The Impact of Modifying the Jones Act on US Coastal Shipping

The study assesses exempt coastal shipping defined as exempted from the U.S.-built stipulation of the Jones Act, operating with functional crews and exempted from Harbor Maintenance Tax (HMT). The study focuses on two research questions: (a) the impact of the U.S.-built exemption on the cost of coastal shipping; and (b) the competitiveness of exempt services. The assessment is based on three typical case studies, the first two involving short and long-range services for domestic cargoes (containers and trailers) provided by Roll-on, Roll-off (RoRo) ships; the third, short-range feeder service for international containers provided by Lift-on, Lift off (LoLo) ships. The study finds that building coastal ships in foreign yards could save about 40% of the capital cost of the RoRo ships and 60% for the LoLo ships. However, due to favorable financing terms for using U.S. shipyards (Title XI), the savings in capital cost would only amount to 13%, 11%, and 4% reductions in door-to-door shipping cost for the three case studies. Because of these minor reductions, along with other structural factors, the study concludes that exempt coastal services in all three case studies are uncompetitive with present truck and rail services.