U.S.-Flag Waterborne Domestic Trade and Related Programs

U.S.-flag domestic waterborne transportation is safe, reliable, efficient and an established mainstay of America's national transportation system. U.S. vessels provide essential freight and passenger services to almost all States and territories.

Coastwise or Jones Act vessels typically handle a combined total of over one billion tons of cargo annually. These cargoes are mostly bulk products such as petroleum, coal, iron ore, grain, crushed rock and decorative stone. However, high value containerized products dominate the U.S.-flag domestic trade to Alaska, Hawaii, and Puerto Rico.  Not surprisingly, the U.S.-flag domestic cargo fleet supporting this massive inland and ocean trade is made up of more than 40,000 vessels (mostly tugs and barges) that represent over $48 billion in private investment.

Domestic waterborne transportation of passengers is also an important component of domestic trade. A total of 220 ferry operators based in 41 U.S. states and territories transport an estimated 90 million passengers on an annual basis, generating an estimated $1.35 billion in yearly revenue.

In all, domestic waterborne transportation contributes billions to the U.S. economy in the form of freight and passenger revenue, and millions of dollars to our Government in the form of Federal, State, and local taxes.

(Statistics:  MARAD Economic Impact of the U.S. Jones Act, April 2006)

The Maritime Administration (MARAD) is the Federal agency that provides assistance to the shipping public in locating U.S.-flag vessels for the carriage of both domestic and international cargo. To encourage a strong U.S. Merchant Marine for both national defense and economic security, the Jones Act (46 U.S.C. § 55101) requires that merchandise being transported by water between U.S. points must travel in U.S.-built and U.S.-citizen owned vessels that are registered in the United States.

U.S. Customs and Border Protection (Customs) has direct responsibility for enforcing the Jones Act and may grant waivers of the U.S.-flag, U.S.-build or U.S.-ownership requirements only in the interest of national defense. When Customs receives a request for the use of a foreign vessel in U.S. domestic trade they must seek our (MARAD) advice regarding U.S.-flag vessel availability before making a decision by law (46 U.S.C. § 501). Our role in the waiver process is to canvass the U.S.-flag domestic shipping market to locate suitable coastwise qualified vessels, and then report the results to Customs. If a U.S.-flag ship is located, no waiver is needed.

The Maritime Administration annually helps dozens of shippers find the U.S. vessel service they need to meet their requirements.

As authorized by 46 U.S.C. § 12121, the Maritime Administration established a process to administratively waive the U.S.-build requirements of the Jones Act for certain small passenger vessels. Specifically, Title V authorizes us to waive the domestic build requirement for foreign-built small passenger vessels carrying no more than 12 passengers for hire. In order to grant such waivers, we must determine that employment of the vessel in the coastwise trade will not adversely affect U.S. vessel builders or the coastwise trade business of any person who employs vessels built in the United States. We grant approximately 75 waivers per year.

Visit the Small Vessel Waiver Program Homepage for more information.

While the Maritime Administration supports the use of coastwise qualified vessels in all circumstances, on rare occasions the launch of an exceptionally large oil rig or offshore platform may require the use of a foreign-built launch barge.

Therefore, 46 U.S.C. § 55108 allows the Maritime Administration to make determinations allowing the use of foreign-built launch barges under very exacting circumstances, and after an application and review process.

One of the most critical elements of the application process is a requirement that the United States be provided with “timely information to maximize the use of coastwise qualified vessels." Therefore, our regulation requires that the platform owner or operator must notify the Maritime Administration at least 21 months prior to the contemplated use of a foreign-built launch barge.

There are other application conditions and requirements as well.  Visit the Launch Barge Program Homepage for more information.

Similar to the Launch Barge Program, MARAD is authorized to make determinations under 46 U.S.C. § 501 allowing the use of foreign anchor handling vessels (used to position mobile offshore drilling units) if no U.S.-flag vessels are available, and if the companies that want to use foreign vessels have contracts in place to bring in replacement U.S.-flag vessels. This is the most specialized of MARAD programs and only applies to operations in the Beaufort Sea and Chukchi Sea adjacent to Alaska.  Since the provision was passed in 2006, MARAD has issued decision letters allowing three foreign-flag vessels into service for a limited length of time.

In response to the DEEPWATER HORIZON disaster and subsequent oil spill, the Maritime Administration entered into a Memorandum of Agreement with the U.S. Coast Guard, the Environmental Protection Agency and the State Department to expedite requests for exemptions for foreign oil spill response vessels (oil skimmers, etc.) pursuant to 46 U.S.C. § 55113. This MOU essentially memorializes the process that these agencies created in response to the Deepwater Horizon Spill and will continue to expedite allowances for foreign oil spill response vessels in the future.

For further information on any of the above programs, please contact the Maritime Administration's Office of Cargo Preference and Domestic Trade (telephone 202-366-4610, or email at cargo.marad@dot.gov).