Ships for America – a great four years ahead for the Jones Act
Owners and financiers of Jones Act vessels for the US offshore sector are upbeat on prospects under the incoming administration of President-elect Donald Trump.
The mood at the Marine Money’s 3rd annual conference in New Orleans, predominantly covering financing of inland waterways tugs and barges, harbour craft, offshore service, with some discussion of coastwise Jones Act trades related to refined petroleum products, was highly positive, if not ebullient.
In general, the likelihood of a favourable attitude regarding energy production in the US Gulf of Mexico and elsewhere, and hence continued ratcheting up of vessel demand, as well as rumblings about increased US flag vessel military readiness/operation- due to “maritime security” concerns, were behind the optimism.
In the day-long sessions, financiers and equipment operators were beginning to turn optimistic on prospects for offshore oil service assets. On a panel of lenders to the US maritime marketplace, Kirk Phillips, President/ CEO of Wintrust Commercial Finance, said: “Offshore is beginning to see a resurgence…now it’s starting to capture our interest again.”
Oil market dynamics obviously plays a role and on the Offshore Service Vessel (OSV) operators panel, Cliffe Laborde, Owner/ Co-manager Laborde Marine Services LLC offered the “Drill baby drill” refrain, and said “Hopefully that takes place, and additional rigs will be coming into the Gulf of Mexico.”
On the same panel, Todd Hornbeck, CEO of Hornbeck Offshore, described a potential scenario over the next year, where US offshore service assets presently in the US Gulf of Mexico are pulled into Brazil, Colombia and Guyana – big growth areas for offshore oil – and the market in US Gulf is facing an undersupply situation.
The political realm, along with geopolitical concerns, was clearly in the air at the conference. On the lender panel, Andy Longhurst, Managing Director, CSG Investments said: “I think that the Jones Act is going to have a great four years…we’re moving into a world where it’s going to be much more nationalistic and protectionist over here”.
John Imhof Jr., Shareholder at law firm Vedder Price, moderating the “Opportunities in the US Flag” panel- dealing with US registered deepsea assets in foreign trades (non-Jones Act), brought up the “Ships for America Act” and said, “There seems to a big tailwind in the U.S. flag”.
On Imhof’s panel, Ryan Libhart Pereyda, CEO of vessel operator Patriot Maritime handling several dozen US flagged assets, chimed in, saying: “The Ships for America Act…is getting a lot of support from Congress…Democratic and Republican…getting tons of support from the military…it’s generational, something we haven’t seen for a long time.”
Imhof, during the session wrap-up said that provisions in the Act included, “more support for shipyards, more support for training [mariners[.” Imhof commented that action on the bill, which has bi-partisan support, including from Senator Marco Rubio- Trump’s nominee for Secretary of State, on the Republican side, might not be enacted in 2025; “it might be the next Congress that pushes it through,” he said, adding there’s certainly an opportunity here.”
Panel member Hugh Eden, Managing Director at investment bank Jefferies LLC, said: “The bigger macro picture around preparedness and the required resources is what’s driving the participants to jump in.”