Jones Act Contributions to Offshore Wind Difficulties
cato.org
cato.org
Water is far and away the cheapest and least fuel intensive way to ship goods. Basins like the Mississippi and Columbia have already been engineered and maintained as shipping superhighways. But we're using less than 1/10th of our riverway capacity. Unless it's bulk grain or sand, everything else being hauled by truck or train because of the outrageous costs.
It's also contributed to the hollowing out of America. The American Midwest underperforms economically because what should be a geographic blessing has become a curse. Materials costs are higher than they should be. These regions could be international logistics hubs in their own right - but all of that industry and wealth gets captured by coastal ports.
I'm no fan of handing out subsidies to industries - but if we are trying to maintain shipbuilding capacity for wartime (or whatever the excuse is) we are all much better off just paying for it.
Then we would get to hear how all of our goods are being delivered by slave labor and experience the same joy of having derelicts that end up being abandoned by their owners. Perhaps with the crew still on them like MV Aman.
You talk about how the Midwest is being hollowed out because the costs are high while proposing to hollow out the shipping sector by allowing fly by night operators in.
How about instead we change the law so that every vessel that docks in the US meets our safety and labor laws. Then we would see the true cost of all this shipping accurately reflected.
Trucking operators from Canada have no problem driving loads into the US on Hyundai semi trucks and it's crazy to think that a nationalist law from a suite of racist legislation in the 1920s is the only thing keeping our rivers from being flooded by slave barges.
If your idea is to require foreign vessels follow all US regulations while doing domestic shipping, that would only fix part of the safety issue and none of the wage issue. Even if you wanted to require foreign vessels pay US minimum wage, what's to stop a vessel from, say, paying less for "international" vs. "US domestic" hours to offset that?
To be clear, the current system isn't great. But we can't break it down unilaterally. We need treaties with specific nations where they agree to bring their minimum wage, safety standards, and other legal protections up to American standards[0]. Ships in the bloc can access each other's domestic shipping markets because nobody has an unfair advantage.
[0] Western Europeans, stop laughing, I know our standards aren't much.
What I don't know is all the ins and outs of whats preventing domestic ship building or flagging or maybe the northeast energy market just isn't big enough.
[0] https://www.iso-ne.com/about/key-stats/resource-mix/ [1] https://www.wbur.org/news/2023/09/22/enbridge-weymouth-compr... [2] https://www.balticshipping.com/vessel/imo/9230062 [3] https://www.worldometers.info/gas/gas-production-by-country/
If it is cheaper for Guam, Hawaii and Alaska to have a direct ship from Asia, they can do that. What they can't do is go Indonesia to Guam to Hawaii.
Some things are one-sided for a reason: There isn't much to support the opposing side.
That doesn't mean that nobody would support the Jones Act, or protectionism in general, but those people are likely to be the benefactors and discount the negative consequences for society at large.
In general, protectionism is like taking $100 from each of us, burning 99% of it, and giving the remainder to one lucky winner. And what's worse is that it's not really money that we lose (we could always create more), but real-world value. We all collectively have far less as a result of protectionism, even though a select few might benefit from one piece of protection. Of course, they also lose to all the other forms of protectionism that apply to others. In the protectionism game, it's a dog-fight all the way down to zero.
Edit: And by the way, while the Jones Act was originally protectionism for the domestic shipping industry, which it immediately killed, now it is actually protection for the domestic TRUCKING industry. It would be much cheaper, with a much lower carbon footprint to ship things by boat up and down the coasts, or even from coast to coast sometimes, than trucking.
For the record, I support the Jones Act, and I'm just part of "society at large" and have nothing to do with shipping or logistics. Personally, I think it should be strengthened and made more strict to block some of the workarounds this article cites as reasons for its repeal.
I think that idea that the only people who support protectionism are those who personally gain from it is lazy and stupid. I'm really tired of that sort of thing in support of libertarianism.
> In general, protectionism is like taking $100 from each of us, burning 99% of it, and giving the remainder to one lucky winner.
