The Schmidt Act.


Here’s a mischievous thought for a Friday. Imagine what it would be like if the EU had a Jones Act – the Schmidt Act.

This thought was prompted by a posting on the gCaptain blog, which reprints a recent article on Reuters about the US Jones Act. For those who don’t know, the 1920 Jones Act (US Merchant Marine Act of 1920) was designed to ensure there would be enough American-controlled ships in times of war. The ships must be at least 75% American in content, crewing and ownership. To support the fleet, all trade between US ports, including Porto Rico, Hawaii and Alaska, must be carried on ships conforming to the Jones Act. Essentially one of the biggest trading countries in the world enforces cabotage.

Imagine if a similar sized group of consumers, such as the EU had introduced the same restrictions, including that all shipments between one EU port and another EU port had to be carried on EU-built, crewed and owned ships. The biggest beneficiary would probably have been the container industry. Once the big ships arrive at the main hub ports from the Far East, all the ongoing EU internal feeder traffic would have to be on EU ships. It would be like the inland waterway model had been extended up to 3500-TEU or more. I think German shipyards would have been the main beneficiaries, and maybe the Lindo shipyard in Denmark would still be open. There is also a lot of oil and gas moved internally within the EU. A steady stream of gas carriers, crude oil and product tankers would have kept the shipyards of Spain, Portugal and Italy busy. Its nice to think there would be a thriving merchant marine across the whole of Europe.

This is clearly what the writers of the Jones Act had in mind for the US, but the Jones Act has many critics inside the US, who say it increases the cost of carriage and the Act does not do what it was set out to do – create a secure supply of merchant shipping in times of need. It also has its defenders, who cite job and wealth creation. Most agree the Jones Act is not working as its original writers intended. But then who is to say the Schmidt Act would have been any different.

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About Craig Jallal
A shipping analyst whose feels the need to comment on the industry.

One Response to The Schmidt Act.

  1. Lol the Schidmt ACT

    Could A.P. Moller MAERSK have been such a leading company with a Schmidt Act.
    Could Norway, Denmark have become Global Shipping Power House ?

    I say tear down this Jones Act and bring foreign flags vessels and investment so we could build the Great Lakes St Lawrence shipping highway of North America.

    It is not shipping vs shipping
    Right now the Jones Act is making the railroads very competitive in the U.S.

    U.S railways, one of the most developed in the world
    U.S airports. deregulated and one of the cheapest freight in the world.
    U.S highways by far the best in the world.

    Marine transportation is supposed to be the cheapest option but in the U.S it is very under-invested, not competitive for many trade.

    My respects, Mr. Jallal

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