High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
By J. Michael Cavanaugh and Eric Lee
(Holland & Knight) – Once he assumes office on Jan. 20, 2017, President-Elect Donald Trump will be responsible for managing a mix of cargo preference, ship documentation, cabotage, and related rules and laws dating back to the First Congress, including the laws popularly known as the U.S. “Jones Act.” During the intervening 227 years, observers have seen the total U.S.-owned or registered fleet grow and contract, relatively speaking, to its current international position, with no U.S.-owned container carrier making the 2015 global top 20. Notably, the largest U.S. container carrier currently ranks No. 33 – some 13 spots behind Iran Shipping Lines (IRISL Group). The U.S. Maritime Administration’s aggregate registry report for 2016 places the U.S. 23rd by deadweight tonnage (DWT) among major registries (including 1,105,585 DWT from the U.S. Ready Reserve Fleet).
The trading and political waters in which the U.S. and its commercial interests compete have changed tremendously over time. The Trump Administration will step in to navigate these waters and see an industry needing capital investment, infrastructure and other upgrades necessary to maintain current demands – with the projections for growth and U.S. strategic requirements further complicating Trump’s course.
President-Elect Trump’s cabinet selections include personalities who are deeply familiar with the maritime industry. The pending nominations include both Elaine Chao (Department of Transportation) and Wilbur Ross (Department of Commerce), who need no introduction to the industry. Assuming they are nominated and confirmed, Chao and Ross will occupy two key leadership positions with responsibility for articulating policy and program suggestions and needs to the President-Elect.
Even if Congress does not have the appetite for the full depth or scope of the President-Elect’s U.S. infrastructure investment vision and eventual plan, it is expected that Chao and Ross will give serious consideration to the U.S. maritime industry – including cargo preference, documentation, cabotage, and related rules and laws – when articulating their suggested policies and programs. At the very least, Holland & Knight’s discussions with key transition leaders and members suggest that the U.S. maritime industry, including ports and terminals, will be a part of the infrastructure investment discussion.
Substantively, the President-Elect’s infrastructure plan appears to be evolving, but both Chao and Ross have made comments recently that frame the conversation. For their part, Democrats have taken steps suggesting that they will pursue additional provisions, such as a proposal by Rep. John Garamendi (D-Calif.) to reserve hydrocarbon exports to U.S.-flag shipping. As the conversation progresses and President-Elect Trump charts his plan for the U.S. maritime industry, Holland & Knight will continue providing insight to our clients.
The Trump Administration must consider more than two centuries of challenging history in drafting its policy and structuring programs.
Holland & Knight is a global law firm with more than 1,200 lawyers and other professionals in 27 offices throughout the world. To find out more about how these plans could affect your company, whether domestic or internationally based, contact Michael Cavanaugh, Eric Lee or Chris Nolan, who will continue to work with stakeholders to shape the process for the future.
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