Jones Act debate continues after Puerto Rico waiver ends

Jones Act debate continues after Puerto Rico waiver ends

The Trump administration declined to renew a temporary waiver that allowed foreign-flag ships to sail from the US mainland to hurricane-ravaged Puerto Rico and reignited a decades-old debate over the Jones Act.

The Trump administration’s 10-day waiver expired Sunday, but not before heated arguments over whether it should have been issued, extended for a year, or made permanent. It was unclear whether any ships took advantage of the waiver.

What is clear is that supporters and opponents of the Jones Act, the 1920 cabotage law requiring US domestic shipments to move on US-flag, US-built vessels owned and crewed by US citizens, are as entrenched in their positions as ever.

Sen. John McCain, R-Arizona, a longtime critic of the act, was joined by Sen. Mike Lee, R-Utah, in a bill seeking to repeal the act. Puerto Rico officials and a variety of pundits criticized the law as protectionist and argued that a long-term waiver or repeal would aid the commonwealth’s recovery from Hurricane Maria.

Jones Act supporters said there has been plenty of US-flag vessel capacity to funnel supplies from the mainland to Puerto Rico, and that distribution delays have been due to damaged inland infrastructure and trucker shortages. US-flag carriers also noted that the Jones Act does not prevent foreign-flag ships from serving Puerto Rico from other nations.

Repeal of the Jones Act is politically popular in Puerto Rico and other noncontiguous US states and territories, where the law is widely blamed for increasing transportation costs. The Honolulu Star-Advertiser last week published an unscientific online poll showing 80 percent of respondents opposed the law.

Despite the current uproar, Jones Act opponents face an uphill fight in amending the law, which has support of US shipyards and other maritime interests who say the law preserves US jobs and military readiness.

Republicans and Democrats on a US House Transportation and Infrastructure subcommittee joined in supporting the Jones Act during a hearing last Thursday.

Rep. Duncan Hunter Jr., R-California, the subcommittee chairman, urged President Donald Trump to decline to extend the waiver. “Trump went very anti-Trump by waiving the Jones Act,” Hunter said. “He went anti-American worker, anti-American-made, and basically sold out to Wall Street and big interests that don’t want American-made.”

Hunter said many countries have cabotage laws regulating domestic waterborne commerce. He said repealing or weakening the Jones Act would threaten US jobs and open the way for non-US vessels and crews to eventually operate on US inland waterways, and undermine military readiness.

Rep. John Garamendi, D-California, said Jones Act carriers had done a “superb” job delivering supplies to Puerto Rico, but “it would be very hard to tell that from the narrative spun by the media and by the critics of the Jones Act.”

Asked whether the temporary Jones Act waiver had any impact on relief shipments, TOTE CEO Anthony Chiarello replied, “There isn’t a bottleneck of cargo to get to the island. The bottleneck is on the island.”

Chiarello said the waiver did not make sense, “so an extension of the waiver would make even less sense.”

Chiarello and Michael Roberts, senior vice president and general counsel at Crowley Maritime, noted that each of their companies has invested several hundred million dollars in new ships and infrastructure to serve the Puerto Rico market.

They also challenged assertions that repealing the Jones Act would reduce shipping costs. Chiarello said Jones Act carriers’ northbound backhaul rates from Puerto on the heavily imbalanced trade with the US mainland are probably much lower than an international carrier would provide as part of a broader service.

Chiarello also said that any international carrier allowed to serve the small Puerto Rico market from the US mainland probably would transship via other ports, resulting in transit times of 10 to 15 days, compared with TOTE’s two-and-a-half days on its back-and-forth route between Jacksonville, Florida, and San Juan.

Contact Joseph Bonney at joseph.bonney@ihsmarkit.com and follow him on Twitter: @JosephBonney.

 

Comments

i support the jones act and agree that the 3 lines face big problems on the island with getting containers delivered. witht hat said the lines should all publicly acknowledge that they are struggling having enough empty equipment and vessel space stateside for the commercial cargo. they are getting hit heavy with FEMA bookings and these take precedent over commercial cargo ( as it should ) the 10 day waiver is a total joke, no line had enough time to make the arrangements to take advantage of this, a couple of "extra loaders" would have served everybody well.