Grain shipper voices concern about Jones Act in hurricane aftermath
A chief logistics officer for one of the country’s largest grain producers told Senate lawmakers Wednesday it may be time to revisit the U.S.-flag vessel transport requirement for domestic all-water transportation.
The 1920 Merchant Marine Act, better known as the Jones Act, restricts transportation in domestic waterborne trades to U.S.-flag vessels.
“This law has created a situation where, because of their higher cost of service, there are very few Jones Act-qualifying vessels even available today,” testified Rick Calhoun, vice president of the North American grain and oilseed supply chain for Cargill, and president of Cargo Carriers, a subsidiary barge line of Cargill, before the Senate Agriculture Committee.
“Those Jones Act vessels that are available remain very expensive to use,” he said. “While shipping rates vary between years and seasons, it is not unusual to see Jones Act vessels quoting rates for bulk commodities that are roughly double that of commercial foreign flag vessels, making them prohibitively expensive to use.”
Temporary waivers that permit foreign-flag vessels to operate in this trade are rarely granted. In the aftermath of Hurricanes Katrina and Rita, the Bush administration granted two temporary Jones Act waivers for shipments of petroleum products from the Gulf to East Coast markets.
Agriculture product shippers have long opposed the Jones Act. After the hurricanes, a coalition of agriculture shipping interests asked the Bush administration for a Jones Act waiver. The waiver has not been granted.
“Within agriculture, if competitive water freight existed between U.S. points that have access to the inland waterway system, intercoastal waterways and the Great Lakes, it would expand U.S. transportation capacity for some movements,” Calhoun said. “And this expansion would free up transportation resources that would ease the congestion in other movements and likely improve both cost and service in the overall freight market.”
Calhoun acknowledged the equally fierce industry resistance outside the agricultural sector to changes of the Jones Act. He warned Congress may soon have no choice but to change the law.
“The increasing congestion of cars and commercial trucks on the nation’s highway, the rail capacity shortage, and the need for more inland waterway capacity may eventually force a reconsideration of this law and a real-world assessment as to whether it has outlived its usefulness,” Calhoun said.