Laws and Regulations

The Military Cargo Preference Act of 1904 (1904 Act) requires all items procured for or owned by U.S. military departments and defense agencies be carried exclusively (100 percent) on U.S.-flag vessels available at rates that are not excessive or otherwise unreasonable. These cargoes are generated primarily by DOD contracts with domestic and foreign contractors. Cargo preference applies not only to the end product but also to component parts.

The Cargo Preference Act of 1954 (P.L. 83-664), as amended, requires that at least 50 percent of the gross tonnage of all Government-generated cargo be transported on privately owned, U.S.-flag commercial vessels to the extent such vessels are available at fair and reasonable rates. In 1985, the Merchant Marine Act of 1936 was amended to require that the percentage of certain agricultural cargoes to be carried on U.S.-flag vessels be increased from 50 to 75 percent. (See Food Security Act)

Section 901(a), Section 46 U.S.C. 1241(a) requires any officer or employee of the United States traveling on official business overseas or to or from any of the possessions of the United States, unless otherwise noted, must travel and transport his personal effects on ships registered under the laws of the United States.

Food Security Act of 1985, amended the Cargo Preference Act of 1954, by the addition of Sections 901a through 901k to the Merchant Marine Act, 1936, in order to increase the minimum U.S.-flag requirement from 50 to 75 percent for shipments of agricultural cargoes under certain foreign assistance programs of the United States Department of Agriculture and the Agency for International Development.

P.L. 105-383 established that substandard vessels and vessels operated by operators of substandard vessels are prohibited from the carriage of Government-impelled cargo for up to one year after such determination has been electronically published. The easy availability of this information has resulted in increased industry use.  A listing of owners/operators prohibited from carrying Government-impelled cargo are available on the U.S. Coast Guard's Homeport  under the listing titled "Ship Management and Vessels Prohibited from Carrying Government Impelled Cargo"

Public Resolution (PR) 17 (48 STAT. 500) of the 73rd Congress requires that all cargoes generated by an instrumentality of the Government, such as the Export-Import Bank of the United States, be shipped (100 percent) on U.S.-flag vessels, unless a waiver is granted by the Maritime Administration.

The Maritime Security Act of 1996, Section 17 of the 1996 Act permits Great Lakes ports to participate in the handling of  P.L. 480 Title II humanitarian food aid packaged commodities awarded on a lowest landed cost basis without reference to vessel flag. The law allows these ports to act as bridge-ports, providing loading and unloading services, even though the cargo actually may be shipped from another port, and thus provides stevedoring jobs during the winter months when the Great Lakes are closed to vessel traffic.