The Jones Act, Explained

Analyzing the effects of a century-old maritime shipping law.

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American Integrity is one of the 13, 1,000-foot ships in the Great Lakes laker fleet. (Photo by: Michael Siluk/UCG/Universal Images Group/Getty Images)

Challenges posed by the Jones Act have been a recurring news story in recent years. The federal law, established by President Woodrow Wilson in 1920, requires that ships transporting goods over U.S. waters meet specific criteria: They must have been built in the U.S., operated under American ownership and crew, and fly the U.S. flag, for example.

Advocates of the Jones Act herald it as a safeguard of national security and a protector of American jobs, yet detractors paint a different picture—one of economic inefficiency, inflated costs, and harm to American manufacturing.

What led to the law?

Following the depletion of the U.S. merchant fleet during World War I, and the security risks of depending on foreign vessels, industry and political leaders began calling for a stronger domestic shipbuilding industry. 

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  1. Avatar photo
    Ben Connelly

    “But other policy experts believe the law should be repealed entirely because it “demonstrably failed to deliver a vibrant shipbuilding market and it doesn’t even provide us with self-reliance,” says Grabow. “My attitude is: Get rid of dumb Jones Act protectionism. It doesn’t work. It imposes a tax on American consumers and businesses, making us less competitive.” ”

    I agree. The Jones Act has never succeeded. Why double down on a failed strategy?

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  2. Trichwages

    Perhaps we can address the issues caused to Hawaii, Alaska, Puerto Rico, and Guam without tearing the whole thing down. Until then, it’s a Chesterton’s fence issue for me, especially with all of the activity going on in maritime waters these days. None of us here (or most of us) are knowledgeable to list all of the pros and cons. This is the second article on TD that I’ve read on this subject but both have been more heavily weighted toward free market issues, which doesn’t provide enough information to form a fully informed opinion other than perhaps the free market needs to be a secondary concern to national security and critical supply chains.

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  3. Sway21

    Time again for the semi-annual repeal of the Jones Act argument, which is currently the only thing keeping the US maritime industry afloat, though afloat may be more awash than imagined. First some history.

    The US has always been a high cost shipbuilding industry. It was the high cost alternative in the 19th century, and often enough for good reason, given that US-built ships were of not only higher quality, but demonstrably safer. When the Sea Witch collided with the Esso Brussels in Stapleton anchorage, off Staten Island, 13 men on the Esso Brussels died, while only one upon Sea Witch did, and the latter due to a heart attack. (The collision, technically an allision, resulted in the dreaded sea of fire conditions which make abandoning the vessels a near impossibility.) When the cruise industry was formed in the eighties most of the ships employed were converted passenger ships, with many of them foreign-built with light weight bulkheads between rooms made of wood product materials, while American vessels of comparable age had steel bulkheads throughout. US ships have generally always been better built, safer and stronger, though that has changed through increased regulation within the past quarter century. Cost comparisons are rarely made apples to apples.

    That said, US ships are always going to cost more to build, just as European ships cost more to build. Currently the top shipbuilders are China, South Korea, and Japan. All three offer subsidies for shipbuilding, though Japan far less so than the other two. As US shipbuilding declined, since the eighties, costs have only increased, as they must within a limited production run for any product. Currently, 75% of the world's ships are built in either China or So Korea.

    The problem for the US is somewhat different than for, say, European nations. Europe has many of the same cabotage laws as does the US (Jones Act), and while it has large merchant fleets within Denmark and Greece, it has the same rather moribund shipbuilding industry. The US could quit easily abandon the Jones Act and who would notice, other than the continued decline in its merchant fleet and shipbuilding capabilities? (The Jones Act does not apply to international shipping, only the US domestic industry.) The problem for the US is one of defense policy. Europe exists as an entity designed to defend its own soil, while US defense policy is to fight its wars overseas, long before they hit US shores. Shipbuilding, both naval and merchant, is essential to that policy, though the USN is far from a reliable ally within the US shipbuilding industry. It operates the Military Sealift Command, which are USN supply and research ships operated by civilian merchant mariners, and so long as its needs are met, the USN is happy. (It still places a preeminence upon the building of warships over auxiliary ships, though.) The problem there is the US then has a shortage of US-flag freighters and tankers to transport military cargoes in time of war, which became readily apparent during the recent Middle Eastern wars, where foreign flags vessels would often enough refuse to sail within a war zone. The Navy maintains a list of US-owned foreign flag vessels purportedly available should war erupt, though availability always remains in doubt, and for good reason.

