HONOLULU — Congressman Ed Case re-introduced three bills in Congress to reform the century-old Merchant Marine Act of 1920 (commonly referred to as the “Jones Act”), which is widely credited with artificially inflating the cost of shipping goods to Hawai‘i.
“These three bills are meant to end a century of monopolistic, closed-market, domestic-cargo shipping to and from my isolated home state of Hawai‘i as well as the other island and separated jurisdictions of our country that lie outside the continental United States,” said Case. “The bills aim directly at one of the key drivers of our astronomically high cost of living in Hawai‘i and other similarly-located jurisdictions.
“Because the Jones Act severely limits the supply of shipping to and from our communities, it has allowed a very few companies to control our very lifeline to the outside world, and as a result command shipping rates way higher than the rest of the world,” said Case.
Last year, 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 Hawai‘i. 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’s three measures and their proposed amendments to the Jones Act are:
• The Noncontiguous Shipping Relief Act, which exempts all noncontiguous U.S. locations, including Hawai‘i, 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 10% above international shipping rates for comparable routes;
• The Noncontiguous Shipping Competition Act, which rescinds the Jones Act wherever monopolies or duopolies in noncontiguous Jones Act shipping develop.
