B2B and the Jones Act

Not exactly.

 

 

 

The cruise operator would be the one required to pay the PVSA fines. The only time a passenger would be required to pay the fine is when the cruise line passes the fine onto the passenger instead of eating the cost.

Which is believe carnival does. Have definitely read a thread on here with the situation of missing embarkation in Tampa s trying to embark in key west where the family was required to pay hundreds for the PVSA fines to board in Key west.

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Having worked the ships in Hawaii for 4 years, including the start up, not aware of any "union agreement" that was part of the original deal with the US government. The point is, that any of the cruise lines could have stepped up and taken advantage of Hawaiian American's bankruptcy. And as far as a monopoly, yes, they are the only ones doing it, but a monopoly means that the operator of the monopoly can set any price they want, since there is no competition. If they really had a monopoly, why did they remove two US flag ships from the trade, and reflag them back to Bahamian flag? Why were they losing $175 million/year in 2008, just on the Hawaiian operation? Because of price competition from the foreign flag ships cruising to Hawaii from the West Coast that can still sell, operate, and profit from a 14 day cruise (with 10 sea days of fuel) for the same or less than NCL can sell the 7 day Hawaiian cruises. Back before NCL started the operation, American Hawaiian Cruises operated the SS Constitution and SS Independence as US flag ships under the PVSA as a similar "monopoly" to NCL, yet no one said a peep about them.

They have a monopoly. NCLH pulled some ships because they had enough trouble keeping one staffed with Americans even with higher wages. Highers costs led to lower profits and they could make more money elsewhere. NCL has had a number of financial difficulties over the years partly because they do take risks.

The GAO report on the "monopoly"

https://www.gao.gov/new.items/d04421.pdf

More on the history

https://www.nytimes.com/2003/12/14/us/political-savvy-gets-us-flags-on-foreign-ship.html

If I come across the union reference will post it, but basically Congress wasn't going to approve the exemption unless a union or two approved it.

They have a monopoly. NCLH pulled some ships because they had enough trouble keeping one staffed with Americans even with higher wages. Highers costs led to lower profits and they could make more money elsewhere. NCL has had a number of financial difficulties over the years partly because they do take risks.

 

The GAO report on the "monopoly"

https://www.gao.gov/new.items/d04421.pdf

 

More on the history

https://www.nytimes.com/2003/12/14/us/political-savvy-gets-us-flags-on-foreign-ship.html

 

If I come across the union reference will post it, but basically Congress wasn't going to approve the exemption unless a union or two approved it.

There was nothing involved with the unions as far as the Congressional action was concerned. I was there for the start up of the program, and was one of the first US officers hired for the ships, and worked there for the first four years, until. At the time that the Pride of Aloha was designated to be the first ship to Hawaii (the POA had sunk at the shipyard), three maritime officer unions were bidding on manning the ships, and no decision had been made as to which one would get the contract. As far as union staffing of ships, it has far more to do with the Longshoremen's Union than Congress, as any ship that docks at a public pier in the US, regardless of flag nation, has to be unionized (for deck and engine officers and crew) or the longshoremen won't work the ship. So, there was no question that NCL's US ships would be unionized, it was just a measure of negotiating the contract to meet both the cruise line and the union's needs.

The only reason NCL has a "monopoly" on the inter-island Hawaiian trade is that no one else has wanted to step up and start another service. There is nothing in the PVSA exemption that prohibits anyone else from either building a PVSA compliant ship, or applying for another exemption to the PVSA, if they have compelling reasons, or political pull as is asserted by the NYT.

It was not that the ships were having difficulty staffing because of the number of ships, as the POA continues to this day to have difficulties staffing? Why? Because the US flag she flies requires much more stringent documentation for all crew members than a foreign flag ship does. On foreign flag cruise ships, only the deck and engine officers and crew are documented merchant mariners. The hotel staff do not need credentials, and the only training required by international convention (STCW) is a 4 hour safety and social consciousness class onboard. For a US flag cruise ship, however, the USCG requires that every single member of the crew receive a merchant mariner's document, with the required training (about 4 weeks), the background check, and a TWIC card which also requires a full FBI background check. It costs NCL about $8000 just to get a new crew member to the ship for his/her first day of work. Now, when that person quits, what happens? On a foreign flag ship, that crew member either pays his own way home and the expense of a bonded escort from the ship to the airport, or waits until the end of the contract to quit so that return flight is paid. On the US flag ship, the crew member can walk off in any port (it is the US after all), and repatriation is guaranteed. Now, the ship needs a new crew member, so they call the staffing agency in the Philippines, and a new crew member is on his/her way the same day. On the US flag ship, there is no pool of documented US mariners for hotel jobs on a cruise ship, so the company has to go through the whole training and documentation process, and sails short in the meantime.

