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Tuesday, October 20, 2015
NYT: Missing Cargo Ship Highlights Vulnerability of Aging U.S. Fleet
By Michael Hansen @ 2:15 PM :: 2294 Views :: Jones Act

by Michael Hansen, Hawaii Shippers Council, October 14, 2015

The New York Times published on October 14, 2015, a major news article linking Jones Act cabotage domestic ship build requirement, the ageing Jones Act fleet, the extraordinarily high cost of domestic ship construction, and the loss of the EL FARO on October 5, 2015, en route from Jacksonville (FL) to San Juan (PR) in Hurricane Joaquin.

Key excerpts:

The 40-year-old cargo ship El Faro, which disappeared in the Caribbean this month with 33 people onboard, was about four times older than the global average.

Yet the vessel, built in 1975, was not at the end of its service life. After the ship completed its runs to Puerto Rico this year, its owner planned to send El Faro to Alaska for service between Anchorage and Tacoma, Wash.

El Faro’s sinking highlights a vulnerability in the United States merchant fleet: its age. Commercial ships around the world are an average of 11 years old, but ships registered in the United States average 31 years, according to the consulting group IHS Maritime.

The fleet’s relative age is in large part a consequence of a law nearly a century old that regulates domestic maritime commerce, critics of the law say. That law, the 1920 Merchant Marine Act or Jones Act, requires that ships serving routes between domestic ports be built and registered in the United States, and owned and crewed by United States citizens.

“One of the surprises in the case of the El Faro is that a 40-year-old ship is still navigating,” said Okan Duru, an assistant professor of maritime finances and logistics at the Department of Maritime Administration of Texas A&M University, Galveston. “But if a ship is built in the United States, the expectation is that it is put in service for a very long time.”

The domestic oceangoing merchant marine fleet declined 82 percent from 1951 to 2011. At its peak, the ocean fleet comprised nearly 1,300 vessels. Today, it has shrunk to about 166 ships and accounts for about 1 percent of the global fleet.

Of those, only about half are eligible under the Jones Act to serve domestic ports, while the rest sail overseas. More than 60 vessels are more than 20 years old, which is the normal life span of a ship.

The episode has renewed questions about whether to amend the Jones Act. The oil industry, for example, has long complained about the restrictions, which it says limit the availability of tanker transportation for its refineries and drive up its costs.

Jones Act restrictions also apply to cargo ships traveling between the mainland United States and Alaska, Hawaii and Puerto Rico. Islanders complain about the restrictions, which they say increase living costs.

But academic studies have found a direct link between ship age and accident rates.

A 2012 report by researchers at Southampton Solent University in Britain concluded, “The evidence confirms that the majority of accidents can be linked with older vessels, a predominance of general cargo carrier accidents and a suite of worst-performing flags.”

Captain Doherty said, however: “What they have done over the past 20 years is lowering the bar. Their definition of seaworthy gets lower and lower because the ships are getting older and older.”

  *   *   *   *   *

UPDATE October 19, 2015

The Shipbuilders Council of America (SCA) posted a press release on its website on Monday, October 19, 2015, defending the domestic ship build requirement of the Jones Act in respect of the loss of the Jones Act cargo containership EL FARO on October 5, 2015 off the Bahama Islands on October 5, 2015.

Since loss of the EL FARO, several news articles – including a major one in the New York Times (NYT) -- have posited a link between: the domestic ship build requirement of the Jones Act; the extraordinarily high cost of major U.S. ship construction; the resultant elderly age of ships in the Jones Act fleet (due high replacement cost); the significantly greater vulnerability of older ships to accidents; and, the loss of the 40-year-old EL FARO.

The obvious solution to the problem, as has been widely-stated recently, is to eliminate the U.S. ship build requirement and allow the use of far lower cost foreign built U.S. flag ships in domestic shipping. However, that would be a serious loss of trade protection for the domestic shipbuilding industry.

As such, the SCA rejects the notion of a causal link between the Jones Act and loss of the EL FARO, and attempts to refute it primarily by admonishing readers to remember the loss of life and respect the bereavement of the crew member’s families.

The SCA press release also claims the U.S. shipbuilding industry leads the world in innovation (which in the commercial sector is patently untrue) and raises the specter of foreign flag ships bogymen operating in domestic trades (which is a non sequitur because what is at issue is the ship build not the U.S. flag operating sector).

Key excerpts:

Today the U.S. shipbuilding and ship repair industry responded to unfounded claims purporting a casual (sic) link between the Jones Act and the loss of the cargo containership El Faro in Hurricane Joaquin earlier this month . . . . .

In the wake of this tragedy, critics have attempted to blame the loss of the ship on the Jones Act requirement that ships operating between two U.S. ports be U.S. built - claiming that if operators could purchase less costly foreign ships they would replace their vessels more often and avoid similar tragedies.

Matt Paxton, President of the Shipbuilders' Council of America (SCA) released the following statement: "To imply that vessels that do not have to comply with rigorous U.S. safety standards are safe than those that do defies common sense," said Matthew Paxton, President of SCA."To try and connect a law that works to protect our economic and national security to this tragedy, particularly during a period when our industry family is mourning such a loss is not only incorrect, but shameful."
Unquote.

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