The Jones Act Parallel Market
One man’s trash is another man’s … Jones Act-qualified LNG carrier?
In the past two months, seven steam turbine LNG carriers built before or in 2000 have sold—six for scrap and one (the oldest) for further trading.
The one ship sold for further trading: the Puteri Intan (130,405 cbm / built 1994), purchased by Crowley Maritime (“Crowley”). Jacksonville, Florida-based Crowley is best known as a Jones Act operator serving the US market.
The Jones Act, in its simplest form, requires that any vessel transporting cargo between two US points must be US-owned, US-operated, and US-built.
Of course, like many other laws, the Jones Act has its exceptions. An amendment from 1996 allows foreign-built gas carriers constructed before 1996 to deliver gas from US ports to Puerto Rico and still be in compliance with the Jones Act.
The 1994-built Puteri Intan, unlike Crowley’s other Jones Act operating vessels, wasn’t constructed in the US; she was built in France.
Crowley has not publicly shared how they intend to trade the Puteri Intan. If she departs for Puerto Rico, then it would seem a safe bet that Crowley will use the 1996 amendment. In which case, the Puteri Intan would exemplify the Jones Act-created parallel market for continued operation of old ships that wouldn’t otherwise be cost competitive in the international market.