Lets end protectionism, stop burning that $99, and outsource all military production to China and Russia. What could go wrong? /s
The only way libertarians can go on and on about many of these "inefficiencies" is because they're willfully blind to a lot of significant considerations, which they utterly ignore in their propaganda.
the problem is that laws like the Jones act are a bad form of protectionism. If the goal is to have more ships made in America, the government can always start building and selling ships (potentially at a loss if that's what is needed to make american shipping competitive). The problem with laws like the Jones act is that it solves one problem (American ships are expensive), but creates a worse one (American shipping is expensive).
The Jones Act specifies that it must be American made ship and American crew.
My bet is that the main issue is that we don't want to pay labour what it is worth.
Why do you support the Jones act?
It makes you wonder if it has actually had the opposite to desired effect and made the ship industry worse in the US. The top 5 shop building countries are South Korea, China, Japan, Italy and Germany. This looks like a game for wealthy nations. Other than China I would expect those places to be paying workers very well.
B...b...but I want to monomaniacally focus on short-term market prices, like they're the only thing that matters in the world! Quit cramping my ideological fixation with complicating factors!
The Jones Act has failed in every way.
It certainly doesn't - there are enough "cowboy" US operators who are working far below the quality and safety standards which are practiced by European contractors. It's really a struggle sometimes to ensure that things are done properly and safely in the US. It's a practically new industry in the US and there is a lot of catching up to do.
As the article says, there are currently no WTIV ships that meet the requirements of the Jones Act. So you can't really say the law guarantees something that doesn't exist.
Is it though? It sounds like the one company that got a contract in this situation is so far unable to come through on it and is well over budget already. It's not exactly a ringing endorsement for protectionism.
Where is the domestic industry that was intended to be encouraged? Where are the US shipbuilders capable of building viable ships? Where are the US registered ships?
This 2019 press release from the department of transportation kind of says it all [1]:
> U.S. commercial shipbuilding of large merchant-type ships has been locked into a downward spiral of decreasing demand and an increased divergence between domestic and foreign shipbuilding productivity and pricing.
> In the case of large self-propelled oceangoing vessels, U.S. shipyards still lack the scale, technology, and the large volume “series building” order books needed to compete effectively with shipyards in other countries.
I'm not against the intent of the the Jones Act, but it hasn't resulted in a viable domestic industry of shipbuilding or water transport. Instead, water transport within the US is very limited and there's a lot of unnecessary import/export of fungible products. There's probably some amount of unnecessary import/export that's useful for other purposes --- economic relations between countries does have value, and maybe there's some additional flexibility this way.
Fundamentally, I think the question is: Is it better to have a barely viable shipyard industry and very limited domestic water shipping capacity or a military only shipyard industry and greater domestic water shipping capacity? And/or --- is there a better way to encourage the US shipyard industry than this?
[1] https://www.transportation.gov/testimony/us-maritime-and-shi...
> Now imagine a future without the Jones Act, where Chinese-flagged vessels all controlled, in whole or in part, by the Chinese Communist Party—were able to freely dock at our domestic ports, cruise our coastlines, and travel up and down our inland waterways. From the St. Lawrence Seaway in the Great Lakes right through our heartland on the Mississippi River, the Chinese Communist Party would have virtually unrestricted access to essential American economic arteries. That access would position our adversaries to do far greater damage to American infrastructure than the pipeline hackers ever imagined.
> Moreover, the American merchant marine and civilian shipping industry would be virtually eliminated by state-subsidized Chinese vessels, just like our manufacturing and industrial base were severely damaged by predatory Chinese practices over the past two decades. And critically, the reserve of merchant mariners and civilian cargo ships we require in the event of conflict would be significantly eroded.
Which is dumb. You could still repeal the Jones Act and require the ships to be US flagged or crewed. Or restrict it to countries that have signed security/trade deals with the US.
Even still, were war declared, a Chinese grain barge in Missouri isn't going to pose much of a threat. Most likely it would be commandeered by the US anyway!
I understand the (theoretical) uses during a peer/near-peer war, but even outside of the (IMO) poor economic implications, I think it can be extremely detrimental to something like emergency response times. Historically the government has been forced to issue temporary waivers during natural disasters but that delay in response time could be life-changing.
