The Jones Act and its impact of shipping between US ports

An article in Bloombergbusinessweek titled “Lots of Oil, Not Enough Ships ” (December 16, 2013) describes the Jones Act, a 1920 US law that restricts ships that ply between US ports to be US carriers with a US crew. Given the small number of such ships (32 tankers and 42 barges) and the substantial domestic oil production (8 million barrels per day), shipping from the Gulf Coast to The East Coast costs three times as much as shipping to Canada (which does not have such restrictions). Similarly ships from China cannot stop in Hawaii, they deliver goods to the West Coast and then need a separate trip back to Hawaii. Should the Jones Act and its costs be tolerated given that it creates volume for rail lines and work for US ship owners? Will the increased US oil production, and its need to be distributed, suggest the need for an exception to the. Jones Act for oil, as a starting point? Are there other such old laws that are a detriment to logistics costs?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

One Response to The Jones Act and its impact of shipping between US ports

  1. A barrier to do domestic business? How is this politically viable? It is obviously not economically good because it raises the cost of doing business. But what politician wouldn’t want the opportunity to create US sea shipping jobs?
    The fact that ships can’t stop at Hawai’i on their way to the mainland is just dumb. How does it benefit the people of Hawai’i to pay extra freight for their goods? Wherever the government sets up bad economic policy, look for a lobbyist.

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