In response to rising energy prices and disruptions caused by the conflict with Iran, the U.S. government has granted a temporary waiver of the cabotage restrictions under the Jones Act. This waiver is temporary, valid for a period of 60 days, expiring on May 17, 2026 and applies to a defined list of products, primarily energy and fertilizer products.
What is the Jones Act and Why is the Waiver Important?
The Jones Act regulates U.S. cabotage trade and stipulates that goods between U.S. ports may only be transported by American vessels. The law aims to protect the American shipping sector, though rare exceptions can be made, as in the current case. Under this temporary waiver, non-U.S. vessels are allowed to transport certain products – such as oil, natural gas, fertilizers, and coal – between U.S. ports.
Scope of the Waiver
The waiver will last a total of 60 days and will only apply to a list of “potentially covered products.” This list is available in the CBP notice and includes over 600 products, primarily energy and fertilizer items. The products are identified by their classification in the Harmonized Tariff Schedule (HTS).
CBP has indicated that compliance with the waiver will be enforced through standard import and documentation procedures. Shipowners intending to transport these products on foreign-flagged vessels must report this to CBP and comply with specific reporting requirements to the U.S. Maritime Administration (MARAD). While this temporary waiver provides flexibility for the shipping sector, questions remain about how effective this measure will be.
Important Considerations for Members/Insured Parties
For shipowners, the temporary waiver offers the opportunity to serve the U.S. market with foreign-flagged vessels. However, this also introduces potential legal and financial risks. Non-compliance with the cabotage restrictions could lead to heavy fines for both the shipowner and other parties involved in the transportation. Shipowners considering taking advantage of this waiver should ensure that their vessels meet all the conditions of the waiver, including the reporting requirements. It is crucial to stay alert to developments, as internal resistance in the U.S. could affect both the duration and scope of the waiver. It is unclear whether the waiver will be extended.
In the event that you wish to consider making use of the waiver we recommend seeking legal advice from a US lawyer and include appropriate clauses in your charterparty agreements. NNPC Marine Insurance will continue to monitor the matter. In the event that you have any questions please feel free to reach out via underwriting@nnpc-marine.com.
