Jones Act great for some but most of us here suffer
We recently attempted to order a cabinet from a Seattle furniture dealer, priced at $1,133.
Shipping in the contiguous states was $211, but to Hawaii the cost was $988, almost the cost of the item.
Although the cabinet was made in Taiwan, it could not be off-loaded in Hawaii but rather had to be shipped to the West Coast, then loaded onto an American ship for the costly backward journey to Hawaii.
Welcome to the 1920 Jones Act, which mandates that all goods — even from Asia — be shipped to the islands by expensive American-built, -owned, -flagged and -crewed ships.
Called “an idiotic rule” by The Economist magazine, reliable sources estimate the Jones Act increases our cost of living by at least one-third above the mainland average.
The U.S. International Trade Commission reported that Jones Act shipping costs are 82 percent higher, about $600 million annually than competing foreign vessels.
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State Sen. Sam Slom researched that shipping a 40-foot container from Los Angeles to Shanghai costs $790 versus $8,700 for the same container to ship from Los Angeles to Honolulu.
Hawaii’s dramatic loss of dairies, poultry farms and reduced agricultural production can be attributed largely to the high cost of shipping in Hawaii.
Shipping industry interests and unions have significantly funded all of our congressional members, past and present.
Indeed, USA Today reports that the Jones Act is “ferociously defended by dedicated lobbies,” including the AFL-CIO and the International Longshore and Warehouse Union.
Hawaii’s congressional delegates are supporters of the Jones Act who see no reason to exempt Hawaii from an artificially imposed financial burden that increases the cost of everything — housing, education, healthcare, energy, business — and decreases the quality of life and opportunities for everyone in Hawaii.
Our high cost of living limits the future for our youth. Our brightest and highest educated will continue to leave for better paying careers, affordable homes, lower taxes, better educational opportunities and lower costs of living.
Before our eyes, Hawaii is becoming a paradise for wealthy foreigners and mainlanders populated by locals who continuously struggle against increasing living costs from which the poor and increasing homeless suffer disproportionately.
There is hope for Hawaii’s future, if people speak out against this economic injustice.
Ask our congressional leaders why they continue to support the Jones Act monopoly that protects and enriches politically powerful maritime shipping interests and unions on the backs, and from the pockets, of Hawaii’s struggling people.
Ask why:
>> Hawaii is denied access to about 90 percent of worldwide shipping at much lower costs.
>> They support building American ships at five times the cost of Asian ships.
>> Hawaii is named the worse state for making a living (workers get 55 cents for every dollar earned, adjusted for taxes and cost of living).
>> Hawaii is the worst state in which to do business.
>> Hawaii is the least affordable state in which to rent.
>> We have the highest per capita homeless rate in the U.S.: 45.1 homeless versus national average of 19 homeless per 10,000 population.
54 responses to “Jones Act great for some but most of us here suffer”
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The Jones Act hurts local people greatly, but unions and shipping lobbyists love it. Guess how our congress critters care more about.
Yup, ever drive down Nimitz Highway during an election year and see all the big guys holding political signs for candidates? it is s win for the owner’s of shipping companies, Unions, and politicians. The losers, general public. Bottom line, our fault for not voting these people out.
Sadly, there is no one else to vote for. Certainly would not vote for a republican. What do they stand for except welfare for the rich?
What do you call the Jones act besides “welfare for the rich?”
I don’t see much difference between the two parties. Both reward the powerful and wealthy, but you are willing to look the other way when it’s your team.
I’m always amazed at how you twist any subject to make your anti-republican bias known. How about commenting on the subject instead.
Ed Case was against the Jones Act, a Democrat, and he didn’t get elected to the Senate.
All Republicans are bad and they are all only for one thing. Seems like a pretty simplistic way of “thinking”.
Hawaii is held hostage by a monopoly party or kleptocracy. It is a deplorable situation and has been for decades. But the Dems. love keeping everyone on their plantation.
Hawaii is a small state. Do you really think republicans would actually change this? Wouldn’t be long before they are paid off too. This state used to be controlled by republicans and it wasn’t pretty. For example you probably couldn’t get into Oahu Country Club except as help.
