Barge on Mississippi River at Memphis
The following article was published originally on July 10, 2022, in the Daily Memphian, based in Memphis, Tenn.
The Fourth of July is a time of remembrance for Americans. We celebrate our country’s independence from English rule and the harmful laws and taxes that came with it.
Unfortunately, today, the United States has its own share of outdated regulations.
The Jones Act is one such bad law.
It requires all ships moving goods between U.S. ports be U.S. built and flagged, and mostly U.S. crewed and owned.
In a column published recently in The Daily Memphian, “General Assembly’s Jones Act resolution supports maritime industry,” George Leavell called the Jones Act the “bedrock law of American maritime” citing its benefits to states dependent on river transportation.
However, the purpose of the law was not to support jobs in America’s heartland. It was to support the “best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency.”
In other words, the Jones Act was intended to ensure a fleet of reliable, commercial oceangoing ships that could serve in times of war or emergency.
The tugs and barges in the U.S. river system no doubt play a critical role in ensuring a reliable supply chain, creating good paying jobs, and growing local economies. But they aren’t the kind of ships the law was meant to protect. A tugboat simply doesn’t have the military utility of a 80,000-ton oil tanker.
Today, there are only 91 such large, oceangoing ships covered by the Jones Act, down from 257 in 1980. Shipyards that build large oceangoing ships have delivered an average of only two a year since 2000. Further, between 1990 and 2020, the U.S. maritime industry moved 33% less cargo.
Are these the signs of a thriving industry?
Worse, the Jones Act has driven up prices for consumers across the country, but especially in states and territories that depend on ocean transportation.
While the maritime industry may provide “20,000 jobs and $4.5 billion in economic output in Tennessee,” as Mr. Leavell claims, the Jones Act costs Hawaii residents $1.2 billion a year, or about $1,800 per average family. Puerto Rico’s economy could be losing up to $1.5 billion annually.
Because of the law, U.S. maritime companies must purchase vastly overpriced ships. It costs four to five times more to build a large, oceangoing ship in the United States than in a foreign shipyard.
The Jones Act also has been blamed as one cause of high gas prices. ExxonMobil recently informed President Joe Biden that Jones Act waivers could help increase the supply of domestic oil.
Most important, supporting the Jones Act, as Mr. Leavell does, does not have to be an all-or-nothing proposition.
One simple fix would be to simply treat the U.S. maritime industry the same as other transportation industries. U.S. trucks, trains, and airplanes may all be built abroad. Why can’t U.S. maritime companies buy ships built abroad?
Without changing any other parts of the law, removing the Jones Act’s “domestic build” section would allow more companies to enter the maritime industry, enhancing competition and fueling innovation.
Doing so would not likely harm Mr. Leavell’s company, Wepfer Marine, which builds barges that are cost competitive with the rest of the world. Such companies have little to fear from more competition.
For other parts of the country, though, removing the Jones Act’s burden would be a much needed relief from inflation and high gas prices.