The Jones Act Arguably Cuts the U.S. Ship Fleet In Half

The Jones Act is a regulation that requires ships to be U.S.-built, U.S.-owned, U.S.-flagged, and U.S.-crewed if they move goods between American ports (cabotage).  For over 100 years, the Jones act has thus restricted competition in American shipping.

The U.S. only had 92 Jones Act-compliant ships in 2024. However, there were 185 U.S.-flagged ships that year. The other 93 are foreign-built ships that have been flagged in the United States. While those ships cannot engage in cabotage, they can take advantage of other programs that protect U.S. shipping, namely, the Maritime Security Program (MSP) and cargo-preference laws. 

Cargo-preference laws require that a specified percentage of goods imported for government projects be brought on U.S.-flagged ships (no matter where they were built). These laws are meant to provide a stable source of demand for such ships. The MSP provides stipends to ships that participate. Currently, 60 ships do so, and as of 2022, none were Jones Act-compliant. 

Thus, U.S. maritime regulations divide the fleet in half. Jones Act-eligible ships almost exclusively engage in cabotage; the monopolistic returns are needed to compensate for the high cost of the ships. Foreign-built U.S.-flagged ships enroll in MSP and take advantage of the cargo-preference laws to compensate for the higher operating costs of being U.S.-flagged, which are 2.7 times greater than those of foreign-flagged ships.