Lawmakers Call For 100-Year-Old Jones Act Law To Be Waived

By Dannie McIntire 

Writer For The City-County Observer

According to a recent article on the Fox Business website, several of our representatives in congress are wanting to either temporarily waiver the requirements of the Jones Act or completely repeal the law.  

The Jones Act was established in 1920 with the goal of maintaining a robust U.S. maritime industry, both for trade and national defense. The Jones Act basically requires that goods shipped between U.S. ports are to be transported on ships that are built, owned, and operated by United States citizens or permanent residents. The Jones Act’s main intent is to protect the American maritime industry from foreign competition.

To many, the Jones Act sounds logical, keep shipping between American ports regulated to only American owned/flagged ships. However, today only 96 Jones Act qualified vessels exist according to the Department of Transportation. The Jones Act effectively stifles competition resulting in higher shipping rates for a port to port American shipping.

One example of the Jones Act stifling shipping rate competition is the State of Hawaii. 

Hawaii has one oil refinery, due to the Jones Act, it can be cheaper for their refinery to import foreign oil from countries in the pacific rim than from the centennial United States.

Michael N. Hansen is president of the Hawaii Shippers’ Council, which has two dozen members. He re-released a 1997 report from the council partly because, he said, no similar credible studies had been done since then on the Jones Act’s impact on the local economy. The report said the Jones Act depressed Hawaii’s gross domestic product by 3.1% a year – which works out to $1,014 per person.

Another example, A study released by the New York Federal Reserve in 2012 found that the cost of transporting a shipping container to Puerto Rico from the mainland was twice as high as shipping the same container from a foreign port.

According to numerous studies that discuss the economic costs associated with the Jones Act:

• Transport costs for a ship subject to the Jones Act are twice as high versus a ship that is not subject to the Jones Act,
• Due to the requirements of an American crew, operating costs for a ship subject to the Jones Act are more than 2.7 times higher, and
• The average price of a ship built in the US is two to four times higher than the average price of a ship built outside of the country.

Hoosiers are not immune to inflated costs resulting from the Jones Act. Goods that Hoosiers purchase which is shipped between American ports incur the cost of this restrictive shipping competition. 

 If America wants to truly be part of the global economy we need to become more adept at competing against our foreign competitors instead of protecting an industry that has little or no incentive to reduce the cost to the American people. Polices favoring competition drives innovation which often reduces the cost to the consumer, protectionism policies tend to stifle competition hitting the consumer in the pocketbook.

America was once the top competitor, we need to take back the throne in the world economy by repealing regulations and laws that stifle invocation and fair competition.