- What is coastwise trade?
- What are the benefits and drawbacks of coastwise trade?
- What are the regulations around coastwise trade?
Coastwise trade plays a key role in the transportation of goods and people within countries and is an important part of the global economy.
However, coastwise trade is also subject to various regulations and laws, which can vary depending on the country and the specific circumstances.
In this article, we will explore what coastwise trade is, the various actors and benefits of coastwise trade, and some of the potential drawbacks and regulatory considerations.
What does the term “coastwise” mean?
The term “coastwise” refers to shipping or transportation that takes place along a coast or within a country’s territorial waters.
This term is often used in the context of maritime trade and shipping regulations, as it can affect which vessels are allowed to carry goods from one port to another.
This type of trade can also have significant economic impacts, as it can help to stimulate domestic industries and create jobs within a country.
In addition to its role in the shipping industry, the term “coastwise” can also be used more broadly to refer to anything that is related to or occurs along a coast.
This can include coastal development, such as the construction of ports and other infrastructure, as well as natural phenomena such as coastal weather patterns.
Coastal development can have both positive and negative impacts on the environment and local communities.
On the one hand, it can provide economic benefits by creating jobs and promoting tourism, but on the other hand, it can also lead to environmental degradation and the displacement of local communities.
For example, the construction of ports and other infrastructure can often require the filling in of wetlands and other sensitive habitats, which can have negative impacts on local ecosystems and wildlife.
Similarly, the development of coastal areas for tourism can lead to overcrowding and environmental degradation if it is not properly regulated.
What is coastwise trade?
Coastwise trade, also known as “cabotage,” refers to the transportation of goods or passengers between two points within a country by water.
This type of trade is typically carried out by ships or boats that operate along the coast, hence the name “coastwise trade.”
The concept of coastwise trade dates back to ancient times, when coastal communities relied on ships to transport goods and people between different ports.
In modern times, coastwise trade continues to play a vital role in the economies of many countries, especially those with long coastlines or large island chains.
In the United States, coastwise trade is regulated by the Jones Act, which was enacted in 1920. The Act requires that all goods transported by water between U.S. ports be carried on vessels that are built, owned, and operated by U.S. citizens.
This includes both the vessel itself and the crew, who must also be U.S. citizens or permanent residents.
The purpose of the Jones Act is to protect and support the domestic shipping industry, as well as to ensure the security of U.S. waters.
It also helps to create jobs and economic opportunities within the U.S., as domestic shipping companies are more likely to hire and train American workers.
However, the Jones Act has also faced criticism, as it can sometimes result in higher shipping costs for goods transported within the U.S. compared to international shipping.
This can make it more expensive for U.S. businesses to transport goods within the country, and may make it harder for them to compete with international companies.
There are some exceptions to the Jones Act, such as for emergencies or national security purposes.
The Act also allows for foreign-built ships to be used in coastwise trade under certain circumstances, such as if no suitable U.S.-built vessels are available.
In addition to the Jones Act, coastwise trade is also regulated by other federal laws and international treaties.
For example, the United Nations Convention on the Law of the Sea (UNCLOS) establishes rules for the use of the world’s oceans, including the rights and obligations of coastal states in relation to coastwise trade.
Coastwise trade plays a vital role in the global economy and is an important part of the transportation of goods and people within countries.
Who does coastwise trade?
There are various actors involved in coastwise trade, including shipping companies, ship owners, and crew members.
Shipping companies are responsible for the operation and management of vessels, which includes everything from scheduling and planning routes to loading and unloading cargo and passengers.
Ship owners, on the other hand, are responsible for the ownership and maintenance of the vessels themselves. They may also be involved in the operation of the ships, either directly or through a shipping company.
Crew members are the individuals who work on the ships and are responsible for various tasks, such as navigating the vessel, maintaining equipment and systems, and handling cargo.
Crew members can include a wide range of professionals, including deckhands, engineers, and officers. In some cases, crew members may also be responsible for the welfare of passengers, if the vessel is transporting people.
In addition to these actors, there are also various government agencies and regulatory bodies that play a role in coastwise trade. These can include port authorities, customs officials, and maritime safety agencies.
