Hurricane Maria spurs criticism of shipping laws

by Cole Lauterbach, Watchdog.org, Nov 13, 2017

Hurricane Maria’s damage in Puerto Rico has again brought attention to a century-old law that critics say is government cronyism at its worst, inflating consumer costs.

The Merchant Marine Act of 1920, commonly known as the Jones Act, says any shipment floating from one American port to another must be carried by an American-made boat, owned by an American company, and operated by an American crew. It also applies to American colonies such as Puerto Rico, which was given a temporary waiver to the rule so that aid could better get to people trying to recover from the September hurricane.

“To impose the Jones Act on the people of Puerto Rico is deplorable,” U.S. Rep. Luis Gutierrez, D-IL, told a crowd at the City Club of Chicago. “You cannot strangle an economy by saying that the only way that a state can ship its goods in or out is by using the most expensive shipping in the world.”

Keli’i Akina, president of the Grassroot Institute of Hawaii, said the Jones Act inflates the price of consumer goods on the islands and across the mainland U.S. as well.

“It doesn’t matter if you live in Puerto Rico or Iowa, it affects the entire nation,” he said.

It also pushes freight off boats and onto trucks, which adds to road damage and congestion.

“From milk to cars to housing, you live with that on virtually every consumer product,” Akina said.

The Grassroot Institute found that, as of this April, there are 171 privately owned U.S. flagged ships in operation but only 93 of them are eligible to operate under the Jones Act.

Defenders of the bill say it strengthens national security and creates local jobs.

“The U.S. maritime industry are first responders in times of emergency like Hurricane Irma and Maria, and Jacksonville is ground zero for getting shipments of goods to Puerto Rico quickly reliably and economically,” U.S. Rep. John Rutherford, R-FL, said in a committee hearing in October.

One work-around, Akina said, would be to allow commercial shippers to purchase craft made by the nation’s allies. This is the standard that the U.S. Armed Forces is held to and would allow for savings on more modern craft at lower prices but wouldn’t create the security issues with foreign interests creating the nation’s watercraft, he said.