The Jones Act
Welcome to my Wheelhouse! THE MERCHANT MARINE ACT OF 1920.
As a former Merchant Marine Master I felt compelled to write this blog post. The Merchant Marine Act of 1920, better known as the Jones Act regulates maritime shipping in the United States. Implemented after the first World War the law was presented as a plan to ensure adequate domestic shipbuilding capacity and a ready supply of merchant mariners to be available in times of war or other national emergencies.
"Investopedia" says this about the law: By requiring domestic cargo to use U.S. ships and American crews, the law was seen as a way to support the strategically-important shipping industry and prevent the country from becoming too reliant on foreign-built ships. Nowadays, it is also seen as a way to generate jobs and business revenue. According to proponents, the Jones Act supports 650,000 American jobs, generating $150 billion in economic activity each year.
The Jones Act requires that any cargo shipped between two U.S. ports must be transported on ships that:
Are owned by U.S.-based companies, with over 75% of the ownership stake held by U.S. citizens.
Have a crew where the majority are U.S. citizens
Are built and registered in the U.S.
However, there are some exceptions to the Jones Act that may be granted in cases of national emergency. The act also allows sailors to bring suit against their employers for injuries suffered at sea.
From "The Hill" The U.S. Department of Homeland Security on Sunday approved a temporary waiver of U.S. cargo transport rules in order to provide Puerto Rico with liquefied natural gas as it recovers from Hurricane Fiona.
The move temporarily waives the Jones Act, which permits only U.S. flagged vessels to complete maritime cargo transport between U.S. ports.
While the Jones Act does not cover passenger vessels, a related law has a similar effect for cruise ships. Under the 1886 Passenger Vessel Services Act, a foreign ship cannot transport passengers directly between two U.S. ports. This means that a foreign-flagged cruise ship (the vast majority of cruise ships) must include foreign ports in any itinerary that begins and ends in a U.S. port. This often results in confusion or even fines for passengers who disembark at ports that violate the Jones Act.
No doubt, with supply chain issues, costly fuel and refining problems here in the US and the remaining possibility of a railroad strike still looming we will be hearing more about The Jones Act from the media especially as the midterm elections approach.
Learn more about some of the investment opportunities that have developed recently as a result of the Jones Act. Reach out for a free consultation!
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