New 'American Ships Act' Mandates 100% U.S. Shipping for DOT Cargo—If the Price is Right

This new piece of legislation, dubbed the "American Cargo for American Ships Act," is pretty straightforward: it tweaks existing federal shipping rules to ensure that U.S. commercial vessels get a bigger slice of the government procurement pie. Specifically, it creates a new exception within the established cargo preference law (Section 55305 of Title 46, U.S. Code) that deals with goods bought or financed by the U.S. government.

The DOT Loophole and the 100% Mandate

Under this Act (SEC. 2), if the Department of Transportation (DOT) is the agency procuring or financing equipment, materials, or commodities—think everything from new subway cars to bridge components—they have to take steps to ensure that 100 percent of that cargo’s gross tonnage is shipped on privately-owned U.S.-flagged commercial vessels. This is a significant mandate designed to boost the domestic maritime industry. However, there’s a crucial catch that makes this less of a hard-and-fast rule and more of a conditional requirement: U.S. vessels must be "available at rates that are considered fair and reasonable compared to other commercial vessels."

What Does 'Fair and Reasonable' Mean for Your Wallet?

This is where the rubber meets the road, and the potential impact on everyday costs comes into focus. When the government buys something, ultimately taxpayers foot the bill. If a foreign shipper offers a rate of $10,000 to move a shipment of steel, and the lowest U.S. bidder comes in at $15,000, DOT has to decide if that extra $5,000 is still "fair and reasonable." The bill doesn't define this metric, leaving significant discretion to the Secretary of Transportation. For example, if DOT is funding a major infrastructure project, and the domestic shipping requirement adds 10% to the overall material cost, that cost increase could eventually trickle down to state and local governments, potentially impacting project timelines or budgets. The bill also specifies that the goal is to make sure U.S. ships get a fair share of cargo across different geographic areas, which adds another layer of complexity to rate comparison and availability.

Who Benefits, and Who Pays?

The primary beneficiaries here are the U.S.-flagged commercial shipping companies and their crews, who stand to gain a guaranteed 100% share of DOT-financed cargo, assuming they meet the rate requirement. This is a clear win for the domestic maritime industry. However, the potential negative impact falls on the government agencies (and ultimately the taxpayers) who might have to absorb higher shipping costs compared to using cheaper, non-U.S. carriers. For businesses that supply materials to DOT projects, they might find their logistics options restricted, potentially increasing their overhead if they can't utilize the most cost-effective shipping routes. The success of this Act hinges entirely on how DOT interprets and enforces that “fair and reasonable” rate clause—a determination that could either maximize domestic shipping or simply maintain the status quo if U.S. rates are consistently deemed too high.