The lead news story for much of the year has been the war between the United States and Iran, and understandably so. The conflict has had far-reaching impacts on the world, notably because of the prolonged disruption to shipping in the Strait of Hormuz, through which 20% of the world’s supply of oil typically moves.
Shortly after the war began on Feb. 28, crude oil prices climbed from around $65 per barrel to more than $110 per barrel. Prices fell back to near pre-war levels in the summer as ceasefire negotiations took place, although volatility remains, both with the war and conditions in the strait.
JONES ACT WAIVERS
For those in the U.S. maritime industry, one of the top stories for the year is a related one: the ongoing waiver to the Jones Act, the nation’s maritime cabotage law that requires vessels transporting goods or passengers directly between American ports to be built, owned, and crewed by Americans. The Department of Homeland Security issued an initial 60-day waiver to the Jones Act on March 17, citing energy supply disruptions and rising fuel prices. The waiver was later extended to Aug. 16.
The lengthy Jones Act waiver has evoked widespread opposition from the U.S. maritime industry, including from those who operate in the inland market.
“The reason the industry has been so up in arms over this waiver is because it is the longest and broadest Jones Act waiver that’s ever been issued,” said Jennifer Carpenter, president and CEO of the American Waterways Operators (AWO), a trade association for the towboat, tug, and barge sectors.
It’s not unusual for the federal government in the wake of a natural disaster to waive certain fuel standards or the Jones Act. Those types of waivers are typically short in duration and narrow in scope.
“What is really new, unprecedented, historic about this waiver is it was just an opening of the barn door,” Carpenter said.
While previous waivers to the Jones Act were granted on a case-by-case basis, the existing waiver, Carpenter said, covers more than 650 commodities.
“That has been profoundly destabilizing to the industry in a way that a one-off approval for a vessel to move X from here to there is not,” she said. “Even when those waivers have not been strictly necessary, it’s perceived as episodic. This waiver is like pulling the rug out from under the market.”
INLAND IMPACTS
Inland operators have been whipsawed by optimism surrounding the Trump administration’s Maritime Action Plan (MAP), released in February, and the perceived mixed signal of the Jones Act waiver barely a month later.
“The Jones Act waiver has thrown cold water on the enthusiasm of domestic operators to go out and spend money on new ships in U.S. yards,” said Matt Woodruff, vice president of public and government affairs for Kirby Corp., Houston, and chairman of AWO. “To the extent that a goal of the MAP is to stimulate American shipbuilding, the Jones Act waiver is doing just the opposite.”
The waiver, Woodruff said, isn’t just impacting bluewater shipping. It’s taking a toll on inland and coastal cargo carriers as well.
“The coastal and inland barge industry has been directly impacted by the waivers. If you look at the Maritime Administration data, you will see a number of moves that are commonly made by coastal ATBs,” he said, referring to articulated tug and barge units. “Jones Act critics almost always ignore this fleet in their discussions, but it is the backbone of the domestic coastwise fleet.
“Equally troubling are the cross-channel and coastwise moves along the Gulf Coast that normally would be made by inland barges,” Woodruff added. “Alcohol from Galveston to Houston. Multiple feedstock moves. These are the bread and butter of the inland tank barge industry, and this business is being lost to opportunistic foreign vessels and shippers who are trying to maximize their profits. Operators are seeing idle equipment, contracts terminated in favor of foreign vessels, and pressure on rates.”
Beyond current operations, Woodruff said he believes the waiver is affecting decisions about future fleet investment.
“My view is those long-term decisions simply will not be made until the Jones Act waiver is behind us and people have confidence in the future of the act,” he said. “That will probably track with the resolution of the Middle East crisis.”
Thanks in part to an outspoken social media campaign and careful articulation from representatives of the maritime industry, more than 50 members of Congress closed out the month of June with a letter calling on the president to allow the Jones Act waiver to expire Aug. 16.
“We are urging the administration, ‘If you’re serious about American maritime dominance, which we think you are and we strongly support, this waiver is exactly antithetical to that,’” Carpenter said.
