White House Gives Foreign Shipowners Access to U.S. Market for 60 Days
The Trump administration has temporarily waived the Jones Act for select liquid bulk and dry bulk cargoes, allowing foreign seafarers and shipowners greater latitude to work within the United States. Energy market analysts expect that the move will reduce fuel prices by several cents per gallon in specific coastal markets, particularly diesel and jet fuel on the West Coast, the region most exposed to Asian fuel demand and least well-supplied with domestic crude and products.
"Distillates should see the largest impact. [East and West Coast] distillate premiums were already elevated, making these flows economically viable and helping boost volumes on these routes," said energy consultancy Sparta in a research note. "The waiver alone likely won't unlock gasoline flows unless [low-emissions blend] spreads widen."
U.S. shipping interests have expressed opposition to the waiver.
"The breadth of this waiver is especially concerning, as it will unnecessarily impact transportation markets where domestic vessel capacity is not lacking. Allowing foreign vessels to transport cargo on U.S. waterways will introduce the price volatility of today’s international market into our domestic commerce, creating instability in our thriving domestic supply chain and undermining American jobs while having no appreciable effect on the price of gasoline," warned the American Waterways Operators, the voice of the inland transport industry.
"America's maritime labor unions are deeply concerned about the Administration's broad Jones Act waiver, which undermines our national security, weakens military readiness, and hands critical maritime work to foreign vessel operators," said the AMO, MM&P, MEBA and SIU in a statement. "To be clear, this decision will not provide meaningful relief at the gas pump. . . . Any marginal savings will not reach consumers but will instead reward foreign shipping interests."
Uniquely, the waiver includes permission for foreign bulk carriers to move fertilizer and coal between U.S. ports, the first exception for dry bulk transport in recent memory. The Mississippi River system has no deepwater channel for deep sea tonnage above Baton Rouge, so foreign-flag bulkers cannot compete in the Western Rivers market - but they could theoretically compete with Intracoastal Waterway barge services along the Gulf Coast, and with rail transport in other markets.
"Farmers applaud President Trump for temporarily waiving Jones Act regulations to allow more ships to bring critical fuel and fertilizer materials to America’s ports. Spring planting season is already underway and the jump in fertilizer and fuel costs, as well as the threat of shortages, sent shockwaves across rural America at a time when farmers are already grappling with low commodity prices and high inflation," said the American Farm Bureau in a statement.
In a waiver outcome predicted by Jones Act shipping stakeholders, the Act's critics have called for permanent loosening of cabotage rules, at least for specific circumstances and markets.
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"[The National Propane Gas Association] has long urged Congress and Administrations, past and present, to recognize the benefits of easing the shipping restrictions imposed by the Jones Act. The current 60-day waiver provides a unique test case for the propane industry and may demonstrate the potential value of a seasonal Jones Act waiver during prolonged supply disruptions, peak harvest, and heating season," the NPGA said in a statement.
"There have been calls for this for two decades now. Let's get rid of [the Jones Act]," said longtime, outspoken opponent Colin Grabow of the Cato Institute in an interview Wednesday. "It's antiquated, it hurts communities . . . it just doesn't make sense to have anymore."
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