Lloyd’s List endorses U.S. Build exemption for Hawaii, Alaska and Puerto Rico

by Michael Hansen, Hawaii Shippers Council

Following a series of four news articles published last week regarding a federal report on the Puerto Rico trade due at the end of February 2013 and the possible impact on the conclusions of that report by new Jones Act containership orders, the influential maritime publication Lloyd’s List endorsed an exemption from the U.S. build requirement for Hawaii, Alaska and Puerto Rico.

The editorial published on Friday January 4, 2013, was written by Tom Leander, Editor-in-Chief, Asia, Lloyd’s List, based in Hong Kong.

Mr. Leander concludes his editorial saying “Any action that weakens the protectionism of the Jones Act will ultimately be to the long-term benefit US shipping,” with which we wholeheartedly agree.

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Made in America

by Tom Leander, Lloyd’s List, Friday 04 January 2013

The US-built requirement of the Jones Act should be waived for Puerto Rico

THE US Government Accountability Office, an investigative division of Congress, is due to release a report in February on the costs and benefits of the US Jones Act on commerce in Puerto Rico, which is not a state of the US but has remained under US rule as a commonwealth since the Spanish-American War of 1898.

Many critics of the Jones Act, including Lloyd’s List, hope that the GAO will provide evidence that can be used to persuade Congress to scuttle the US-built requirement of the Jones Act as it applies to Puerto Rico — and further to Hawaii and Alaska – under a so-called sunset waiver.

The report follows a request by Puerto Rico’s two Congressional representatives to the GAO to establish whether the Jones Act has a negative effect on Puerto Rico’s economy.

It may just be the caprice of timing, but US shipowner TOTE signed a contract with General Dynamics Nassco, based in San Diego, to build two 3,100 teu liquefied natural gas-powered containerships for delivery in 2015 and 2016 for a total of $350m.

The two green boxships will be targeted for trade between Jacksonville, Florida, and San Juan, Puerto Rico. The deal includes options for three more ships to be built at Nassco. TOTE is a wholly owned subsidiary of Saltchuk Resources, a Seattle-based business.

Observers have questioned the timing of the December order, implying that it was timed to influence the outcome of any debate over a waiver for Puerto Rico after the GAO issues its report on February 28.

TOTE’s chief executive Anthony Chiarello eloquently denied this in Lloyd’s List, saying: “It is somewhat amusing that people think we have $350m available just to impact the outcome of a GAO report.”

The issue of TOTE’s timing aside, if the GAO report does show that the Jones Act US-built clause affects Puerto Rico, Congress should apply the waiver.

Any action that weakens the protectionism of the Jones Act will ultimately be to the long-term benefit US shipping — no matter what the medium-term gain to individual US companies and yards.

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CB: Jones Act Reform Movement Picks Up Steam

Related: Matson, TOTE Ship Orders Timed to Influence Federal Jones Act Study?