Supply Chain Optimization

First crack in the Jones Act?

The Jones (Maritime) Act of 1920 applies only to ships carrying commercial cargo from one place in the U.S. to another. It forces shipments between US ports to be on US-built and registered ships with US crews. For example, it does not affect a non-US ship carrying the load from Mexico to Puerto Rico. Likewise, the Jones Act does not involve non-US ships from non-US ports.
The United States Government Accountability Office (GAO) found that 2/3 of commercial cargo in Puerto Rico goes from outside the U.S., so the act affects only 1/3 of all ships bringing commercial cargo to Puerto Rico.

The lack of American-flagged LNG tankers forces such anomalies as LNG shipping to Boston from Kuwait vs. Texas. New England, for example, does not get American LNG. As a result of the Jones Act, most of the gas delivered to the area comes from Asia.
The first crack is appearing — the administration is allowing urgently needed diesel fuel to be delivered to Puerto Rico on a vessel flagged to the Marshall Islands. It is time that the Jones Act goes away.

Is it time for railroads to start building more tracks? In 1914 there were 245K route miles, today <100K. A glance at the map of the Rock Island Railroad map (1914) shows that rationalization was needed. But, today:

  • Chicago is often near gridlock
  • Rail dwell time at the Port of Los Angles is 13 days (it was 2.5 days)

The railroad map (1914) illustrates the differences with nowadays railroad system
The Rock Island Railroad map, 1914

Future delivery prices are an indication of the direction the market may go. They specifically exclude all taxes.