We must defend the JONES ACT at all costs. We must have US Flag vessels to properly supply American military forces all over the world. The Cato Institute and other short-sighted people want to kill the Jones Act to get cheaper coastwise rates. Al Melvin
I don’t think you understand the intent of the Jones Act at all. The intent isn’t to supply U.S. Flagged ships in international trade. It’s purpose was to specifically limit coastwise domestic shipping to U.S. flagged ships so that 1) the demand would stimulate US shipyards and these shipyards would continue to exist to supply a dependable source of militarily useful tonnage and 2) some amount of the Jones Act vessels could be transferred to sealift capacity when needed in times of war.
Since US coastwise shipping has not been saved under the protection of the Jones Act, it only makes sense to question how it can be overhauled to meet this need.
Whatever it is you do in DC, I cannot wait for you to be replaced by a $600 a month Filipino that works twice as hard.
With all due respect I believe it was the ship construction differential subsidies that sustained shipyards and its manufacturing base. The subsidies ended in 1981 under Reagan. Yes, ships cost more to be built in the US. That has been true for a long time. When we had the construction subsidies US built ships were approximately twice as expensive that were built foreign. Once the subsidies ended and the demand and manufacturing base were lost the construction cost differential is now closer to 4 times that of a foreign built ship.
To say it that it is the cost of foreign labor as the sole reason for the cost differential is not completely true. When I worked in Korea some 10+ years ago the president of HMD said the average worker made about $50,000/year then. What made ships cheaper was a combination of the economies of scale building multiple ships of similar design as well as the manufacturing base to support that industry.
I believe there are plenty of ways to keep cabotage laws requiring US flagged ships crewed with American sailors that can be combined with additional incentives to increase coastwise shipping. I’m not so sure about US shipyards capability to return to commercial viability. But if the government wants to subsidize them more, I’d be fine with that, too. What I’d hope we all can agree on, is that the current trajectory for US Merchat Marine is not positive. People seem wedded to the Jones Act as it was written in 1920 without realizing that the policy can be improved to be better for our industry.
WHAT DO YOU MEAN BY THIS? Are NASSCO, Aker/Philly, Halter and AmFels all non viable? They may not be Hyundai or Samsung or DSME but they do build ships for commercial customers and even though those ships may cost 4x more than the same ones built in Korea, the owners of them are also viable operations which make profits. It is only the populations of Alaska, Hawaii and Puerto Rico who whine and cry and howl about how much more they believe they have to spend for consumer goods because of the Jones Act yet I have yet to see any definitive study which shows exactly how much more? My $3/gal bottle of milk in Seattle might be $5 in Anchorage however what would it be if the ship used to bring it to AK was foreign built and not US? $4.25? $4.50? $4.75? it certainly will not be the same $3 I pay because it will always cost more to live in any place that requires ocean carriage of cargo by the very nature that these places are far away? DO YOU NOW UNDERSTAND?
Yes. I guess I was wrong. Everything is fine with both our shipbuilding sector and the Merchant Marine. It was the ALL CAPS that has made me see the error in my ways.
35 years ago I asked why beer was so outrageously more expensive in Kodiak. About 3 times what is was in Seattle. The answer I got was shipping cost. The beer came direct from Seattle on Sealand to Kodiak. I looked up the Sealand tariff on a container load of beer and found out how many cases per container. The truth of the matter was that shipping beer from Seattle to Kodiak cost 2 cents per can. In other words, the cost of shipping was trivial, and shipping was just a convenient excuse for price gouging.
Today, a lot of things in Anchorage have the same cost as Seattle. The WA and King County sales tax is 10%. The cost of shipping to Alaska is lees than 10% and there is no sales tax in Anchorage. However, reefer perishables like milk do cost a lot more than in Seattle. That’s to be expected. Car parts also cost a lot more in Anchorage. Their excuse is, you guessed it, shipping costs, but that is total bs.
Eliminating the Jones Act would not save consumers anything. It might put a few extra pennies of profit in foreign shipowners pockets at the cost of eliminating most US ship and boat building, most US shipping companies, including tug and barge, and eliminating most jobs for US mariners.
If we drastically reduce US ship, boat and barge building capacity. How much more is the government going to have to pay for ships? In the event of a war, there would be next to no ship or boat building capacity left.
The myth of “effective US control” over American owned flag of convenience ships, has been sold to the gullible US military. If, or more likely when, we have a real war against a credible foreign military, we are going to find out just how big that myth is.
YOU’RE DAMNED RIGHT YOU WERE…
Of course, the only shipyard in my hometown is going bankrupt later this year as well because of lack or orders - they are now building their last ship and it sucks.
Could what make shipbuilding more expensive in US be the much larger wages difference for the management and the higher profit demanded by the shareholders?
One the first is actually fully US owned and a major builder of vessels for the US Navy/ US Gov. at greatly inflated costs (read Subsidies)
Aker/Philly is owned by a Norwegian listed company and managed under the Aker/KIR umbrella.
Halter and AmFels are owned and managed by Singapore companies ST Marine and Keppel O&M respectively. Both are Singapore Gov. affiliated companies.
None of these companies have CEOs and top Managers paid in the Mill.of $$/year in wages and bonuses.
When a shipping company are ordering ships they don’t look at the price of milk in Alaska, or gasoline prices in PR, they are looking at where they can get the best quality ship, designed to be the most operationally efficient, most fuel efficient ship for their trade at competitive costs.
That is exactly why Northrop Grumman spun off it’s shipbuilding sector to HII. Although it was profitable, the return wasn’t meeting the overall company’s expectations.
This is about government policy, prices matter politically.
Until short sea shipping makes it presence in the US (if ever) the unfortunate reality is that there is limited demand for large vessel Jones Act tonnage. Once a sector of the industry goes through a building cycle it can be some years for noticeable demand to pick up again. Tankers are a good example. Aker/Philly and NASSCO built a fair number of tankers for the Jones Act trade. Now that the last of those vessels have been delivered a few years ago there hasn’t been any new orders.
I think if we have a “real war” the only ships involved would be underwater, either subs or sunk or both. The idea that the next war would last long enough to build a ship is ludicrous.
There is no money in “real war” or we would have had a few more already.
Yet the actual bill to overturn it comes from a senator from Utah:
I would think this landlocked state has more pressing issues that their senator should be pursuing other than the Jones Act. Hopefully the voters in Utah will take notice more than the voters of Arizona ever did of where their elected official’s loyalties lie.
That’s essentially what this report says.
A container full of whiskey is a DG so it is all laid out for anyone to see. The cost of shipping a container of scotch Rotterdam to Chennai transhipped through Singapore worked out at $0.08 per bottle. More scotch moves through the port of Singapore than any other port in the world, the vast majority transhipped to other destinations in Asia and Pacific ports. The excuse for the gouging price is always the shipping costs. I hope that C.Captain keeps taking the little pink pills.
90% of everything gets shipped by sea. Why? Because the shipping cost is an absolutely trivial portion of the final consumer price —- at least in full container loads.