Many people probably do not know it, but American shipping is still governed by the Merchant Marine Act of 1920. As noted by Keli’i Akina, president of the Grassroot Institute of Hawaii, and in a recent op-ed in the Honolulu Star-Advertiser, Akina asserted that this antiquated law represents:
The most economically debilitating plank of the Jones Act requires that ships carrying cargo between U.S. ports be built in the United States. This has created an artificial scarcity of ships largely due to the inefficiency and extraordinary cost of U.S. ship construction, driving up freight and charter rates and thus limiting domestic commerce.
As a consequence, U.S. shipbuilding yards today construct fewer than 1 percent of the world’s deep draft tonnage, and the ships produced for the commercial market come at a hefty price.
If you’ve ever wondered why some goods cost so much when shipped via ports, then the reason is directly related to the Jones Act. According to the purpose of the act (TITLE 46, APPENDIX App. > CHAPTER 24 > § 861),
It is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States; and it is declared to be the policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine, and, insofar as may not be inconsistent with the express provisions of this Act, the Secretary of Transportation shall, in the disposition of vessels and shipping property as hereinafter provided, in the making of rules and regulations, and in the administration of the shipping laws keep always in view this purpose and object as the primary end to be attained.
Essentially, no foreign built ship can carry goods domestically between ports. Each ship has to be built in the U.S., owned by U.S. citizens, and staffed by American citizens and permanent residents. Talk about driving up the costs of shipping! As a result, goods are not as low as they otherwise would be because of this nearly century old piece of legislation.
I am reminded of the fabulous HBO series The Wire, where in one season it catalogued the decline of shipping in Baltimore as a result of inefficient union control and corruption. Not surprisingly unions oppose changing the act for a more free market and consumer friendly law in order to protect jobs. As a matter of good public policy, and for the sake of consumers, the Jones Act should be repealed.