How did that Puerto Rican rum or Louisiana crawfish end up in your local grocery store? The answer may be the old-fashioned way – on ships. But that’s not the only thing that’s old-fashioned about how those and other goods often get from point A to point B.
A 1920s-era law known as the Jones Act governs how American goods are shipped between two domestic ports. This law mandates that all commercial shipments between American ports be carried by American-made ships, staffed by a majority of American sailors and repaired by American crews.
While this may sound like a reasonable — even “patriotic” — policy on its face: It raises prices, limits choices, benefits a few well-connected companies and puts many American-made products at a competitive disadvantage with foreign rivals.
Imagine, for a moment, a government requirement that every pizza in Denver be cooked in a U.S.-manufactured oven, and delivered by a Colorado native driving an American-made car that could be repaired only by Mile High City mechanics.
This kind of anti-competitive mandate would obviously reduce the number of local pizzerias and force Broncos fans to pay a lot more for their pies during Monday Night Football. After all, the additional costs of these absurd mandates would be baked into the cost of every pizza.
The Jones Act mandate has precisely the same effect on domestic shipping costs — which are passed on to all of us in the form of more expensive goods. Even worse, this effect is amplified for remote parts of the country that are much more dependent on shipping than those in the highway-connected continental United States.
In Hawaii, for example, where a large portion of electricity is generated using petroleum, domestic oil shipments must be made on Jones Act compliant vessels. The result? Hawaiian electricity bills clock in at nearly double those of the state with the next highest electricity cost.
This is hardly surprising when you consider that it costs nearly 10 times more to ship a 40-foot container from Los Angeles to Honolulu as it does to ship the same container from Los Angeles to Shanghai, China.
Islanders in Puerto Rico find themselves similarly marooned by the Jones Act thanks to their disproportionate reliance on domestic maritime shipping, which is subjected to the act’s mandates.
For example, Puerto Ricans pay a whopping $6,000 more for vehicles than their counterparts here in the Lower 48 — and nearly twice as much for food as their countrymen only a few hundred miles away in Florida.
But the Jones Act’s victims aren’t limited to America’s sun-kissed islands. There are plenty of victims in the continental U.S. as well who often find themselves harmed by this outdated law.
A recent study from the Heritage Foundation revealed that, thanks to the wide disparity in shipping rates between American and foreign carriers, consumers routinely purchase foreign-made animal feed, fertilizers and even road salt from overseas suppliers located hundreds of miles beyond our borders. Why? Because inflated Jones Act shipping rates make it cost prohibitive to “buy American.”
The overall loss to the American economy is $682 million a year — money that employers could use to expand their businesses, hire more workers and pay higher salaries.
Put another way, the Jones Act is an anchor holding back the American economy. Rarely will you see a law that so obviously deserves to be repealed. For the better part of a century, the Jones Act has provided a sweetheart deal to a few politically connected shipping companies at the expense of everyone else. It’s long past time for lawmakers to scuttle this failed federal mandate.
Mr. Zimmerman is director of strategic policy at Americans for Prosperity. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
