Jones act and airlines


#21

No it’s not losing it’s “gold standard”. Their customers want it and CAAC has been working with the FAA for many years on building it’s expertise as a civil aviation authority. The FAA was working with them on the ARJ21 but had some issues with their process. If you knew anything about type certifications you would know that both Boeing and airbus receive their type certificates from their respective civil aviation authority(FAA for Boeing and EASA for Airbus) once they get a certificate from their home regulator they very easily earn certification from the remaining CAA (either the FAA or EASA). In fact many times the type certificate testing is done jointly with EASA and the FAA issuing at the same time as there are bilateral agreements in place.

No airliner can fly in the US without a type certificate from the FAA. I can’t think of any Boeing or Airbus that doesn’t have type certificates from both agencies. Just because the EASA has agreed to take a look at the plane does not mean it’s going to get a TC and the FAA will suddenly become irrelevant LOL. Truth be told the 919 is years behind the 737MAX and the NEO and cannot compete with them and they don’t have to because their own domestic market is demanding a cheap plane and it fits the bill. Unlike China, Norway has very high standards for it’s equipment so naturally they operate an all Boeing fleet.


#22

Other countries have cabotage laws that require ships in coastal trade to be flagged and manned locally. I know of no other country that demand locally built, however. (Please enlighten me if I’m wrong)
If local yards can compete on price, terms of finance, delivery and quality they win, if not they lose to foreign yards that offer better deal.
Why could that not work for US shipping as well??

As to American ownership and management of ship under foreign flag. If American Shipping Companies were banned from doing so they would find ways to bypass such laws, just like all other restrictions put on individuals and companies.

American Finance Companies and Hedge Funds have controlling interest in foreign shipping companies in many countries, This is not limited to FOC ships, but applies both in Europe and elsewhere. Management are usually by flag state nationals, or by Ship Management Companies though, thus not many US jobs created.


#23

As we have just discussed, Americans buy, finance, and operate a very large percentage of the World’s ships. As I recall, it’s something like 30% of the World’s ships. This has been the case for a very long time.

If we counted American ownership of large blocks of stock and financing in foreign shipowning and operating companies, Americans would be the largest shipowners in the World.

Examples of Americans owning foreign shipping companies include: US Secretary of Commerce Wilber Ross, and the family of US Secretary of Transportation Elaine Chao (wife of Senate Majority Leader Mich McConnell).

Several of the largest flags of convenience were created by Americans and operate out of offices located in America.

The regulatory divide between the US and foreign flags of convenience is converging, but there will never be any serious level of effective regulation by flag of convenience countries, like Vanuatu. Flags of convenience just hand regulation off to Class Societies and Port State Control. And yes, the USCG inspections are not what they use to be. More and more is being handed off to Class, and other third parties. US flag foreign trade cannot survive without an even regulatory playing field.

The US tax system is an abomination. US shipping companies cannot hope to compete in foreign trade under the US tax system as it applies to US flag vessels.

The cost of crewing per container carried is tiny and shrinking. While crewing with higher paid Americans use to become a major cost, it’s becoming less and less of a factor.

Allowing significant numbers of foreign built ships into the Coastal trade would not make the coastal trade any larger, cheaper, or better. But it would wipe out most of the small vessel builders and drive up the cost of US repairs.

Even with the 50% US tax on foreign repairs that we have now, a fair amount of repairs are done in foreign yards.


#24

I never mentioned the thought of eliminating the Jones Act (specifically cabotage). I specifically pondered, what if the Jones Act more closely resembled the rules the Airlines play by.

Some ships are foreign built, but USA flagged. My understanding is these ships can’t carry cargo between USA ports, because they are not built in the USA. Again, airlines, truckers, etc don’t face the same requirements for equipment procurement.

Everybody in this threads keeps repeating this, but where is the proof or analysis? In the 70’s Japanese cars started coming to the USA. Now, almost every foreign auto maker produces cars here, employing Americans. Aren’t many of the shipyards owned by foreign money anyway?

Why the massive protection of the ship yards? Perhaps short term pain would force efficiency in some areas? I do not know the answer, but it appears nobody can truly provide a solid analysis; instead it’s always the same response, “It won’t help, yards would die.”

Are all the buildings, bridges, and other infrastructure in the USA build using the same raw material sourcing requirements as Jones Act vessels? There is much more cost to building a vessel than the cost of labor. For goodness sakes, “awesome Norway” probably has some of the highest cost of labor, yet they export quite few vessels each year, correct?


#25

What would be the purpose of changing the Jones Act to allow foreign built ships?

To save American consumers money by supposedly reducing domestic shipping costs? Bullshit.

