Home Knowledge Base Cabotage Law in Sea Transportation

Cabotage Law in Sea Transportation

What Does Cabotage Mean?

Cabotage Law in Sea Transportation is the transporting of goods and passengers between ports in a country by a foreign transporter.

What is Cabotage Restriction Meaning?

Some countries don’t allow foreign transporters( foreign-flagged vessels) to transport goods between ports of the country.  This describes as the Cabotage Law in Sea Transportation.

Why Cabotage Law was Implemented?

The law was implemented mainly to protect national maritime service and to maximize national security. Sometimes domestic maritime may not strong enough to compete with foreign maritime services. So, by letting both foreign and domestic competing together will push the domestic service providers out of the game.  There are both advantages and disadvantages in the law. Using the cabotage wisely, a country can gain in the international market.

Plus and Minus in Cabotage Law

Some developing countries make strong their supply chain by cabotage rules, while some face challenges in their supply chain with the same. By exposing domestic maritime service to international services can improve the quality of the maritime services and reduce freight rate. At the same time, Due to huge competition, uplifting the law can destroy the domestic players who are not strong enough to compete with international players. For small countries, cargo under the cabotage rules could be very less. Competing lot of players for a small amount of cargo is questionable. For big countries, restricting competition with cabotage leads to less efficient and costly transportation. Countries with a big coastline can gain by letting liner to compete for domestic cargo.

With cabotage regulations, liners have to hire feeder vessels or flag state vessel of the particular country to move goods. This could lead to a delay the cargo movements, increasing total transport cost as well as increase the inefficiency.

Thus, if a nation has a considerable amount of a vessel fleet, protecting the national fleet get priority where uplifting the cabotage regulation becomes questionable. At the same time, if the national flagged fleet is small to handle the volume under cabotage, it is ideal to uplift the regulation.

Some countries attract new businesses, improve the efficiency among ports with competitions by uplifting the cabotage law. India is one of the best examples. By holding control over maritime service up to some extent with the cabotage law, countries can restrict the cash flow to other countries too. In another way, a small country with few ports can become a hub country instead of having a hub port by increasing the connectivity and efficiency by uplifting the cabotage regulation.

What is the Jones  Act?

The Jones Act or the United States Merchant Marine Act-1920 speaks on the U.S cabotage law. As per the act, goods transport between US ports should be US-flagged vessel, the vessel should be built in the US. Further, the vessel crew should be US citizens, and vessels should own by a US citizen. If the vessel uses steel for her repairs, the total weight of the steel should be less than 10% of the vessel weight.

So, the Jones act consider as a very prohibitive cabotage law.


Please enter your comment!
Please enter your name here


Hydrogen and Biofuel will be Future Shipping’s Fuel

MSC said they will be further exploring the viability of hydrogen and fuels derived from it as a possible fuel source for...

LR Awards Digital Safe Security Certification to “Ever Forward”

LR has awarded Digital Safe Security certification to Evergreen Marine Corp. Ltd. (Evergreen), for its latest 12,000 TEU ultra large container ship...

DCSA Releases Standards for Cargo Operations

It is essential for the vessel operator to forecast the estimated number of container moves (load and discharge) in order to estimate...

Abu Dhabi Ports Acquires MICCO

With the integration of MICCO as part of Abu Dhabi Ports Logistics, the Group’s logistical arm is setting itself apart from the...

DP World to Strengthen the Business with Israel and Dubai

DP World and Dubai Customs signed a series of memorandums of understanding (MOUs) to develop trade links between Israel and the United...

Maersk plans to Open a Carbon Neutral Warehouse in Poland

Maersk plans to Open a Carbon Neutral Phama Warehouse in Poland. This will add more capacity to the existing warehousing capacity in...

More Articles

Largest Shipbuilding Companies in the world 2020

Top 10 Largest Shipbuilding Companies in the world 2020 By Container ship Capacity 01. Samsung Heavy Industries

Customs Declaration- CusDec

What is CusDec Stand for? Customs Declaration What is the Use of Customs Declaration?

The Charter Party Contract

What is Chartering? In general, you know how cargo moves via sea with the support of the carrier. If...

What is HS Code – Harmonized System (The complete Guide)

What is HS Code? Harmonized Commodity Description and Coding System is commonly known as the...

Logistics Jargon

The logistics jargon or the logistics terminologies are important to know when you deal with the industry. We are trying our best...

AMS filing- Automated Manifest System

What is AMS meaning in shipping? AMS-Automated Manifest System is the manifesting system in U.S ports. This is also...