The Jones Act: A Protectionist Law with Mixed Results

by | Sep 15, 2023 | Editorial

It is important to stay up-to-date on global shipping regulations, including laws that impact our customer’s ability to efficiently and cost effectively move their cargo. As far as local regulations are concerned, the Jones Act is an often discussed act within FGN’s offices.

The Jones Act, also known as the Merchant Marine Act of 1920, is a federal law that regulates maritime commerce in the United States. It requires that all ships transporting goods or passengers between U.S. ports be built in the United States, owned by U.S. citizens, and crewed by U.S. citizens or permanent residents.

The Jones Act was passed in 1920 to address concerns about national security and economic protectionism. At the time, the United States was a major maritime power, and the law was intended to ensure that the U.S. merchant marine would be available in times of war. The law also sought to protect U.S. jobs and businesses from foreign competition.

The Jones Act has been controversial since its inception. Supporters argue that it protects national security, creates jobs, and ensures that the U.S. has a reliable supply of goods. Opponents argue that it raises the cost of goods for consumers. It also reduces efficiencies in the U.S. shipping market as it makes it more difficult for businesses to transport goods between U.S. ports, which can lead to delays and disruptions in the supply chain.

There is no doubt that the Jones Act has had a significant impact on the U.S. maritime industry. The law has made it more difficult for businesses to transport goods between U.S. ports, which has increased the cost of shipping which is passed through to the end users. 

In recent years, there has understandably been growing debate about whether the Jones Act is still necessary. Some argue that the law is no longer relevant in today’s environment as the maritime industry has greatly improved among other countries. While proponents argue that the law is still important for national security and economic reasons.

The future of the Jones Act seems to be certain in the near future; the law has been challenged in court several times, but it has always been upheld. However, there is increasing pressure to reform the law and adapt it to the changing needs of the U.S. economy and maritime industry.

Here are some of the outdated parts of the Jones Act:

  • The requirement that ships be built in the United States. This requirement is no longer necessary in the 21st century, as there are many modern shipyards in other countries that can build ships just as well as those in the United States.
  • The requirement that ships be owned by U.S. citizens. This reduces competition in the market, and therefore, creates higher prices especially in Hawaii, Alaska, and U.S. territories. 
  • The requirement that ships be crewed by U.S. citizens or permanent residents. This requirement makes it difficult to find qualified crew members for ships that operate in remote areas.

As it has been a precedent for over 100 years, the industry has certainly adapted to the Jones Act regulations, however, there remain a number of drawbacks. If you are looking into creative solutions for moving bulk liquids between U.S. ports, our team at FGN has the expertise to help you navigate these laws and choose your best path forward.

Written by Juli Herndon

September 15, 2023