    As a result of the decline in the American merchant marine, we now lack both the manning for such vessels as may be needed, it taking a minimum of five years continuous sea service to raise one's license to that of master mariner or chief engineer, but a shortage of shipyards necessary to build even just the naval ships now required. Traditionally shipyards filled their order books with merchant ships between contracts for naval ships. What's more, come war, we'll have ships damaged or sunk and just where are those ships to be repaired or replaced? Contemplate a war in the Far East and where are we to get the ships for sealift? Where are we to get the ships the Navy will need? We, until the Reagan administration, subsidized shipbuilding and operation under US flag just to maintain what merchant fleet we had, with the ship owner agreement the vessels so operated would be turned over to government control in time of conflict. Those ships are now so old they no longer even qualify for the US reserve fleet. The SL-7s the US used to supply the Middle East wars are now fifty years old, with the average life of a merchant ship being 25 years.

    Fine, repeal the Jones Act, and we've still a crisis within the US shipbuilding industry. I'm as against subsidies as is anyone, but buying Chinese or Korean built ships has not revived the US-flag merchant fleet and does almost nothing for the shipbuilding industry. And shipbuilding is not a business which you just start up in short order. (In WWII the then atrophied US shipbuilding industry took the five years before WWII to build itself back up, supplying the merchant marine with the ships needed by our future allies as well as in the building of US naval ships.) Will we have a five year lead time in the next war? Had the Japanese attacked the shipyards in Hawaii on Dec 7th the war effort might well have gone much differently. Nonetheless, all those ships launched in the early forties were not just built overnight, and were built within a much more vibrant US shipbuilding industry. Today the former yards of Beth Steel, Todd, Sun, etc... are all covered with condo developments.

    By the way, containerization began in the US with US-flag Jones Act vessels, largely due to road taxes for East coast trucking. That company, eventually known as Sea Land, was then eventually bought by the Danish shipping giant Maersk Lines. It operates around twenty US-flag vessels, all of which were built in So Korea.

    Suggesting elimination of the Jones Act, perhaps a boon to Alaska, Hawaii, and Puerto Rico, does nothing to address the crisis in US shipbuilding. (It probably does little to lower freight rates, either.) Maybe we should also open the US airline industry to foreign competition on its domestic routes as well?

    While I'm open to suggestions on what might or might not replace the Jones Act, I never read any within the typical article upon the subject on what to do about the US shipbuilding industry, this one included. We're not going to build naval ships overseas, there being simply insurmountable security interests at risk there. And we're not going to have a revived US shipbuilding industry without a merchant ship component to the plan. (That's why we continued building the LCS-class ships even after it was common knowledge they'd be scrapped almost upon completion, just to keep their yards working.) So, what's the solution?

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    1. Sway21

      I should add to my comment that the US could easily build nuclear powered merchant ships and regain a tremendous advantage within a shipping world desperately trying to reduce emissions.

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    2. Trichwages

      Thank you - informative.

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  4. Steve Winfield

    I agree.. a nightmare scenario would be a complete repeal of the Jones Act leading to a fleet of Chinese containerships moving tens of thousands of freight containers between U.S. ports the following week. But, scaling it back by exempting ships under a certain size (tonnage capacity) and/or beyond a certain age, could be worthwhile. I would also consider replacing or augmenting Jones Act with a system of port access taxes/fees, very high for foreign ships, low or waived for Jones compliant ships. Money from those fees could help fund loans to bootstrap U.S. steelmaking, shipbuilding and maritime shipping. (And.. using those loans to build out new, modern shipyards could become a major advantage long term..)

