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Commercial overview of the shipping industry

The United States has a diverse maritime landscape comprising the Arctic, Pacific and Atlantic Oceans; the Gulf of Mexico; the Great Lakes; and thousands of canals, rivers and bays that make up its inland waterways. These extensive bodies of water have made the US water transportation industry a major player in international commerce.

The United States is one of the world's largest trading countries, making up one-quarter of the world's imports and exports, which includes more than 2.2 billion metric tonnes of cargo. In 2020, the value of total US trade with foreign countries was US$7.7 trillion. Despite this volume of international trade, the US-flagged merchant fleet (ocean-going vessels of more than 1,000 gross tonnage) comprises only 181 vessels, 100 of which are Jones Act eligible vessels that benefit from laws protecting US citizens' participation in domestic trade.

The expansion of liquefied natural gas (LNG) exports is expected to further increase the activity of US ports. Exports of LNG are forecasted to average 11.35 billion cubic feet per day in 2022 and 12.13 billion cubic feet per day in 2023.

The US shipbuilding industry has remained consistent during the past 30 years. US shipyards have built on average more than 1,600 vessels a year since 1987, ranging from military vessels to small barges. The Biden Administration has announced an ambitious clean energy plan with many states adopting green energy plans. It is forecast that the evolution of the US offshore wind energy industry will increase the demand for Jones Act eligible vessels, which may boost the shipbuilding industry. For example, in 2021, the first Jones Act compliant wind turbine installation vessel was being built at a Texas shipyard.

General overview of the legislative framework

Admiralty and maritime law is one of the oldest sources of US common law. The Constitution extends admiralty jurisdiction to federal courts and provides that Congress may pass legislation in this field. There are four main sources of admiralty law: general maritime law, federal statutes, international agreements and state law when not pre-empted.

The primary source of admiralty law is judge-made general maritime law. This is a body of principles, rules, customs and concepts that have been developed over time by the federal courts. In addition to the federal judiciary, Congress can exercise its constitutional powers to enact legislation governing maritime issues such as death on the high seas, seafarers' rights and workers' compensation. These enactments often pre-empt the general maritime law and courts will conform to the will of Congress in these areas.

The United States is a party to a number of significant international conventions, such as:

  1. the International Regulations for Preventing Collisions at Sea 1972 (COLREGs);
  2. the International Convention for the Safety of Life at Sea 1974 (SOLAS);
  3. the International Convention for the Prevention of Pollution from Ships 1973 (MARPOL);
  4. the International Convention on Load Lines 1966 (the Load Lines Convention); and
  5. the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1995 (the STCW Convention).

There is a large body of federal law that governs maritime activities. Statutes such as the Carriage of Goods by Sea Act (COGSA), the Jones Act, the Shipowner's Limitation of Liability Act, the Oil Pollution Act and the Clean Water Act cut across a wide area of maritime activity. Federal regulators such as the US Coast Guard (USCG), Customs and Border Protection, and the Federal Maritime Commission have a significant role in regulating maritime commerce.

Federal maritime law strives for uniformity given its unique environment. However, when there is not a federal rule that pre-empts an area, state law is often applied by maritime courts. For example, marine insurance is governed by state law. In some instances, activities that appear to be maritime in nature, such as shipbuilding, are in fact governed by state law.

The common law and statutory framework that affects maritime commerce is a composite mixture of international conventions, federal statutes, case law and, to a lesser extent, state law. The bulk of the body of law, however, that affects maritime activities remains federal statutory and the general maritime law.