Jones Act reform for Hawaii needed

By Michael N. Hansen                                                                                                                                           President, Hawaii Shippers Council 

In the December 2012 issue of WorkBoat, I read the “Jones Act Battles” article by Dale K. DuPont in which she mentioned several current challenges to the Jones Act.

In that regards, I would like to introduce you to our noncontiguous trades Jones Act reform. In 2010, the Hawaii Shippers Council (HSC) put forward a federal legislative proposal to reform the Jones Act, called the Noncontiguous Trades Jones Act Reform (NTJAR).

The NTJAR initiative would only exempt the Jones Act noncontiguous domestic trades — Alaska, Guam, Hawaii and Puerto Rico — from the U.S.-build requirement of the Jones Act and only for large self-propelled oceangoing merchant ships.

This proposal originated with the HSC and does not have a mainland counterpart as did previous reform efforts during the late 1990s led by Rob Quartel and the national Jones Act Reform Coalition (JARC). We are not proposing to repeal the Jones Act nor create a full exemption from the Jones Act for Hawaii, Alaska, Guam and Puerto Rico.

The NTJAR would not change the existing U.S.-flag, -owned and -crewed provisions of the Jones Act as they currently apply to the noncontiguous domestic trades. It would not allow foreign-flag ships, foreign seamen or foreign shipowners in any domestic trade where they are not currently allowed. Apply to the domestic tug and barge industry anywhere in the U.S. including in the Jones Act noncontiguous jurisdictions. If would not affect any domestic shipping along the coasts of the contiguous U.S. mainland, in the intercoastal trades, on the inland waterways, or on the Great Lakes. It would not negatively impact any maritime industry jobs in Hawaii and the other noncontiguous jurisdictions and it would not have any material adverse effect on national security.

The NTJAR proposal is a limited and narrowly targeted reform of the Jones Act that would greatly improve the efficiency of the critical interstate oceanborne transportation between the U.S. mainland and the domestic noncontiguous jurisdictions that is currently subject to cabotage.

The NTJAR would allow U.S. shipowners to purchase large self-propelled merchant ships that meet U.S. Coast Guard standards from qualified shipbuilders in other industrial countries and renew their aging noncontiguous fleets with much lower cost, more available and efficient modern ships. It would substantially lower the acquisition cost of major capital ships by at least two thirds and materially increase access to new modern ships available to the noncontiguous trades. The NTJAR would also eliminate the artificial scarcity of major capital ships in the noncontiguous trades created by the U.S.-build requirement of the Jones Act.

The proposal would significantly reduce barriers to entry and increase competition in the Jones Act noncontiguous domestic trades through significantly less expensive and far more available ships. It would also reduce freight rates — through lower capital costs and greater competition — to Hawaii, Alaska, Guam and Puerto Rico and lower the cost of living in those jurisdictions.

The Jones Act reform proposal would also stop consumers in the affected noncontiguous jurisdictions from being forced to pay substantially higher freight rates to subsidize an inefficient, expensive and commercially uncompetitive U.S. major shipbuilding industry that has constructed on average fewer than three large merchant ships per year since the mid-1980s.

The proposal will also put the deep-draft noncontiguous shipping industry on the same footing as other modes of domestic transportation where foreign manufactured equipment is permitted into the U.S. for commercial operation without restriction. This includes aircraft, railroad cars and locomotives, trucks, buses, automobiles (for taxis) and mass transit vehicles.

Ed. Note: Honolulu-based Hawaii Shippers Council is a business league organization formed in 1997 to represent shippers who tender goods for shipment with the ocean carriers operating in the Hawaii trade.  

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