    The problem isn't just with freight cargo, either. Jones Act applies to all "Coastwise Trade", basically any marine commerce which doesn't involve a foreign port. Passenger services, harbor maintenance, towing, fishing, its all included.

    Jones act affects me personally.. I recently purchased a 33', 20 gross ton surplus lifeboat from the U.S. Navy. Lifeboat was built in Norway. Current legal uses are "private pleasure boat"; anything legal under "registry endorsement" (trade with foreign ports.. but it lacks the size , range or speed to do this economically.. (the contents of 1 semi trailer could be packed into her, she's equivalent to 1 highway semi truck or 1 tour bus)); and "gold dredge in Alaska". ILLEGAL "coastwise endorsement trade" includes local water taxi, charters for fishing/diving/sightseeing, Lake Erie island hopper ferry, towing, small cargo service to remote Alaska villages, commercial fishing, oil spill cleanup, survey/research etc.. There are 3 categories of foreign built vessels which qualify for exceptions to Jones Act restrictions - (1] wrecked vessels, appraised after salvage then rebuilt in U.S. for more than 3x the salvaged value, become "U.S. built".. (2) vessels sold by the U.S. after being seized and condemned as "war prize".. and (3) vessels sold by U.S. after being seized and forfeit for crime (drug running, human smuggling etc..). My boat was sold by U.S., but since U.S. obtained it by purchase overseas in '87 (where was Jones Act then???) and all it did since was stand by to protect U.S. sailor lives for 35 years.. my boat LACKS THE CRIMINAL/BELIGERENT HISTORY to qualify for a Jones Act exception and "Coastwise Endorsement" on its U.S.C.G. registration document. I am tempted to "confess" to a fictional scenario where my boat was stolen and used for smuggling, surrender the boat to a Federal judge, then BUY IT AGAIN from the "drug boat auction", just to enable the boat to obtain the criminal history to qualify for a Jones Act exception.. because the actual value of what the U.S. BOUGHT THEN SOLD TO ME, is greatly enhanced if I can navigate around the Jones Act restrictions.

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  5. Avatar photo
    Rmstrng

    So much effort to protect US Shipping, and yet Volvo does not seem to be an existential crisis to US trucking.
    We're 50 years past the point of tweaking the Jones Act. At this point, we'd be better off chucking the whole thing. An increase in any shipping between US ports will increase maritime jobs in US ports, which will do more to bolster US shipping than more band-aids on "America Only" ships.

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  6. Joe Federici

    I’m skeptical of any article against the Jones Act. They appear funded by corporations that want to use cheap ships made in Asia. If they get their way that would further damage the American shipbuilding industry, which is obviously vital to our security.

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    1. TheRealAndy

      What ship building?

      Also, if the basis for your argument is ad hominem, consider your priors. One could just as easily say everyone in favor of the Jones act is in the pocket of trucking companies. At least that's a concentrated interest and not some diffuse bogeyman. But it would be equally wrong.

      Sincerely, from person who would like to restore the US shipping industry.

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  7. Derek L

    If the stated goal is a thriving US merchant marine fleet, wouldn't we be in a vastly stronger position with a massive fleet of cheaper foreign built ships under US ownership with a mixed crew of US and foreign mariners that maximize the use of our qualified but constrained workforce with thriving foreign and domestic shipping activities as opposed to simply having the ability to build ships in the future? I get that it would be nice to have that ship building infrastructure, but we're long past that and the only way we catch up is to do the exact opposite of buy American...

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  8. Avatar photo
    Joe Delanis

    This all strikes me as an incredibly silly problem.

    Despite the Jones Act, the US is manufacturing so few ships annually we can literally count them on a single hand.

    If we want to goose American manufacturing of ships, then let's stop with this half-measure of industrial policy and use the Navy/DoD/whatever arm(s) of the federal government to exnihilate some shipbuilding "firms." Give billions of dollars to some manufacturers for them to build ships exclusively for Navy purchase and use. Isn't the - ostensible - point of some of these protectionist policies to safeguard our military from being reliant on countries that are or could become (a) hostile to us or (b) blockade-able?