You point out the environment that existed more than 50 years ago. You may be surprised to learn that OCC has been admitting non-whites for decades. Stop living in the past. The issue is not whether or not republicans would change anything. The issue is whether or not you support the Jones Act and, if not, how can we change it.
Allie, what are you talking about? The Jones Act was passed by Congress in the election year of 1920. The racist Woodrow Wilson, a Democrat, was President but took little part in the promulgation of the Act and had been in poor health for almost two years. I guess History Education was not much of a priority in ND.
you misread my post hon. I am well aware of the politics of the Jones Act.
Americans rather save two cents by sending money out of this country, rather than keep the money here at home.
If we were talking about only two cents the Jones Act would not be a problem. Unfortunately, the cost to Americans and specifically people in Hawaii, is a lot more.
Guaranteed our state legislators will be sweating nails over the higher tax burden they are going to need from us taxpayer to build and maintain rail. I’ve never known them to do anything that might help reduce the tax burden to the vast majority of Hawaii’s businesses and citizens such as getting rid of the Jone’s Act. They have never shown a propensity to do that, we need more squeaky wheels!
Governor Ige won’t touch it. Have you even seen him mention it? He avoids it at any opportunity.
Ige also doesn’t have the power to change it.
Please learn the difference between the levels of government and who has what power over what laws.
IGE dosent have the b@lls to do anything !
What would a Donald Trump comment on this Jones Act controversy?
Corruption is alive and well in hawaii
Tell us something that we do not know already?
The time for the South Hilo/Puna Foreign Trade Zone has arrived. Hilo Harbor and Airport becomes Free Trade ports and the entire 400,000 acres of the Political subdivision opens the door for Free Trade application to Hawaii County and the State of Hawaii. The establishment of the South Hilo/Puna Foreign Trade Zone expands Hawaii’s economic opportunities for the next 50 to 75 years. This develops Hawaii to become the true gateway between East and West. The Jones Act will not impact the Foreign Trade Zone Ports.
I sure hope so.
Kuroiwaj, Foreign Trade Zones (FTZ)s within the U.S. are in fact embraced by the coastwise laws including Section 27 of the Merchant Marine Act of 1920 commonly known as the “Jones Act.” As such, the South Hilo/Puna FTZ will be subject to the Jones Act. In addition, there are many other reasons why the port of Hilo on Hawaii Island will not become a gateway between East and West.
Lightfoot9, have had discussions in D.C. with Commerce Department on the issue. Jones Act restrictions can be left out of the Hilo Harbor FTZ, as is the Honolulu Harbor at Pier 9 FTZ. Foreign ships are allowed to load and unload at Pier 9.
Kuroiwaj, if so the Commerce Department people you spoke with do not know what they are talking about. I would suggest that you contact the Customs and Boarder Protection (CBP) of the Homeland Security Department. Customs has the main responsibility to enforce the Jones Act. There are knowledgeable Customs Officers in the Honolulu District Office who can sort this out for you. FYG, there are other FTZs in Hawaii — perhaps the best example is the Hawaiian Independent Energy (HIE) oil refinery in Kapolei (formerly the Tesoro Hawaii Refinery) — all cargo movement in to and out of the refinery are subject to the Jones Act.
Lightfoot9, you may be opposed to establishing a South Hilo/Puna FTZ with your posts, but, pls checkout the West Coast. In particular San Francisco and Long Beach FTZ’s with foreign flagged ships moving cargo between them and other FTZ harbors. San Diego has a huge are along the Mexican border with a number of hi-tech communication companies. The same foreign flagged ships also sail up the Mississippi to other FTZ ports. Explain why many of the crude oil freighters are foreign flagged that unload at sea for Chevron and at a time for Tesoro?
Kuroiwaj, this post is in response to yours of 1:19 p.m. I’m not opposed to the South Hilo/Puna FTZ and have no connection with it. The coastwise laws of the U.S. including the Jones Act apply to all FTZs located within the U.S. Foreign flag ships cannot transport cargo from one FTZ to another if they are both located in the U.S. Foreign flag ships can discharge foreign cargo at a U.S. FTZ, and load export cargoes from a U.S. FTZ for discharge in a foreign place. This is true whether the U.S. place is in a FTZ or not. This is precisely what happens at the HIE (formerly Tesoro) refinery at Kapolei which is in a FTZ. Please give CBP a call and speak to a Customs officer — they will sort this out for you.
