The US decision to temporarily waive the Jones Act, in our view, would have limited to no impact on dry bulk trade.
The 60-day waiver allows foreign-flag vessels to carry cargo between US ports, easing restrictions that normally require shipments to be handled by US-built, owned and crewed ships. The move is aimed at relieving supply pressure across domestic logistics chains, particularly in energy, in response to the fluctuating oil prices.
At first glance, the waiver primarily affects the supply side, as foreign-flag vessels are now able to participate more economically in the US domestic market. This could place downward pressure on freight rates within that market, while marginally tightening global vessel supply and lending some upward support to freight rates on other trade routes. This, however, would not meaningfully apply to the dry bulk segment.
The main reason is because dry bulk shipping activity within this domestic segment is sparse, averaging only a handful of voyages per month, with vessels used in these domestic trades exclusively limited to the Panamaxes. Notably, cargoes have been concentrated in sand and iron ore pellets, which together account for about 90% of all trade, with only marginal volumes in other commodities.
In terms of ton-mile, these cargoes primarily move between the US North Pacific, the Great Lakes and the West Coast, which keeps voyages short. This limits any meaningful increase in ton-mile demand, which remains the key driver for freight markets. Unlike long-haul iron ore or coal trades, these shipments would not materially draw on global vessel supply.
The policy is aimed at targeting dislocations in domestic energy logistics, where tanker movements play a more central role. Understandably, the waiver is likely to have greater relevance for tanker markets than for dry bulk shipping.