The Jones Act does not enhance our defense

by Donald B Frost

It is illuminating to compare the Mises Institute critique of the Jones Act published on March 3rd to the pro Jones Act testimony before the U.S. House Subcommittee on Coast Guard and Maritime Transportation on February 25th. I would ask rhetorically: How many Congressmen and testifiers in that hearing invoked national defense as a reason not to change anything with respect to the Jones Act? They ALL did, of course.

Three Mises points stand out to me – all dealing with the national defense argument in support of the Jones Act.

The first Mises’ point is "only one of the shipyards that builds the Navy's primary vessels also builds large commercial shipping vessels." This is a reference to General Dynamics’ San Diego shipbuilding yard NASSCO. I have made that point before but only in passing while I was trying to quantify the impact if the Build American requirement was removed (i.e., possible lost shipbuilding jobs). However, I like the way Mises stated the physical nexus between major commercial and naval ship construction: a single shipbuilding yard.

Looking further into the shipbuilding industrial base, the website of that major U.S. shipbuilding yard constructing large commercial ships, Aker Philadelphia Shipyard (AKER), claimed 1,400 jobs in the yard a few months ago. It was 1,200 when I looked two weeks ago. In his testimony before the House Committee last week the Maritime Administrator placed the number at 1,100.

These numbers are representative of employment levels the three major shipbuilding yards in the U.S. constructing commercial ships. Collectively all major U.S. commercial shipbuilding employment is not great in comparison to the negative impact of the Jones Act’s domestic build requirement on the larger economy that suppresses employment nationwide.

The second Mises’ point is the U.S. Department of Defense (DoD) quote "Unfortunately, very few commercial ships WITH HIGH MILITARY VALUE have been constructed in US shipyards in the last twenty years." [emphasis added] This statement speaks for itself.

The third Mises’ point amplifies the second and deals with the logistics for the first Gulf War and brings us up to date, "In 2014 less than a third of the Maritime Administration's Ready Reserve Fleet, which transports unit and combat support equipment and resupply, were American built."

In addition and not mentioned by Mises the U.S. Military relies upon the foreign-built U.S. flag international trade fleet of 89 ships as the backbone of their sealift capacity to resupply overseas operations.

Let me also tie this to the Combat Logistics part of the Office of the Chief of Naval Operations and their exploring the "dual use" of Roll-on Roll-off (Ro/Ro) ships as part of the America’s Marine Highway (AMH) program in 2012-13 timeframe seeking ships that would be both militarily and commercially useful.

Although the U.S. Maritime Administration (MARAD) spent a lot of money (mostly funded by DoD) studying dual use Ro/Ro designs for the AMH Program, it ultimately determined a military and commercially useful ship is not workable in the current environment. References are available.

In comparison to the Government AMH effort, Alternative Marine Technologies LLC (AMTECH) proposed a coastal Ro/Ro design and operating pro forma, known as “Coastal Connect.” Their economic analysis indicated the design and operating mode would be commercially successful if deployed. However, the Coastal Connect model was based on a foreign build ship for commercial purposes only, and would not prove viable at U.S. ship construction prices.

As the great 18th Century man of letters Samuel Johnson (a.k.a. Doctor Johnson) famously said “Patriotism is the last refuge of a scoundrel” in reference to what he termed “false patriotism,” that remark is certainly apropos in today’s debate over the Jones Act.

---30---

Donald B. Frost is a maritime arbitrator and expert witness in charter party disputes, and a maritime analyst and journalist based in Stamford, Connecticut. He is a USCG licensed deck officer (second mate) with a many decades long commercial management career working with ship owners, shippers (i.e., cargo owners) and merchant traders. His experience includes logistics planning and consulting covering all surface modes of transport and bulk materials handling.

Mises Institute: Protect American Shipping? The Jones Act Record of Failure

VIDEO LINK: Jones Act discussed between the 1 hour and 1 hour 25 minutes marks.