreams or magic).
2. Decide upon the right set of (public and private) investments and regulatory changes to start down the road. This plan will require a range of inputs and consensus building to put into place. It will take a concerted effort to accomplish both the goals and an implementation plan. It will be contentious in our hyper-politcal environment (because everything is). Labor and business interests are likely to be at odds in this. We should recognize that the changes are likely to be complex and will probably need analysis and tweaking as they go into implementation. Thus, the plan needs to identify some metrics that can be used to monitor results and measure progress.
3. An investment strategy must include the entire supply chain (as you stated). Steel seems like a key input that may drive everything else. What can be done? If the US is unwilling to bear the environmental costs, is there another country in the western hemisphere that might be interested in the opportunities and costs associated with the production of the type of steel needed for shipbuilding?
4. I do think that a modularized shipbuilding approach is worth a look, and IIRC, I think this approach has been looked at before. I do not know the conclusions reached previously (this was in the 90's I think) but I suspect the market (and technology) conditions then were FAR different than those which exist today.
Anyway, this was a GREAT episode and thank you for your efforts.
Yes to Jones Act.
The people who are against the Jones Act are what I call "Race to the Bottom" people. "Race to the bottom" is a Race to the lowest price possible .
In the beginning lowering prices can be had without sacrificing quality of product or service. After that quality and safety are sacrificed for lower cost. The result is products that don't last and fail. Sometimes this is OK like when I need a tool I will use once. When the product is something we rely on, this can result in death.
Then there those who make their money off "Race to the Bottom ".
My wife talked to a "friend" who is a travel agent about a Mississippi River Cruise. The agent responded by saying the Jones Act makes US Cruises too expensive and we should book a foreign cruise. It turns out the agent makes a lot more money booking foreign Cruises! The agent wanted the Jones Act removed so she could make more money!
Anything from the Heritage foundation or Cato Institute should be taken with a very large pinch of salt, and you are right to drill down into the various facts and figures they put out because as you are finding they are rife with suspect numbers, mis-quotes and cherry picked or out of context data.
Many years ago it was proposed to build ships that could drop off hull sections as they arrived off shore to be unloaded in port and the empty sections would be reconnected to the"Mother ship", to be reloaded.
The world's full of them, of course!
Thx Sal! Good luck with the blimp
How much money do you think the CCP is channeling into lobbyists to bring down the Jones act so they can non-militarily take over our waters ways?
Thanks Sal. Great overview! Wow, I expect The Heritage Foundation to be better than this…
Hi Sal, here's a short sailing story, and I'm curious if you have any comments. One time, while on vacation in South Korea, I met a guy who, basically, sold everything he owned, bought a ship, learned to sail, and then spent most of his time living on his boat and sailing around the world. (Nice job if you can get it.) He told a few of us a story about what it meant to be a US flagged vessel. One time he was in pirate areas, somewhere off the east coast of Africa, and a non-US flagged ship declared an emergency on the radio, asking for help. There were US Navy assets in the area, but did not respond (because foreign flagged ship = "not my problem"). Sail boat bro called over the radio to say he's US flagged and is on his way to provide assistance. After that a US Navy ship called over the radio, saying they'll send a helicopter to help out. The Navy only helped because a US boat got involved. Like, the US Navy will only help you if you're US flagged, otherwise, you're on your own.
Re off loading container ships at sea; since when has double handling freight made it more efficient on top of all the other problems you pointed out.
Another great video by Sal on cabotage, the Jones Act. Very powerful discussion on this topic. Sal points out heartedly it’s not “To repeal or not to repeal, the Jones Act”, but that the Jones Act should be updated and tweaked but don’t scuttled.
Fascinating discussion by Sal for straight 43 minutes on this topic. Crazy that China pumps over 100 billion annually into its Chinese ship building industry and America less than 100 million into its ship building industry.
I plan to read and review the indirect subsidies China’s CCP indirectly subsidizes their shipping industry. China seems hell bent to dominate ship building worldwide. 174 pages is a lot to read but plan to do it. Thanks Sal.
If they did repeal the Jones Act how much more would illegal drug contraband increase? I read the US Coast Guard presently only interdicts maybe 10% of all drug laden subs dragged by ships or powered on their own from South and Central America drug traffickers.
Sal,
I had this all in nice paragraphs and lost it. I'll try it outline style this time. I must say I enjoyed The Sal Show, or Let's Blame The Jones Act.
Reasons Lightering Is a Bad Idea
1. Containerships
1.a Volume
1.b Time
2. Offshore Lightering
2.a Increased Transfer Time
2.b Time Ever Forward Spent Lightering
3. Transfer Process
3.a Water Depth
3.b Anchor or Drift
3.c Lightering Master/Pilot
3.d Vessel Stability
3.e Seakeeping
4. Equipment
4.a Fendering
4.b Standby Vessels
4.c Cranes
4.c.1 Height
4.c.2 Reach
4.c.3 Safe Working Limits
4.c.4 Positioning
4.c.4.a Containership
4.c.4.b Lighter
5. Aircraft
5.a Helicopter
5.a.1 Lifting
5.a.1.a Capacity
5.a.1.2 Gear
5.b.2 Rotors
5.b.2.a Clear Area
5.b.2.b Downwash
5.b.2.c Static Discharge
5.b.2.d Time
5.c. Airship
5.c.1 Lifting
5.c.1.a Capacity
5.c.1.b Gear
5.c.2 Clear Area
5.d.1 Helium
5.d.1.a Volume Required
5.d.1.b Source/Availability
6.1 Bunkering
7. Safety
8. Environmental
One of your students might find it interesting to look at the evolution of the Jones Act tanker fleet and its evolution from 1920 to today. I started with ARCO in 1978. In 1978 we had 3 – 30,000 DWT, 1 – 50,000 DWT, 2 – 70,000 DWT, and 3 – 120,000 DWT Jones Act tankers in operation and 2 – 188,500 DWT on order. Over time the 3 – 30,000 DWT and the 50,000 DWT went, then we acquired the stern of a 70,000 DWT and added a new 90,000 DWT forward end. In need of additional tonnage we acquired the use of 2 – 265,000 DWT tankers built with Construction Differential Subsidies (CDS). A deal was negotiated where if the CDS was repaid you could operate a ship six months a year. By repaying the CDS on both ships you had 1 – 265,000 DWT tanker for a year. Eventually, the remaining CDS was repaid for both ships was repaid and ARCO had 2 – 265,000 DWT tankers full-time. Then the Oil Pollution Act of 1990 came into force. ARCO Marine contracted for the five 150,000 DWT Endeavour Class tankers.
With time the fleet dwindled to the five Endeavour Class tankers. The Polar Endeavour is now 22 years old. Considering these vessels are subject to the USCG's Critical Area Inspection Plan (CAIP) and the ships were built according to knowledge gained in over 20 years of operating in the Alaskan trade, they should last for at least another 20 years.
By the way the US tanker fleet did not start the transition to diesel, until the 1980s. The 188,500 DWT tankers built at NASSCO were all steam powered. Many of the smaller US built tankers were diesel driven prior to 19980. On a worldwide basis the tanker fleet was primarily diesel driven, my guess is starting in the early 1970s. It should also be pointed out that prior to the turn of the century the majority of the LNG tankers built were steam powered.
Bob