U.S. Reps. Ed Case, D-Hawaii, and James Moylan, R-Guam, are making a renewed push to reform the controversial Jones Act, which they say promotes shipping monopolies that artificially inflate the cost of imported goods to non-contiguous U.S. states and territories. 

What You Need To Know

  • The Congressmen recently reintroduced three legislative measures that would remove or alleviate shipping restrictions that drive up the cost of essential goods for Hawaii, Alaska, Guam, Northern Marianas, American Samoa, Puerto Rico and the Virgin Islands
  • The Jones Act, formally known as the Merchant Marine Act of 1920, is a federal law that requires all shipping between U.S. ports to be transported on ships that are built, owned and operated by U.S. citizens or permanent residents of the United States
  • Case noted that Hawaii imports greater than 90% of its necessities by ocean cargo
  • The Noncontiguous Shipping Relief Act exempts all noncontiguous U.S. locations, including Hawaii and Guam, from the Jones Act

The Congressmen recently reintroduced three legislative measures that would remove or alleviate shipping restrictions that drive up the cost of essential goods for Hawaii, Alaska, Guam, Northern Marianas, American Samoa, Puerto Rico and the Virgin Islands.

“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,” Case said. “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, formally known as the Merchant Marine Act of 1920, is a federal law that requires all shipping between U.S. ports to be transported on ships that are built, owned and operated by U.S. citizens or permanent residents of the United States. The act has been frequently cited as a factor in the high cost of imported good and numerous attempts have been made over the years to repeal it.

“Because of the 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,” Case said. “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.”

Case noted that Hawaii imports greater than 90% of its necessities by ocean cargo.

“There are plenty of international cargo lines who could and would compete for a share of that market,” he said. “Yet only two U.S. flag domestic cargo lines — Matson Navigation and Pasha Hawaii — operate a virtual duopoly over our lifeline.” 

A 2020 Grassroot Institute of Hawaii study on the economic impact of the Jones Act on Hawaii found that the median annual cost of the law to the state is $1.2 billion, costing each resident more than $645 per year. The nonprofit estimated that without the Jones Act, annual tax revenues for the state would be $148.2 million higher.

The three bills Case and Moylan reintroduced include:

  • The Noncontiguous Shipping Relief Act, which exempts all noncontiguous U.S. locations, including Hawaii and Guam, from the Jones Act;
  • the Noncontiguous Shipping Reasonable Rate Act, which benchmarks the definition of a “reasonable rate” that domestic shippers can charge as no more than 10% 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 areas develop.

“Essentially, these bills are designed to provide viable solutions for alleviating the burdens faced by our U.S. noncontiguous areas,” Case said in remarks on the House floor. “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.”

Michael Tsai covers local and state politics for Spectrum News Hawaii. He can be reached at michael.tsai@charter.com.