Bloomberg finds Jones Act serves no purpose

by Michael Hansen, Hawaii Shippers Council, December 18, 2017

Bloomberg published another editorial, “The Jones Act serves no purpose,” on December 14, 2017, which is the second in a planned series of four editorials focusing on the impacts of Jones Act cabotage on the U.S. economy.

The subtitle of the instant editorial clearly states its point, “If the shipping law worked as intended, its costs might be forgiven. But it doesn't.” It follows the first Bloomberg editorial, “The Jones Act costs all Americans too much,” published December 12, 2017, which described the economic burden of Jones Act cabotage.

The authors included in their fifth paragraph a link over “large oceangoing vessels” to a Hawaii Shippers’ Council chart, “Merchant ships constructed, under construction, or on order in U.S. yards years 2000 – 2016,” May 26, 2016.

Key excerpts from Bloomberg:

The costs of the Jones Act . . . . . get too little attention. The toll is heavy, and the burden is unfairly distributed. But what if the law serves a vital purpose? Are these costs somehow justified?

Defenders of the law say it's needed to sustain maritime industry -- a sector that's essential during national emergencies or wartime. Yet if this is the law's purpose, it sure isn't working.

In 1960, there were nearly 3,000 U.S.-flag oceangoing vessels -- 17 percent of the world fleet. By 2016, there were 169 such ships -- less than one percent of the global total. And of those, just 92 were Jones Act vessels carrying cargo between U.S. ports.

The oceangoing Jones Act fleet has shrunk by more than half since 2000. The ships tend to be older and less efficient and can be less safe.

The U.S. shipbuilding industry has lost its competitive edge, and the number of shipyards that build large oceangoing vessels has steadily fallen.

U.S. output has more than quadrupled since 1960, but the amount of freight carried by U.S. coastal shipping -- an entirely protected market -- has fallen by almost half.

Even the national security argument for the Jones Act fleet rings increasingly hollow. Foreign-flag ships safely make thousands of calls at U.S. ports each year. Although the U.S. military taps Jones Act vessels for sealift, it also regularly uses foreign-built and foreign-flagged ships for that purpose.

More broadly, a buy-and-build-American approach doesn't necessarily make America safer.

Undaunted, Jones Act champions propose to make the law even more onerous.

But give the Jones Act this much: Rarely has a law that costs so much and achieves so little survived so long.