A US maritime union warns that American Industrial Partners (AIP)'s moves into shipping could spell doom for the Jones Act cabotage law.
American Maritime Officers (AMO) president Paul Doell said AIP affiliate Rand Logistics put nine of the American Steamship Co's 12 debt-free bulkers up for collateral in securing a $390m loan last May, potentially endangering the 114-year-old Buffalo, New York, company.
"If Rand's poor credit tradition prevails here, the American Steamship Co fleet will be sold for the exclusive benefit of Rand Logistics and [AIP]," Doell said.
"The potential consequences along the way to American Steamship Co's fast fade from Great Lakes service include a rate war, in which long-established Great Lakes bulk fleets will have to diminish labour standards and pare wages and benefits to compete and survive.
"As fleets go under, powerful business and political interests will demand waiver of exemption from the venerable Jones Act to fill service gaps — foreign-flagged ships will be delivering iron ore, limestone and coal to Midwest steel, automotive and energy industries.
"This will inspire calls for comparable Jones Act concessions in East, Gulf and West Coast and inland markets and, ultimately, outright repeal of this domestic shipping law."
New York private equity firm AIP acquired the American Steamship Co in February 2020 from railcar lessor GATX for $260m, pairing its fleet with Rand's three conventional bulkers and 11 self-unloading vessels.
The deal created what Rand at the time called the most diverse fleet on the Great Lakes.
But since then, Doell said Rand subsidiary Grand River Navigation has had a difficult time completing bareboat charters of five American Steamship Co vessels.
Grand River has a labour agreement with an AMO competitor, the International Organization of Masters, Mates and Pilots.
Doell argued that the same "chaos" seen in the Great Lakes could be coming to inland and oceangoing fleets, with AIP completing its $1bn acquisition of Seacor Holdings on Thursday.
Seacor and its diversified fleet of tankers, bulkers, tank barges, tugs, ro-ros and others — many in the US flag — have been taken private, as founder Charles Fabrikant steps down as chief executive in favour of his son, Eric.
AIP did not immediately return a request for comment.
The century-old Jones Act mandates that goods shipped between domestic ports be carried on locally built, US-flag vessels, crewed and owned primarily by Americans.
The law enjoys broad support from elected officials, who say it provides jobs and strengthens national security. Critics argue that it raises costs.
Former President Donald Trump was said to have considered measures that could have weakened the law, but ultimately did not pursue them. New President Joe Biden issued an executive order in January prioritising the US flag.
Figures from domestic unions, shipping companies and industry groups cheered the order, Doell included.
