# Understanding the Noncontiguous Shipping Competition Act

The United States has long-standing rules called "coastwise laws" that require ships carrying cargo between American ports to be American-owned and American-built. These rules were created to protect the domestic shipping industry. However, this bill creates an important exception for shipping routes that connect non-contiguous parts of the country—mainly Alaska and Hawaii—to the mainland or to each other.

Right now, any cargo shipped between these distant states and the rest of America must use American vessels, which can be expensive. This bill says that foreign ships can compete on these routes, but only under specific conditions. The exemption kicks in only when there are already at least three different American shipping companies operating on that same route, and each one is moving at least 20 percent of the cargo. Additionally, these three companies can't be owned by the same person or organization. Essentially, the bill is saying: "If there's already healthy competition from American shippers, then foreign vessels can join in."

The practical effect is that consumers and businesses in Alaska and Hawaii could potentially see lower shipping costs when foreign competition enters the market. For residents of these states, this could mean cheaper goods since shipping represents a significant portion of product costs. However, American shipping companies operating on these routes might face tougher competition. The bill tries to balance these interests by only allowing foreign competition when the American shipping industry is already robust enough to handle it—protecting smaller markets from being overwhelmed while encouraging price competition in well-served routes.

Noncontiguous Shipping Competition Act

Case, Ed

Noncontiguous Shipping Competition Act This bill revises coastwise laws, commonly known as the Jones Act, that govern domestic transportation of merchandise or passengers by vessels. The Jones Act requires that vessels transporting merchandise or passengers between Puerto Rico and other U.S. ports be built in the United States, be at least 75% owned by U.S. citizens, and be mostly crewed by U.S. citizens. The bill exempts carriage on a route in noncontiguous trade from Jones Act requirements unless (1) at least three owners or operators of certain coastwise vessels regularly operate such a vessel on the route, (2) each of such owners or operators transports at least 20% of the volume of goods on that route, and (3) none of such owners or operators are under common ownership.