American Maritime Industry Fights Back Against False Claims on Jones Act and Relief Efforts in Puerto Rico

Workers unload containers of shipping company Crowley from a Jones Act container barge after the area was hit by Hurricane Maria at the port in San Juan, Puerto Rico, September 26, 2017. REUTERS/Alvin Baez

Breaking: DHS Approves Temporary Jones Act Waiver for Puerto Rico

The American maritime industry is firing back against harsh criticism of the Jones Act in the media and by certain lawmakers in Washington amid the unfolding humanitarian crisis in Puerto Rico.

Attacks on the Jones Act intensified after the Department of Homeland Security seemingly denied a request to waive Jones Act requirements for Puerto Rico in the wake of Hurrican Maria on Tuesday, saying a waiver was not needed at this time because there are enough American ships bringing supplies to the island.  

“The limitation is going to be port capacity to offload and transit, not vessel availability,” a spokesman for the DHS said Tuesday.

On Wednesday, however, the DHS said it had not made up its mind on the issue and it was still considering a request by members of Congress to waive the shipping restrictions, but so far it had not received any formal requests from shippers or other branches of the federal government to waive the law.

“We are considering the underlying issues and are evaluating whether a waiver should be issued,” a senior Homeland Security official told reporters on Wednesday.

The Merchant Marine Act of 1920, aka the Jones Act, is a federal law requiring goods shipping between two ports in the United States be carried on American-built ships that are mostly owned and crewed by American citizens. The law applies to ships transporting goods between the U.S. mainland and Puerto Rico, although not the U.S. Virgin Islands. 

To get the facts straight on the Jones Act’s impact on hurricane relief efforts in Puerto Rico, we reached out to the American Maritime Partnership, a group representing more than 400 U.S. maritime companies from Alaska to Puerto Rico.

“A steady stream of additional supplies keeps arriving in Puerto Rico on American vessels and on international ships from around the world. The problem now is distributing supplies from Puerto Rico’s ports inland by surface transportation,” said Thomas Allegretti, Chairman of the American Maritime Partnership.

Since Maria hit, American maritime companies have moved approximately 9,500 containers of goods in Puerto Rico to help the territory and its residents with the recovery. Foreign-flag vessels are also arriving at the island as they normally do when transporting goods not coming from the United States.

Allegretti offered another statement later in the day amid reports that thousands of shipping containers loaded with vital supplies were stacking up San Juan:

“Earlier today, the President responded to a question on the White House lawn regarding the need to waive the Jones Act for the recovery in Puerto Rico.  He mentioned that the shippers are not in favor of waiving the Jones Act. He is right and here is why.  What we are seeing clearly on the ground is thousands of cargo containers piling up at the port of San Juan, filled with essential goods that the Puerto Rican people desperately need, but not nearly enough trucks and clear roads to distribute the goods.  So, the problem at the port is a lack of trucks and delivery routes, not a lack of vessels. 

The President was also right when he said that we have a lot of ships out there right now. Much needed cargo has been delivered to the port, and an armada of U.S. and foreign vessels continues to arrive.

We continue to work hand in glove with the FEMA and the rest of the Administration to help find solutions to get the goods distributed from the ports to our fellow Americans, and the men and women of American and Puerto Rican maritime, along with foreign shippers, are answering the call.” – Thomas Allegretti, Chairman, American Maritime Partnership

In response to numerous reports in the media claiming that the Jones Act is somehow hindering relief efforts in Puerto Rico, the AMP provided the following fact check to hopefully set the record straight: 

Claim: The Jones Act prevents cargo from foreign vessels to reach Puerto Rico.

False. Any foreign vessel can call on Puerto Rico. The Government Accountability Office (GAO) noted in a 2013 report that, according to data from the Puerto Rico Ports Authority, in April 2011 alone, 55 different foreign-flag cargo vessels—including tankers, containerships, and roll-on/roll-off cargo vessels, among others—loaded and unloaded cargo in the Port of San Juan, Puerto Rico. In all of 2011, 67 percent of the vessels that operated in the Port of San Juan were foreign-flag vessels, while 33 percent were U.S.-flag vessels, the GAO noted. Foreign shipping companies compete directly with the American shipping companies in an intensely competitive transportation market.

Claim: Import 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.

Claim: Jones Act vessels lack sufficient capacity to reach communities impacted by Hurricane Maria.

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. Goods are arriving to the island on vessels but bottlenecks on the roads are limiting arrival to the communities. The largest bottleneck is not getting goods to the island, but delivering goods once they arrive.

Domestic maritime companies have the equipment at their terminals to handle the throughput at the terminals without overwhelming the shoreside and inland infrastructure. Domestic maritime roll-on/roll-off barges can immediately discharge cargoes while work is performed to restore power for cranes and other equipment at the terminals. Domestic maritime containerships can deliver cargoes from the U.S. mainland to Puerto Rico in three days.

Claim: A Jones Act waiver would add efficiency to the delivery of essential cargoes to impacted communities.

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. Already there are logistical bottlenecks 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.

Claim: The Jones Act adds significantly to the cost of goods in Puerto Rico.

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.

Claim: Changing the Jones Act in Puerto Rico will help the island, especially considering its current economic crisis.

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 hundreds of 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.

“The men and women of the American maritime industry stand committed to the communities in Puerto Rico impacted by Hurricane Maria, where many of our own employees and their families reside and are working around the clock to respond to the communities in need,” said Allegretti. “As our industry has done in past natural disasters, including most recently Hurricanes Harvey and Irma, we are actively working with the Administration, FEMA, MARAD, and relief organizations to deploy quickly and deliver essential goods like food, fuel, first aid supplies, and building materials.”

Suggested Reading: 

• GAO Study: Characteristics of the Island’s Maritime Trade and Potential Effects of Modifying the Jones Act (2013)