The Jones Act has been controversial since inception in 1920.
Section 27
Section 27 of the Merchant Marine Act 1920, better known as the Jones Act, a moniker derived from the name of the leading sponsor, Republican Senator Wesley Jones of Washington State, is the primary legislation regulating US vessels operating on domestic voyages — essentially passages coastwise, inland and on the Great Lakes but also including states and territories like Hawaii and Alaska along with Puerto Rico and the Pacific island of Guam. While codifying some pretty commonplace maritime principles like American flag ships are exclusively to operate in the carriage of freight between US ports [a concept known as cabotage], this over a century old statute has periodically sparked bitter controversy over a broad spectrum of businesses and regions.
Discussions on the value to America of the Act are often polarizing. And the views on the Jones Act’s importance to the US economy are frequently at odds.
We are now immersed in one of those periods as the United States attempts once again to redefine its maritime mission and the Jones Act has come to the fore.
Cabotage and Beyond — Framing the Act
While many features of cabotage have literally been around from the very beginning of the nation, the goal of the Jones Act was far broader — in a sense, to pull together all the facets of merchant marine activities under an umbrella legislative effort. The broad embrace sowing the seeds of future disputes.
The rationale for the Jones Act is well documented. When the US entered World War 1 in 1917, the nation quickly discovered that it didn’t have the ships necessary to provide the capacity to transport troops, equipment and supplies along with essential raw materials to support the war effort. This was nothing new as the blue-water (ocean) segment of the American merchant marine frequently fell into deep troughs from under investment with a resulting loss of US flag tonnage and jobs.
The maritime shortfall led to the creation of the US Shipping Board which triggered an emergency wartime shipbuilding program (not unlike the one launched in World War 2) which in short order successfully pumped out hundreds of US built, flagged, owned and manned ships for the war effort.
Not wanting to suffer through a similar decline in American flag commercial shipping and shipbuilding in the event of another war, the Jones Act was promulgated to provide the regulatory underpinnings of a strong American built, owned, flagged and manned [although not necessarily fully with US citizens] merchant fleet. A merchant fleet that could in times of war serve as Senator Jones himself said at the time, as the “fourth arm of defense.” And with World War 1 ending (1918) shortly after the wartime US Shipping Board’s shipbuilding spree got underway, there were plenty of freshly built and unemployed ships to add to the newly minted Jones Act fleet. However, almost immediately in the post-WW1 global economy there were now more ships than freight, a familiar refrain in the shipping business.
Legacy in the Legislation
Much of the debate over the Jones Act comes from the legacy of the legislation’s parts or goals — how the Jones Act impacts shipbuilding, blue water shipping, inland and Great Lakes shipping and defense operations. And how these various roles interact and fit within the US commerce both domestic and international — a fit that over the century plus of the legislation’s existence is always changing with economic and geo-political environment of the times.
In many respects, the COVID-19 epidemic highlighted the supply chain and the maritime sector’s role and lifted the Jones Act’s visibility to the general public. In June of 2022 then Federal Maritime Commission (FMC) commissioner (and now President of the DC-based National Association of Waterfront Employers [NAWE]) Carl Bentzel said at the Maritime Trades Department (MTD) convention in Philadelphia that the COVID-19 pandemic spotlighted “the essential character of transportation…. The US Merchant Marine is an essential component of our industrial base and our security. We can’t rely on foreign shipping to provide our nation’s objectives.” Adding, “It was always something that offended me, that we would consider ceding our territory, our navigable waters, to some foreign nation.”
But Bentzel is hardly alone in his strong defense of the Jones Act.
Jennifer Carpenter in an op ed article in the AJOT on October 22, 2025, on the Jones Act wrote, “Repealing the Jones Act would not just destroy a vital sector of our economy; it would be a threat to our national security. As Mike Stevens, CEO of the Navy League of the United States, has observed, ‘Opposition to a law as important as the Jones Act is a peacetime luxury that quickly evaporates when American security is at stake.’”
It is worth noting that AMP’s membership includes vessel owners and operators, shipboard and shoreside workers, shipbuilders and repair yards, equipment manufacturers and vendors, dredging and marine construction contractors, maritime trade associations and national security organizations. And by the AMP’s measure there are 40,000 vessels that were built in American shipyards, 650,000 jobs related to maritime trades and $41 billion in labor compensation and $154 billion in economic output from the sector. Much of this economic output is related to activities on US inland waterways, the Great Lakes and coastwise.
