Transportation analyst and presidential advisor Bob Poole of the Reason Foundation raises this question, which is critical to Hawaii. Here is his analysis:. All highlights were added by me.
"I’m not sure how many readers are aware of the
Merchant
Marine Act of 1920, generally known as the
Jones Act. For 90 years, this piece of protectionist
legislation has been a politically sacred cow. It requires that all water-borne
shipping from one U.S. port to another—whether along inland waterways,
along coastwise routes, or between the mainland and Alaska, Hawaii, Guam, and
Puerto Rico—be provided only via U.S.-made vessels, owned by U.S.
companies, and operated by U.S. crews. The original rationale for this was
national defense—but post-World War II, the military has made voluntary
deals with major U.S. airlines to make certain planes available in times of
military need, and the same could be done for ocean vessels. Today, the Jones
Act is supported mostly by the seafarers unions and the dwindling number of
companies that own and operate Jones Act ships.
The consequences of this legislation are many, and nearly
all negative. My MIT classmate William Hockberger (naval architecture)
described the impact on the U.S. marine industry to me this way:
“Our coastal and seagoing fleet is
pathetic*, along with the marine industry that is supposed to provide and
sustain it, as a result of the ‘protection’ that has prevailed for most of our
country’s existence. If ship operating companies could buy ships on the open
market, if shippers could use ship services provided by any company in the
world (subject to some basic rules regarding human and environmental safety),
if the money to buy the ships could come from anywhere, and crews didn’t have
to be mainly U.S. citizens, we could have a marine industry much larger than it
is and the economics would be very different. The cost of using a ship [versus
some other mode] would be much lower, and in many cases a ship would be the
preferred alternative.”
The very high costs resulting from the Jones Act have
basically killed nearly all proposals for so-called “marine highway” shipping.
Recent reports from the Maritime Administration, the Congressional Research
Service, and the Center for Commercial Deployment of Transportation Technology
have all blamed the high costs imposed by the Act for the lack of progress in
coastwise shipping.
Other victims of the Jones Act are the people and industries
of Alaska, Guam, Hawaii, and Puerto Rico, who pay what amount to monopoly
prices for transportation of the food, consumer products, and energy that must
be shipped in from the mainland.
And then there are U.S. ports and waterways. The Jones Act
also applies to all dredging vessels, ballooning the cost of maintenance
dredging of inland waterways and deepening of major harbors.
Although the Jones Act has long been a sacred cow, there are
several straws in the wind suggesting that change might be possible. Last
November Honolulu attorney John Carroll filed a class action lawsuit against
the federal government, arguing that the Act violates the Commerce Clause of
the Constitution and subjects Hawaiians to a shared monopoly on shipments of
imported goods. It seeks damages and a halt to enforcement of the Act.
Last month Americans for Tax Reform took up the cause, arguing
that the Jones Act should be repealed because, among other things, it is
driving up the cost (and reducing the extent) of shipping gasoline by water
from the Gulf Coast to the Northeast.
And then there is the proposed free-trade agreement between
the United States and the European Union. Among the items on the agenda for
this proposed deal, according to
The
Economist, is to eliminate the protectionist restrictions on shipping imposed
by the Jones Act.
As I noted in last month’s issue, Congress is planning to
enact a new Water Resources & Development Act this year, dealing with both
harbors and inland (as well as coastwise) waterways. This would be a good
opportunity to tackle the reform or repeal of the Jones Act, a precondition for
new investment in America’s maritime industry."
If you ever wondered why Senator Inouye and his followers are so successful in becoming "entrenched politicians" then the two words, Jones Act provide a big part of the answer. (All you have to do is check the campaign contributions for Hanabusa, Hirono, etc.)
(*) One of the main links of Hawaii to mainland US is Horizon Lines.
The average age of
Horizon’s fleet is 35 years as compared to 28 years for all Jones Act
noncontiguous trade container ships, and 12 years in the international
fleet. This is the picture of where US marine shipping is going with the Jones Act:
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