SIC 4424 Deep Sea Domestic Transportation of Freight

 
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SIC 4424

This industry consists of establishments primarily engaged in operating vessels for the transportation of freight on the deep seas between ports of the United States, the Panama Canal Zone, Puerto Rico, and U.S. island possessions or protectorates. Also included are operations limited to the coasts of Alaska, Hawaii, or Puerto Rico. Establishments engaged in operation of vessels for transportation on the deep seas between the United States and foreign ports are included in the entry for SIC 4412: Deep Sea Foreign Transportation of Freight. Establishments primarily engaged in transportation of freight on the Great Lakes and St. Lawrence Seaway are included in SIC 4432: Freight Transportation on the Great Lakes—St. Lawrence Seaway. Establishments performing transportation of freight on the intracoastal waterways paralleling the Atlantic and Gulf coasts are classified in SIC 4449: Water Transportation of Freight, Not Elsewhere Classified.

NAICS CODE(S)

483113

Coastal and Great Lakes Freight Transportation

INDUSTRY SNAPSHOT

Deep sea domestic transportation of freight is part of a massive interrelated system of transport of manufactured and raw materials. The nature of the U.S. deep seas domestic freight is predicated on the Merchant Marine Act of 1920, which includes the Jones Act. The Jones Act requires that ships carrying cargo between domestic ports must be U.S. flag ships, owned by U.S. citizens, and built in U.S. shipyards, thus protecting domestic trade from foreign competition. According to Maritime Cabotage Task Force, by the mid-2000s the U.S. Jones Act fleet of large commercial vessels doubled from less than 900 in the 1970s to almost 1,900 ships, including over 1,700 dry cargo and "super jumbo" tank barges (over 250 feet in length). In addition, another 30,000 ocean-going barges transport containers along the coasts.

Although the health of the industry depends in large part on the health of the overall U.S. economy, domestic deep sea transportation plays an important role in the nation's private and public interests. Oceangoing domestic vessels facilitate business between various areas of the country by providing relatively low-priced shipping service and are part of the vast network of trains, trucks, and inland water carriers that keeps the nation's commerce moving. The industry also supports millions of other jobs at shipbuilding yards, seaports, and terminals. In addition, the domestic waterborne shipping industry is vital to national defense interests, as it has relieved rail congestion and provided transport of military equipment and supplies during periods of national emergency.

In the mid-2000s, the Jones Act fleet, or domestic fleet, made up 97 percent of all U.S.-flag deep sea freight, 78 percent of total U.S.-flag tonnage, 87 percent of all shipping employment, and 70 percent of U.S. ship building. The domestic fleet transports about 1.1 billion tons of freight annually, which is valued at $222 billion. In comparison, the entire European Community fleet hauls less than one-fifth of the American domestic fleet.

ORGANIZATION AND STRUCTURE

The U.S. deep sea fleet consists of three categories of service: liner, nonliner (or tramp), and tanker service.

Liner service includes regular, scheduled stops at ports along a designated route. The operators either own or charter the ships and must accept any legal cargo they are equipped to carry, unless it does not meet the minimum freight requirements. Liner service usually carries manufactured goods. Often, two or more carriers form "conferences" in order to regulate rates and competition along a route. All conference members must charge the same freight rates, although the laws of supply and demand may affect rates from one sailing to the next. Frequency of trips depends upon the demands for shipping along the route.

Nonliner, or tramp, service is scheduled individually by a customer who, in essence, is chartering the ship to carry its cargo. Tramps generally carry only one type of bulk cargo, usually a raw material such as coal, ores, grain, lumber, or sugar. On occasion, two shippers of the same commodity charter a ship jointly.

Merchant ships have become increasingly more specialized, especially during the last half of the twentieth century. Special ships were designed to carry bulk cement, coal, iron ore, liquefied natural gas, wood chips and pulp, refrigerated foods, and heavy equipment. These ships, operating as nonliner service, were often on long-term lease by one company. Because the ships were so expensive to build, the ship owner could require the company to sign a long-term lease for most of the life of the vessel before beginning construction.

Tankers carry shipments of liquid cargoes, especially crude oil and petroleum products. Oil companies could own and operate their own tanker fleets and charter privately owned ships as needed. The transport of oil in bulk began in the late 1880s. Tankers in the following 100 years have changed dramatically, with ship work handled more by computers, thus cutting back on the size of the crew. The enormous size of the tankers of the modern era has also increased the risk of oil spills and the impact such spills can have on the environment. The infamous Alaskan oil spill in Prince William Sound by the Exxon Valdez in 1989, which caused significant ecological damage to the area, thus served as a catalyst in the institution of strict environmental regulations for tankers and other vessels.

One innovation in oil product shipment was the tug-barge. The bow of the tug fits into a notch in a barge weighing up to 20,000 tons and pushes the barge. This vessel was devised as a way...

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