Speeches & Testimony

Mr. Speaker:

Today I again introduce three bills to end over a century of federally-imposed monopolistic closed market domestic cargo shipping to and from my isolated home state of Hawai‘i and the other island and separated jurisdictions of our country not part of the contiguous 48 United States. In doing so, we seek to break the stranglehold on the peoples and economies of our exposed communities and our resulting sky-high costs of living which are caused by just a few domestic shipping companies controlling the lifeline of commerce upon which we absolutely depend.

These bills all amend the Merchant Marine Act of 1920, also known as the Jones Act. That federal law mandates that all cargo shipping between U.S. ports occur exclusively on U.S., not foreign, flagged vessels. Additionally, the law requires that these vessels are built in the U.S. and owned and crewed by U.S. citizens.

The Jones Act was enacted in a protectionist era under the guise of preserving a strong national merchant marine. But today it is just an anachronism. Most of the world’s shipping is by way of an international merchant marine functioning in an open, competitive market. And those few U.S. flag cargo lines that remain have maneuvered the Jones Act to develop virtual monopolies over domestic cargo shipping to, from and within our most isolated and exposed locales – our island and offshore states and territories – that have no alternative modes of transportation such as trucking or rail.

My Hawai‘i is a classic example. Located almost 2,500 miles off the West Coast, we import well over 90 percent of our life necessities by ocean cargo. There are plenty of international cargo lines who could and would compete for a share of that market. Yet only two U.S. flag domestic cargo lines – Matson Navigation and Pasha Hawai‘i – operate a virtual duopoly over our lifeline.

While they are nominally subject to federal regulation, the fact of the matter is that cargo prices have gone in only one direction – up, fast and repeatedly, despite a surplus of international shipping – and it is indisputable that there is no downward market pressure which would otherwise result from meaningful competition. These accelerating cargo prices are not absorbed by the shipping lines, but passed through all the way down the chain, to the transporters, wholesalers, retailers, small businesses, mom-n-pops and ultimately consumers, of all of the elementals of life, from food to medical supplies, clothes, housing and virtually all other goods. The result is a crippling drag on an already-challenged economy and the very quality of life in Hawai‘i.

The Jones Act has far-reaching consequences for the people of Hawai‘i, one of the most glaring and pervasive being its contribution to the high cost of living across all segments of our society. For the average Hawai‘i family, the act adds nearly $5 a day to their expenses, which amounts to $1,794 a year. While this may seem like a small amount on its own, when compounded over time, it creates a substantial financial strain on households already grappling with high living costs. That extra $1,794 could be spent on essentials like healthcare, education or better housing—things that would directly improve the quality of life for Hawaii’s residents. However, instead of these scarce resources being available for more pressing needs, it is channeled into inflated transportation costs and the profits of the Jones Act shippers and their owners. These price increases cascade through every aspect of daily life: families are paying an additional $389 for housing, $200 for motor vehicles and their maintenance and $147 for food, on top of what they would otherwise be paying, due just to the difference between market and monopoly shipping costs. 

One of the most significant areas affected by the Jones Act is housing, already challenged. The construction industry in Hawai‘i relies heavily on noncontainerized cargo like sand, cement, gypsum, steel and bricks, materials that are essential for building homes and infrastructure. However, due to the restrictions imposed by the Jones Act, the number of available vessels to transport these types of goods is severely limited. This scarcity drives up the cost of building materials, making it more expensive to develop affordable housing or address deferred maintenance on existing housing. In addition, because a large portion of these materials must be imported from foreign countries, they are subject to tariffs that further increase the price. This results in higher construction costs, which ultimately contribute to the already skyrocketing housing prices in Hawai‘i. The burden on the real estate market not only affects homebuilders but also exacerbates the affordable housing crisis, as fewer homes are being built, and the ones that are tend to be priced out of reach for most families.

