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Cargo Preference Laws and Regulations

This page provides more details about the many cargo preference laws and regulations. It is not exhaustive and does not necessarily cover all scenarios and situations. For additional information, contact the Office of Cargo and Commercial Sealift.

Military Cargoes

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 Department of Defense (DoD) contracts with domestic and foreign contractors. Cargo preference applies to all components of the shipping process, not only to the end product. Below are some of key guidance artifacts: 

  • Defense Federal Acquisition Regulations Supplement (DFARS):
  • DFARS Table of Contents
  • Transportation of Supplies at Sea, Clause 252.247-7023
  • Notification of Transportation of Supplies by Sea, Clause 252.247-7024
  • Ocean Transportation By U.S.-Flag Vessels, Subpart 247.5

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Civilian Agencies Cargoes (includes Ex-Im Bank)

Cargo Preference Act of 1954. Section 901(b) of the Merchant Marine Act of 1936, as amended and codified in various subsequent documents (46 USC 55305, Title 46 CFR Part 381, P.L. 83-664). 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. The “at least 50 percent” requirement is applicable to the extent such vessels are available at fair and reasonable rates, as determined by the Maritime Administration.

  • The Cargo Preference Act of 1954 is applied to and administered by all Federal Departments and Agencies (except DoD)
  • Each Department or Agency is responsible for ensuring compliance, including contractors. An effective measure to promote compliance is to include the appropriate cargo preference clauses in all program contracts and documentation.
  • Documentation on all government-impelled cargo moves must be reported to the Maritime Administration within (20) working days from date of loading on all shipments loaded INSIDE the United States and (30) working days for shipments loaded OUTSIDE the United States. This reporting requirement applies to cargo moving on a foreign-flag OR U.S.-flag vessels (as a way to track and weed out potential violations). A copy of the ocean carrier’s bill of lading, certified onboard (to include rates and charges), is usually sufficient.

For additional information, see "The Cargo Preference Act of 1954 and Related Legislation”, an informative article from the July 2008 edition of Journal of Maritime Law & Commerce.

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.

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Agricultural Cargoes

Cargo Preference Act of 1954. Section 901(b) of the Merchant Marine Act of 1936, as amended and codified in various subsequent documents (46 USC 55305, Title 46 CFR Part 381, P.L. 83-664). 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. The “at least 50 percent” requirement is applicable to the extent such vessels are available at fair and reasonable rates, as determined by the Maritime Administration.

The Food for Peace Act (7 USC 1691 to 1738r) contains the various programs, as listed below, the United States uses to support its food supply mission:

TITLE II. (7 USC 1721) the Emergency and Private Assistance Program provides for agricultural commodities donated by the U.S. government to meet emergency needs.  Commodities may be provided under government-to-government agreements or through public and private agencies, including intergovernmental organizations, such as the United Nations World Food Program and other multilateral organizations. Non-emergency assistance may only be provided through private voluntary organizations, cooperatives, and intergovernmental organizations.

TITLE III. (7 USC 1727) the Bilateral Grant Program provides for government-to-government grants to support long-term growth in the least developed countries. Donated commodities are sold in the recipient country, and the revenue generated is used to support economic development programs. In recent years, this title has been inactive.

FOOD FOR PROGRESS. (7 USC 1736o) provides for the donation or credit sale of U.S. commodities to developing countries and emerging democracies to support democracy and an expansion of private enterprise.  The donated commodities may be sold in the recipient country, and the proceeds used to support agricultural, economic, or infrastructure development programs. Assistance is provided through foreign governments, private voluntary organizations, nonprofit organizations, cooperatives, or intergovernmental organizations.

SECTION 416. (7 USC 1431) the Disposition of Commodities Program provides for overseas donations of surplus commodities. Availability of commodities depends on Commodity Credit Corporation (CCC) inventories and acquisitions. The commodities are made available for donation through agreements with foreign governments, private voluntary organizations, cooperatives, and intergovernmental organizations. The donated commodities may be sold in the recipient country, and the proceeds used to support agricultural, economic, or infrastructure development programs.

MCGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION AND CHILD NUTRITION PROGRAM. (7 USC 1736o-1) provides for donations of U.S. agricultural products, as well as financial and technical assistance, for school feeding and maternal and child nutrition projects in low-income, food-deficit countries. The commodities are made available for donation through agreements with private voluntary organizations, cooperatives, intergovernmental organizations, and foreign governments. Commodities may be donated for direct feeding or for local sale to generate proceeds to support school feeding and nutrition projects.

BILL EMERSON HUMANTARIAN TRUST. (7 USC 1736f-1) is a food reserve program, administered under the authority of the Secretary of Agriculture. U.S., from which commodities held in reserve can be tapped for humanitarian food crises in developing countries. The Secretary of Agriculture is authorized to release commodities from the Trust to provide food aid for unanticipated emergency needs that cannot otherwise be met through Food for Peace.

Title I. Food for Progress, Section 416(b), and the McGovern-Dole programs are administered by the U.S. Department of Agriculture (USDA). Titles II and III are administered by the U.S. Agency for International Development (USAID).

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Guidance Documents

The following table lists additional cargo preference guidance documents. 

 
 Reference Document
OCP-2009-01 Vessels, Owners, Operators Prohibited from Carrying Government Impelled Cargo
OCP-2009-02 Prioritization of U.S.-Flag Shipping Services – Listing of priorities of U.S.-flag shipping services for compliance with cargo preference requirements of the Cargo Preference Act of 1954
MIL-2009-01 Transportation Requirements for Department of Defense Projects in Guam
AG-2009-01 “The United States Government is currently in the process of reviewing the manner in which the U.S. Agency for International Development (AID) and the U.S. Department of Agriculture (USDA) are conforming with the Cargo Preference Act (“CPA”), 46 U.S.C. § 55305 et seq., which requires that a minimum percentage of ocean cargo generated by certain Government programs be transported on U.S.-flag vessels. While that review process is pending, the agencies that operate CPA-related programs have agreed to comply with the CPA in a uniform manner. The details of that agreement can be found [here].”
AG-2009-03 Procedures for Determining Vessel Categories Liberty Appeal to MarAd (November 2009)
AG-2009-02 Memorandum of Understanding among the U.S. Department of Agriculture, the U.S. Department of Transportation, and the U.S. Agency for International Development Regarding Procedures for Determining Vessel Service Categories for Purposes of the Cargo Preference Act
MIL-2010-01 Notice to the Trade – Reminder of Priority System to Maximize the Use of U.S.-Flag Vessels for DOD Cargoes
MIL-2010-02 Summary of Procedures to Follow Under Department of Defense Contracts When U.S.-Flag Service is Not Available (updated 1/2/2018)

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Quesitons?

For questions about any cargo preference law, regulation, or guiding document, contact the Office of Cargo and Commercial Sealift.

Updated: Friday, July 19, 2019