> Even still, were war declared, a Chinese grain barge in Missouri isn't going to pose much of a threat. Most likely it would be commandeered by the US anyway!
No, your idea is dumb. If war is declared, are the Chinese going to let the US use its shipyards?
The 90s called, and it wants its always-smooth-sailing free trade fantasies back.
But even if the Mississippi was covered in Chinese manufactured and owned ships, if war were to break out, we would just seize the ships. There would not be a huge impact to our infrastructure.
The only real vulnerability would be deep-water domestic transport - places like Guam and Hawaii. But the irony is the Jones Act has made these places more reliant on Chinese shipping because domestic transit options are so stinking expensive.
Why would that be true? To work in the US you still need to (mostly) have legitimate papers. We don't require every truck or train in the US to only be driven by US citizens. It's weird to think that a barge going up and down the Mississippi would be held to a different standard.
One thing people don't realize about the Jones Act is that it requires 75% of crews to be American citizens. The law dates back to a time when it was just as much about being anti-immigrant as it was protectionist.
There may be elements of the Mississippi River Boat job which make using foreign crews completely impractical - like, maybe it can't be done without at least some of them going ashore? I'm pretty sure there aren't immigration agents at every river port!) - so maybe it's not a concern. I don't know anywhere near enough about the subject to make confident assertions about that.
> 75% of crews to be American citizens
I didn't know that, either! Thanks.
Requiring that these vessels adhere to American laws is exactly the intent of requiring them to be American flagged and crewed.
I would agree with you that it's probably outdates that crewing has to be predominantly citizens and otherwise LPRs and it probably makes sense to open this up to legitimate immigrant labor too. But I'd argue that's an adjustment to the Jones Act vs a repeal of it.
I think it's worth bearing in mind that we're responding to an article by the Cato Institute. Their interest is in stripping away regulations that put limits on big businesses. They are primarily funded by the Koch Family, whose companies spend _huge_ sums on domestic shipping in particular (think about the volume that Georgia-Pacific moves around). Of course they're in favor of reducing regulations that limit domestic shipping: they'd probably love to turn around and use a Liberia-flagged, Filipino crewed ship to move domestic shipments. It doesn't make their arguments _inherently_ valid, but there is an obvious self-serving motive.
In any world where China and the US are shooting at each other, Japan and South Korea are getting shot at too. They have the severe drawback of being in adversary's backyard, not an ocean away.
Not to say there aren't problems with US shipbuilding that need to be fixed (IIRC, unlike South Korea and Japan, all the suppliers and subcontractors are too geographically dispersed to be globally competitive), but repealing the Jones Act won't help with that.
> But even if the Mississippi was covered in Chinese manufactured and owned ships, if war were to break out, we would just seize the ships. There would not be a huge impact to our infrastructure.
That's assuming all the US needs in a war are its existing stock of ships with no need for replenishment, but that's almost certainly not true.
Also, China's not dumb. What if the conflict is timed so that most of those ships are in no position to be seized? Or scuttled right as the conflict starts?
But how about let's go all the way, and outsource military manufacturing the the China and Russia. What could go wrong? There's no such thing as a back door.
For merchant vessels, I think we'd have to get by with what was already in the market before the war; or as the sibling pointed out, get by with orders built by other Asian countries. Commandeering merchant vessels owned / flagged by the other side of a war is pretty common. And while fleets typically go through a regular replacement regime, you can always extend things a bit, unless there's a lot of sinking of the merchant fleet; depends on the details of the war.
1. US flagged and owned 2. US crewed 3. US built.
I genuinely agree with the first two points. Most container ships sail under flags of convenience (so that they can minimize regulations in terms of conduct/the environment/etc) and with crews from developing nations that they abuse and treat as indentured servants.
Do you want to allow US domestic shipping to be done by entities over which the US has negligible regulatory control? I don’t!
The third is intended (along with the other 2) to ensure that the US maintains strategically important maritime capabilities, to retain the ability to build and crew a merchant marine. Personally I think this is a less compelling case than the regulation case, but I don’t think it’s totally without merit.
