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Editorial | Island Voices

In defense of the Jones Act

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Lee Catterall’s analysis of the Jones Act ("Time to Ship Out?" Honolulu Star-Advertiser, June 27) raised some interesting points surrounding the overall importance of federal shipping laws, but missed specific, critical concerns as to how these laws protect Hawaii residents and ensure reliable overseas shipping to our ports.

Hawaii is unique in the nation for our reliance on ocean-going vessels for transporting goods to our state. Trucks and rail are not available, and air shipping is either too costly or, in the case of goods like automobiles and petroleum, simply not feasible.

Given our dependence on overseas transport, some argue that Hawaii should be exempt from the Jones Act, federal laws that govern the waterborne carriage of merchandise between U.S. ports. They claim that by limiting shipping to vessels built in the United States, owned and crewed by American citizens, and registered under the American flag, the Jones Act creates a "duopoly," unreasonably increases the costs of goods, and places an undue burden on Hawaii residents.

Those assertions are untrue. Rather, the Jones Act provides vital protections to Hawaii residents and ensures that we do not fall prey to foreign influences, while costing each of us less than the price of one plate lunch a year.

Modern Hawaii has always benefited from a variety of domestic shipping lines carrying cargo to our shores; since 1980, 11 carriers have initiated service to Hawaii, and four have exited the market. Each operates independently, while all comply with uniform laws and regulations that protect their crews and cargo, our natural environment, and all of us as consumers. The result is a shipping market that is both competitive and reliable. This holds true not only for shipments to and from the mainland but also for interisland shipments by tug and barge.

Without the Jones Act — if our market were open to foreign shippers — there is no guarantee that shipping rates would fall. However, we would find ourselves in a situation where carriers operating under different flags would be covered by a wide variety of regulations. The condition of our goods and the reliability of deliveries would be less secure.

If shipping rates did go down, those reductions could be the product of poor crew conditions, routes that limit eastbound shipments carrying Hawaii products to the mainland, or subsidies offered shippers by foreign states.

Unlike many other countries, our government does not provide subsidies to support our shipping industry. Under the Jones Act, with all shippers competing on a level playing field, that system is fair. However, shipping lines from countries that do offer subsidies, such as Japan, South Korea and China, may be in a position to lower shipping rates and drive domestic carriers out of our market. As a result, Hawaii could find itself at the mercy of foreign governments; if they withdrew their subsidies — an act over which we could exert no control — our shipping costs could experience a sudden, crippling increase. In addition to driving up the cost of goods, that would divert a larger portion of our economy overseas.

Hawaii could also face a situation where one or more foreign shipping lines withdraw from our market because of their own domestic concerns. Anything from economic difficulties in Japan to political challenges in South Korea or social instability in China could provoke a shipper to end service to our state. Again, conditions that we cannot entirely foresee or adequately control could have devastating effects.

While many place primary emphasis on the delivery of consumer goods, our greatest vulnerability lies in the fact that, for better or worse, we import all of the oil that serves our energy needs, including the petroleum that produces the vast majority of Hawaii’s electricity. A serious disruption in shipping is not primarily about rice and toilet paper; it is about serving fundamental needs.

The cost to Hawaii consumers for this level of security and reliability is eminently reasonable. A 2003 review by the Maritime Cabotage Task Force found that the Jones Act costs Hawaii residents $5.52 per person per year, or less than two cents per person per day. That minimal additional cost provides tremendous value as an investment in our state’s security, and remains a necessary part of providing for Hawaii residents.

Robert G. Frame is a principal in the Honolulu law firm of Frame and Nakano, which specializes in admiralty and maritime law.

 

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