If we wanted to save American consumers money with lower cost and higher quality services there are many easier and more effective ways to do it.

Such as, allowing foreign doctors and dentists and medical insurance companies to operate clinics in the US. Most foreign medical care is higher quality and costs about 25% of American costs. If we want to save consumers money, that is the low hanging fruit, let’s start with that.

Or, why are we overpaying for all these expensive teachers and school administrators? Let’s open these jobs to better educated, smarter, harder working, and much cheaper foreign workers from India, the Philippines, and Europe.

Why pay $25 million to an American contractor to build a new school, when a Mexican contractor can build the same school for $15 million?

Why pay big money to American defense contractors when we could hire Foreign defense contractors for a small fraction of the cost?


#26

The cars where crap and the companies where selling service more than a car. You need to take a look at our economy and the still emerging Japanese to get a better picture of why also lets not even get into the environmental regulations coming into effect in the US not a very good comparison.

You know senator McCain desperately wants our war ships built with cheap foreign shipyards hopefully this never happens.

Be careful i’m sure this last generation would buy into something like that pretty easily so long as they can live in their little house in the parents back yard.

All countries have some form of protection we have the Jones act I believe with out its protection our maritime industry would be in grave danger.


#27

You are almost right, US Shipowners own and control the 7th biggest fleet of ships in terms of USD Value (2016 figures):


If there were any way of knowing how much of the world fleet that is owned by companies partly owned by US based Finance Companies, Hedge Funds and US based Multinational companies not defied as Shipping Companies, you may get closer to the figure of 30%

Counted in a more Maritime term, DWT, US falls one place, to # 8, which is abt. 3.5% of the world fleet:


In terms of number of ships China is on top, with around 5000 ships, while US creep up to #6, with abt. 2000 thanks to the large fleet of smaller ships.

I don’t think there is much of a divide between the regulatory regimes between quality flag states, as proven by the White List of the Paris and Tokyo MOUs.
USCG may have a lot of special requirements and procedure, but does it actually improve safety?
If so, shouldn’t US have the best safety record of all major shipping nations?

The same goes for Tax. Most countries do not tax their Shipping Companies and Seafarers the same as others, if at all. To get a level playing field is thus a case for US to get in line with others, not forcing others to comply with US tax system.

BTW; Is there any reason why most US Shipping companies operating ocean going ships are registered in Delaware?


#28

There are a lot of reasons why a great many corporations of all types and sizes prefer to incorporate in Delaware. In the beginning,Delaware was set up as a “flag of convenience” for American corporations. No State taxes in Delaware. Delaware provides very fast and convenient corporate services. And it has done so since long before the Internet. Many states are slow and inefficient. Delaware has long had very corporation friendly and predictable laws that are promptly updated to attract business. Delaware has a special court called the Court of Chancery just for handling corporates cases that acts quickly and predictably on corporate matters. The Chancery Court has a well developed body of common law for corporations and smart experienced judges that only handle business cases. No other state provides a prompt specialized business court. Delaware also has a good reputation for insulating shareholders and managers from personal liability


#29

Thanks. You pretty much describe why places like Liberia, Panama, Bahamas, Bermuda, Cayman Islands and BVI etc. are popular for registration of “Post Box” Companies. (Not ONLY Shipping companies)

At one time a non-existing building in Monrovia, Liberia, was the registered address for the Owners of the largest merchant fleet in the world. Those who have been around for a while in shipping will be familiar with this address;
80 Broad Street, Monrovia:


The main difference is that in world shipping nearly all arbitrations are handled in London, Singapore or Hong Kong, all according to British Law.


#30

No, that is not the purpose. Often times, it is prudent to question established rules and regulations. For me, the end goal would be to increase the number and quality of jobs for those that operate these ships.

For the sake of discussion, I counter your question with this question: What is the purpose of requiring domestic built ships (to include raw materials) in the Jones Act when nearly every SIMILAR industry (Airlines, Rail, Trucking) does not have the same requirement?


#31

Because when the Jones Act was written there we no airlines as we know them, the literal handful of “large” aircraft available at the time were mostly foreign made so it was them or nothing, and the American automotive industry was growing at a rate that did not need protection.

Unless you want to make the only comparison that matters, the comparison between the rules covering ownership, financial security, adherence to a common international standard of construction, training, maintenance and operation, trying to compare ships and shipping to the airline industry is just a diversion.

Until FoC ships and their owners meet the same standards and transparency noted above they should be banned from American ports … period.

The AJACs don’t want to help Americans, they want to discard the American mariner and American shipyards in their race to the top of the profit ladder and leave every other American at the bottom. Fuck 'em.


