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Jones Act Causes Ships To Turn To Chinese Shipyards For Maintenance Needs

As many of you know I have an LLM in Maritime Law, therefore to endure that additional pain of more study in Law School above the basic JD it holds a place in my heart.  One of those fun and interesting classes for the LLM was a class on this topic – the Jones Act.  The Jones Act is a federal law that regulates maritime commerce in the United States. The Jones Act requires goods shipped between U.S. ports to be transported on ships that are built, owned, and operated by United States citizens or permanent residents.  It stems from the Merchant Marine Act of 1920 and is designed to provide for the promotion and maintenance of the American merchant marine.   The act was introduced by Senator Wesley Jones – thus the name.

Jones Act supporters, including the owners of ships operating in the domestic fleet, often claim the law is necessary to thwart other country’s maritime ambitions within the United States.  Jones Act shipping companies regularly make use of shipyards outside the United States for repairs, maintenance, and upgrades of their vessels. Including facilities in China.

No operator of Jones Act ships is a more enthusiastic patron of Chinese dry docks than shipping firm Matson, whose vessels have paid more than 50 visits to the state‐​owned COSCO (China Ocean and Shipping Company) shipyard in Nantong for needed work. Indeed, Matson has been such a loyal customer that COSCO hosted senior executives from the U.S. firm last year to celebrate the two companies’ 20‐​year relationship.

And Matson isn’t alone. A vessel owned by Jones Act shipping firm Pasha Hawaii, the Horizon Spirit, recently departed Nantong after nearly 50 days in a local shipyard, suggesting its stay was for more than a mere paint job.

According to maritime attorney Wayne Parker, who served for nearly eight years as in‐​house counsel to Matson and now‐​defunct Horizon Lines, “I never heard of any of our Jones Act‐​qualified container vessels being dry‐​docked, surveyed, or undergoing routine maintenance in U.S. shipyards. This was always done in foreign, usually mainland Chinese, shipyards.”

Incredibly, the Jones Act actually helps keep Chinese repair yards humming. While ships plying the world’s oceans are typically scrapped at 15–20 years of age, Jones Act vessels—thanks to a U.S.-build requirement that dramatically raises the cost of buying new ships—are often kept in service until age 40 or beyond. An old fleet means more maintenance—and more business for Chinese shipyards.

Let’s review what’s going on here. By massively increasing vessel replacement costs through its U.S.-build mandate, the Jones Act promotes the use of older ships requiring more maintenance. Some of this maintenance is then hypocritically performed in Chinese state‐​owned shipyards, a portion of the cost savings from which is then spent on lobbying and advocacy work urging the Jones Act’s retention as a vital tool against China.

Beyond the rankling hypocrisy, this use of Chinese shipyards further illustrates the gaping chasm between the Jones Act’s intended results and reality. The Jones Act has not fostered a vibrant domestic maritime industry or freed the United States from foreign reliance to meet its maritime needs. What it has produced is economic harm, a domestic fleet insufficient to meet U.S. national security needs, and shipyards so uncompetitive that vessels are dispatched to the far side of the Pacific Ocean for repair and maintenance.

The Jones Act is a classic example of a good intention with a bad approach creating a bad result.  In an attempt to manipulate commerce, a law was created to keep US maritime business intracountry has ultimately driven that commerce intercountry due to the cost.  Many times laws are created for a concept without reflection on the ultimate outcome.  It becomes necessary to Amend that law or sometimes simply repeal the entire law.  Good luck getting our representatives to actually remove laws, instead of constantly adding more layer of law over already existing layers of law.  This is why it is important to elect Representatives that understand law, because in the end it is their job to represent you in making or removing law.  That is the epitome of what their job should be.  It is the role of your attorney  – Goldfinch Wnslow – to help you make since of the mess they tend to create.

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