Posted: July 26, 2018 1:35 PM

Maritime Experts Defend Jones Act

By RICHARD R. BURGESS, Managing Editor

JonesPhotoWASHINGTON — Experts in maritime policy, shipping and economics defended the Jones Act before a congressional committee, noting its role in national defense and its advantages in economic prosperity for the nation and Puerto Rico, in particular.

In a July 25 roundtable hosted on Capitol Hill by the House Transportation and Infrastructure Committee, chaired by Rep. Duncan Hunter, R-Calif., committee members heard from economist John Reeve, principal, Reeve & Associates; Michael G. Roberts, senior vice president, general counsel and corporate secretary of Crowley Maritime and vice president of the American Maritime Partnership; Augustine Tellez, executive vice president, Seafarers International Union; and Jon Kaskin, vice president for legislative affairs, and chairman, Merchant Marine Affairs Committee, Navy League of the United States.

The roundtable focused on a recent report, “The Impact of the U.S. Jones Act on Puerto Rico,” issued by Reeve & Associates and Estudios Tecnicios Inc., a firm based in San Juan, Puerto Rico, and funded by the American Maritime Partnership.

The Jones Act — formally titled the Merchant Marine Act of 1920 — generally prohibits foreign-built, foreign-owned or foreign-flag vessels from conducting coastwise trade within the United States and between the United States and its overseas territories. It also generally applies restrictions that effectively prohibit ships under the Jones Act from being overhauled at foreign shipyards. Ship crews must be composed mostly of U.S. citizens or legal residents of the United States.

The Jones Act came under criticism from some quarters in the wake of Hurricanes Irma and Maria that devastated Puerto Rico in 2017. Critics said that the shipping restrictions slowed distribution of supplies and kept consumer prices higher than would have been the case with unrestricted shipping.

Reeve’s report said that the Jones Act not only had no impact on retail prices but that the “state-of-the-art maritime technologies, Puerto Rico-focused investments, and dedicated closed-loop service offered by the Jones Act carriers provide a significant positive impact to the island, at freight rates lower than or comparable to, similar marine transportation services provided to other Caribbean islands.”

Reeve testified that his study showed prices of 13 imported consumer items in Puerto Rico were the same or less than those of the U.S. mainland and that freight rates were highly comparable to those of Haiti, the Dominican Republic or the U.S. Virgin Islands. He also noted that the Jones Act carriers benefitted the Puerto Rican economy with 1,000 jobs and $250 million in commerce annually.  

Roberts pointed out that the 53-foot shipping containers used by the Jones Act carriers in the Puerto Rican trade, with their increased capacity compared with the 20- and 40-foot containers used by international carriers, drove $100 million of costs out of the Puerto Rican economy. His company, Crowley Maritime, has started using ships powered by liquid natural gas, which have near zero emissions, on the route. He said Crowley and TOTE Marine delivered thousands of pounds of relief supplies and hundreds of utility trucks to the island.

Kaskin focused on the national defense imperatives of the Jones Act and the “unintended consequences for our national security if the Jones Act were waived.

“One of our major concerns is the number of fully qualified, active, unlimited, ocean-licensed and certificated mariners available to crew sealift ships during wartime or national emergency,” he said.  “Jones Act mariners provide the bulk of the crews for activation the Ready Reserve Force and the Military Sealift Command’s Surge Sealift fleet. In fact, 99 of the 181 ocean-going U.S.-flag/crewed ships are Jones Act vessels. The loss of any vessel due to changes in the Jones Act will only exacerbate that shortfall.”

Kaskin said the Navy League supports “reducing the shortfall by expanding the number of ocean-going Jones Act vessels, either through MARAD’s American Marine Highways program, or by removing the Jones Act waivers for the small number of offshore support vessels that move cargo from U.S. ports, since many of those ships would require U.S. citizen crews with unlimited ocean licenses and certificates.”

He noted that the “America-build requirement of the Jones Act helps the Navy and Coast Guard by reducing overhead costs in shipbuilding yards and protecting the shipbuilding knowledge and technological edge of the industrial base” and that having American-crewed ships reduced potential security threats to U.S. ports.

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