How Shipping Supports U.S. Security and Economic Health

Sept. 20, 2013
The Maritime Industry represents 500,000 jobs and $100 billion in economic output, including $29 billion in labor compensation. Its size and scope were never more vividly demonstrated than on September 11, 2001.

The Jones Act, now nearly a century-old, is a remarkable example of a statute that is both a commercial success for the American economy and a public policy success for our country. It is the statutory foundation of the U.S. domestic maritime industry. Technically, section 27 of the Merchant Marine Act of 1920, requires that vessels moving cargo in the domestic commerce of the United States be owned by American companies, built in American shipyards, and crewed by American mariners. 

Underpinned by the Jones Act, the American domestic maritime industry is an economic engine and a jobs creator.  More than 40,000 American vessels built in American shipyards and crewed by American mariners ply our domestic waterways, from the North Slope of Alaska to the island of Puerto Rico; from Portland, Oregon to Portland, Maine; from St. Paul, Minnesota to New Orleans. The economic value of that activity is an astonishing 500,000 jobs and $100 billion in economic output, including $29 billion in labor compensation, with those wages spent in every corner of the country. Additionally, the domestic maritime industry generates more than $11 billion in tax revenue for federal, state and local treasuries.

Opportunities for Employment 

Let’s look at the human impact that exists behind those numbers. In the tugboat, towboat, and barge industry, a young man or woman can come to us out of high school and not just get a job, but embark on a ladder of career opportunity.  He or she can start out as a deckhand making $45,000 a year and rise through the ranks, earning more than $100,000 as a captain or pilot in just a few short years.  The domestic maritime industry offers a career to be proud of and the compensation and benefits that enable a mariner to support his or her family.  Jobs like that are good for American families, for American communities, and for the American economy.

Contributing to the Economy

Let’s talk more about the contributions of the domestic maritime industry to the American economy, which is a remarkable story of a sector that is thriving. 

Underpinned by the Jones Act, companies in the domestic maritime industry have made, and are making today, multi-billion dollar investments in vessels, in shoreside facilities, and in technology to meet the needs of their customers in every sector of the U.S. economy.  You don’t have to look far to find examples.  Over the last two decades, the U.S. tank barge industry has transformed and renewed its fleet, building state-of-the-art double-hull barges and larger, more powerful tugboats and towboats to propel them. 

In the past five years alone, Kirby Corporation has invested over $2.1 billion in fleet replacement, acquisitions and capital improvements to its existing vessels. TOTE is building new state-of-the-art vessels powered by liquefied natural gas for the Puerto Rico trades which are expected to be the largest LNG-powered vessels in the world.

Another great example from the industry is Crowley Maritime, which has just completed a new build program, investing more than $1 billion in 17 articulated tug-barge units ranging in size from 155 to 330,000 barrels. Crowley has also announced plans to build up to eight 330,000-barrel product tankers to be delivered between 2015 and the end of 2017.

Companies are not only investing in their fleets, but in the industry’s future. Bouchard Transportation has also had a substantial fleet modernization and expansion plan underway, having made it its own investments in excess of 1 billion dollars. Bouchard also recently announced a $750,000 donation to SUNY Maritime to establish a tug and barge simulation center for cadets to learn the skills to operate today’s modern tugs and barges.

Underpinned by the Jones Act, which provides the level playing field and the certainty that enables companies to make these multi-billion dollar investments, the domestic maritime industry continues to demonstrate that it can, and will, adapt and grow to meet America’s transportation needs.  This is a dynamic marketplace, and this is a dynamic industry.

Important to Our Security

We’ve talked about the domestic maritime industry’s role as an economic engine and a jobs creator.  I also want to focus on our industry’s role as a partner with government in protecting our country’s national and homeland security.

We saw the industry’s contributions dramatically on that fateful day, September 11, 2001, when the maritime community came together and spontaneously carried out the largest sea evacuation in history, bringing more than 500,000 Americans to safety from the terror that struck lower Manhattan. On one of the nation’s darkest days came some of its most heroic moments, and the 9/11 Boatlift is a reminder of the domestic maritime industry’s role in keeping our country safe.

And, there’s more to that story. 

Underpinned by the Jones Act, the domestic maritime industry supports U.S. national and homeland security at zero cost to the federal government.  The Department of Defense and the U.S. Navy strongly support the domestic maritime industry – and the Jones Act as its statutory foundation – because strong vessel operating companies, a skilled, available supply of mariners, and a robust shipyard industrial base are critical force multipliers that the U.S. government must have, but could not sustain, without the commercial domestic maritime industry. 

The United States has adopted a multi-layered approach to homeland security, and many new layers have been added over the past 12 years.  The American-owned, American-crewed, and American-built domestic maritime industry is a foundational element of that homeland security strategy.  Here’s what one expert, Dr. Daniel Goure of The Lexington Institute, has written:

“Although the Jones Act was not written with today’s threats to homeland security in mind, its provisions provide an important base on which to build the systems, processes and procedures needed to secure America.  The provisions in the Jones Act regarding vessel ownership and manning simplify efforts to ensure that rogue regimes and international terrorists cannot strike at this country via its ports and waterways.  One could readily assert that were there not a Jones Act, Congress would have to invent one.”

I know from my conversations with AWO members that the men and women who crew their vessels see themselves as the eyes and ears of our nation’s homeland security as they work on the water every day. It is a responsibility they feel innately as Americans and it is an integral part of who they are and what they do. 

There really is no doubt. The Jones Act made sense when it was enacted nearly a century ago, and its value to our country has deepened, not diminished, over the last century. It underpins an industry that serves the broad needs of the modern U.S. economy.

It provides certainty to an industry that is an engine of economic growth and a creator of high quality, family wage jobs. And it serves important national public policy priorities at no cost to the federal government. That is a win, win, win, and why I’m so proud to represent the domestic maritime industry in both AWO and AMP.

This is the text of a speech delivered by Tom Allegretti in New York City on September 18, 2013 at the TradeWinds 2013 Jones Act Shipping Forum.  He is president of The American Waterways Operators, which representsthe U.S. domestic maritime industry.