From Lloyds List:
Removing coastal roadblocks
07 Sep 2017
by Michael Grey
US politicians are likely to shoot down the attempt to abolish the Jones Act, which means American coastal shipping will remain stagnant
Despite all the positive arguments for repeal of the Jones Act, there are no signs that the objections to this might in any way be ameliorated.
ONCE in every US presidency, people raise their heads above the parapet to question the continued rationale of the Jones Act, that fiercely protective and now ancient legislation securing US maritime jobs. It is a talking point at present, with a bill before Congress seeking its abolition on the grounds of its cost to the country. This has coincided with some research from Tufts University, which has been considering the prospects for coastal shipping and which has concluded that the dear old Jones Act might be considered a “roadblock” to any large-scale use of the coastal waters for the movement of freight. A more accurate term might be “sea-block”.
If we just considered the logic of logistics in the US, there would be no arguments against the development of a large and healthy coastal shipping industry. The coast is long, the ports are available and the sea is empty. The interstate coastal highways are bunged up with freight traffic and getting ever more congested. Only a few years ago, the government put some thought into the US coastal shipping prospects and even developed a range of useful ship designs which, if anyone wanted them, could be dusted off and constructed in a trice.
But despite all the positive arguments for repeal of the Jones Act, and the manifest advantages it might bring, there are no signs whatsoever that the objections to this might in any way be ameliorated. There is no breakthrough in sight that might see the maritime unions or organised labour in the shipyards, backed up by the powerful road haulage lobbies, agreeing to cut coastal shipping a bit of slack.
If anything, their resistance to any weakening of the Act is hardening, not least because of the examples they see around the world in which local industries have been damaged by cheap labour and imported ships, with the inexorable movement towards those who can run ships cheapest. Where would the US Merchant Marine end up if its remnants, now almost exclusively in Jones Act trades, were to be undercut by cheap foreign seafarers and their open register ships? The same as Australia, the UK or the high-cost countries of Europe — is that what those who challenge the Jones Act really want?
There is no question the potential is there for the modal shift of colossal quantities of cargo from road to the sea. The US Marine Highway Programme offers a blueprint for this transfer, which sees a realistic track to real growth, if only the “roadblocks” could be moved. There are a few signs some brave souls are making an effort. Atlantic Coastal Services, for instance, is to launch a weekly ro-ro service between Miami and Newark, supported by the programme, and it will be interesting to see if this can prosper.
But as has been found in Europe, it is a struggle to build up coastal services, which depend on changing the logistic habits of a lifetime of the potential users. The European Union’s Motorways of the Sea scheme helped to do just that, aided by the willingness of the ports to invest and the bravery of a few operators who have grown trade and changed shippers’ habits.
In an ideal world, rather than building expensive new ships to inaugurate US coastal freight services, it would be made possible to charter suitable tonnage at a fraction of the cost and test the waters. But that will not happen when there is an absolute prohibition on any imports of foreign-built tonnage and very little available in the US.
Might it be possible to persuade the supporters of the Jones Act to think rather more long-term and compromise on their fierce stance against any weakening of the legislation?Might such a compromise be to agree a long-term arrangement that would see domestic construction of “replacement” ships once a service using imported, chartered tonnage, albeit with US crews, had been established and was regarded as viable?
But arguments over the operational costs of US ships would not disappear in a hurry. In a country in which operators are forced to use tug-barge units instead of “proper” ships, it would be argued that the high costs of operating US coastal tonnage would remain prohibitive when compared with the costs of cheap road haulage. Sadly, the costs of congestion, road accidents and pollution rarely enter into these comparisons, as is the case in many other countries in which coastal shipping ought to play a far larger role.
And for all his pronouncements about deal making and the importance of business, it seems most unlikely that President Donald Trump would risk the wrath of many of his supporters by freeing up US maritime industry from its Jones Act constrictions.
The US Marine Highway Programme will probably stagger on, assisting a few brave operators, but any real breakthrough seems unlikely. Years ago, it was said that only when the costs of congestion and pollution on the US highway system become insupportable will America look to its coastal seas for salvation. That may take a little while yet.