During the 3 years NCL had at least two ships in Hawaii, and the 2 years they had 3 ships, there was a 500% increase in the foreign flag berths going to Hawaii from the West Coast. This increase in supply caused a drop in cabin fares, that led to NCL being forced to charge fares that could not make a profit, even with onboard spending. This is why NCL lost $174 million on Hawaii in 2007. If they had an actual monopoly, they could set fares high enough to make a profit no matter what the costs.

Yes, NCL took a risk. The risk was to expand the Hawaiian market so greatly in such a short period of time. This didn't work, and the other cruise lines saw how much NCL was charging for a cabin, and decided to increase their commitment to Hawaii in order to cash in on some of what for them would be excess profit, since they didn't have the additional cost.

The only reason NCL has a "monopoly" on the inter-island Hawaiian trade is that no one else has wanted to step up and start another service. There is nothing in the PVSA exemption that prohibits anyone else from either building a PVSA compliant ship, or applying for another exemption to the PVSA, if they have compelling reasons, or political pull as is asserted by the NYT.

PVSA ensures there will never be a major US cruise line due to the exorbitant cost of obtaining and maintaining a US flagged ship. The US is simply non-competitive.

I still maintain that Congress would have never approved the exemption without union buyoff. There was an enormous amount of money spent on lobbying and we all know money talks.

PVSA ensures there will never be a major US cruise line due to the exorbitant cost of obtaining and maintaining a US flagged ship. The US is simply non-competitive.

 

I still maintain that Congress would have never approved the exemption without union buyoff. There was an enormous amount of money spent on lobbying and we all know money talks.

Actually, the PVSA only pertains to a cruise line that sails exclusively to US ports, or between US ports without a distant foreign port call. There could be US flag cruise ships built in foreign yards that could sail any of the other itineraries that every other cruise line offers. Now, whether these ships would be competitive with foreign flag ships is a different question, but it has nothing to do with the PVSA. Similarly, there are US flag cargo ships that were not built in the US, and therefore are not Jones Act compliant, but trade from the US to overseas, which has nothing to do with the Jones Act.

What has made the US non-competitive in the maritime industry was the Merchant Marine Act of 1936. President Roosevelt created this act to ensure that the US was ready for WWII by having sufficient maritime infrastructure and capacity. Part of the Act was to provide a subsidy for the difference between the cost to build a ship in the US or overseas, and a subsidy for the difference in operating costs between a US flag ship and a foreign flag ship. This subsidy caused the unions and the owners to "game the system", such that each time the shipyard wanted more money to build a ship, or a union wanted more money for their members, the company would just say "fine", since the increase would be passed to the government via the subsidy. When Reagan abolished the subsidies, the US flag overseas trading fleet collapsed. This is where we went from the largest maritime fleet in the world after WWII to the 17th or 19th largest now, and the vast majority of that fleet is Jones Act or PVSA vessels. The Jones Act and PVSA fleets don't need to be competitive in the world market, since they don't trade on the world market, only within the US.

I can tell you that due to the loss of the subsidies (which I personally think was a good thing), maritime salaries in the US have been stagnant for the last 40 years. A Chief Engineer made virtually the same salary (in current dollars) in the 70's as he does today, and converting those current dollars to constant dollars gives a buying power of about 20% today. This has made US maritime labor much more competitive on the world market, and when shipping companies use foreign built ships as US flag ships (non-Jones Act compliant), they are becoming more competitive.

I have belonged to two of the three US maritime union officers' unions, and I can tell you that the unions did not need to be "bought off" to want a chance to increase the jobs available for members, since they knew that one of the three unions, and one of the two unlicensed unions would automatically get the jobs. The only ships in the US that are not unionized are ones that call at private piers (refinery piers), like tankers. And even these are partially unionized.

What B2B combinations does carnival block you from taking?

An example would be Hawaii to Vancouver for a repositioning cruise and then Vancouver to Seattle for an Alaska cruise. This is because the journey would start in one US port (Hawaii) and end in a different US port (Seattle) without traveling to a distant foreign port (Canada is not considered distant).

When we did our Vancouver to Seattle Alaska cruise a bunch of people wanted to also do the Hawaii to Vancouver cruise before it, but were not allowed because of the PSVA.