Any constitutional lawyers here? I agree we will get no help from Congress. How about we sue to have the law ruled unconstitutional by violating the constitution’s equal protection clause? Thoughts?
Yeah, it could happen this way but there are competing priorities. The Act was originally passed in 1920 to protect American shipping during a time when maritime commerce was pretty much supreme. By the late 1930s, it became an issue of national security. With the development of a “global” economy since the 1990s or so, it’s really an anachronism. I believe that the Jones Act contributes to economic difficulties in Hawaii but if Congress repeals it, expect to see the disappearance of US flagged ships. We just can’t compete with foreign flags.
inlanikai, I am not a constitutional lawyer, but have discussed this question with nationally recognized constitutional lawyers. Their advice is the various coastwise laws of the U.S. including the Jones Act are not unconstitutional and have been part of U.S. jurisprudence since the founding. Local attorney John Carroll has pursued several constitutional challenges in court to the Jones Act with out success and his suits dismissed with prejudice. As such, it is fair to conclude that the application of the coastwise laws to Hawaii is a political issue and not a legal one.
Thank you for the info. Interesting.
I’m against the Jones Act and I agree it should be repealed. This essay outlines some good reasons why it acts like another tax on our way of life in Hawaii. However Mr. Nakao states, “Hawaii’s dramatic loss of dairies, poultry farms and reduced agricultural production can be attributed largely to the high cost of shipping in Hawaii.” This statement is not true and also unprovable. If anything, the Jones Act kept the dairies, poultry farms etc.. in business far longer than they would have without the Jones Act. I’m not saying this is a good thing, but for a long time the higher shipping costs brought on by the Jones act added a virtual tariff on milk and agricultural products produced outside of the state of Hawaii. As a result, dairies and farms had some level of protection against mainland agricultural products simply because it was too expensive to ship things like milk and keep it refrigerated, the entire 2500 mile journey from the west coast. While I agree the Jones Act should be repealed, it speaks volumes more that local dairies and farms could not survive despite NOT having those expenses. Can you imagine it is cheaper to ship packaged milk in giant refrigerators across an ocean at 3 times the cost of shipping things elsewhere in the world then it is to try and make that milk in Hawaii? That has nothing to do with the Jones Act! Quite the opposite in fact.
Tony94, The Jones Act did lead to the demise of much of Hawaii’s animal agriculture during the 1980’s n 1990’s. The cost of transporting feed grains in bulk from the U.S. West Coast to Hawaii became untenable due to the Jones Act requirements. This caused the closure of the local fresh chicken industry (Ewa Brand), much of the egg industry, local pork produces, milk industry, and cattle feed lot (at Campbell Industrial Park). This was a major loss of agricultural economic activity. During this same period, the Jones Act also had a negative impact on the Hawaiian sugar industry in terms of shipping raw sugar in bulk to the Crocket Refinery.
Again, shipping in feed was more costly than shipping in finished product? A raw material should not cost more than the finished product. My point still stands, if shipping in feed for the cows and bottling the milk here is more expensive than shipping in finished product at the same (exorbitant) shipping cost, then the production process in Hawaii is totally out of whack and way too costly. The dairies went out of business here not because of the Jones Act, but because of everything else about Hawaii: high real estate costs, agricultural labor costs, inefficient farms etc…
Tony94, I agree there are many costs other than shipping that impinge on the viability of agriculture (and all other businesses) in Hawaii. However, for the animal agriculture, the Jones Act has been a particularly pernicious obstacle due to the supply of feed grains. The transportation costs to ship feed grains in bulk — as a raw material — escalated with the shrinkage of the Jones Act fleet to the point where there were really no geared dry bulk carriers to accommodate the needs of Hawaii’s animal agriculture. An exemption allowing the use of foreign flag bulk carriers in the Hawaii trade would have given access to the regular international traffic in the Pacific and materially aided Hawaii’s animal ag. FYG, most of the Milk being sold in Hawaii is also “bottled” here, though virtually all milk is being sourced from the Mainland and shipped in specialist refrigerated (and pressure controlled) stainless steel tank containers.
