AMO Currents - Congressional leaders stress critical need for Jones Act, push back on false claims

AMO Currents - Posted: November 3, 2017

Congressional leaders stress critical need for Jones Act, push back on false claims

The following is excerpted from an article released November 3 by the American Maritime Partnership, a coalition of which American Maritime Officers Service is a member and which American Maritime Officers supports.

WASHINGTON (November 3, 2017) - The House Subcommittee on Transportation and Infrastructure held a hearing Wednesday on "Emergency Response and Recovery: Central Takeaways from the Unprecedented 2017 Hurricane Season," during which Congressman John Rutherford (R-FL) and Ranking Member Peter DeFazio (D-OR) highlighted the importance of American maritime for Puerto Rico's recovery and the capacity and capability of Jones Act vessels to meet Puerto Rico's present and future needs.

In his testimony, Congressman Rutherford recognized the critical role of American maritime first responders in the wake of Hurricane Maria and highlighted the significance of American maritime in supporting the long-term restoration of the island's economy.

"The Jones Act has not added difficulties to the recovery in Puerto Rico and the Virgin Islands. The goods getting to the port were not the problem. It was the distribution from the port into the country where the need was at - that was the difficulty," said Congressman Rutherford. "The U.S. maritime industry are first responders in times of emergency like Hurricane Irma and Maria and Jacksonville is ground zero for getting shipments of goods to Puerto Rico quickly reliably and economically ... Jones Act carriers to date have delivered tens of thousands of containers to the island via the Port of San Juan. They have worked closely with federal emergency responders, customers, and nonprofit organizations to meet the ever changing and increasing needs of the island. They have proven themselves committed to meeting Puerto Rico's immediate needs while also supporting the long term restoration of the island's economy." Congressman Rutherford added: "Part of the rebuilding effort is also making sure that the hundreds of maritime employees in San Juan and in Jacksonville are able to keep their jobs. The Jones Act provides stability to these American workers and certainty to industry, which in turn has reinvested more than a billion dollars into vessels and infrastructure in the shipping corridor between Jacksonville and San Juan ... Consistent application of the Jones Act enables (a domestic maritime company) to make these 35-year investments that ensure consistent on time deliveries to the people of Puerto Rico and that ensure cargo shipments back to the mainland to support the island's manufacturing sector, and it's this continuity and certainty that position the U.S. maritime industry in Jacksonville to be so capable to respond to the needs of Puerto Rico as the Coast Guard reopened the port after Maria."

Echoing Congressman Rutherford's strong remarks, Ranking Member DeFazio also stressed the importance of the Jones Act for ensuring reliable delivery to the island and the challenge of moving relief containers out of the port due to infrastructure problems.

"Finally, I hope once and for all to put the idea to rest the idea that somehow the Jones Act is inhibiting the recovery of Puerto Rico. We've had more than 20,000 containers delivered," said Ranking Member DeFazio. "The problem has been the logistics of getting those out of the port. The remote parts of the island want to hear more about the infrastructure problems that are inhibiting the distribution and what we can do about that in the short and the long term."

These comments come after a prior hearing of the Subcommittee on Coast Guard and Maritime Transportation on Tuesday, October 3, 2017, in which congressional members and leaders from the U.S. Coast Guard also discussed the importance of the law to Puerto Rico's recovery.

For nearly a century, the Jones Act has had bipartisan support from the U.S. Congress. The following statements address the false claims reported by media and those in opposition to the Jones Act.

Fact Check on False Reported Claims in Media:

Truth: The Jones Act does not prevent foreign vessels from carrying cargo to Puerto Rico.

Any foreign vessel can call on Puerto Rico. The Government Accountability Office (GAO) noted in a 2013 report that two-thirds of the ships serving Puerto Rico were foreign ships. 55 different foreign carriers provided imported cargo to Puerto Rico in a single month, as cited as an example by GAO. Foreign shipping companies compete with the American shipping companies in an intensely competitive transportation market.

Truth: The Jones Act does not double the cost to transport goods to Puerto Rico.

While critics may claim transportation costs are at least twice as high in Puerto Rico as in neighboring islands on account of the Jones Act, there is no study that supports this statement in any way. In fact, anecdotal evidence about rates indicates that the opposite is true. For example, one analysis shows it is 40% more expensive to ship goods from the U.S. mainland on foreign vessels to the U.S. Virgin Islands (not subject to the Jones Act) than on Jones Act vessels to Puerto Rico.

Truth: Jones Act vessels have the capacity and capability to support Puerto Rico's relief and recovery efforts.

In the immediate aftermath of the hurricane, one hundred percent of the island was without power, and roads were blocked by downed trees and debris. While goods continue to consistently arrive to the island on vessels, power outages, lack of warehousing and refrigerated storage, damage to stores and roads impact distribution of the goods. The challenge is not getting goods to the island, but delivering goods once they arrive. In fact, since the hurricane, American maritime companies have significantly increased their capacity to assist the island, adding nine vessels to the fleet of Jones Act vessels regularly serving Puerto Rico.

Truth: A Jones Act waiver could negatively impact the reliable and efficient delivery of essential cargoes to Puerto Rico.

Because of infrastructure challenges, a Jones Act waiver could hinder, not help, relief efforts. A Jones Act waiver could overwhelm the system, creating unnecessary backlogs and causing confusion on the distribution of critical supplies throughout the island. With more than 6,000 containers remaining on the docks or in nearby streets, there are already logistical bottlenecks even for Jones Act cargoes as a result of the inability to distribute goods within Puerto Rico due to road blockages, communications disruptions, and concerns about equipment shortages, including trucks, chassis, and containers.

Truth: Critics have ignored the GAO and continued to falsely blame the Jones Act for contributing to higher costs of goods in Puerto Rico without any facts on their side.

Over the last decade, a parade of politicians and "experts" have attempted to estimate the so-called "cost" of the Jones Act in Puerto Rico. Because the estimates have been wildly contradictory, in 2012, Puerto Rico Delegate Pierluisi asked the GAO to determine the true "cost." The GAO studied the issue for more than a year and debunked the previous estimates. First, the GAO said there are far too many factors that impact the price of a consumer good to determine the supposed cost related to shipping, much less the Jones Act. Second, the GAO said, one could not truly estimate the cost unless one knew which American laws would be applied to foreign ships if they were allowed to enter the domestic trades, which would certainly increase the cost of foreign shipping.

Truth: The Jones Act provides reliable and efficient delivery of goods, supports family-waged jobs in Puerto Rico, and promotes reliable services essential for the long-term recovery of Puerto Rico.

A GAO study on Puerto Rico listed a number of potential harms to the territory itself if the Jones Act were changed, including the possible loss of the stable service the island currently enjoys under the Jones Act and the loss of jobs on the island. Moreover, American domestic carriers are making some of the largest private sector investments currently underway in Puerto Rico by investing nearly $1 billion in new vessels, equipment, and infrastructure. They employ Puerto Rican American citizens on the island and on vessels serving the market, providing highly reliable, low-cost maritime and logistics services. These private sector jobs and reliable services are important to the long-term recovery of the Puerto Rican economy and would be jeopardized by changes to the Jones Act.