Case Calls For Changes To Jones Act But There's Already Opposition

Dec 23, 2019

Hawaii Congressman Ed Case wants amendments to the Jones Act, the maritime shipping law that requires only American-owned and built ships transport cargo between the U.S mainland and Hawaii as well as other American territories and states.

Supporters of the Merchant Marine Act of 1920, known commonly as the Jones Act, say the law ensures national security, provides jobs and is an economic driver, contributing more than $3 billion annually to Hawaii’s economy.

Opponents say it drives up shipping costs and contributes to Hawaii's high cost of living.

The shipping law has been long debated and its impact on the islands closely scrutinized.

In a September 2019 study, University of Hawaii Economic Research Organization researcher Will Olney says his findings support claims that the Jones Act has reduced domestic water trade and increased domestic prices.

The study says over 90 percent of merchant ships are built by Japan, Korea and China and that it now costs about 400% to 500% more to construct a ship in the U.S. As a result, the number of domestic ships built have plummeted and the requirement that domestic good be shipped on American-built vessels "has become more onerous over time." 

Case maintains the act is a major factor contributing to the high cost of goods in Hawaii.

“Because the Jones Act severely limits the supply of shipping to and from our communities, it has allowed a very few companies to control our very lifeline to the outside world and as a result command shipping rates way higher than the rest of the world," Case said in a statement.

The congressman is introducing three measures that would amend the Jones Act with the aim of lowering the costs he says are associated with it.

One measure would rescind the act wherever monopolies or duopolies develop. A second would exempt noncontiguous U.S. locations, including Hawaii, from the act, and a third would set a "reasonable rate" that domestic shippers can charge at no more than 10 percent above international shipping rates for comparable routes.

Opposition to the changes is coming from the American Maritime Partnership, which represents U.S. shipping interests. The group's president, Matt Woodruff,  said in a statement that the Jones Act delivers national security and economic benefits and "is especially true for Hawaii which ranks #2 of all U.S. states for per capita jobs related to the domestic maritime industry." 

He said in addition to the billions the industry contributes to the Hawaii economy, it creates $787 million in worker income through 13,000 jobs in the islands.

"The Case proposal would outsource these real economic benefits to foreign crews and workers. Without the Jones Act, the people of Hawaii could find themselves dependent on the whims of a Chinese government-controlled shipping company for their groceries.

"These are reasons why an overwhelming majority of Congress from both sides of the aisle as well as dozens of national security leaders support the Jones Act," Woodruff stated.