These organizations are responsible for overseeing the operation of ships and enforcing regulations and laws related to coastwise trade.
What are the benefits of coastwise trade?
There are several benefits to coastwise trade, both for the countries and regions involved and for the global economy as a whole.
Some of the key benefits of coastwise trade include:
Economic Development: Coastwise trade can help to stimulate economic development in coastal communities and regions by creating jobs and business opportunities. This can include everything from shipbuilding and repair to port operations and cargo handling.
Environmental Sustainability: Coastal shipping is generally considered to be more environmentally sustainable than other modes of transportation, as it typically produces lower greenhouse gas emissions and requires less energy.
National Security: Coastal trade can contribute to national security by strengthening a country’s domestic shipping industry and by providing a means of transporting goods and people within the country. This can be especially important in times of conflict or emergency.
Efficiency and Cost-Effectiveness: Coastal shipping can be more efficient and cost-effective than other modes of transportation, particularly for long distances or for large quantities of goods. This is because ships have a much larger capacity than other modes of transport, such as trucks or planes.
Global Connectivity: Coastwise trade can help to connect countries and regions to the global economy by facilitating the transportation of goods and people between different parts of the world. This can help to promote trade and economic growth on a global scale.
Coastwise trade offers a range of benefits for countries and regions involved, as well as for the global economy as a whole.
It is an important part of the transportation of goods and people within countries and plays a vital role in the global economy.
What are the drawbacks of coastwise trade?
While coastwise trade has many benefits, there are also some drawbacks to consider.
Some of the potential drawbacks of coastwise trade include:
Cost: Coastal shipping can be more expensive than other modes of transportation, particularly for shorter distances or for smaller quantities of goods. This can be due to a variety of factors, including the cost of building and operating ships, as well as the cost of complying with regulatory requirements.
Limited Reach: Coastal trade is typically limited to points along the coast or on large islands, which means that it may not be practical or feasible for some locations that are inland or otherwise not connected to the coast.
Infrastructure: Coastal trade relies on a range of infrastructure, such as ports, docks, and other facilities, which can be expensive to build and maintain. This can be a challenge for countries or regions with limited resources or funding.
Regulation: Coastwise trade is often regulated by various laws and treaties, which can vary depending on the country and the specific circumstances. These regulations can sometimes be complex and burdensome, which can be a drawback for businesses and individuals involved in coastal trade.
Competition: Coastal trade can face competition from other modes of transportation, such as trucking or air cargo. This can make it more challenging for coastal shipping companies to compete and can also result in price competition, which can be a drawback for consumers.
What are the regulations around coastwise trade?
In the United States, coastwise trade is regulated by the Jones Act, which was enacted in 1920.
The Act requires that all goods transported by water between U.S. ports be carried on vessels that are built, owned, and operated by U.S. citizens. This includes both the vessel itself and the crew, who must also be U.S. citizens or permanent residents.
The purpose of the Jones Act is to protect and support the domestic shipping industry, as well as to ensure the security of U.S. waters.
There are some exceptions to the Jones Act, such as for emergencies or national security purposes.
The Act also allows for foreign-built ships to be used in coastwise trade under certain circumstances, such as if no suitable U.S.-built vessels are available.
In addition to the Jones Act, coastwise trade in the U.S. is also regulated by other federal laws and international treaties.
These can include laws related to maritime safety, environmental protection, and customs and immigration.
Other countries may have their own regulations for coastwise trade.
For example, the United Nations Convention on the Law of the Sea (UNCLOS) establishes rules for the use of the world’s oceans, including the rights and obligations of coastal states in relation to coastwise trade.
Wrapping up: Coastwise trade
Coastwise trade is a complex and multifaceted industry that involves a range of actors and is regulated by various laws and regulations.
While it has many benefits, including economic development, environmental sustainability, national security, and efficiency and cost-effectiveness, there are also some potential drawbacks to consider.
These may include the cost of coastal shipping, limited reach, infrastructure requirements, regulatory burdens, and competition from other modes of transportation.
Despite these challenges, coastwise trade remains an important part of the global economy and will continue to play a vital role in the transportation of goods and people within countries.
