Tags: Glossary

A federal law requires coastal and inter-coastal traffic to be carried in U.S.-built and registered ships.

What is Cabotage?

Cabotage is a term used in the field of logistics to describe a federal law that regulates the transportation of goods and passengers between two points within a country's coastal or inter-coastal areas. This law mandates that such traffic must be carried exclusively by ships that are built and registered in the same country.

The purpose of cabotage laws is to protect a country's domestic shipping industry by ensuring that it has a fair opportunity to compete with foreign shipping companies. By requiring coastal and inter-coastal traffic to be transported only by domestically built and registered ships, cabotage laws aim to promote the growth and development of the national maritime sector.

One of the key reasons behind the implementation of cabotage laws is to maintain national security and sovereignty. By having control over the transportation of goods and passengers within its own coastal waters, a country can safeguard its economic interests and ensure that it has the necessary infrastructure and capabilities to respond to any potential threats or emergencies.

Cabotage laws also have economic implications. By restricting foreign ships from engaging in domestic coastal trade, these laws create a level playing field for domestic shipping companies. This protectionist measure allows domestic companies to compete fairly, which can lead to the growth of the national maritime industry, the creation of jobs, and the generation of revenue for the country.

However, it is important to note that cabotage laws can also have some drawbacks. They may limit competition and potentially result in higher transportation costs for goods and passengers. Additionally, they can restrict the availability of certain goods or services that may be more efficiently provided by foreign ships.

In conclusion, cabotage is a federal law that regulates the transportation of goods and passengers within a country's coastal and inter-coastal areas. It aims to protect the domestic shipping industry, ensure national security, and promote economic growth. While cabotage laws have their advantages, they can also have some disadvantages. It is crucial for countries to strike a balance between protecting their domestic maritime sector and promoting efficient and cost-effective transportation.

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