You have a good point. The Jones act might have destroyed the viability of animal agriculture for export from Hawaii back to the mainland, but if the imported grain was only being used for local agriculture for local consumption, then unless there are other aspects to the story, it seems that it should have been cheaper than importing finished product from the mainland.
good points
Until the Jones Act begins to hurt the interests of other states, Hawaii will have to live with the Jones Act. We need to think outside the box and try to find other ways to get rid of the Jones Act. We may need to have our trading partners like Japan, Korea, China, Mexico, Canada,EU, etc., put the protectionist Jones Act on the negotiating table. No Nebraska corn and soybean to Korea, Wisconsin cheese to EU, etc., unless US opens shipping routes, ship building to other countries.
Ship building has been cited as vital to our national defense. If shipbuilding is so important for our nation’s defense and needs to be protected, then, all 50 states must share in the cost of maintaining the Jones Act.
Unfortunately Hawaii is not a big enough market for our trading partners to give a hoot about. It is not a negotiating point anyone would be interested in. To that point, there is risk that without protectionist forces, we might loose some shipping as our market is too small for many shippers to be interested in. That is a risk, but I am still for repealing the Jones Act.
Tony94, a number of manufacturers, communication and others, see Hawaii with a large FTZ project to establish a manufacturing and marketing base in a free trade Country with minimum financial and other risks.
Outside of Alaska, how many other states do you think could be adversely affected?
It’s really sad that Puerto Rico may get a full or partial Jones Act exemption before we do because their economy is in ruins. The mainland was able to get a taste of how bad the Jones Act is during Hurricane Sandy a few years ago when east coast oil refineries were knocked out temporarily and there were few or no Jones Act compliant ships to transport refined fuel and natural gas from gulf coast U.S. ports to New Jersey and New York. As usual, our lightweight representatives in the U.S. House and our U.S. senators won’t lift a finger to try to pass legislation that would bring real, lasting, positive change to our state. Obama is oblivious and doesn’t care, either.
Libertarian, at this point in time it appears unlikely that Puerto Rico will be exempted from the Jones Act (either full or partial) due to opposition in the Congress primarily from Democrats though some Republicans too. The House is scheduled to take up the Puerto Rico financial / economic crisis in March 2016. You might say the current members of the Hawaii Congressional delegation are “lightweights” in particular because of their lack of seniority. However, when Hawaii did have a heavyweight in the U.S. Senate — Sen Dan Inouye — he was probably the strongest Jones Act supporter in Congress. The Hawaii Democratic Party is completely in the tank for the Jones Act because of strong maritime and Jones Act industry support.
, but Brewbaker implied shipping costs don’t affect the cost of living, or something like (see interview done in Hawaii News Now storyline, “Priced out of paradise”). Whatever context in which he spoke, I was incensed by the statement.
Straight up. It’s been hurting our economy since its inception. But no one cares about our tiny state except us.
Why didn’t Mr. Nakao ship via NYK. NYK’s Asia Hawaii Express (AHX) sails Shanghai – Busan – Yokohama – Honolulu and return.
Why didn’t he just buy a cabinet locally? Sounds like too much whining and not enough critical thinking to me.
Mr.Nakao is flat out wrong when he asserts that the Jones Act “…mandates that all goods — even from Asia — be shipped to the islands by expensive American-built, -owned, -flagged and -crewed ships.”
Foreign flag ships call here all the time bringing in oil, raw materials and cargo from all over the world. There is a glass half-empty; glass half-full component here.
Sure, if Hawaii was exempt from the Jones Act cheaper foreign ships could bring in all the goods. But what happens when freight rates tank and COSCO, Evergreen or NYK Line decides there is not enough profit margin in such a small market. “Bye-bye…” that’s what happens. Next thing you know, that crate of asparagus you were expecting from California is not coming. That’s not likely to happen with Matson and Pasha (who has acquired Horizon Lines).
While I am in favor of amending the “American-build” provision of the Jones Act it is essential to keep the American-owned, -operated” and -manned clauses. Every major industrialized country in the world has their own “Jones Act” (cabotage law) protecting domestic trade and ensuring the safe, reliable delivery of goods. The USA is no different.
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