The Jones Act only makes the news every now and then. When a politician wants to gather votes by pointing out he can save the American public billions by lowering shipping costs. When a shipping company wants to save money by hiring foreign labor and points out how antiquated the Jones Act is or when a shipping company wants to build a new ship and doesn’t want to have it built in a shipyard in the United States.
Just recently, the Jones Act was under attack by Senator McCain. He is probably the most vocal about his Jones Act Hatred - which is incredibly ironic because he was gave the commencement speech at Maine Maritime Academy in 2005. He tacked it on to the Keystone Pipeline Legislation which in my opinion was completely inappropriate and underhanded.
Whenever the Jones Act is under attack most times the first statistic that is thrown out is the amount that Americans would save by being able to use foreign vessels at reduced freight rates. Normally, this number is in the Billions (insert mental image of Austin Powers). I’d first like to point out that the Jones Act does much more than protect jobs on ships for American Mariners. It also ensures that ships continue to be built in the United States - this obviously protects shipyard workers jobs but it also keeps Naval Architects busy, it keeps ship building innovative (because lets face it what America often times has to offer the world is creativity). I’d also like to point out that one reason US Shipping is more expensive than foreign shipping is because we are a heavily regulated industry. It costs more to be safe. Repairs are conducted in a timely manner, safety equipment is replaced and renewed, our vessels are inspected - inspections aren't free, we are more environmentally friendly - newsflash: low sulphur diesel is more expensive than heavy fuel oil, we follow international regulations regarding rest hours - we don’t falsify rest hours - this means we have larger crew sizes. You get the idea. The cost of the Jones Act is hard to actually pinpoint. Sure, it costs more to operate a US Vessel but, in the future, there may be incredible cost savings by operating well maintained vessels safely with qualified mariners.
I could talk for hours about the Jones Act and the long term consequences and implications of doing away with a law that protects our Nations Maritime Industry. I whole heartedly agree that the Jones Act could stand to be modernized. The global economy is constantly changing and evolving and legislation which directly affects it clearly should grow and evolve with it however; its incredibly frightening because it doesn’t seem that our Government can have a thoughtful discussion. Once the Jones Act begins to be modified it can't be ignored that any mega corporation could throw a Congressman a few bucks so that his corporation could save a few bucks.
This past month I shipped my Household Goods from California to Hawaii and it changed how I feel about the Jones Act and the cost of shipping goods domestically.
I’m going to tell you a story. It’s long. Sorry in advance.
Remember when I left Houston? I put everything into a U-Haul UBox and sent it from Houston to California until I decided what to do with it. Well, it was time to go home to Hawaii - so I was going to arrange to send it from California to Hawaii. The cost was going to be 3500. This seemed very expensive so I also called Matson and received a quote for a 20ft container. Their rate was also 3500. This told me one key thing: U-Haul is basing their price off the price of a container. They know I won’t unpack my U-Box and stuff a container for the same price - there would have to be a price savings on the container. To make a container cheaper for myself I could find someone to share it with but, this is complicated because I’d need to find someone going to Hilo - if I didn’t need my items in a timely manner that might be fine. One critical point of information here: A U-box is 300 cu. ft. A 20’ container is approximately 1360 cu. ft. (the height of containers can vary).
So I decide that I’m way smarter than all of them - and I go find a 3PL (Third Party Logistics) they handle the warehousing, and logistics required prior to transport. I find one who quotes me 1100 for shipping (based on cubic) and 800 to re-crate it. I feel like a genius.
Freight Forwarders are licensed and basically negotiate ocean freight. They are also responsible for all the paperwork necessary to complete the Bill of Lading which is required for shipment.
Even though I’m in the shipping industry it would have been really hard for me to go directly to the Freight Forwarder. Basically, I knew just enough to get myself into trouble.
It turns out that what I actually found was a con artist. He took my money for the logistics and didn’t pay the Freight Forwarder - which meant that my shipment was impounded in Honolulu and I had to negotiate the release of my Household Goods. I had to file claim disputes with my bank and credit card companies and shut down all my accounts.
The Jones Act isn’t costing the American Public billions of dollars. Individual companies are charging rates based on the rate of container. They are grossly overcharging Americans per cubic foot.
Freight Forwarders have increased the cost of shipping Household Goods over other types of items because they know its a high claim item but, they also don’t charge an individual the same rates that they charge a 3PL. Which means, I have to use a 3PL to save money with the Freight Forwarder.
It’s statistically impossible that I just happened to select the only con-artist 3PL. 3PL’s aren’t exactly popping up on Yelp so, you basically take a gamble when you use one.
What initially would have cost 3500 to ship has cost 5000 by the time I got swindled. Want to know what the actual freight cost was? 1400.
So the next time you hear someone quote how much Americans are losing by shipping their goods on US Flag vessels you can divide that number by three. At a minimum. Then you add in what it’s worth to keep jobs in America. Can you put a price on clean water and white sand? How about the very human element involved - shouldn’t foreign sailors make a livable wage like American Sailors? These things are hard to quantify but protected by the Jones Act.
The next time you hear the Jones Act mentioned please remember that it’s reach is far and most often misunderstood.