    Yes, it would be a handout to the manufacturers who get those contracts. Yes, it would be horribly inefficient from a free-market standpoint.

    But I'd rather we repeal the Jones Act and give blatant, undisguised handout to a select few market actors, than make everybody else marginally worse off just so we can pretend we aren't giving preferential treatment to those market actors anyway.

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    1. Donnybrook

      I believe the DOD already gives US military shipbuilding "firms" huge, lucrative contracts that are well above international market levels for building warships. I'm not suggesting that is bad, considering the need for security, but those "firms" have been doing VERY WELL off of DOD contracts for decades.

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  9. Donnybrook

    Somewhere, John McCain is smiling.

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  10. Avatar photo
    Geoffkrassy

    Since we have some mariners here, I'd appreciate some feedback on a thought...

    How about only removing the US built requirement? My view is that having US crewed ships is more important to National Security than the source of the ships themselves (assuming safe construction standards...)

    We buy aircraft from Europe and chips from Taiwan (and Korea and Japan)... Delta's Airbus' are US flagged.

    I think we should have the capability to build specialty (i.e. war) ships, but we might be a bit more flexible on the "generic" transports. The RORO "dual use" ships Mr Hartley mentioned also interest me... alternative to the giant container ports (like LA)?

    While the Jones Act offends my tender free trade and market driven sensibilities :-) , the fact that the USCG can't have an American made icebreaker is irritating...

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    1. Michael Hartley

      My response to the challenge of your question:
      Objective: A substantive and profitable commercial shipbuilding and ship repair industry on both coasts and the Great Lakes.
      Acknowledgement: The Jones Act is failing the nation in this regard and should be overhauled.
      Proposed Policy Goal: A 21st Century analog to maritime mail contracts -- in which the government offers formulaic subsidies to American flag companies for certain kinds of vessels (built in the U.S.) in certain kinds of trade to the extent that these vessels can be economically competitive with the world market.
      We don't want to become dependent on foreign and uncertain sources in the manufacture of semi-conductor chips -- at least certain specialized chips. I think the same applies to at least certain kinds of ships.

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      1. Avatar photo
        Geoffkrassy

        While I am hugely sympathetic to an argument for domestic manufacturing, I think (pun intended) that ship has sailed... the support industries (steel making in particular) are functionally gone. I think the focus should be on the people, experienced mariners who operate the vessels. Current building capability focused on specialized surface and sub combatants is essential... General shipbuilding? Still not sure I can see the "why?" In peacetime, no issues. Should there be enough conflict to cut us off from external manufacturers of cargo vessels... well, I'm a believer in the concept of Letters of Marque :-) and that's where I need trained mariners, to crew the seizures.

        So I guess I'd have as my Objective: A robust system to create mariners who are trained and experienced in both civil operations and capable of acting as a tactical reserve in time of conflict.

        That would require subsidies for training and certification (limited to AMCITS) in Anti Sub Warfare, littoral ops, basic intel, etc. Just as we have pilots who could figure out how to do tactical approaches with a B777 based on previous experience, have mariners who could (with a relatively short refresher) operate as armed merchant cruisers, or fleet support assets. Development of "bolt on" packages for both defense and offense, with recurrent training and sim experience supported with a stipend... Heck, add in flight deck ops (F35s are VTOL, as are (of course) helos :-)

        Nothing so terrifying as a huge cargo ship where a bunch of the containers unfold for reveal GLCM batteries (similiar to modding a 747 to carry 120 ALCMs and launch them out the back...)

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        1. Michael Hartley

          According to the Lake Carriers Association, in 2022 American flag vessels on the Great Lakes delivered 42.3 million tons of iron ore (taconite) to the steelmaking industries (USX, Cleveland Cliffs) on the lower lakes. This year's deliveries of ore to date are more than 1/3 higher than last year - so the steel making industry isn't functionally gone yet.
          And in 2022 the Fincantieri Shipyard in Sturgeon Bay, WI completed a new 639-foot freighter for the Interlake Steamship Company -- the first Jones Act compliant vessel built on the Great Lakes since 1983.

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