Jones Act

Definition

The Jones Act, formally Section 27 of the Merchant Marine Act of 1920, is US federal legislation designed to ensure a robust domestic maritime industry capable of supporting national defense and economic continuity. It establishes strict rules for vessels engaged in cabotage, or coastwise trade, within the United States. It is named after its sponsor, Senator Wesley Jones.

Core Function and Requirements

The central function of the Jones Act is to ring-fence domestic waterborne commerce from foreign competition. This protective measure applies to all trade commencing and concluding at US points, including Puerto Rico, Alaska, and Hawaii.

The requirements, often referred to as the "Four Pillars," are mandatory for compliance:

• Vessel must be built in the United States.

• Vessel must be registered (flagged) under the United States flag.

• Vessel must be crewed primarily by US citizens or permanent residents (at least 75%).

• Vessel must be owned by US citizens or corporations (at least 75%).

Administration and Scope

The Jones Act is primarily administered by the United States Maritime Administration (MARAD), an agency within the US Department of Transportation (DOT), which oversees enforcement and strategic sealift capacity. The Act also extends employer liability for US vessel employees who are injured during their duties, providing specific remedies outside typical state workers' compensation schemes.

Expert Advice

For logistics managers, compliance with the Jones Act is non-negotiable when planning domestic supply chains involving ocean transport. Failure to adhere to the build, flag, ownership, and crew requirements can result in severe penalties, including the seizure of cargo. When optimizing multi-modal routes, ensure that the cost premium associated with Jones Act-compliant shipping is accurately factored into landed cost calculations. In disaster scenarios, temporary waivers may be granted by the Secretary of Homeland Security in consultation with the Secretary of Defense, but these are rare and highly situational.