I think the idea that this is responsible for the high cost of goods in Hawaii and Puerto Rico is basically not credible, because it doesn’t prevent those ports being included in import sailings. You could make a case that it makes those places less competitive as manufacturers of goods for export to the rest of the US, but if you think that the jones act is the major reason Hawaii isn’t a manufacturing hub… idk what to tell you.
I think the other reality is that even if you like (1) and (2) but not (3) it’s hard to break it apart because the jones act unites concerns over the ability to regulate with concerns over strategic readiness, which creates a coalition to maintain it that would potentially break otherwise.
> But rising costs aren’t the Charybdis’ only problem. Delays in the vessel’s construction have seen its projected delivery pushed back from late 2023 to late 2024 or early 2025. That’s not a surprise. The shipyard building the Charybdis signed a contract to deliver two containerships in 2020, but the first ship wasn’t delivered until 2022 and the second in 2023.
Gosh, I wonder if there might have been some notable world event c. 2020 that might have lasted around 2 years and pushed out heavy industry deliveries?
Eeesh. Now I'm wondering what else they're spinning. Wind power in the US is, on balance, doing just great. Surely there are things to improve, but is the Jones Act really the thing standing in the way? Not sure, but I don't think we can trust Cato to tell us.
A 2023 report by US Congressional Research Service [1] concludes the global market is saturated, making it difficult for US industry to profitably re-enter the market.
In the news there are ample reports that even the defense sector is not building ships at a rate to sustain the naval fleet.
“Individual liberty, limited government, free markets and peace”
Can demonstrably not all coexist.
If we were pre-internet, pre global information exchange with excessively easy ways to tell if a source is good or bad, understandable. Ignorance is no longer an excuse. At this point, this is malicious.
I'm certainly of the opinion that we are not at the frontier for these and that all of them have room for improvement that does not necessarily sacrifice the others. But if we were, I (and almost certainly CATO) would be capable of making a decision as to which of the priorities was more important in a given situation and trading off against the others. You are arguing against a straw man.
Your claim that these priorities are all fully incompatible with each other, is, in my opinion, much hotter of a take and less well supported than the idea that anyone could have a reasonable preference for the combination.
I fully acknowledge that these ideals must play some semblance of a role in creating laws where reasonable, with the possible exception of a “free market”, but that’s only because even regulated markets are horrible, evil institutions, so letting it be even more free is fundamentally idiotic.
You can call it a “strawman” all you like. Grafton demonstrates that it’s not a strawman at all. Libertarians actually believe this, and they actually argue that the issue is that grafton wasn’t libertarian enough (narrator: that wasn’t the problem).
I also can't decide which claim I think is the more ridiculous.
Right-libertarians have unquestioning faith in the belief that “the market and competition will handle (it)”. This belief is held despite the literal millennium of evidence that states this is false, and every single attempt at such failing miserably.
Left-libertarians believe in strong personal freedom and somewhat strong regulatory bodies on the market.
I don’t know why you don’t believe that this is what libertarians believe, as it’s what libertarians themselves claim to believe (despite their being easily trapped to state things counter to their own beliefs).
But the CATO institute is a particular organization with relatively consistent views. If you can point to it clearly and plainly espousing the views you are talking about, I will be surprised.
The article you are currently commenting on is a demonstration of their inconsistent views and they were only a few days ago complaining about the exact opposite issue.
Libertarianism has no consistency. It cannot be consistent by definition because libertarian pillars cannot be reconciled.
Left libertarianism is a bit better, but even the individual pillars on their own are irreconcilable. Free market cannot be reconciled with itself. Individual freedom cannot be reconciled with itself.
Which is why I was so disappointed to see that throwaway spin in there seemingly blaming the covid pandemic on the Jones Act shipping regulation. That's just bad form.
Sounds to me like you saw Cato (certainly not a “rag”) and went in looking for a reason to disagree.
I'll add that I more or less agree with the Cato Institute on this particular issue. I just think it's absolutely fair to highlight that this is an article coming from a source with an agenda.