INFRASTRUCTURE
The status of the country’s maritime cabotage law isn’t the only factor impacting the inland operators. Rising operating costs impact day-to-day business, and factors like high steel prices have driven up vessel construction costs. Locks throughout the system have a direct impact on the efficient movement of cargoes, and several lock construction projects are at critical stages.
Along the Gulf Intracoastal Waterway and the Lower Mississippi River, the Corps of Engineers’ New Orleans District recently released its final report on replacing the 103-year-old Inner Harbor Navigation Canal lock with a shallow-draft 900'x110' chamber. A 30-day comment period on the final report runs through Aug. 10. The New Orleans District estimates the cost of the lock, an associated bridge replacement, and community mitigation to exceed $7.5 billion.
Elsewhere on the system, Congress will soon have to approve cost escalations at both the Kentucky Lock and Chickamauga Lock. On a positive note, though, the House Fiscal Year 2027 Energy and Water Development Appropriations Bill would send $250 million for the new lock project at Lock and Dam 25 on the Upper Mississippi River and $166 million for new chambers at Montgomery Locks and Dam on the Ohio River in Monaca, Pa.
“The $250 million earmark represents the largest of all 12 appropriations bills, and inland waterways projects represent 17% of the total Corps construction account,” said Tracy Zea, president and CEO of Waterways Council Inc., a trade association that advocates for a well-maintained inland waterways system.
Those are positive signals that dovetail with the Corps’ recently unveiled “Building Infrastructure, Not Paperwork” initiative that puts an emphasis on starting and completing waterway infrastructure projects. Typically, representatives from the towboat and barge industry, which contributes 29 cents per gallon of diesel to the Inland Waterways Trust Fund, would sit down with Corps officials throughout the year to advise and track Corps infrastructure projects. However, the Inland Waterways Users Board (IWUB) has been suspended since last year.
“Unfortunately, there is no movement on the IWUB,” Zea said. “It is stuck somewhere within the Department of War.”
Woodruff, who served on IWUB until it was disbanded, said he’s frustrated with the slow pace of reconstituting the advisory committee.
“Congress intended that it play a vital role in ensuring the users who help pay for these investments have a say in how our system is recapitalized,” he said.
Surveying the infrastructure landscape, Woodruff said he has optimism, at least on the appropriations side.
“I am very pleased at the numbers we see in the House bill,” he said. “Chairman [Chuck] Fleischmann is a great friend of the waterways. He understands what needs to be done and is doing his best to get us there. The daunting challenge is that each time we think we are there, the Corps moves the goalposts and says they need more money for projects they previously said were funded to completion.”
BUSINESS DECISIONS
All those factors affect investment decisions, and many companies are opting for enhanced maintenance of existing fleets rather than replacement.
“It’s no secret that current prices are having a negative impact on new equipment construction, and we are not immune to these market pressures,” said Aaron Barrett, president and chief operating officer of Ingram Marine Group, Nashville, Tenn. “Ingram has been an industry leader for decades in how we maintain our assets, which leads to longer useful asset lives and helps offset some of the impacts of these increased costs today.”
Barrett said that business-wise, he isn’t seeing “major trend spikes” in the near term. Over the past decade, though, Barrett said inland operators have seen dramatic change in market dynamics. There’s been a shift to more spot or short-term business, a decline in predictable annual business (like coal), changing dynamics in the agriculture space (storage capacity growth, demand for biofuels, and global pressures), and increased demand for domestic industrial development, like infrastructure projects and LNG export facilities.
Those factors have been positive for some sectors, like steel, cement, and aggregate. But they have also introduced some question marks for operators.
“These changes have resulted in a more volatile business environment, which when coupled with significant cost increases, make the capital investment case more challenging,” he said. “Operators with assets are bearing a greater portion of risk and cost associated with ensuring capacity exists to meet ever-changing market needs.”
Rather than fleet capitalization projects, Ingram is focusing on a pair of infrastructure projects. The company is upgrading and renovating all eight of the terminals in St. Louis that were part of Ingram’s acquisition of SCF in 2024. In addition, Ingram is building out its Ashland City River Port, a multimodal facility on the Cumberland River in Ashland City, Tenn.
