Passed in 1920, the Jones Act mandates that vessels transporting goods between two points in the United States meet four conditions: they must be U.S.-registered, at least 75 percent U.S.-owned, at least 75 percent U.S.-crewed, and U.S.-built. The logic behind the law was that restrictions on foreign competition would, among other things, encourage the development of a strong U.S. shipbuilding sector.
It hasn’t worked out that way.
Rather than prospering, U.S. shipyards have been in a decline for decades, and there are only a mere handful that build oceangoing commercial ships. That may seem a headscratcher to some given the Jones Act’s U.S.-build requirement, but it makes more sense when one considers that these ships cost up to five times more than equivalent vessels built in foreign shipyards.
The most recent vessel christened at the Philly Shipyard, the Kaimana Hila, is a case in point. Built for transporting goods from the West Coast to Hawaii, the ship offers a cargo capacity of 3,600 TEUs (20‐foot equivalent units) for the whopping price tag of $209 million. For comparison, the world’s largest container ship, the 21,413 TEU capacity OOCL Hong Kong, was built in South Korea for $158 million. That’s over six times the cargo capacity at a $51 million discount.