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How To Increase Vessel Valuation With MARAD Waivers And Coastwise Endorsements

Your step-by-step guide on how to apply for an exemption to the Jones Act.

It was the year 1920 when Section 27 of the Merchant Marine Act was written and placed into law. Most commonly known as the Jones Act, Section 27 is a federal law that requires vessels operating in coastwise commerce (meaning, to operate commercially) to be built in the United States. That means a foreign-built vessel cannot be used for commercial charters where crew, food, and/or fuel are provided along with the boat.

One of the initial purposes of the Jones Act was to stimulate U.S. shipbuilding and related industries after World War I. The only thing is… the writers of the law didn’t anticipate what life would be like 100 years later. And boy, is it different.

Today, the law is sort of a catch 22 and essentially, it’s where the concept of “bareboat charter” (also known as demise charter) came about in the states. To get around the law, an owner of a foreign-built vessel might rent their boat to a customer without crew, food, or fuel. But of course, that comes with a whole set of complications, liability, and safety concerns further described in our article about The Merchant Marine Act and The Jones Act.

But alas! Owners of foreign-built boats that are more than 3 years old can apply for an exemption to the Jones Act. It’s called a MARAD Small Vessel Waiver, which when combined with a Coastwise Trade Endorsement, allows foreign-built vessels to operate as a crewed commercial charter in the U.S., and it’s not a (totally) scary application process.

Let’s break down a few common questions related to MARAD Waiver approval, the USCG Coastwise Endorsement, and the Uninspected Passenger Vessel (UPV) Examination, all of which theoretically increase your vessel’s valuation and operating flexibility when done properly.