Jones Act Exacerbates US Ferry System Struggles

Colin Grabow

Washington State Ferries (WSF) has certainly seen better days. With over 3,500 canceled sailings last year and just 15 of its 21 vessels reliably operating, a recent Seattle Times editorial described the ferry system as “in crisis” and characterized its fleet as “antiquated” and “depleted.” Such language is apt. With 11 of the system’s ferries at least 40 years old and WSF five short of the 26 vessels it considers ideal, new vessels are badly needed. Unfortunately, none are projected to arrive until 2028 at the earliest.

The extended delivery timeline is sufficiently disruptive that it has become a topic of this year’s governor’s race, with considerable criticism directed at the state’s decision to procure ferries powered by hybrid electric engines—a move some observers allege has complicated the acquisition process. At most, however, this is only a proximate cause of WSF’s ferry woes. Far more deserving of blame are protectionist maritime laws that prohibit the purchase of vessels from the international market. Such restrictions mean that WSF—in fact, all US ferry systems—must provide service with one hand tied behind their backs.

That Washington urgently needs to revamp its ferry fleet isn’t news. Five years ago, the state passed legislation allowing a contract extension with Seattle shipyard Vigor—which has built WSF’s last ten vessels—to build up to five more large ferries using hybrid electric technology. But negotiations with the shipyard then hit a snag. While Washington had pegged the cost of new ferries at $188 million each in 2018—an estimate that rose to $249 million in 2022—the price quoted by Vigor for the first such ferry was over $400 million.

Ouch.

Washington responded by rebidding the contract and changing its law so shipyards outside the state could compete to build the vessels. That, however, has meant delays in the acquisition process, mounting frustration among ferry users, and the ongoing exchange of barbs over the new propulsion system.

But this controversy misses the bigger picture. Washington’s chief obstacle to cost‐​effectively acquiring new ferries isn’t rooted in technology but protectionism. One only needs to look across Washington’s international border to see why.

In late 2019, only two months after Washington announced its plan to purchase new hybrid electric ferries, Canadian ferry operator BC Ferries ordered four vessels with the same technology from a European shipbuilder. All four were delivered before the end of 2021. Featuring a capacity approximately one‐​third that of the vessels sought by WSF (450 passengers and crew and 47 vehicles versus 1,500 passengers and 144 vehicles), the ferries cost about $38 million each—less than a sixth of the new WSF ferries’ estimated price.

WSF and BC Ferries’ contrasting experiences are largely (if not entirely) due to the latter’s ability to buy vessels from international shipbuilders. When BC Ferries announced its desire to purchase four new hybrid electric ferries, 18 shipyards from around the world indicated their interest (of which 9 were selected to compete). Notably, not a single Canadian shipyard bid on the project.

In contrast, WSF must contend with the 1920 Jones Act, which applies to the domestic waterborne transportation of merchandise (e.g. vehicles), and the Passenger Vessel Services Act of 1886, which restricts the domestic waterborne transportation of people. Both laws require vessels to be constructed in US shipyards that are far less numerous and far less competitive than their international counterparts. Significantly higher prices for WSF’s new ferries are a foregone conclusion.

And the protectionist headaches don’t stop there.

After the vessels are delivered, WSF still faces the task of finding mariners to crew them. That’s unlikely to be easy, with a January report from Washington’s Department of Transportation pointing out that the ferry system faces “severe staff shortages that are unprecedented in its 70‐​year history.” Maritime protectionism figures here too. While BC Ferries and other international ferry systems can hire skilled foreign mariners to help mitigate such crew shortages, the report points out that WSF is “precluded from doing [so] by the 1920 Jones Act” (US‐​flagged vessels are restricted in the employment of foreign nationals to green card holders).

Unfortunately, Jones Act‐​induced complications to US ferry systems go beyond Washington.

Like WSF, the Alaska Marine Highway System (AMHS) also needs new vessels, including a hybrid electric replacement for its 1964‐​built ferry Tustumena. Described by the system’s director as thirty years past its prime, the ferry has a history of structural issues and saw its return to service from an annual overhaul recently delayed by the discovery of wasted steel. Just maintaining the vessel costs $2 million per year. As the Anchorage Daily News has pointed out, however, finding the money and a shipyard willing to build the new ferry is proving a challenge:

The replacement vessel is expected to cost around $350 million. Sam Dapcevich, a marine highway spokesperson, said the state has so far secured nearly $243 million, counting around $60 million in expected federal formula funds. That leaves more than $107 million needed to fund the project. The state is hoping most — if not all — of the balance can be covered through a federal grant.

As of March, amid months of delays, the Tustumena replacement vessel has yet to go out to bid. The design was changed to include batteries, reflecting a federal requirement for reduced emissions. A bid attempt in 2022 yielded no takers [emphasis and hyperlink added]. Last summer, [AMHS Director Craig] Tornga said he wanted to select a shipyard by the end of the year. In December, Tornga said he wanted to put out a request for proposals in January. Delays have piled on as Tornga held meetings with several shipyard officials to ensure that unlike in 2022, shipyards would, in fact, bid on the project.

On the East Coast, meanwhile, Massachusetts’ Steamship Authority hasn’t even bothered constructing new purpose‐​built vessels to replace three of its aging (and deteriorating) ferries. Instead, it purchased three offshore service vessels—all at least fifteen years of age—used to support Gulf of Mexico offshore oil and gas operations and is converting them into ferries. The project has already experienced hiccups, with the conversions’ cost increasing from a projected $9 million per vessel to $13.6 million.

Transporting over 131 million passengers in 2019, ferries form an important part of the US transportation system. They are particularly vital for parts of the country, including Alaska and the greater Puget Sound region, for which land‐​based transport alternatives are either less direct and more time‐​consuming or non‐​existent. For these communities, ferry service is a lifeline and their difficulties demand an effective response from policymakers. Taking aim at costly and ineffective maritime protectionism that impedes US ferry systems’ ability to obtain the vessels and mariners they need would be an excellent start.