Should the Jones Act be Repealed?

1402599684rif7cFor anyone who receives an ocean freight shipping rate for shipping cargo between US ports, it is important to understand the Merchant Marine Act. Since 1920, this has been an important law regarding the maritime industry in the US. It provides oversight for the US ocean freight industry. Specifically, the law dictates that goods transported between US ports must be on US-flag ships. Essentially, these vessels must be manufactured, owned and crewed entirely by US citizens. While this puts some pressure on business, it ensures that US-owned operations handle goods shipped between US ports.

This section of the Merchant Marine Act has been very controversial, especially as of late. It seems that there are some people who want to ensure the elimination of this law. Recently, United States Senator John McCain filed an amendment to the Keystone pipeline bill regarding the Merchant Marine Act. The amendment proposed would repeal the entire Merchant Marine Act. Although the bill did not pass, the message lives on. Senator McCain’s reasons for the amendment are because he claims that the Merchant Marine Act limits free trade and makes the US less competitive. In addition, Hawaii lawmakers recently asked for their state to be exempt from the Merchant Marine Act due to the higher prices for goods their residents pay. Meanwhile, all of this talk about ending the Merchant Marine Act worried many financiers of US shipper builders.

You can speak to your freight forwarder to ask what would happen if the Merchant Marine Act ended. In the mean time, it is important to understand the history of this law.

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