Our country is a pacesetter in many global industries, but we’re not among the world’s leaders in the building of commercial sea-going ships. Countries such as China, Japan and South Korea build far more tankers, freighters and container ships than the U.S., which produces almost none of these types of vessels. We don’t build cruise ships, either; most of them are built in Germany or Italy.
The reason for our lack of shipbuilding prowess is pretty simple: It costs too much to build these ships in the U.S., and most of the world’s huge shipping companies cannot afford to spend their ship construction money here if they want to be competitive in world markets.
But the U.S. has long been the world’s leader in the production of smaller recreational vessels less than about 30 feet in length. The reason for that is pretty simple too: The U.S. is far and away the world’s largest market for these small recreational vessels.
The American fleet of bass boats, bay boats, ski boats, sailboats, runabouts, pontoons, cabin cruisers and other fun craft is much larger than that of any other country. Domestic builders have long dominated the U.S. recreational boat market because they are located right here where the buyers are found.
But there is a shift happening. Production costs in some other countries have become so much lower that it can now be cheaper to build that runabout overseas and ship it to this country than it is to build it here and sell it here. What country would you guess is now shipping the most recreational boats to the U.S. market?
If you said Poland, you get a gold star. Polish-built boats are entering the U.S. market at a rapidly increasing rate. As of 2018, Poland is the world’s second-largest producer of boats less than 30 feet in length, second only to the U.S. And 95 percent of Poland’s recreational boat production is exported, mostly to the U.S. Quite a few of these boats are built under contract for well-known American boat brands. Check the label on your boat.
We’ve all been seen recent news coverage of global economic issues. Tariffs, trade wars, economic sanctions and other tools are used by governments, including our own, to try to shape the global economy to their own benefit. While these topics have gotten a lot of attention recently, they are not new ideas. Governments around the world have grappled with each other in a similar manner for centuries. And while this stuff may seem far removed from Southwest Florida, we do see some of the effects of these battles even here.
Have you heard of something called the Jones Act? This is a piece of U.S. legislation dating way back to 1920. It is a complicated bit of law that has been frequently modified over the 99 years of its existence, but one of its main goals is to protect national interests by requiring that coastwise commercial shipping in our country be carried out by vessels built in the U.S. and also owned and operated by U.S. entities. As we approach the Jones Act’s centennial, it still makes news from time to time as politicians argue about economic policy.
Protecting our domestic shipping interests seems like a laudable goal — but there can be unintended consequences. For example, when the BP Gulf oil spill was in full blossom, there was a mad scramble to enlist the aid of as much pollution-control equipment that could be found. But bringing foreign-owned or -flagged vessels to help control the goopy mess could be a violation of the Jones Act, and working through Jones Act issues delayed some help that we needed.
More recently, when Hurricane Maria walloped Puerto Rico, there was an urgent need to ship supplies to the hard-hit island. The argument was made that the Jones Act hampered relief efforts. As a note: It is possible for the U.S. Congress to grant waivers to the Jones Act for specific emergency situations or to specific vessels. More on this in a moment.
So how can Poland be shipping all those recreational boats to the U.S. when American markets are protected by the Jones Act? It’s because there are a few caveats with Jones Act coverage. One is that it applies only to coastwise service, so boating on inland lakes would not be affected. Another is that it applies to commercial shipping, not recreational boating.
And yet another is that it doesn’t apply to small boats that are registered at less than five net tons. Net tonnage is a little tricky to decipher. Some boats 26 or 28 feet in length might meet that five net ton cutoff. Other boats at 32 feet might not. If you really want to see how it’s calculated, go to http://bit.ly/2Z1Gn0Z. Hope you like math.
There are boats in Southwest Florida that are affected by the Jones Act. Because of the Jones Act, it is illegal to operate a coastal charter boat over five net tons if it was built in a foreign country.
There have been more than a few hopeful charter operators who bought nice foreign-built sportfish boats or sailboats or trawlers, only to find out as they pursued their licensing paperwork that their investment was not going to pan out. And there have been some operators who went into service anyway and who got busted out of the business by the USCG, which has no sense of humor about such things.
However, as mentioned above, there is a way around this: Congress has the power to waive Jones Act provisions for specific boats. There have been well-connected vessel owners who were able to get such waivers for foreign-built boats. However, it’s unlikely that most of us would be able to pull the necessary strings.
Do you think that the Jones Act doesn’t directly affect you? It does if you ever go on a cruise. Not a King Fisher cruise to Cabbage Key for lunch, but a cruise on one of those huge ships where you join a few thousand others for a huge party at sea. As mentioned above, almost all the cruise ships in the world are foreign-built vessels, including those that sail from Florida. Bermuda, the Bamahas, Panama and a few other countries account for most of the cruise ship registries.
But what about the Jones Act provision against commercial shipping by foreign vessels? Have you ever noticed that every cruise ship itinerary originating in this country includes at least one port call in another country? If a cruise only visited ports in the U.S., or if it simply went out to sea and then came back to home port, it would run afoul of the “coastwise” part of the Jones Act if the vessel had been built overseas.
But if there’s at least one port call in another country, then it’s an international voyage and the Jones Act does not require that the ship be a U.S. vessel. You can board a foreign-flagged cruise ship in Port Canaveral for a cruise to Key West, but that ship is going to stop in Nassau or at some other foreign port during the cruise to satisfy Jones Act requirements.
The same thing applies on all of our coasts. If you go to Seattle and take an Alaskan inside passage cruise which calls at U.S. ports such as Juneau, Skagway and Ketchikan, the boat will make at least a brief stop in Victoria or Vancouver on the way back to Seattle to satisfy the Jones Act.
Shipbuilders don’t build many big ships in the U.S. More and more small boats being purchased in this country are being built overseas. Millions of U.S. citizens are spending their money on foreign cruise ships, and in some cases foreign ports are selected in place of U.S. ports for the passengers to go ashore and spend more of their money. Does it sound like the Jones Act is really protecting our interests?
Let’s go fishing!
Capt. Ralph Allen runs the King Fisher Fleet of sightseeing and fishing charter boats located at Fishermen’s Village in Punta Gorda. He is an award-winning outdoor writer and photographer, and is a past president of the Florida Outdoor Writers Association. Contact him at 941-639-2628 or Captain@KingFisherFleet.com.