BY MICHAEL HANSEN – The Hawaii Republican Party meeting in convention on May 17, 2014, adopted eight platform resolutions including one calling for Jones Act reform that would exempt the noncontiguous trades – Alaska, Guam, Hawaii and Puerto Rico – from the domestic ship build requirement.
The Jones Act is a federal cabotage law enacted as Section 27 of the Merchant Marine Act of 1920 and requires a vessel be U.S. built, flag, owned, crewed and managed to transport cargo by water between two domestic points.
The resolution addresses the very high cost of major ship construction in the U.S. that contributes to high shipping costs and a lack of competition in the Hawaii trade. It is now well recognized the cost of major shipbuilding in the United States is four to five times that of building comparable ships in Japan and South Korea. Together with China, South Korea and Japan now construct more than 90% of the world’s self-propelled new ships over 1,000 gross tons each year. The U.S. build requirement has created an artificial shortage of capital ships in domestic trades disproportionally penalizing the noncontiguous jurisdictions, which are completely dependent on ocean shipping for interstate surface transportation.
The party resolution follows from four companion resolutions were introduced in the Hawaii State Legislature during its 2014 session. The resolutions called on the Hawaii Congressional Delegation to introduce and Congress to enact federal legislation that would exempt the noncontiguous trades from the domestic build requirement of the Jones Act. Two of resolutions (SR 45, SCR 93) were introduced by State Senator Sam Slom (R) and the other two (HR 113, HCR 153) by State Representative Gene Ward (R) with six Democratic House members including the Speaker Joseph Souki .
To reach out to the other noncontiguous jurisdictions, three Hawaii State Legislators held a bipartisan press conference at the Hawaii State Capitol on March 13, 2014, with participation of legislators from Alaska, Guam and Puerto Rico, demonstrating widespread support for Jones Act reform. A month later on April 15th, the Legislature of Guam adopted a resolution calling on their Congresswoman Madeleine Z Bordallo to introduce federal legislation to exempt the noncontiguous trades from the U.S. build requirement. The Senate of Puerto Rico is readying a report due out shortly covering the extensive hearings held earlier this year (Jan. 27th – Feb. 10th) to learn the impact of the Jones Act on the Commonwealth.
Further buttressing these legislative initiatives, the Governor’s Hawaii Refinery Task Force released their Final Report on April 28th recommending that the State pursue a Jones Act exemption to lower the cost of energy in Hawaii. And, the Congressional Research Service issued on May 5th a report on the rail transportation of crude oil, which among other things detailed the adverse impact of the domestic build requirement of the Jones Act on U.S. energy markets.
Former Congresswoman, gubernatorial candidate and current Chairwoman of the Hawaii Republican Party, Patricia Saiki, said in response to the adoption of a party resolution calling for Jones Act reform: “Many in politics have expressed their concern over the high cost of living here in Hawaii. Being the most expensive state in which to live, with goods and services including food costs higher than any other state in the nation, is of real concern to our people. But few in power today have done much to alleviate this situation. Getting an exemption from the Jones Act, as expressed in the Resolution recently passed by our Republican Party is one of the ways by which we can effectively change things for the better. Our Party is committed to finding such solutions to a serious problem and we seek support for our candidates to lead the way.”
Former Hawaii State Lt. Governor and 2014 Republican gubernatorial candidate, James “Duke” Aiona, stated in respect of his prospective role as governor, “The Jones act is a federal regulation that affects all the people of Hawaii. It is time for all stakeholders to come together and resolve this issue in a manner that is in the best interests of our state. I am encouraged and excited by the Hawaii Shipping Council’s recent proposal and the Republican Party’s resolution relating to the Jones Act. I look forward to providing the leadership needed for this resolution.”
U.S. Senatorial candidate Campbell “Cam” Cavasso (R), who will face the winner of the Democratic primary (either U.S. Senator Brian Schatz or U.S. Representative Colleen Hanabusa) in November, said, “It is time for our Hawaii to free our people from the bonds of federal regulations which artificially increase the cost of living for every family by multiplied thousands of dollars. It is time to set our people free from extreme, external regulations costing every man, woman, and child in Hawaii. We can do this now.”
Hawaii State Representative Gene Ward (R), minority leader emeritus, and introducer of Jones Act resolutions in 2013 and 2014, said, “As the cost to feed ourselves escalates and we continue to import over 80% of everything we consume, the most sustainable approach to food security in Hawaii is lowering the cost of living by lowering the cost of shipping. We know we can cut the grocery bills of Hawaii’s struggling families through a minor exemption to the Jones Act-but we have not acted. Now is the time to press for real food security and sustainability by using all the ships in the world to come to our shores, not just a select expensive few under the Jones Act. If only a fraction of the people understood the Jones Act and how it punishes us, Hawaii would be quick to act for an exemption as we have done with Obama Care to protect our Pre-Paid Healthcare in Hawaii. National security will not be effected and in their hearts, the naysayers know this is true.”
Hawaii State Senator Sam Slom (R), minority leader and introducer of a Jones Act reform resolution in 2014, said, “Thanks to the work of the Hawaii Shippers Council and others, I feel after 20 years of activity, the public has a better understanding of the cost impact of the Jones Act and our options. We welcome support from the Hawaii Republican Party but reiterate this reform is a non-partisan issue that negatively affects all residents of Hawaii. We welcome future support from political, social and business organizations. We can win this issue.”
