Case re-introduces measures to relieve impacts of Jones Act on cost of living in Hawai‘i

US Reps. Ed Case (D-HI-01) and James Moylan (R-Guam) are leading re-introduction in Congress of three legislative proposals to reform the century-old Merchant Marine Act of 1920, commonly known as the “Jones Act.” The Act has long been criticized for creating shipping monopolies that increase the cost of imported goods to non-contiguous US regions, including Hawai‘i, Guam, the Northern Marianas, American Samoa, Puerto Rico, the Virgin Islands and Alaska.

Moylan and Case claim the Act has unfairly impacted the Pacific regions, in particular, punishing islands like Hawai‘i and Guam based on their geographic location to benefit a duopoly of shipping companies, which in turn inflates residents’ costs of living.

For Hawaiʻi, ocean shipping provides 85-90% of Hawaiʻi’s food products, and close to 100% of building supplies and crude oil for transportation and energy are imported. Despite the availability of international carriers, only two US cargo lines—Matson Navigation and Pasha Hawai‘i—dominate the market, which Case says leaves Hawaiʻi to bear inflated shipping costs.

The Jones Act requires all cargo shipping between US ports be done by US-flagged vessels, which must also be built in the US and mostly owned and crewed by Americans. According to Statista, just 93 vessels are Jones Act compliant in the country, which is shrunk from 257 in 1980. This US fleet represents only 1% of all oceangoing commercial vessels in the world.

“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 reintroduced measures include:

1. The Noncontiguous Shipping Relief Act: This bill would exempt non-contiguous US regions, such as Hawai‘i and Guam, from the restrictions of the Jones Act.
2. The Noncontiguous Shipping Reasonable Rate Act: This proposal defines a “reasonable rate,” which states domestic shippers can charge no more than 10% above international shipping rates for comparable routes.
3. The Noncontiguous Shipping Competition Act: This bill would eliminate the Jones Act in regions where monopolies or duopolies have developed in the shipping industry.

Case and Moylan argue that these reforms are crucial for addressing the high cost of living in these regions, which results from the lack of competition among shipping companies.

A 2020 report by the Grassroot Institute of Hawai‘i found that the Jones Act costs Hawai‘i’s economy $1.2 billion annually and increases shipping costs by $654 million each year, resulting in prices $916 million higher. The report claims the Jones Act annually costs each Hawai‘i resident more than $645, and results in approximately 9,100 fewer jobs representing $404 million in lost wages.

Case concluded, “These long-overdue reforms are of the utmost importance to our unique non-contiguous localities which have been left undefended to bear the brunt of the Jones Act for reasons which don’t hold up to the reality of the modern world. If the Continent wants to keep the Jones Act for whatever reason, where alternatives to shipping at least provide some insulation from monopolistic shippers, go ahead. But don’t expect us to pay through the nose for your privilege.”