Skip to comments.Save our ships (Prez vs. key US industry)
Posted on 10/06/2012 6:30:23 AM PDT by lowbridge
In Wednesdays debate, President Obama told the nation that he wants to stop sending jobs overseas. Funny: His administration has repeatedly circumvented a long-standing law that guarantees the employment of American maritime workers, in order to give the job to foreigners.
Last year, the Obama administration waived the Jones Act dozens of times making the rare practice almost commonplace. In doing so, he allowed foreign vessels and foreign crews to transport oil between our ports, leaving US vessels and American seafarers standing idly on the sidelines.
Not many people outside the maritime industry have heard of this federal law, but the importance of the Jones Act to the countrys economic and national security cant be understated. Enacted over 90 years ago, it has been upheld by every administration Republican and Democrat ever since, until recently.
The Jones Act requires that all goods transported on the water between US ports must be carried by US-flag vessels, built in America and owned and crewed by US citizens. The law is critical to helping ensure a robust domestic maritime industry one that that operates quietly, efficiently and safely, all the while moving billions of dollars worth of commerce on our inland waterways and along our vast coastlines.
(Excerpt) Read more at nypost.com ...
There are legitimate differences of opinion among various industry groups about the benefits and negative impacts of the Jones Act, and every now and then there is a concerted effort to get it overturned in Congress. Some of the strongest advocates for overturning it are U.S. industries that find themselves at a competitive disadvantage because they are subject to provisions of the Jones Act while others (including others here in the U.S.) are not. The requirement for all commercial maritime trips between U.S. ports to be carried out by U.S.-flagged and U.S.-staffed vessels adds some serious inefficiencies into the transportation system. This provision, for example, is the basis for passenger ship schedules for foreign-flagged vessels that operate between the Pacific Northwest and Alaska. A foreign-flagged ship that makes port calls in Seattle and Juneau or Anchorage, for example, must first stop in Vancouver, British Columbia in order to be considered an "international" voyage rather than a "domestic" voyage under U.S. law.
I also contend that the Jones Act has quietly been one of the major factors in the decline of the Rust Belt, because U.S. industries in the Midwest that use the extensive inland waterway system of the American heartland have higher transportation costs than their counterparts who have access to deep-water ports for international trade. This is an oversimplification because it doesn't take into account variations in the supply chain characteristics of different commodities, but the Jones Act provisions basically make it more expensive to move a ton of cargo 300 miles down the Mississippi or Ohio Rivers than to move it 6,000 to 7,000 miles between Asia and the West Coast.
Without the Jones act, US shipyards are really not competitive with the super yards of Korea and other parts of Asia. Part of this is our wages, part of it is our inefficiency, part of this is excessive regulation. All together they make it impossible to compete head to head with those other yards. The Jones act makes it unnecessary to compete, since some ships MUST be bought from US yards. It’s the government propping up US yards. Now we do need a domestic shipbuilding capability for our navy and merchant marine, thats for sure so I’m ambivalent about the Jones act.
I'm not sure that I would agree with you on this. I am no big fan of the Jones act, I think the industry should work to automate and bring down costs to compete with international shipbuilders. But comparing river transport to modern international container shipping is not an apples to apples comparison. The economies of scale are huge in the large container ships, which can't exist on rivers and the great lakes transportation system. Those can only exist as a feeder into the large ships.
And even then, rail seems to be better for internal transport, which is the real competitor which makes the Jones Act so destructive.
Dozens of shipyards closed in the last 50 years. Post-war American shipbuilding was destroyed by the Jones act. The American merchant marine with it.
When you can build a ship for 1/2 or 1/3 the cost in Asia, no one is going to build one here.
I work on a Jones Act ship engaged in US trade. If it wasn’t for Jones Act, we’d be operating at least 2 ships for the same capital cost. Sure, the Act protected US shipyard jobs for a year, but after that it cost jobs because the Act ensured only one ship was built, not 2.
It's interesting that you point out the cost comparisons between railroads and maritime vessels. Just after posting that last item of mine I decided to do some research on railroad issues as they relate to domestic maritime transportation, and I came across the same resource. Without even checking to verify this, I can pretty much guarantee you that the U.S. railroad industry lobbies heavily to keep the Jones Act in force ... for the reasons described in that link.
Yes, I would suspect that too. The marine highway is a really good idea, but it would take some deregulation to accomplish.
Right now our intermodal system is really designed to pick up Chinese goods at the coast, and distribute them around to regional distribution centers. The geography of that heavily favors rail. And a water based feeder system doesn't work to get containers from ports in California to the middle and east parts of the country.
If manufacturers locate along the gulf coast, a water feeder distribution system could be established and profitable. But the feeder systems which that company was trying to emulate, was modeled on feeder systems in high export countries, which we are not.
As also part of the marine highways initiative, I would seriously encourage robotic ships, especially up and down the rivers. We are already building robot cars, and it would seem that robot ships would actually be easier, since they are slower and already confined on the waterways. This would help to lower costs, especially labor costs. The container ship Emma Maersk is one of the largest ships ever built, has a capacity of 14,770 TEU, and only has a crew of 13. If we spread those 14,770 TEU out on small feeder container ships, like the MV TransAtlantic, it would take 38 feeder ships. Yet the MV TransAtlantic carries the exact same number of crew, 13. So the labor costs are 38 times the transpacific giant container ship. However, if they were robot ships, the labor cost difference would dissappear.
Very interesting post — thanks!