Study Says U.S.-Flag Ships Provide Regular, Reliable Service to Puerto Rico

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GAO Report Confirms M.E.B.A.’s Long-standing Views on the Jones Act

This Study disproves the simplistic charge that the Jones Act is responsible for higher consumer prices in Puerto Rico.

The General Accountability Office (GAO) released a study on the Jones Act and its affect upon Puerto Rico this week. The Study shows that the U.S. domestic container shipping fleet has provided regular, reliable service while offering significant rate reductions.

The Study notes that most of the cargo shipped between the United States and Puerto Rico is carried by four Jones Act carriers that provide dedicated, scheduled weekly service using containerships and container barges. Jones Act dry and liquid bulk cargo vessels also operate in the market. This allows shippers to meet “just in time needs” for the local population and businesses as warehousing on the island is limited.

Importantly, the Study found that the average freight rates of the four major Jones Act carriers in this market were lower in 2010 than they were in 2006.

“This Study disproves the simplistic charge that the Jones Act is responsible for higher consumer prices in Puerto Rico,” stated Mike Jewell, president of the Marine Engineers’ Beneficial Association (M.E.B.A.).

Foreign-flag carriers serving Puerto Rico from foreign ports operate under different rules, regulations, and supply and demand conditions. Shippers the GAO contacted reported that they often experienced lower freight rates when shipping from foreign ports versus U.S. ports to Puerto Rico. However, data was not available to allow GAO to validate the examples given or verify the extent to which this difference occurred.

“This was an opportunity for the Jones Act nay-sayers to provide facts to back up their rhetoric. They didn’t do so because the facts are not on their side,” said Bill Van Loo, Secretary-Treasurer of M.E.B.A.

The GAO Study states, “The effects of modifying the application of the Jones Act for Puerto Rico are highly uncertain, and various trade-offs could materialize depending on how the Act is modified….While proponents of this change expect increased competition and greater availability of vessels to suit shippers' needs, it is also possible that the reliability and other beneficial aspects of the current service could be affected. Furthermore, because of cost advantages, unrestricted competition from foreign-flag vessels could result in the disappearance of most U.S.-flag vessels in this trade, having a negative impact on the U.S. merchant marine and the shipyard industrial base that the Act was meant to protect.”

The Jones Act applies to maritime transport of cargo between the United States and Puerto Rico, and requires that such cargo be carried by vessels that are (1) owned by U.S. citizens and registered in the United States, (2) built in the United States, and (3) operated with predominantly U.S.-citizen crews. The general purposes of the Jones Act include providing the nation with a strong merchant marine that can provide transportation for the nation's maritime commerce, serve in time of war or national emergency, and support an adequate shipyard industrial base. Other nations around the world also have similar cabotage laws that protect and promote their own merchant maritime fleets.

About the Marine Engineers’ Beneficial Association

The M.E.B.A., America’s oldest maritime labor union, supplies U.S. Coast Guard-licensed deck and engineering officers in both the U.S. domestic and international trades including Jones Act trade to Puerto Rico. The Union was established in 1875. Its members serve aboard containerships, tankers, tugs and barges, research vessels and ferries. In wartime, M.E.B.A. members have sailed in virtually unarmed merchant ships delivering critical defense cargo despite attacks from enemy aircraft, submarines and warships. In times of peace, our members still face dangers such as piracy on the high seas in order to serve their country.

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Audra Kincaid
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