High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
Continuing with the Jones Act theme we’ve seen this week, here are two views from Hawaiians opposing the Jones Act.
In this first video, Reason TV sits down with Ken Schoolland, professor of economics at Hawaii Pacific University and scholar at the Grassroot Institute, to talk about the Jones Act and his argument on how it is crippling the Hawaiian economy. The video was released Thursday in response to Attorney John Carroll’s petition to overturn the Jones Act in Hawaii that was recently dismissed by the court with prejudice.
Meanwhile, Hawaii Shippers Council has released this statement in response to a Reuters article by columnist John Kemp, disparaging the Jones Act.
Reuters published on this second day of May 2013 an opinion column written by one of their market analysts in London, John Kemp. On the one hand, Kemp finds the Jones Act restrictions have an onerous effect on the U.S. economy, but on the other hand, can’t see any way the law might be repealed due to its highly concentrated political support.
Kemp mentions the problems facing oil refiners and other petroleum interests on the U.S. East Coast as the Jones Act limits the availability of suitable tankers. He also touches on the higher costs associated with noncontiguous jurisdictions of the United States – Alaska, Guam, Hawaii and Puerto Rico – due to the Jones Act.
At the Hawaii Shippers Council, we agree with Kemp that a full nationwide repeal of the Jones Act appears to be a virtual political impossibility for many reasons. However, we believe that the Jones Act can be modified to greatly lessen its currently negative impacts on the nation’s economy.
In respect of the noncontiguous domestic trades, we have put forward our proposal to exempt those trades from the U.S. build requirement. This is a critical issue because the cost of constructing large oceangoing ships – of the kind that service the noncontiguous trades – in the U.S. is now four to five times that in the major shipbuilding countries of Japan and South Korea.
Significantly reducing the capital costs of the shipping companies by allowing them to buy much lower cost ships will provide many benefits to the consumers in the noncontiguous jurisdictions. However, the Jones Act shipping companies continue to vigorously oppose our reform proposal because the domestic build requirement for their ships provides them with among other things greater protection from competition. And, its protectionism that the shipping companies do not have to pay for – the consumer pays the freight.
Michael N Hansen
President, Hawaii Shippers Council
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