Press Releases

(Washington, DC) – U.S. Congressman Ed Case (D-HI-01) and U.S. Congressman James Moylan (R-Guam) are leading re-introduction in Congress of three legislative proposals to reform the century-old Merchant Marine Act of 1920 (the “Jones Act”), which is widely recognized as creating domestic shipping monopolies that artificially inflate the cost of critical imported goods to the non-contiguous parts of the United States (Hawai‘i, Guam, Northern Marianas, American Samoa, Puerto Rico, Virgin Islands and Alaska.)

“Our three bills aim to end a century of federally-created, monopolistic, closed-market domestic cargo shipping to and from our isolated and shipping-dependent homes,” said Case. “In doing so, they target one of the key drivers of our astronomically high costs of living: domination of our lifelines to the outside world by a small group of federally-protected shipping companies that are shielded from any effective competition for service and rates, forcing us to pay far more for both shipping and goods than virtually anywhere else in the world.”

“The Jones Act has unreasonably affected thousands of Americans living in the Pacific-most areas of the United States for years. Created long before Hawaii became a State or Guam became a modern territory, the Jones Act has punished both based on their location,” said Congressman Moylan. “This tyranny of distance is not a new challenge for us, so I am happy to lead this bill with my friend, Rep. Case. As we continue to support partners and opportunities in the Pacific, I encourage my colleagues to recognize the damage the Jones Act does in the Pacific.”

Case continued: “The Jones Act 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. Because Jones Act shipping has shrunk to less than 100 vessels for the entire country and international shipping has increased dramatically, especially in the last quarter-century, the Jones Act results in a very few carriers serving all domestic shipping needs even though there is plentiful shipping outside the Jones Act bubble.

“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.” 

Case continued: “While they are nominally subject to minimal 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 families, of all of the elementals of life, from food to medical supplies, clothes, housing and virtually all other goods.”

In 2020, the Grassroot Institute of Hawai‘i published a thorough and first-of-it-kind report, “Quantifying the Cost of the Jones Act to Hawai‘i.” The report found that:

• The median annual cost of the Jones Act to the Hawai‘i economy is $1.2 billion.
• The annual cost of shipping to Hawai‘i is estimated to be $654 million higher and prices $916 million higher.
• The Jones Act annually costs each Hawai‘i resident more than $645.
• Thanks to the Jones Act, Hawai‘i has approximately 9,100 fewer jobs, representing $404 million in wages.
• Hawai‘i families across all income groups would benefit from Jones Act reform. In the absence of Jones Act restrictions, those making between $15,000 and $70,000 annually would see an annual across-the-board economic benefit ranging from $78 million to $154 million.
• Annual tax revenues would be $148.2 million higher.
• Focusing solely on the Jones Act requirement that vessels be built in the United States, they found that the build provision results in a 1.2% shipping cost increase for Hawaii. This translates annually to an added cost of $531.7 million to the state’s economy, or about $296 per resident. It also means a loss of 3,860 jobs, and $30.8 million less in state and local tax revenues.

Case and Moylan said their three measures and the proposed amendments to the Jones Act are:

• the Noncontiguous Shipping Relief Act, which exempts all noncontiguous U.S. locations, including Hawai‘i and Guam, from the Jones Act;
• the Noncontiguous Shipping Reasonable Rate Act, which benchmarks the definition of a “reasonable rate” which domestic shippers can charge as no more than ten percent above international shipping rates for comparable routes; and
• the Noncontiguous Shipping Competition Act, which rescinds the Jones Act wherever monopolies or duopolies in noncontiguous Jones Act shipping develop.

Case said: “These long-overdue reforms are of the utmost importance to our unique noncontiguous localities which have been left undefended to bear the brunt of the Jones Act for reasons which don’t hold up to the reality of the modern world.

“If the Continent wants to keep the Jones Act for whatever reason, where alternatives to shipping at least provide some insulation from monopolistic shippers, go ahead. But don’t expect us to pay through the nose for your privilege.”

Attachments:

·        Case remarks in the full House on introduction of the bills is here

·        Text of the Noncontiguous Shipping Relief Act is here

·        Text of the Noncontiguous Shipping Reasonable Rate Act is here

·        Text of the Noncontiguous Shipping Competition Act is here

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