Navy League Honolulu says Jones Act necessary for national security

by Michael Hansen, Hawaii Shippers Council, June 8, 2020

The Honolulu Star Advertiser published on June 6, 2020, a letter to the editor, ”Jones Act necessary for maritime security,” submitted by Capt. Larry Osborn, U.S. Navy (ret.) and currently President, Honolulu Council of the Navy League of the U.S., a pro-Jones Act organization.

Capt. Osborn also maintains a small consulting business, Pacific Associates Inc., with himself as its single employee, offering consultancy to the Defense Department and defense contractors.

Osborn’s letter responded to my letter to the editor, “Defense of the Jones Act doesn’t hold water,” published by the Honolulu Star Advertiser on June 4th, which in turn responded to a letter submitted by a Matson master mariner supporting the Jones Act.

Leading off his arguments that the Jones Act is essential for national security, Osborn wrote, “This is simple. Without the Jones Act we would not have a U.S.-flagged Merchant Marine. Without U.S.-flagged vessels, our expeditionary forces (Navy and Marine Corps) cannot defend us in Hawaii.”

It’s important to understand the simple fact that the Jones Act, or that body of laws and regulations known formally in American jurisprudence as the “coastwise laws of the U.S.,” apply only to domestic maritime activities conducted within U.S. waters and between U.S. places and not to the foreign trade of the U.S.

The support of “expeditionary forces” operating in response to overseas contingencies rely on seaborne logistical support known as “sealift” performed by self-propelled oceangoing ships in the foreign trade of the U.S.  Virtually no sealift is provided by Jones Act ships, which are typically dedicated to domestic trading and not available for sealift.

Sealift is organized by the Military Sealift Command (MSC) employing non-Jones Act-eligible ships from several sources including:

• The most important is the U.S. flag foreign trade fleet (all foreign-built, and half foreign-owned) which are actively trading and subsidized by the Military Security Program (MSP) and preference cargo program (for the carriage of government impelled cargoes).
• The U.S. Ready Reserve Fleet (RRF) are federal government-owned ships, about half of which are foreign-built, maintained in a reserve status and must be activated for sealift employment.
• The effectively U.S. controlled foreign shipping fleet of foreign flag ships owned and controlled directly by U.S. owners.
• And, also, allied-controlled shipping.

Osborne further writes, “The foreign-flagged vessels will not be in Hawaii ports in time of crisis or conflict.” This appears to be in response to my presentation of the facts that there are foreign flag cargo ships in Hawaii harbors virtually on a daily basis and more cargo by volume is imported on foreign flag ships than from the U.S. mainland on Jones Act ships. The cargoes arriving from foreign sources on foreign flag ships are largely but not exclusively bulk commodities, without which the Hawaii State economy would not operate.  Since the end of World War II in 1945, there has not been a disruption of foreign flag ship deliveries to Hawaii, despite the many crises and conflicts (e.g., the Korean War, Vietnam War, etc.) during this time period.

Finally, Osborne writes, “Whatever small price we pay [for the Jones Act] as consumers in Hawaii (if any, as the economics on this issue are disputed) is money well spent [for our collective national security].” There is, however, no dispute that the cost of constructing an oceangoing merchant ship in the U.S. (to comply with the domestic build requirement of the Jones Act) is four to five times that of comparable ship construction in South Korea and Japan. This disparity in capital costs has a material effect producing significantly higher domestic freight rates and severely limited ship availability in Jones Act trades, which results in the importation of foreign commodities and goods (a phenomena known as “import substitution”).

The high cost of domestic ship construction also significantly impacts national security as the Navy Department is facing ever increasing costs of combatant and support ships substantively constricting their ability to build necessary ships within budget constraints. This is an important facet of the competition with our country's near-peer competitor in the maritime space, the Peoples Republic of China (PRC), which is a low cost ship construction country.

Osborn’s letter to the editor of the Honolulu Star Advertiser:

Jones Act necessary for maritime security

In response to Michael Hansen’s letter about the Jones Act (“Defense of Jones Act doesn’t hold water,” Star- Advertiser, June 4): This is simple. Without the Jones Act we would not have a U.S.-flagged Merchant Marine. Without U.S.-flagged vessels, our expeditionary forces (Navy and Marine Corps) cannot defend us in Hawaii.

The foreign-flagged vessels will not be in Hawaii ports in time of crisis or conflict. Whatever small price we pay as consumers in Hawaii (if any, as the economics on this issue are disputed) is money well spent.

Larry Osborn

Captain, U.S. Navy (retired)

Hawaii Kai