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Laws and Regulations

Military Cargo Preference Act of 1904 codified at 10 USC 2631, Under this law all items procured for or owned by U.S. military departments and defense agencies be carried exclusively (100 percent) on U.S.-flag vessels available at rates that are not excessive or otherwise unreasonable. These cargoes are generated primarily by DOD contracts with domestic and foreign contractors. Cargo preference applies not only to the end product but also to component parts.

Cargo Preference Act of 1954 refers to section 901(b) of the Merchant Marine Act of 1936, as amended and codified at 46 USC 55305. The regulations can be found at Title 46 CFR Part 381. The law requires that at least 50 percent of the gross tonnage of all Government generated cargo, meaning cargoes procured, furnished, or financed by the United States Government, shall be transported on privately owned, U.S.-flag commercial vessels to the extent such vessels are available at fair and reasonable rates.

Public Resolution (PR) 17 – 73rd Congress, approved March 26, 1934 and codified at 46 USC 55304. PR 17 requires that all cargoes generated by an instrumentality of the Government, be shipped (100 percent) on U.S.-flag vessels, unless the Maritime Administration issues a determination of non-availability as per the Maritime Administration U.S.-Flag Shipping Guidance for Shipments Financed by the Export-Import Bank of the United States.

Additional Information:
“The Cargo Preference Act of 1954 and Related Legislation” (article from July 2008 Journal of Maritime Law & Commerce)

Updated: Wednesday, October 31, 2018