The Jones Act and Shipping to Hawaii and Puerto Rico

For 100 years, the Merchant Marine Act of 1920 (aka the Jones Act) has been the foundation of Domestic Maritime regulation in the U.S. The Jones Act has had a positive impact on the U.S. shipping industry and defines the rules regarding maritime trade between the Continental U.S. and offshore markets like Hawaii, Alaska and Puerto Rico.

The Jones Act has also significantly impacted the U.S. economy. Each year, it:

• Provides stability to the U.S. maritime industry
• Generates more than $154 billion in total economic output
• Creates $41 billion in labor income for American workers
• Adds $72 billion to the value of U.S. economic output
• Helps to sustain nearly 650,000 American jobs, with one shipyard job creating four jobs elsewhere in the economy

For shippers, this means that they get reliable, dedicated, first-class service from the carriers that provide assistance in those trade lines.

Understanding the Jones Act

Named after Senator Wesley R. Jones, the Jones Act was passed as the Merchant Marine Act of 1920. Its purpose was to create a safe network of merchant shipping, and merchant mariners within the U.S. after World War I.

The Jones Act was a continuation of U.S. maritime cabotage laws that trace their origins back to the establishment of the country. Jones Act regulations include the requirement that all vessels carrying goods between two U.S. points must:

1. Fly the U.S. flag
2. Be built in the U.S.
3. Be at least 75 percent owned by American citizens and/or businesses
4. Have crews that are at least 75 percent American

These laws ensure organizations taking part in domestic trades or services compete equally and are subject to U.S. laws and regulations.

The Jones Act only applies to vessels carrying cargo between U.S. ports — ships bringing goods to and from the U.S. and foreign countries are not regulated by the Jones Act. The U.S. Merchant fleet includes roughly 40,000 vessels that are covered by the Jones Act and they move nearly one billion tons of cargo every year along U.S. internal waterways, across the Great Lakes and overseas to Alaska, Hawaii, Puerto Rico and other U.S. territories.

Why the U.S. Jones Act Is Still Needed 100 Years Later

Aside from its positive economic impacts, the Jones Act ensures safety under U.S. laws. Jones Act ships are subject to strict inspections and maintenance schedules. This ensures these ships — as well as their owners and operators — are adhering to U.S. safety and environmental laws.

Jones Act companies, unlike foreign vessel owners, are also required to comply with all other U.S. laws, such as tax, immigration and labor laws. This is why, as a shipper, you should feel confident that any Jones Act vessel will get your maritime freight to its port of destination safely while adhering to best practices.

Furthermore, the Jones Act:

• Assures the U.S. mainland and its offshore communities continue to have reliable domestic water transportation service subject to national control in times of emergency
• Enhances environmental standards, liability, safety and enforcement by having American-owned vessels and U.S. citizen crews responsible for safely delivering goods along our nation’s waterways

The Impact of the Jones Act on Hawaii

Shipping to Hawaii isn’t like shipping anywhere else in the U.S. It starts with being 2,500 miles from anywhere with a state composed of various Islands. Population centers are separated by water, necessitating multi-modal deliveries of cargo and materials.

Opponents of the Jones Act in Hawaii say the relative scarcity of Jones Act-compliant vessels raises shipment costs and, therefore, the cost of living on the islands.

While Hawaii has one of the highest costs of living in the U.S., economists from Boston-based Reeve & Associates and Hawaii-based TZ Economics released a joint report concluding that the Jones Act has no significant impact on the cost of living in Hawaii. The cost is primarily driven by housing expenses and other factors, like fuels and utilities, and medical care, not the shipping costs of goods carried to Hawaii by Jones Act carriers.

The Impact of the Jones Act on Puerto Rico

Shipping to Puerto Rico is nearly as easy as shipping to anywhere else in the U.S., and there are several quality asset-based carriers out there who can help you do it efficiently. Even though the island has endured many struggles over the past decades, Puerto Rico is positioned for a rebound.  

In terms of employment and economic impact, Reeve & Associates concluded the Jones Act provides significant benefits to the people of Puerto Rico, contributing well over 1,000 jobs that provide an overall annual economic contribution to the commonwealth in excess of $250 million.

When shipping freight to Puerto Rico, U.S. mainland and Puerto Rico domestic carriers offer dedicated ocean services from the U.S. Atlantic and Gulf Coasts that provide a high level of service frequency and rapid transit times. And because these services operate directly between the U.S. mainland and Puerto Rico, shippers are provided with a high level of service reliability.

Find a Shipping Partner Dedicated to Shipping to Hawaii and Puerto Rico

Finding reliable shipping to Hawaii and Puerto Rico isn’t as easy as it sounds. That’s why you need a shipping partner with a proven track record moving cargo in these lanes.

ATS International has decades of experience and pairs customers with a single point of contact from start to finish, providing unique asset-based solutions for U.S. domestic offshore trade lanes and beyond. We have long-standing relationships and partnerships with ocean carriers in all the trade lanes covered by the Jones Act. Contact us today to learn more or reach out to request a quote.