Per Jones Act - US indirect subsidies to foreign carriers

Since just about nobody on these forums works in international liner service, because the US no longer has any real international liner companies (container ships), I’ve seen no mention how US law benefits foreign carriers, namely the antitrust exemption for shipping conferences.

Dating back to forever, the US was a big supporter of conferences. The reason was due to the extremely high cost of operating US flagged ships. The theory was that, if the vast majority of the big ship companies charged the same, US companies could compete. The conferences were granted antitrust (price fixing) exemptions. That did not work, as evidenced by the fact that the US companies all went out of business.

The Ocean Shipping Reform Act of 1999 granted a lot leeway on prices, but the antitrust exemption remains. We have no American companies engaged in the business, so we’re granting an exemption that only benefits foreign carriers. It’s like giving them a subsidy. By the way, the EU did away with such exemptions years ago.

We have people likeMcCain complaining about the Jones Act, while the US has another law that specifically benefits foreign shipping companies

[QUOTE=JohnG;152409]Since just about nobody on these forums works in international liner service, because the US no longer has any real international liner companies (container ships), I’ve seen no mention how US law benefits foreign carriers, namely the antitrust exemption for shipping conferences.

Dating back to forever, the US was a big supporter of conferences. The reason was due to the extremely high cost of operating US flagged ships. The theory was that, if the vast majority of the big ship companies charged the same, US companies could compete. The conferences were granted antitrust (price fixing) exemptions. That did not work, as evidenced by the fact that the US companies all went out of business.

The Ocean Shipping Reform Act of 1999 granted a lot leeway on prices, but the antitrust exemption remains. We have no American companies engaged in the business, so we’re granting an exemption that only benefits foreign carriers. It’s like giving them a subsidy. By the way, the EU did away with such exemptions years ago.

We have people likeMcCain complaining about the Jones Act, while the US has another law that specifically benefits foreign shipping companies
[/QUOTE]

More than one law if you count Maritime Security Program (MSP), which allows foreign owners to put a US flag on foreign built vessels, and even pays a subsidy to a lucky 60 vessels (operated by largely US shell corps for foreign owners) amounting to several million tax dollars a year per vessel (because US mariners are expensive) so they can take advantage of US cargo preference laws.

None of this amounts to a very interesting policy issue for most Americans, so no one ever really gives it much thought, and professional marine industry forums like this only champion the programs (instead of showcasing the loss to US shipbuilding or taxpayers) since they also are a benefactor as the MSP provides mariner jobs. No one ever complains that these foreign flagged vsls represent a failure to invest in a capable US shipbuilding industry or ship repair industry (everyone, including the Jones Act hulls will get repairs in foreign drydocks over US). We should be throttling back on MSP (which went from an authorized fleet of 47 to 60 some years ago) to ensure that the order books on US shipyards survive past the current blip in US shipbuilding that I would consider a largely necessary recapitalization due to the excess average age of the current Jones Act fleet–which can only survive so long after all, no matter how many hundreds of tons of steel are welded into them at the Asian shipyards they visit every couple of years.

I’m having a hard time grasping the underlying motive for sanctioned price fixing. How could this arrangement be presented as a benefit to American companies when there is zero prospect of competing with rock-bottom foreign labor (slavery) costs? Was the exemption lobbied by foreign shipping interests?

I hadn’t heard of this before. Is there anything that can be done about this?

[QUOTE=JaredFromSubway;152470]I’m having a hard time grasping the underlying motive for sanctioned price fixing. How could this arrangement be presented as a benefit to American companies when there is zero prospect of competing with rock-bottom foreign labor (slavery) costs? Was the exemption lobbied by foreign shipping interests?[/QUOTE]

No, it’s very old. The idea was that American ships could only compete with the prices fixed (at a high level). However, there are no longer American ships. Now that exemption only helps foreign owned lines.

Interesting. Something to read up about.

Wow- what can we do