Letter for Aug. 29, 2015
Jones Act to blame for Hawaii costs
In a recent letter Loyd Clayton asked why it is so expensive to ship items from the Mainland to here. Loyd, if you’re reading this, you’d better sit down.
The culprit is the Jones Act, also known as the Merchant Marine Act of 1920. That’s right, it’s been around for nearly 100 years. The objective of the Jones Act? Pretty simple.
In the preamble it states this: “… to ensure a vibrant United States maritime industry.”
Seems harmless, doesn’t it?
It’s not. Under the act, any ship that transports cargo between two U.S. ports, say, San Francisco and Honolulu, must be U.S. flagged, U.S. crewed, U.S. owned and U.S. built. It excludes any foreign country from competing with U.S. ships for Hawaii’s trade. In effect, the Jones Act subsidizes the domestic shipping industry and gives them a monopoly on trade to Hawaii, as well as carte blanche to charge any rate they darn well please.
Is it fair?
Hardly. The World Economic Forum and Federal Reserve Bank in New York concluded that the Jones Act hinders economic development. But don’t bother raising a stink because no one is going to listen to you — not the bigger businesses, like Matson, who make a whole lot of money because of the act, or our congressional delegation, who say that “creating and maintaining an American-owned and-operated fleet would be crucial in times of war and other emergencies.” (Funny, I didn’t realize we were that close to another war.) If that’s not enough, the coalition that supports the Jones Act includes politicians from shipbuilding states, so changing any part of the act would endanger the coalition.
Finally, there’s the money angle. The Hawaiian Islands are hundreds of miles away from major shipping routes, so it wouldn’t be profitable for foreign carriers to change course in mid-stream and make a stop in Hawaii just to drop off a bunch of bananas.