Hawaii’s Major Newspaper Endorses Jones Act Reform

by Michael N Hansen, President, Hawaii Shippers Council

The major daily newspaper in the State of Hawaii, the Honolulu Star Advertiser, published their editorial on Thursday, March 28, 2013, endorsing the pair of companion resolutions introduced in the Hawaii State House of Representatives on March 13, 2013.  Those resolutions call on the U.S. Congress to enact an exemption from the U.S. build requirement of the Jones Act for the noncontiguous domestic trades of the U.S. – Alaska, Guam, Hawaii and Puerto Rico.

The resolutions, House Concurrent Resolution 150 (HCR150) and House Resolution (HR119), were introduced by a bipartisan group of five members of the Hawaii State House.

The Hawaii Shippers Council (HSC) strongly supports the measures and is looking forward to their adoption by the Hawaii State Legislature to demonstrate support in the noncontiguous jurisdictions for the limited Jones Act reform proposal described in the resolutions.

An outline of the HSC’s noncontiguous trades Jones Act reform proposal can be found here.

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Modify Jones Act to Assist Hawaii

SA Editorial: For nearly a century, foreign-built ships have been blocked from carrying cargo directly from the mainland to Hawaii, resulting in higher prices for consumers.

Two Republicans and three Democrats in the state Legislature are calling for Congress to create a narrow exemption from the Jones Act that would allow foreign-built ships to be used on the route — a change that likely would lower cargo costs for island consumers….

The law's effects are large. The U.S. International Trade Commission estimated in a 2002 study that the Jones Act costs the nation's economy between $119 million to $9.8 billion a year by denying access to lower-cost shipping. Ward maintained in 1997 that Hawaii residents pay $1 billion a year — $3,000 per household — in higher prices because of shipping costs. Those figures can only have increased since then.

In the past, Ed Case was the sole Democrat who shared that concern, proposing an exemption of Hawaii when he was U.S. representative from 2002 to 2007….

The proposed resolution spearheaded by Ward points out that Gov. Neil Abercrombie has urged the Legislature to "move forward" with allowing import of liquefied natural gas from the mainland.

It asserts that none of the "special tank ships" that transport LNG have been built in the United States since the 1970s, and that buying such US-built ships now "would be cost prohibitive."

It says that U.S.-built ships cost five times as much as foreign-built ships. Purchasing foreign-built ships for carrying LNG makes economic sense.

Abercrombie has been flexible on the issue in the past. As a U.S. House member in 2003, Abercrombie and the late U.S. Sen. Daniel K. Inouye won a narrow exemption from the 1886 Passenger Vessel Services Act, similar for cruise lines to the Jones Act's rules for cargo shipments. That allowed Norwegian Cruise Line to use three foreign-built ships for interisland cruises.

Since building LNG tank ships in the U.S. is regarded as too expensive, the exemption of Hawaii, Alaska and Puerto Rico from the Jones Act — as long as foreign-built ships be used — would "revitalize" shipping to those destinations.

The resolution calls for maintaining the Jones Act requirements that those ships be U.S.-flagged, -owned and -crewed, so the proposal is narrow compared with past exemption proposals.

Our Legislature should pass this resolution to push the limited-exemption issue in front of Congress, where Hawaii's delegation can then work toward its enactment.

read … Jones Act Reform

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The Hawaii Shippers Council (HSC) is a business league organization incorporated in 1997 to represent cargo interests – known as “shippers” – who tender goods for shipment with the ocean carriers operating the Hawaii trade.

Please contact the HSC at email pacmar@hawaiiantel.net if you wish to be placed on our email list.