Still, a relatively small percentage of the US flagged merchant fleet is engaged in ocean carriage, especially the international ocean carriage and particularly those operating containerships and roll-on/roll-off vessels. A vast majority of the containership and Ro/Ro vessel calls in US ports are made by owned and operated foreign flagged carriers. In short, foreign flagged vessels accounted for nearly all of the estimated 28 million TEU throughput of US ports in 2024.
Nonetheless, well known US flag operators like Matson, Pasha and Crowley operate US flag vessels that connect ports in the lower 48 states to ports in Hawaii, Alaska, Puerto Rico and Guam with some other international routes in the mix. [It is worth noting that a Matson vessel calling in China was assessed massive fees as part of the tit-for-tat response to fees being assessed on Chinese built, operated or flagged vessels calling US ports.]
But this wasn’t always the case.
An Inconvenient Truth About Flags
There was a precipitous fall in the US flag vessels beginning in the late 1950s and into the 2000s. It was this drop in general cargo ships (now containerized vessels) and tonnage that opened the way for foreign flag vessels to dominate the US trade lanes. An article in Business Insider in 2021 by Rachel Premack outlined the fall in US flag tonnage. In 1960 the US merchant fleet was about 16% of the world’s fleet and now it represents an estimated 0.2% of the world fleet (Editor’s note: this number fluctuates somewhat between different data bases).
What happened?
Similar to the situation after WWI in the post-WWII era, the US again had a massive amount of tonnage and in a fire-sale sold or moved into private hands a great number of ships. Ironically launching Greeks and other foreign competitors. As is the case now, US flag ships were more expensive to build and operate in the 1960s and to even the playing as Premack wrote, “They decided, then, to dole out government subsidies in another way. There were two programs: the operating differential subsidy (ODS) and the construction differential subsidy (CDS). Throughout the 1960s and 1970s, taxpayers were spending billions per year to support the building and operating of American ships.” While the supports did produce some remarkable vessels like the SL-7s high speed containerships and first generation of large LNG carriers, it wasn’t enough to prevent the erosion of US flag vessels from 2,926 in 1960 to 864 in 1980 – a mere twenty years. And this was happening at the time when the world fleet was growing — especially with the shift to containerships. Simultaneously, the US economy was shifting from heavy industry and manufacturing to a more services-based economy.
With this economic transition US ship owning interests began moving to other flags like Liberia and Panama and building in foreign shipyards. It started with the tankers and oil interests and by the time the Reagan administration dropped the industry’s subsidies, the flight of flag was well underway. In the ensuing decades many of the American carriers either went out of business or were like Sea-Land and APL - swallowed up by foreign carriers, such as Maersk and CMA-CGM. For the blue-water American flag operators, it was simply a matter of good business to use flags of convenience and build overseas while for US political leadership it was always a balance between interest groups and agricultural businesses and interests of the American hinterland outweighed those of the maritime. During this time US shipbuilding became either dedicated to constructing for domestic Jones Act trade or defense. And containerships — an American invention— and the building of other ships engaged in international trade moved to other countries before China embarked on its own maritime expansion.
The Unappealing Appeal of Repeal
Over the years there have been a number of efforts to repeal the Jones Act often spearheaded by groups like the Cato Institute which argue that “The Jones Act has wreaked havoc on the US economy…[and] it is time to repeal the law. And while the Jones Act and shipping costs in general are frequently at the top of complaints by American farmers trying to transport their crops to market, there is rarely a discussion about what would take its place — it’s doubtful whether a blank sailing would be acceptable practice. And the Cato Institute and others rarely consider the complex nature of the Act and how it interacts with other facets of the economy.
There have been better grounded proposals to tweak the system such as Hawaii Congressman Ed Case’s 2021 “Noncontiguous Shipping Reasonable Rate Act” which would define a “reasonable rate” for the noncontiguous domestic ocean trade as no more than ten percent above the rate set by a comparable international rate.
And while US shipbuilding and the Jones Act may have missed a golden opportunity to revitalize the maritime industry with offshore wind projects, there are other opportunities in the works, such as nuclear-powered containerships and other innovations on the horizon.
For all the flaws in the Jones Act, the legislation has held together fairly well. And while a more comprehensive understanding of how the Act can be modified to function better within the framework of the modern US supply chain may be desired, repeal is not a solution.
