Legislative Efforts to Reduce Cost of Living in Hawaii

From Aloha Chapter, Military Officers Association of America (MOAA), April, 2014 

You undoubtedly have noticed with alarm that the price of a few bags of groceries at the commissary has doubled in the last few months.  For example, if you used to pay $75 for the week’s groceries, it now costs about $150 for the same amount of groceries for a week.

This surge in our local prices cannot all be blamed on droughts and cold weather. By far the biggest contributor to our high prices in Hawaii is because of the outdated, oppressive Merchant Marine Act of 1920, more commonly known at the Jones Act.

On 13 March lawmakers from Alaska, Hawaii and Puerto Rico came together by video to voice their concerns to the public and our government regarding the Jones Act. (Technicians were unable to establish a link with Guam, also subject to high prices as a consequence of the onerous Jones Act.)

Domestic ocean transportation to and from Alaska, Guam, Hawaii and Puerto Rico is known as the non-contiguous trade. The non-contiguous jurisdictions are unique in the nation as they are completely reliant on ocean shipping for interstate surface transportation.  The forty-eight states comprising the contiguous continental United States (CONUS)—also known at the Mainland and the Lower 48—have many interstate surface transportation alternatives, including truck, rail and river barge.

Succinctly, the Jones Act requires that shipments to and from the non-contiguous states and possessions be on U.S. flag ships constructed in the United States and crewed by Americans.

We are adversely impacted in Hawaii since we receive about 90% of our supplies through California. Specific exemptions can be made for political purposes, as was done for our foreign-flagged interisland cruise ships.

You may have read the recent newspaper article about two new container ships being built in America at approximately four times the cost of the same construction in South Korea, a major shipbuilding nation. That exorbitant cost overrun is being passed on to us.

A common reform solution, by exempting the non-contiguous states and possessions from the U.S. ship build requirement and U.S. crewmen, would create a larger market and foster greater competition in ocean shipping for the non-contiguous destinations and, consequently, lower prices for consumers.

For comparison, recent figures show that shippinga 40-ft. container from Los Angeles to Shanghai is $790 whereas a 40-ft. container rate from Los Angeles to Honolulu—about one-third of the distance— is $8,700! Consequently, according to the USDA thrifty plan data, the average cost of groceries in Hawaii is 49% higher when compared to the mainland costs (ref: www.cnpp.usda.gov/USDAFoodCost-Home.htm).  It’s not fair that our interstate transportation costs are not reasonably comparable to those between any two other states.

There is absolutely no competition between our two predominant ocean shippers, both subjected to the Jones Act: Horizon Lines and Matson.  Allegedly in collusion, when one raises it’s rate, the other in lock step quickly matches it.

Many lawmakers would like to know why the U.S. is contributing to a lower cost of living in China, while continuing to encourage high costs of living in the non-contiguous U.S. states and possessions.  The lawmakers in all four of the affected non-contiguous areas propose a Jones Act reform that would exempt them from the U.S. ship build and American crew requirements. It is time for more competition and, thus, lower prices! If you agree, contact your Hawaii legislators now.

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PDF: Article from MOAA Aloha Chapter Newsletter  (reprinted with permission)