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By Ed Walsh, Blog Editor
For most of its history, Pittsburgh has been a center of industry and commerce. From its early days as a trading post along the early American frontier to its industrial boom days as the steel capital of the world, Pittsburgh’s has been linked to its geographic location along the three rivers.[1] But Pittsburgh’s future economic development rests in the hands of a 100-year-old law protectionist law known as the Jones Act.
The Jones Act, formerly known as the Merchant Marine Act, requires all goods shipped between United States ports be shipped on vessels built within the United States, crewed by United States citizens, and that the ships used to transport cargo be owned by U.S. companies with at least seventy-five percent (75%) of the ownership stake held by United States citizens.[2] While the act does allow for waivers from these strict requirements in the case of natural disaster or national security, these waivers are rarely granted.[3]
The Jones Act was passed in 1920 and its purpose is two-fold. First, it was meant to protect American industries from being overly reliant on foreign shipping which was a serious concern following World War I when European ships were called back to Europe to aid the war effort.[4] Second, the act was meant to protect American workers from losing their jobs to the massive waves of southern and eastern European immigrants coming into the United State at the time.[5]
Despite its protectionist sentiments, the Jones Act has done everything but protect American shipping. Because of the strict requirements of the Jones Act, shipping costs within the U.S. have risen to such high levels that it has maimed the American shipping industry. A 2014 Congressional Research Service study found that shipping crude oil between the U.S. Gulf Coast and the U.S. Northeast cost about $5 to $6 per barrel while shipping it from the U.S. Gulf Coast to eastern Canada cost only $2.[6] Additionally, the Jones Act has caused ship building in the U.S. to be 6 to 8 times higher in the U.S. than in other areas of the world.[7]
These high prices have caused an abandonment of a once proud shipping industry in the United States. Since 1960, shipping along American coasts and in the Great Lakes has decreased by over half despite the American economy growing 50 times since then.[8] Over that same period, the amount of cargo shipped via air and truck has increased by 15% and 200%, respectively.[9] Post World War II, the United States was the preeminent shipbuilding nation- today, 90% of ships are built in China, Japan, or South Korea.[10]
This has led to Americans looking internationally to get what they need instead of looking to their own backyards. Consider for example that Virginia gets its rock salt not from other places in the U.S. but from Chile and India. [11] Or consider Hawaiian cattle farmers who fly their cattle to the U.S. mainland because it is cheaper than shipping them![12]
All this has meant bad news for Pittsburgh. Pittsburgh’s rivers give it a natural connection to most of the United States, allowing it to ship and receive large industrial goods like coal or steel more easily. Two facts contribute to this. First, it is 10 times cheaper to ship goods over water than it is over land.[13] Second, the Mississippi-Missouri-Ohio river system includes over 6,000 miles of navigable water.[14] Consider that you could travel from Morgantown, West Virginia to Great Falls, Montana without ever having to leave a boat.[15] Historically, this has allowed Pittsburgh companies to transport goods farther for cheaper than other cities.[16] But none of this has been allowed to work to Pittsburgh’s advantage for the last 100 years because of the requirements of the Jones Act.
Therefore, Congress needs to change the Jones Act so that it can be easier for goods to be shipped between places in the United States. This would allow Pittsburgh and other cities to use their water resources to be important economic nodes in the interconnected American economy. The Port of Pittsburgh is already the second biggest inland port in the United States by tonnage.[17] However, many of the commodities like coal that pass through the Port of Pittsburgh are bound for China.[18] Modifying the Jones Act can create a situation where it is more economical to ship goods between American cities than ship them to other countries.
Additionally, the global economy is changing. COVID and the subsequent supply chain shortages have put a new premium on domestic supply lines.[19] Industries that have been housed abroad for decades are starting to return to American soil.[20] Pittsburgh with its rivers, is a prime location for these new industries to set up shop but only if the Jones Act gets out of Pittsburgh’s way.
[1] William Dietrich, A Very Short History of Pittsburgh, Pittsburgh Quarterly (August 25, 2008), https://pittsburghquarterly.com/articles/a-very-brief-history-of-pittsburgh/
[2] 46 U.S.C. §§ 55101-55102
[3] Colin Grabow, et al., The Jones Act: A Burden America Can No Longer Bear, CATO Institute (June 23, 2018) (referencing 46 U.S.C. § 501)
[4] Cristopher J. McMahon, The U.S. Merchant Marine: Back to the Future?, 69 Naval War College Review Article 6, 4 (2016).
[5] Id.at 3.
[6] David R. Henderson, How The Jones Act Harms America: A century-old protectionist law that inflicts economic harm. Hoover Institution (last updated October 7, 2019), https://www.hoover.org/research/how-jones-act-harms-america
[7] John Fritelli, Cong. Rsch. Serv., R44831, Revitalizing Coastal Shipping for Domestic Commerce (2017) at 6.
[8] Henderson, supra note 5.
[9] Id.
[10] Id.
[11] Arlington, N.Va. road salt comes from far and wide (mostly wide), InsideNova (last updated January 7, 2016), https://www.insidenova.com/news/arlington/arlington-n-va-road-salt-comes-from-far-and-wide-mostly-wide/article_33e18d66-b53c-11e5-aee1-1b0eb7cf4749.html
[12] Henderson, supra note 5.
[13] Peter Zeihan, The Accidental Superpower: The Next Generation of American Preeminence and the Coming Global Disorder, Hachette Publishing (2016).
[14] Waterways, Mid-America Freight Coalition, (last updated March 1, 2024), https://midamericafreight.org/index.php/rfs/network-inventory/waterways/
[15] A boat could travel along the Monogohela River beginning in Morgantown, W.V., then to the Ohio River, Mississippi River, and then up the Missouri River until Great Falls, Montana. This journey would be over 2,000 miles.
[16] Id.
[17] Economic Impact Study- 2021, Port of Pittsburgh Commission, (2021), https://www.portpitt.com/pages/economic-impacts.
[18] Id. 70% of the coal, the Port’s biggest commodity, is shipped to China not somewhere else in the United States.
[19] John Keilman, America Is Back in the Factory Business, Wall Street Journal (last updated April 8, 2023), https://www.wsj.com/articles/american-manufacturing-factory-jobs-comeback-3ce0c52c
[20] Id.
