Jones Act stands on strong political support

Jones Act stands on strong political support

Whitworth quantifies vibrant domestic fleet, explains vital roles of cabotage trades

The Jones Act stands because of consistently strong bipartisan support in Congress, a major U.S.-flagged domestic vessel operator said in Washington May 1.

"Without a stable legal regime and regulatory environment to ensure a level competitive playing field ... investment in this industry would dry up," said Jonathan Whitworth, senior vice president of Overseas Shipholding Group. "There is clear recognition by our political leaders that a strong domestic maritime industry -- vessels, crews, companies -- is vital to U.S. economic and national security."

Addressing the Washington chapter of the Propeller Club of the United States, Whitworth said the Jones Act deep-sea, Great Lakes and inland waters fleet is "strong and vibrant" at 39,156 vessels, an increase of 59 percent in 40 years.

Enacted as Section 27 of the Merchant Marine Act of 1920, the Jones Act reserves all domestic waterborne commerce for merchant vessels owned, built, flagged and manned in the United States. The law applies to trade within the continental U.S. and to direct cargo movements between the mainland and the remote states and territories of Alaska, Hawaii, Puerto Rico and Guam.

Whitworth said Jones Act tonnage represents 97 percent of the U.S.-flagged merchant fleet and is "growing in both size and carrying capacity, particularly among the largest cargo vessels."

OSG, which now includes the former Maritrans fleet of tankers, tugs and barges operated in domestic trade under American Maritime Officers contract, has invested more than $2 billion in Jones Act vessels since 2004, Whitworth said. OSG units have 13 self-propelled tankers and six articulated tug-barges on order in U.S. shipyards for service between domestic points.

Whitworth was representing the Maritime Cabotage Task Force, a Washington-based coalition of sea, air, rail and road transportation industry and labor interests, including AMO. Charles Crangle, AMO's director of Congressional and legislative affairs, serves on the board of directors of the MCTF.

In a related development, the Maritime Cabotage Task Force released its annual report on the state of the Jones Act.

"Although the Jones Act governs domestic shipping, it plays a critical role in helping defend our nation from threats overseas," MCTF Chairman Philip Grill noted in his introduction to the report. "America's Jones Act fleet remained on guard in 2006, moving U.S. troops and supplies around the globe." The report characterized 2006 as "a year of quiet satisfaction" for Jones Act vessel operators. "After years of effort, an issue with the lease financing of vessels in the coastwise trade was resolved in a way that ensured Congress' intent to allow bona fide Jones Act operators to have access to foreign capital, but did not also allow foreign operators to import unfair tax advantages into the domestic market," Grill wrote. "Owners and operators need such assurance in order to commit hundreds of millions of dollars for new Jones Act vessels."

Grill pointed out that, after Hurricanes Katrina and Rita ravaged Gulf Coast communities in 2005, the Jones Act was waived to allow limited foreign-flagged delivery of crude oil and petroleum products from Gulf distribution points to the East Coast -- despite the immediate availability of suitable Jones Act tonnage.

But, in 2006, Jones Act interests cultivated "new and strengthened relationships" with federal agencies. "As a result, should the nation suffer another severe hurricane season, decision-makers will better understand that the Jones Act fleet is a dependable asset to recovery efforts.

Grill said the Maritime Cabotage Task Force "is confident that 2007 holds more good news for America's Jones Act fleet and those who rely on their services." Foreign interests "may seek to become a part of America's billion-plus-ton domestic maritime trade," he added. "But as long as the Jones Act remains the foundation of U.S. domestic maritime policy, this industry will remain American-owned, American-built and American-crewed."

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