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Thursday, July 27, 2017

Jones Act waiver for USG/USAC to 13 November

US DHS - Jones Act waiver for USG/USAC to 13 November

 

The US Department of Homeland Security (DHS) issued a notice stating that, effective through 13 November, the cabotage restrictions of the Jones Act have been waived so as to allow tankers not otherwise eligible to engage in the US coastwise trade to transport petroleum products from ports in the Gulf of Mexico to ports on the northeastern Atlantic coast.

In addition, it has been reported that the US Environmental Protection Agency has also waived the ECA air standards for ships operating in this region.

Source: Bryant's Maritime Consulting

 

Tradewinds reports that the US government's decision to issue a temporary blanket waiver of the US Jones Act has sent rates for MR tankers skyrocketing.

 

The move is designed to allow foreign-flagged tankers to transport petroleum products from the US Gulf (USG) to the US Atlantic coast (USAC).

 

On Friday morning rates on the USG-UKC route – which has become a de facto benchmark for the growing USG market – had risen to WS160.

 

But post the announcement of the waiver, rates quickly rose to as high as WS190 offering owners a time charter equivalent (TCE) of around $26,200 per day.

 

But US broker Charles R Weber suggests the move appears more politically motivated, than driven by necessity.

 

“Though no fundamental shortage had yet materialised, faced with multiple images of motorists queuing for miles to purchase gasoline, the Department of Homeland Security sought to allay fears by permitting foreign-flagged tankers to trade cargos within US waters,” it says.

 

“It remains to be seen how this will positively impact consumers in the US Northeast, where a number of MR tankers are already waiting outside of New York Harbour to discharge gasoline cargoes from Europe, Canada and the Caribbean as soon as port facilities reopen.”

 

Charles R Weber’s senior market analyst George P Los said that following the waiver announcement essentially all fresh ex-USG inquiry includes a USAC option.

 

Additionally, he said several charterers have sought to revise voyage orders for tankers already on spot charters with at least one having already ordered a deviation to the USAC.

 

“Given the level of inquiry, fresh interest to trade the sudden USG-USAC arbitrage and continued delays at New York harbour, rates appear set to extend this week’s gains during the star of the week ahead,” Los said.