However, if we're going to be pedantic... the informal jab can work if the author doesn't respect the what is published by the CATO institute.
If we're wanting to be true to the term, "rag" doesn't fit because the article is an opinion blog post, not published in a newspaper or magazine.
> informal
> a newspaper or magazine that is considered to be of bad quality:
https://dictionary.cambridge.org/dictionary/english/rag
> Informal.
> ...
> a newspaper or magazine regarded with contempt or distaste: Are you still subscribing to that rag?
I know what the words mean and the potential self-deprecation? But I don’t think we should characterize high quality publications we disagree with as low quality.
This is hypocrisy.
"Rag" is a word we typically use for publications like NYPost, not an article by a research fellow at a think-tank. I suspect the usage here is motivated by political animus.
It obliges some pretty ridiculous transport and installation methodologies to construct wind farms that just don't exist anywhere else on the planet. This adds significant cost, complexity, and risk and makes US offshore wind farms more difficult and more expensive to build. So much hinges on contorded legal interpretations of what counts as a "coastwise point" and how that relates to "trade" between two of those points in the US.
In Europe, a specialized heavy lift crane ship or jack-up can sail into port and take on multiple foundations, transition pieces (the part between the foundation and turbine), or turbines and sail to the wind farm and install one after the other as fast as the weather permits. And to protect those foundations another specialized ship can come either before or after (or both) and place rock as efficient as possible. And a cable-lay vessel can come along and cut trenches and lay cable all with its own specialized subsea tooling. This is literal decades of development of best practice in terms of cost and efficiency.
In the US that's not possible.
The foreign heavy lift crane vessel can still do the lifting offshore - but, generally speaking, it can't go to port in the US and pick up anything to install offshore because, the US port is "coastwise point" A and the seabed offshore is point B and that counts as "coastwise transport." So that's where feeder barges come into play. The crane ship (or jack-up) sits offshore, more or less stationary (it's permitted to rotate, because that's technically not transport from point A to point B) and components are brought out by tug and barge. Not to mention the embarrasing physical state of & significant lack of fit-for-purpose cargo barges in the US...
The foreign cable lay vessel can still lay cable between two US points (there's an exception), but it can only make the trench to do so by "jetting" or "fluidizing" the soil because "cutting" or mechanically doing so would be dredging, and that's not allowed by any foreign vessels. If the soil conditions don't allow that, then a 2nd US-flagged vessel has to come. Huge cost increase, and again more complex, multi-stage operations.
The rock protection also gets a lot more complicated, depending whether it's US or non-US rock and depending on the foundation design needs to be installed before, or after, or both before & after the foundation itself is installed. It's a huge puzzle with potentially excessively expensive logistics.
All of this is possible & reality, but it's so much more complex, costly, and difficult. It's many more puzzle pieces to fit together accounting for tight supply chains, high weather risk & impact, and global competition where it's just a lot easier to do things elsewhere.
I forget what set it off, but it was seemingly ridiculous: the vape shop or the burger stand blaming the Jones Act for something like being out of napkins or not having a flavor in stock. It's surprisingly far-reaching.
Kinda like finding out that the rules to prevent exporting missiles mean that some people get a different version of Microsoft Word. Who knew.
Oil rigs are expensive and profitable enough to warrant throwing huge piles of money at shipping costs.
Dr. Salvatore R. Mercogliano on the Jones Act Debate | Center for Maritime Strategy & Heritage Foundation | Container ships & Dirigibles https://www.youtube.com/watch?v=qWKz3psejb0
Today it feels like there are way more people opposed to governance & laws than at any point in the living past. That terrifies me. Making laws feels harder; Hastert Rule was just the start of non-cooperstion it felt like, & there is now broad unwillingness to legislate reasonably.
And then we get to the court system, where 5th District Court of Appeals & others seem to take rampant delight in pushing over years of precedent to de-govern and disempower the government. All it takes is one judge to unmake decades of law.
I think it's safe to say that would apply to 100% of the HN readerbase.
So it would effectively still be unlimited for any specific individual.
This is misleading. None of them are legally enforceable. They simply haven’t been struck from the books because it would be entirely performative.