During the 1920 Great Lakes shipping season, the steamer HOMER D. WILLIAMS set a new record for the most cargo carried in one season — 462,498 tons of iron ore, coal and stone. During the recently-completed 1996 shipping season, the M/V PAUL R. TREGURTHA lead all U.S.-Flag lakers in the long-haul trades by moving 3,244,780 tons of coal and iron ore. In other words, one modern laker today equals the hauling power of seven 1920’s vintage vessels.
There have been many other changes on the Lakes since 1920, not all of which were positive. After a period of growth, Lakes shipping fell victim to the Great Depression just like the rest of the country. The demands of World War Two revived the industry; the post-war boom kept the ships busy as well. The development of pelletized iron ore in the 1950s ensured that lakers would still have cargo to carry once reserves of natural ore were exhausted.
In the 1970s, the Great Lakes shipping industry built the first of thirteen 1,000-foot-long vessels and in the early 1980s completed the changeover to self-loading ships. The efficiencies of larger, self-unloading vessels enabled the industry to weather the recession of the early and mid-1980s and meet the demands of the strong economy which has generally characterized the 1990s to date.
During all this, there has been one constant (besides change itself) which has allowed ship owners and operators to deal with the vagaries of waterborne commerce — the Jones Act. Enacted in 1920, the law (actually Section 27 of the Merchant Marine Act of that year) simply requires that cargo moving between U.S. ports be carried in ships which are U.S.-owned, U.S.-built and U.S.-crewed. What these three provisions mean is that U.S.-Flag carriers are given the one guarantee that they need to compete — a level playing field. Anyone engaged in Great Lakes shipping (or shipping on any U.S. waterway) must comply with the same rules and regulations, pay corporate taxes, employ American citizens and provide commensurate wages and benefits. If an individual carrier is able to offer lower freight rates, it’s because that company found a way to do things better, not because it built its ships to lesser safety standards or escaped a host of taxes.
The stated purpose of the Jones Act is so that the United States "shall have a merchant marine of the best equipped and the most suitable types of vessels..." Other countries share this goal and have laws very similar to the Jones Act. Canada’s Coastwise Trading law differs primarily in that it allows Canadian carriers to build foreign (but then in most cases imposes a tariff before that foreign-built ship can enter the domestic trades). Worldwide, there are approximately 50 "Cabotage Laws" setting the groundrules for domestic waterborne commerce, all close cousins to the Jones Act.
Near universality is not the only common thread among Cabotage laws. Most date among the earliest laws of modern nation states. The U.S. Congress has barred foreign ships from the nation’s domestic trades since 1817, but enacted its first law to promote a U.S.-Flag fleet as early as 1789.
There are some misconceptions about the Jones Act. Some individuals mistakenly believe the law to apply unique restrictions on waterborne commerce, but that is far from the case. While ship operating companies in the domestic trades must have a clear majority U.S. ownership, the foreign-owned companies in other businesses must likewise have a clearly-identifiable U.S. corporate presence which complies with all applicable laws and regulations. The crews on U.S.-Flag vessels must be U.S. citizens or legal aliens. What’s unique about that?
The only provision truly particular to the Jones Act is the requirement that the ship be built and maintained in American shipyards. This requirement acknowledges that the United States must maintain a vibrant shipbuilding and repair industry for reasons of national defense. Since 95 percent of all American Merchant Mariners are employed in the domestic trades, it too is the Jones Act fleet that provides the reserve of Merchant Mariners so needed when war or international crisis sends American troops to lands far away and arms and supplies must cross the oceans.
There is also a notion that the Jones Act is somehow a subsidy. It is true that the U.S. government provides financial incentives to American carriers in the overseas trades, but this program has never extended to Jones Act carriers. The U.S. government must underwrite the foreign-trade fleet to a degree as it competes with "Flag of Convenience" operators, companies which register their ships in countries with little or no maritime regulation and employ Third World crews willing to work for as little as $15 a day. Jones Act operators compete against companies paying the same corporate taxes, complying with safety and environmental laws, employing Americans..., so no other support is necessary.
The most important question is has the Jones Act accomplished its goal of a "merchant marine of the best equipped and the most suitable types of vessels..." The answer is a resounding yes on all waterways, but perhaps most so on the Great Lakes. No other nation’s fleet even begins to rival the vessels flying the U.S.-Flag on the Great Lakes. 1,000-foot-long supercarriers deliver 70,000 tons each trip and discharge that cargo in less than 10 hours without need of shoreside personnel or equipment. Smaller ships serve customers in waterways so confined that the navigation skills of Great Lakes deck officers are renown throughout the world.
These efficiencies and skills are the industry’s key to survival. Competition with the railroads and, in some instances, short-haul trucking, has left freight rates virtually unchanged in the past 15 years.
Is the Jones Act a maritime policy for the 21st century? Do its simple tenets, U.S.-ownership, -construction and -crews have a place in what will be an even more global economy?
Again, the answer is a resounding yes. Although the law itself is largely unchanged since 1920 (or 1817 if you like), the industry has evolved with changes in the marketplace and competing modes of transportation. The vast increase in individual vessel carrying capacity has been illustrated in the first paragraph, but Jones Act carriers have done much more than just build bigger ships to ensure that waterborne commerce remains a competitive segment of the nation’s transportation industry. The self-unloading vessel was invented and perfected by U.S.-Flag carriers on the Lakes. The principles of the Jones have never and will never stifle competition or innovation. In fact, it’s quite the opposite. While other American industries have succumbed to unfair foreign competition, the Jones Act has kept America a world leader in maritime technology and skills.