Letter: Domestic Shipbuilding Costs

Your April 7 editorial “Tax Incentive Expands to Include All Jones Act Vessels” praises the Capital Construction Fund’s expansion as a measure to encourage the U.S. merchant marine’s modernization and expansion. These are understandable and indeed worthy goals. It is difficult, however, to reconcile this position with The Waterway Journal’s steadfast support of the Jones Act.

Among the Jones Act’s requirements is that vessels be constructed in U.S. shipyards. The significance of this burden is difficult to overstate given domestic prices for new vessels that—depending on the type—can be several times greater than those offered by overseas shipyards. The impact of allowing Americans to purchase vessels for a fraction of their current price on the U.S. merchant marine’s size and age profile would dwarf that of the Capital Construction Fund’s expansion.

That so many U.S. maritime voices support the Jones Act status quo—including forcing Americans to pay inflated prices for new vessels—is an enduring puzzle. Few things would do more to promote the industry’s health and vibrancy than the removal of what is a massive de facto tax applied to no other form of domestic transportation.

One other note: the editorial mistakenly refers to noncontiguous trade as “vessels engaged in trade between the United States and foreign countries.” In fact, as defined in statute, the term “noncontiguous” refers to trade between the contiguous 48 States and “Alaska, Hawaii, Puerto Rico, or an insular territory or possession of the United States.”

Colin Grabow  

Research fellow, Cato Institute  

Washington, D.C.