Antiquated Law Holding Back U.S. Supply Chain

Jan 17, 2024, 10:16 AM by Nicholas Rita
An outdated law is causing higher costs for transporting goods by water within the United States.

Viewpoint | Future Cities

Antiquated Law Holding Back U.S. Supply Chain



Executive Summary

  • A 1920 law, Merchant Marine Act (the Jones Act), makes water-based methods for shipping goods within the United States not price-competitive with trains and trucks, causing most freight to be transported via land.
  • In the absence of this law, water-based transit of goods would likely be much cheaper and more widely utilized.
  • A transition to water-based transit would likely increase industrial demand in well-positioned markets such as New Orleans, Tampa, Houston, and eastern port markets.

Due to the Jones Act, a law passed in 1920, any vessel transporting freight from one U.S. port to another is subject to a strict set of legal criteria. Any ship engaging in such activity is required to 1.) be made in the United States, 2.) be owned by an American citizen, and 3.) be crewed by American citizens or legal residents.

So, how do these requirements increase shipping costs for the U.S. economy? How could supply chains improve in the absence of these restrictions, and how would this affect the industrial real estate sector?

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