July 21, 2017 | Industry Insights
Repeal of the Jones Act Introduced in the Senate
Senator and once-Presidential candidate John McCain has introduced the Open America’s Waters Act of 2017, which would repeal the Merchant Marine Act of 1920, known as the Jones Act. The Jones Act requires that all goods shipped between ports in the United States be transported on American-built ships that are owned and operated by Americans. Nearly 100 years ago, it was intended to strengthen national security and commerce.
However, now these regulations are limiting the number of vessels available for shipping, and contributing to the growing cost of maritime transportation for the United States. For example, according to a report by the Energy Information Administration, approximately only ten tankers are used for the shipping of crude oil from Alaska to the West Coast. In addition, the increased cost can also be found in the vessels themselves. A report by the Congressional Research Service in 2014 found that the cost of an American medium range product tanker is over three times the worldwide price of the same vessel. The operating cost for American flagged vessels is almost 2.7 times more than their foreign flagged competitors. This increases the cost of expanding the supply of vessels in the market, creating an inability to meet demand, and ultimately a higher cost of transportation.
Senator McCain has said, “I have long advocated the repeal of the Jones Act, an archaic and burdensome law that hinders free trade, stifles the economy, and ultimately harms consumers. My legislation would eliminate this regulation, freeing American shippers from the requirement that they act against their own business interests.”
Indeed Senator McCain has tried to reform and repeal the Act several times, including two attempts in the last 18 months. In January 2016, he introduced an amendment to an energy modernization bill that would have waived the U.S. build requirement for oil and gas tankers. In 2015, he attempted to attach a similar amendment to a Keystone XL pipeline bill, looking to eliminate the U.S.-build requirement of the Jones Act.
McCain has said that in allowing “U.S. shippers to purchase affordable foreign-made carriers, this legislation would reduce shipping costs, make American farmers and businesses more competitive in the global marketplace, and bring down the cost of goods and services for American consumers.”
“The protectionist mentality embodied by the Jones Act directly contradicts the lessons we have learned about the benefits of a free and open market. Free trade expands economic growth, creates jobs, and lowers costs for consumers. I urge my colleagues to support this bill and finally repeal the outdated and protectionist Jones Act,” Senator McCain added.
Roanoke Trade specializes in insuring the transportation industry, offering end-to-end insurance solutions that are tailored to your specific exposures. For information about our insurance products and services, please contact one of our Roanoke Trade professionals at 1-800-ROANOKE (800-762-6653).
Sources: Container Management, GCaptain, The Hill