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Hawaii, Alaska, territories team up on Jones Act

Posted: March 16, 2014 - 11:00pm

HONOLULU — Lawmakers from Hawaii, Alaska, Puerto Rico and Guam are teaming up to pressure the U.S. government for relief from a maritime law passed in the 1920s.

The Jones Act was designed to protect the domestic shipping industry. It states that only ships made in the U.S. and flying the country’s flags can deliver goods between U.S. ports.

That means a cargo ship from China cannot deliver goods from one U.S. port to another. It can’t, for example, take goods picked up from Los Angeles to Hawaii.

Hawaii state Sen. Sam Slom says the law punishes the people of Alaska, Puerto Rico, Guam and Hawaii with high costs of living.

Representatives from the impacted states and territories met in a videoconference Thursday.

“All of our areas are specifically impacted by the Jones Act,” Slom said. “It is now known that the Hawaiian cost of living, primarily because of our additional shipping cost and because of the Jones Act, are now 49 percent higher than the U.S. mainland. And this is becoming unbearable. It’s difficult for individuals. It’s difficult for families. It’s difficult for small businesses as well.

Slom is part of a bipartisan group of Hawaii lawmakers pushing Congress to reconsider the Jones Act or to consider a waiver for noncontiguous states and territories. Slom said it costs about $790 to ship a 40-foot container from Los Angeles to Shanghai, but it costs $8,700 to ship the same container from Los Angeles to Honolulu.

Alaskan lawmakers have made a similar request to Congress, but the state hasn’t yet seen results, said Alaska state Sen. Fred Dyson. Like Hawaii, the state brings in most of its goods by ship or airplane.

Most of Alaska’s goods move along the coast, and freight rates would be drastically reduced if the state could use foreign ships, he said.

The American Maritime Partnership, a coalition that represents vessel owners and operators, unions, equipment yards and vendors, says the Jones Act is critical for economic and security reasons. It says the domestic maritime industry is responsible for nearly 500,000 jobs and more than $100 billion in annual economic output.

The Puerto Rico Senate passed a resolution calling for an investigation of the economic impact of the Jones Act, Puerto Rico Sen. Rossana Lopez Leon said. Studies by the World Economic Forum and Federal Reserve Bank in New York have concluded that the Jones Act hinders economic development in the commonwealth, she said.

“If we truly want to create jobs and boost our economic development, we need to eliminate the implementation of the Jones Act in Puerto Rico,” Lopez Leon said.

The territory of Guam is currently exempt from the Jones Act, but because natural shipping lanes pass through Honolulu the law affects Guam.

Rep. Gene Ward of Hawaii said the state isn’t asking for much, just a waiver from the rules. “Having something made, flagged, and owned by America is obsolete,” said Ward, a Republican.

The cost of building ships in the U.S. is five times higher than constructing comparable ships in Japan and South Korea, said Michael Hansen, president of the Hawaii Shipper’s Council, an association that represents the interest of cargo owners. There also are far fewer ships built in the U.S. than abroad.

“The extraordinarily high cost of shipbuilding and the artificial shortage or commercial ships in the U.S. creates a narrow and highly concentrated domestic shipping market,” Hansen said.

The group agreed to stay in touch and meet again to coordinate efforts.

“The general population is utterly ignorant of either the Jones Act or its implications for us,” Dyson said. “We have a job to do to explain what the savings would be.”

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