Hunt & Associates P.C.

Another Stab at Cargo Preference for the U.S. Merchant Marine

Cargo ShipThere are approximately 50,000 merchant ships engaged in international trade, transporting every kind of cargo.[1]  Fewer than 200 of those ships fly the American flag.[2]  What is left of the U.S. merchant marine is heavily dependent on cargo preference laws; i.e., federal statutes which mandate that shippers transport certain cargos on U.S. flag vessels.  For example, any military cargo shipped by sea must be carried in a U.S. flag ship.  Other laws mandate that a certain percentage of government generated cargo, meaning cargos procured, furnished or financed by the United States Government, be transported on privately owned U.S. flag commercial vessels.

A proposal is now underway in Congress to expand the cargo preference laws to require that up to thirty percent (30%) of liquefied natural gas exports from this country be carried on U.S. flag vessels. As the article points out, the U.S. is expected to be a net exporter of LNG by 2020, but there are currently no U.S. flag carriers to handle such cargo.

Predictably, the American maritime trade unions are entirely in support of this job producing proposal.  It remains to be seen how much support those unions can muster on Capitol Hill for this legislation.  The last effort to dramatically increase the cargo preference laws was in the early 1970s when Congress considered legislation which would have mandated that thirty percent of oil imports into American ports arrive via U.S. flag tankers.  The legislation actually passed both houses of Congress, but the bill was vetoed by then President Ford.

Given President Trump’s stated objective to bring back American jobs, it will be interesting to see if this bill will “float” and, if so, whether the President will sign it.

© 3/13/2017 Charles A. Ford of Hunt & Associates, P.C.  All rights reserved.

[1] According to the International Chamber of Shipping

[2] According to the U.S. Maritime Administration

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