#32

We probably should require that airliners on Domestic Routes Be US built. Then we would have more than one airplane maker. I think Boeing is the only large commercial aircraft builder left in the US. It has a near monopoly on government planes too. Yes, Lockheed and maybe a couple others build some military planes.

Nearly all the smaller commercial aircraft on Domestic routes are foreign built, Canada, Sweden, Brazil, etc., with the exception of small Cesnea, all the smaller commercial planes I fly on are foreign built.

I believe that the vast majority of rail cars and locomotives are built in North America, but I’m not a railroad buff. I think most subway and light rail cars are foreign built.

As far asvI know, most of the large commercial trucks are built in North America, even if they are foreign name brands.


#33

Not sure about the trains as I seem to remember EMD moving to Canada years ago.


#34

A lot of things changed after GM’s bankruptcy.

I say North America, not US, because so much is made or assembled North and south of the border under NAFTA. Environmental rules and the manner of their enforcement drove a lot of production across the border. The total cost of labor and production is cheaper Canada or Mexico. Things like free national healthcare in Canada and Mexico, affirmative action in the US, and too many opportunities to sue the boss in the US , and the drug abuse problem in the US, make both Canada and Mexico more attractive.


#35

Require airliners to be US built? Then Boeing can kiss their export business goodbye.


#36

If it were not so horribly sad, that would be funny … keep drinking the Kool-Aid laddie.

Boeing has a factory in China that is designed to build 100 737s a year plus perform modifications and maintenance. Boeing has been outsourcing work to China for years and its marketing pushes the concept of Boeing as a multi-generational, long term part of Chinese society where its young workers can look forward to many years of being part of the Boeing family.

Meanwhile, Boeing dumped more than 6,000 American workers in 2017.

“This year, Boeing reported a second-quarter net profit of $1.8 billion.”

But at a time when many North American companies are bringing work home, Boeing is doing the opposite. Thus far in 2017, the company has shed more than 6,000 jobs, some 4 percent of its workforce, most of them in Washington state. Over the past four years, Boeing has reduced its Seattle-area workforce by more than 20,000.

“Boeing Tianjin Composite Co., Ltd. … manufactures interior parts and composite structures for commercial airplanes, … Boeing Shanghai Aviation Service Co., Ltd., … is a maintenance, repair and upgrade center for airplane interiors, avionics and in-flight entertainment systems.”


#37

There are subsidies and than there are indirect subsidies, grants and loan guarantees:
https://globalnews.ca/news/3773916/bombardier-boeing-subsidies/

Then you have the long running dispute between US and EU over Boeing and Airbus subsidies:
https://www.ft.com/content/71cc85d4-4d2c-11e7-919a-1e14ce4af89b

There are several ways to help a company without paying outright subsidies. One well known and well used way is granting inflated Government contracts, especially defence spending and development projects:

Nothing in trade, politic or marriage is as simple as black and white.


#38

I agree. FoC provide an artificial set of regulations for companies to operate under which are below the standards of most 1st world countries.

But let’s look at a recent tragedy, the El Faro. Do we all agree that the El Faro was a old piece of junk that should have been scrapped years ago? But, it met “the standards” of the USCG. Meanwhile, many FoC ships are much newer–and thus potentially safer for the crew and more environmentally caring.

I don’t know the solution, and don’t have any answers. I’m just trying to gain perspectives from others.

There is one thing that I do know for sure: the current system is broken, and something must change. The average age of the Jones Act deep sea fleet continues to increase, right?


#39

Is there an echo in here?


#40

Flags of convenience, and their affiliated class societies, should be banned. They should not be allowed to have offices or employees, or especially owners, in The US. Americans citizens or companies that wish to register a ship with a flag of convenience should be subject to a very US high tax, 100% of the value of the ship.

One third of US foreign trade should be reserved to US flag ships, one third to trading partners, and the remaining one third to bonafide third party flags where the owners reside and operate their ships from the flag state.

For example: US/China trade. Chinese ships get 1/3 of the volume, US ships get 1/3 of the volume, everyone else can compete for a portion of the remaining 1/3. After any month where China or the US gets more than 1/3rd, it’s ship calls will be limited until the balance is restored. Same with every other country.

If ships flying the flag of a trading partner cannot handle their share of the volume, their share becomes open to anyone.

The US should also set minimum seafarer wages for foreign ships calling in US ports. For developed countries it should be the same as US union wages. For third world countries, it should be at least 50% of US wages. If shipowners don’t want to pay the minimum wage, they cannot come to US ports. Proof of payment of the minimum wage should be part of US port state control inspections. Any non compliant ship shall be detained until the proper wages are paid or the ship is sold to satisfy the wages.