We certainly appreciate all the support from the Hawaii Republican Party for Jones Act reform and would endorse Senator Slom’s reminder that this is a non-partisan issue.
Michael N Hansen is the President of the Hawaii Shippers Council. The Hawaii Shippers Council (HSC) is a business league organization incorporated in 1997 to represent cargo interests – known as “shippers” – who tender goods for shipment with the ocean carriers operating the Hawaii trade.
Crazy. This is utter nonsense. Hawaii will become the dumping ground for every plastic trinket ever made in the world. What about illegal aliens. This is not a one dimensional issue on origin and point to point. This is all we have to save what little economic energy that we still have. Slom and Ward…. like both of you guys but this is the wrong issue.
Sandybeach. The Jones Act and the proposed reform have nothing to do with all the trinkets in the world and illegal aliens. Firstly, the Jones Act is a domestic shipping law that applies to shipping between U.S. ports, not the international trade. Presumably all the foreign made trinkets will continued to arrive in Hawaii on foreign flag ships as they do today. Secondly, the Jones Act applies to cargo and not to passenger carriage. As such, reforming the Jones Act will not affect the movement of people to and from Hawaii. Reforming the Jones Act will lower the cost of domestic goods including most commodities delivered to Hawaii. That is a good thing for consumers, and Senator Slom and Representative Ward were right to support Jones Act reform.
Mike. I think the Jones Act does affect passenger travel. If you leave an American port on a ship your final destination cannot be another American port unless your travel is on a Jones Act vessel.
matson navigation co. which owns and operates fleet of approximately 8 ships at any given time have already been allowed to send all their ships,which were built in us shipyards,are allowed to send thesevessels to foreign shipyards for dry-docking and repair work.mostly in shipyards in mainland china and hong kong.so it would make sense economically for the next evolution,to build new ships in foreign shipyards and/or buy second hand ships that are foreign owned and foreign flagged on the open market and reflag American.it has been done in the past.and ironically these reflagged ships were allowed to carry us military cargo!!!! my one immediate concern is that Hawaii shippers council is a special interest lobbying group.how transparent are they with political donations and what kind of priviledges and benefits are they seeking? are they truly free and open market or are they crony-capitalists?
Shaftalley. Regarding military cargo. The U.S. Department of Defense through its Military Sealift Command (MSC) relies primarily on a group of ships known as the U.S. flag international trade fleet for sealift capacity. This fleet of 89 ships is all foreign built and about half are foreign owned through U.S. owning companies, and as such are not eligible for Jones Act trades. The fleet of 90 Jones Act ships are very rarely used for military sealift as these Jones Act ships are typically fully committed to the domestic commercial trades in which they are employed. Regarding the Hawaii Shippers Council. The Council represents the interests of cargo owners, that is those who ship their merchandise. In respect of the ocean carriers — such as Matson and Horizon Lines — the interests of cargo owners align with those of the consumers, seeking lower ocean freight rates and better service.
mr. Hansen, thanks for your reply.if the dod and msc rely on ships of which at least half are foreign owned then the national security argument for using us merchant ships to carry our military cargo is weak.and going back to thejones act waivers you seek, if foreign flag ships and /or foreign built ships are allowed into the domestic trade,they will not be exmpt from all environmental,labor laws which are very costly to implement by shipping companies.not to mention all the taxes and fees from local,state,federal.and the united nations has enforced various regulations which are being enforced in us waters.not to mention us custom fees which will will be charged on matson and horizon lines for foreign ship builds and purchases.the stevedore s and dockworker union (ilwu)willcontinue to add high labor costs.and if your shipper clientsand members start showing profits,chances are the Hawaii state legislators will create laws to raise your taxes.they are always in need of additional revenue.
free trade is crucial.i barely made it out of high schoolallthose years ago,and I don't need a college education to understand that capitalism allowsfor prosperity and freedom,etc. ok,i'll get off my soapbox andhope that allowing foreign flag ships in the domestic trade and/or allowing matson/horizon lines purchase or build cargo ships in foreign yards will benefit the consumers here in Hawaii.because alltheseshipping companies will still have to deal with city,county,state federal and United Nations(yeah,united nations! I'm not making it up),rules,regulations,mandates and compliances on environmental and labor laws etc.which are very costly.and which will be passed on to the customers and consumers.and then there will always be the high cost of using the local longshore and stevedores.organized labor has a monopoly on the waterfront here and on the mainland.and they are very,very expensive.and then there are all the taxes and fees from state and federal government.a humogous toll booth.wether we use foreign flag ships or not all costs will be paid by the consumers.and then price inflation,etc.reduce the government involvement first.
The jones act is outdated and continues to increase the cost through protectionism constraints. The entire idea is as mentioned in shaftalley's last few words – get gov't out of the mix.
This exception would allow a container ship to stop in Hawaii on its way to long beach. It would also allow oil tankers to bring Alaska oil to Hawaii. They can not now do that because there are no us built tanker ships. How is that not good for Hawaii? Cruse ships can not now go between Hawaiian islands because they are all no us built ships.
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