Cliff Slater’s Second Opinion—March 9, 1998
End Jones Act now
Hawaii can no longer afford the Jones Act requirement that goods shipped between U.S. ports must be in U.S. ships.
Hawaii’s ocean freight costs from the Mainland are the world’s most expensive and contribute significantly to our high cost of living. For example, from Los Angeles, it costs less to ship merchandise 7,250 miles to Hong Kong than it does to ship it one-third that distance to Honolulu.
Hawaii’s legislators must urge Congress to exempt us from the Jones Act. American Samoa gained such an exemption and it now costs less to ship goods there from Los Angeles than it does to ship goods half that distance to Hawaii.
An exemption for the "U.S.-built" requirement alone would significantly reduce prices in Hawaii. However, supporters say that the Jones Act is needed to protect American seafarers’ jobs. But is it rational to tradeoff the thousands of Hawaii jobs now being lost because of our high cost of living for these few mainland seamen on Matson ships.
Supporters then wrap themselves in the flag and say our military needs these ships. Never mind that during Desert Storm, the military did not use a single Matson ship.
Meanwhile half-empty foreign container ships are passing by Hawaii on their way back to Asia because they are not allowed to stop here and unload. What a wasted opportunity to save money.
Then supporters say that we must protect U.S. shipbuilders and our merchant fleet. Never mind that the U.S. once had more than half the world’s shipping tonnage and now has less than 2% of it. Our shipyards have degenerated to being now primarily defense contractors¾ the same folks that bring us $1,000 toilets and $500 hammers. Unsurprisingly, the few U.S. ships they build cost two to three times what the same quality ships cost elsewhere.
Hawaii shipping companies should be allowed to use modern European or Asian built vessels. We have already reformed transportation regulations to allow overseas-built airplanes, trains and buses. It is time to include ships.
Legislators and other supporters then try to sell us on the idea that that the restrictive Jones Act requirements, and the resulting duopoly of Matson and Sealand, actually save us money. To do so, they cite spurious special interest studies but refuse to support an objective study by, say, the State Auditor or the UH Economics Department.
What is the reason for all this resistance? Quite simply, it is special interest money paid to our elected officials both locally and nationally. For example, Rep. Neil Abercrombie gets over 30% of all his campaign funds from members of the special interest group opposing any reform of the Jones Act. With well over $100,000 so far, he is the biggest recipient of such funds in Congress.
We must press for reform of the Act; it is unreasonable that Hawaii’s economy be weighed down by this outdated national policy. The biggest single opportunity we in Hawaii have for lowering our high cost of living is an exemption from the Jones Act. If it only reduced our shipping costs 30% it would mean savings of over $1,000 per Hawaii family. In these tough times, that is too much to pass up.
Hawaii House and Senate resolutions requesting that Congress grant us the same exemption enjoyed by the citizens of American Samoa should be the first step. Passage of the resolutions introduced by Sen. Whitney Anderson and Rep. Gene Ward will do that.