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Section 27 of the Merchant Marine Act of 1920, also known as the “Jones Act”, was a statute passed after the first World War with the goal of reinvigorating the US merchant marine, for both economic and strategic purposes (Carey). Initially, it regulated cabotage (the trade between two ports within the same country), what vessels could carry out cabotage, and established rules that protect the safety and wellbeing of crew members. Over the past century, “… Congress has enacted provisions that could be said to tighten Jones Act requirements as well as provisions that exempt certain maritime activity from the requirements” (Congressional, 2). These include forbidding vessels that were sold to foreign owners or repatriated from qualifying as “Jones Act vessels” (1935), the expansion of the Jones Act to towing and salvage vessels (1940), requiring dredge spoil or municipal waste transport ships to be Jones Act ships (1988), and other regulations (Congressional, 2). More recent amendments have focused on compliance with environmental regulations (Carey). All these regulations, in one way or another, have provided increasing amounts of protection to American ship builders, Jones Act carriers, and American citizens involved in the maritime commerce industry. From an economic perspective, it can be argued that the Jones Act has been disadvantageous for both citizens of the continental United States, and citizens of the United States territory of Puerto Rico.

Over time, the Jones Act has led to an increase in shipping costs, which has spilled over to affect the price of goods transported between United States ports. The premium paid for U.S.-built ships has gone from 20% (1920), to 50% (1930s), to 200% (1990s), to 300% (2019) (Congressional, 3). Likewise, the cost of operating Jones Act vessels has increased over time. The United States Maritime Administration found in 2011 that operating costs on Jones Act vessels is 2.7 times higher than that of foreign ships (24). Due to the increase in premiums for shipbuilding and the increase in operating costs, it has become more difficult for Jones Act carriers to operate profitably. Since 1990, the amount of international U.S.-flag commercial vessels has decreased from 199 to 82 (U.S., 11).

The Jones Act is disadvantageous for U.S. states and territories that are not connected to the mainland, despite it only regulating trade between U.S. ports. As long as a ship is coming from a foreign port, it can come from any country, be staffed by crew from any country, and could have been built anywhere. This is not bad news for mainland U.S. states, as most of them have fairly large ports with a large amount of commercial demand. For Hawaii, Alaska, and Puerto Rico, this policy often results in logistical inefficiencies and increased costs. Shipments coming from South America, rather than taking a temporary stop in Puerto Rico to drop off some cargo, usually go directly to South Florida. This is because a foreign vessel, once it has reached a U.S. port, cannot go to another U.S. port. The cargo destined for Puerto Rico, once it arrives in South Florida, is then loaded on a Jones Act vessel, and shipped back to Puerto Rico. Much of Hawaii’s cargo that comes from Asia is often routed through California and then sent back to Hawaii, due to similar issues.

The scarcity of certain Jones Act vessels makes it impossible to import certain goods from the continental United States. In Puerto Rico, where a third of energy is derived from liquified natural gas (LNG), all LNG is imported from Trinidad and Tobago. Puerto Rico cannot import cheaper LNG from the mainland United States, as there are no longer any LNG vessels that are compliant with Jones Act regulations (Energy). Repeated attempts by the Puerto Rican government to request a waiver to the Jones Act for the purpose of cheaply importing LNG have been repeatedly shot down by U.S. Congressmen.