As a consequence of the Jones Act’s impact on construction, the limited availability of affordable housing in Hawai‘i leads to a number of secondary challenges. With fewer new homes being built, the housing stock becomes increasingly vulnerable to damage from natural disasters like hurricanes or flooding. These older homes are at greater risk during such events, further exacerbating the state's housing crisis. As the risk of damage rises, insurers are forced to adjust premiums to reflect the increased likelihood of costly claims. This, in turn, drives up the cost of housing insurance, further burdening homeowners and renters alike, while also making it more difficult for individuals and families to secure affordable, safe housing.

Another prime area for Hawai’i is food, most of which we import on Jones Act ships. The monopolistic cargo premium is priced into our food products, contributing to the highest cost of food of any state. And even for locally-produced agriculture, the Jones Act extracts its price for necessary imports including farm machinery, fertilizer and processing materials, resulting in an addition to one of the highest costs of food production anywhere in the country. 

Nor is the Jones Act’s impact limited to imports into Hawai’i, for it also restricts cargo exported from Hawai’i to other U.S. ports (especially the West Coast) to the very few Jones Act shippers and their monopolistic prices. Take our cattle industry, which is dependent on access to the market on the continent. No non-Jones Act international ship can serve that route, so, for example, no international ship could ship cargo from Asia into Hawai’i, pick up cattle for another run to the West Coast, and then pick up U.S. exports to ship them back to Asia. That means our cattle industry is forced to take whatever is offered by the Jones Act ships returning to the continent, when they want, how they want, and at the prices they choose. It also means that we get very little direct international imports; they must first go to the continent and then ship on Jones Act ships to Hawai’i, jacking up prices completely unnecessarily. 

The Jones Act also has other consequences, in addition to monopolistic shipping costs absorbed by Hawai’i families, that are nothing short of ridiculous. Take the case of defueling the military’s bulk fuel storage facility at Red Hill after the disastrous leaks. The great bulk of that fuel was transported elsewhere, which required specialized fuel tankers. There are many in the international trade but few Jones Act tankers in domestic use and in high demand. Much of the fuel was transported to non-U.S. locations and so could access non-Jones Act international shipping and much lower rates. But some fuel was between U.S. ports and so required short-supply Jones Act tankers and much higher rates. Even a one-tanker load transported from Pearl Harbor to another location in Honolulu just ten miles away required bringing in a Jones Act tankers from the continents at much higher rates, rather than allow an international tanker here for international export to do a short hop. I specifically asked for a waiver of the Jones Act to avoid this result, a total waste of taxpayer dollars, but got no support from the Jones Act shippers, who, although it made no real difference to them, were petrified of the precedent. 

The three bills I introduce today say: enough is enough. If you, the 48 contiguous United States, want to continue the Jones Act as to shipping between your ports, that’s your business. But don’t penalize us island and other noncontiguous locations by throwing us to the monopoly wolves you’ve created.

The first bill, the Noncontiguous Shipping Relief Act, exempts all noncontiguous U.S. locations from the Jones Act. These include Hawai’i, Alaska, the Northern Marianas, Guam, American Samoa, Puerto Rico and the Virgin Islands.

The second, the Noncontiguous Shipping Reasonable Rate Act, benchmarks the definition of a “reasonable rate” that Jones Act shipping can charge to within ten percent of analogous international shipping rates.

And the third, the Noncontiguous Shipping Competition Act, prevents monopolies or duopolies in noncontiguous Jones Act shipping by allowing the noncontiguous jurisdictions to be serviced by non-Jones Act vessels, in order to create and increase and increase competition in these critical shipping lanes. Again, this is a very small portion of the total national Jones Act shipping where it is particularly destructive in application, and would not affect the bulk of Jones Act shipping throughout the 48 contiguous United States.

Essentially, these bills are designed to provide viable solutions for alleviating the burdens faced by our U.S. noncontiguous areas. While there are multiple pathways to address this issue, one thing is clear: we must change the status quo that has caused such widespread harm to my state and other jurisdictions dependent on the Jones Act. I urge my colleagues to lend their support to this important effort to reduce the sky-high costs of living to the people of Hawai‘i and the other non-contiguous areas.