The Line Forms

As should be surprising to no one, representatives of various industries are lining up to feed at the trough which the Biden Administration’s “infrastructure plan” will provide. Among them I found this at RealClearPolicy from Ben Bordelon, representing the maritime industry, particularly interesting:

The U.S. maritime industry is resilient, and as the backbone of America’s national and economic security, has delivered despite significant trials from natural disasters to foreign conflict. However, 2020 brought unprecedented challenge. Reduced demand and the increased operational costs that have accompanied some harsh new operating realities dampen hopes for an industry that will be critical if we are truly going to “Build Back Better.”

To ensure the maritime industry’s long-term viability as a critical engine of the U.S. economy, our country is in need of decisive leadership. From regulations, to shipbuilding, to port development, there are many areas that are in dire need of attention. It is our hope that the Biden administration will put the personnel and policies in place to make that a reality.

He continues with a defense of the Jones Act, the century old legislation that mandates that only American-flagged ships built, owned, and operated by U. S. citizens may transport goods between U. S. ports or operate in inland waterways. The Jones Act is controversial with supporters arguing that it fosters American jobs and interests and opponents arguing that the effect of the Jones Act has been to decimate American shipbuilding. Today the U. S. builds very few if any container ships—almost all are built in Asia. American ships tend to be older and inefficient.

Furthermore, the Jones Act is easily subverted for much coastal transport and shippers have incentives to do so as Cato points out:

To get a sense of the inefficiencies, a Maritime Administration report found that the operating costs of U.S.-flagged vessels engaged in foreign commerce in 2010 were 2.7 times greater than those of their foreign competitors.61 The daily operating costs, which include crew, tools, supplies, maintenance and repair, insurance, and overhead were tallied at $7,454 for foreign‐​flagged vessels, but a whopping $20,053 for U.S.-flagged vessels. Of the U.S. total, 68 percent ($13,655) was crew costs, as compared to 35 percent for foreign‐​flagged ships. It should be no surprise that labor unions are among the Jones Act’s most vigorous supporters.62 Maintenance and repair costs, meanwhile, are inflated by a provision in the Tariff Act of 1922 — supported by Senator Jones — mandating that repairs made in foreign ports be subject to a 50 percent ad valorem tax.63 Moreover, any rebuilding of a ship abroad — defined as the addition of more than 7.5 percent of the vessel’s steelweight to the hull and superstructure, or adding a major component weighing more than 1.5 percent of the vessel’s steelweight — will cause the vessel to lose its Jones Act eligibility.

Unlike Cato my view is that subsidizing U. S. shipbuilding would be prudent and that the Jones Act should be expanded if anything. There is presently no such thing as a genuinely “green” container ship. Although present container ships have become more efficient over the last decade, they are completely dependent on oil to power them and there is a limit on how efficient they can become. For the record China’s restrictions on cabotage, as it is called, are much stricter than ours are.

2 comments… add one
  • walt moffett Link

    If we want to stand up to China, domestic ship building should be on the list of things to do. That is costs more to hire Americans and hurts the bottom line is regrettable but am sure subsidy of some sort will be arranged.

    On a related note, saw a Nissan Kicks (assembled in Mexico) with USG tags. What is wrong with that picture?

  • Grey Shambler Link

    All electric with solar sails, and to complement Obama’s solar panel investments, they should have the added advantage of never materializing.
    All buck and no bang.

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