Facts About the Jones Act.

Saying the Jones Act increases the cost of living in Hawaii is only part of the story.

First the Jones Act was intended to protect the Merchant Fleet of the US (a national security issue) not being eliminated by cheaper foreign shipping service.  This monopoly of service has an impact which cannot be quantified but raw numbers alone but needs to be understood by the overall effect its has on Hawaii’s economy .

US flag vessels are more costly to build, and operate under greater federal regulations then foreign flag vessels.   For instance, European ship builders achieve lower cost by using better economy of scale (multiple ships being built on the same design as opposed to to US ship builders doing one or two ships at a time).

This and other factors increase the hard cost for US companies by tens of millions of dollars per ship adding significantly to the cost of shipping.

For Hawaii the question becomes more complex as services like Matson operate on an on-time schedule not necessarily a fully-loaded schedule.  Matson ships arrive on Sunday to Monday morning and on Wednesday’s.   They have pre-assigned berths and are offloaded accordingly.

As well the containers carried on these ships have become the “warehouse’s” for many island retailers.   This “just in time” method of shipping and delivery has eliminated the large warehouses major retailing once required.    This can only work because there is a reliable conveyor belt of ships arriving on a precise time schedule from the mainland which is essential for keeping Hawaii’s stores well stocked.

Foreign flag vessels transporting goods across the Pacific operate on a fully- loaded not an on- time schedule.  How they could be inserted into the conveyor belt and how that would effect offloading and the limited available warehousing space are questions that need to be addressed when dealing with the economic infrastructure the Jones Act has helped create.

If the Jones Act was dropped would there still be savings after everything is taken into account?

The recent discovery of Chinese spy chips in sensitive US technology also highlights the need for a robust US manufacturing base (including ships and ship building) to maintain US security.

Hawaii’s cost of living needs to be a core of any reform movement but so does building a more business friendly and robust economy.  The full range of options and how the Jones Act works for or against this needs to be put into perceptive and analyzed as a whole not in isolation from existing  conditions.

 

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