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Know The Facts

There’s a lot of misconceptions about the maritime industry but it’s critical to separate fact from fiction. The maritime industry provides reliable service of goods, family wage jobs, and plays a key role in homeland security. There’s a lot of misconceptions about the maritime industry and the Jones Act but it’s critical to separate fact from fiction. Below are five true facts about the Jones Act and the U.S.-Puerto Rican maritime.

Only goods transported between Puerto Rico and the mainland U.S. are subject to the Jones Act

The Port of San Juan is no different under the law than any other U.S. port. Merchandise can be imported and exported from anywhere in the world, trading with anyone at any time. In 2011, GAO said, two-thirds of the ships serving Puerto Rico were foreign ships. 55 different foreign carriers provided imported cargo to Puerto Rico in a single month as cited as an example by GAO. In most cases, U.S. carriers deliver origin to port, while international carriers only offer port-to-port services. This means that with foreign carriers, Puerto Rican customers would have to arrange for their own inland transportation.

Contrasting U.S.-flag Jones Act vessels and foreign-flag vessels is an “apples to oranges” comparison

Most trading nations have cabotage laws applied to aviation, maritime, rail, and trucking. A GAO study found that foreign-flag ships are not subject to U.S. taxation, U.S. immigration, U.S. safety and other U.S. laws. Foreign-flag vessels operating in the domestic trades would be subject to the same laws as U.S.-flag vessels, drastically affecting any perceived cost savings. The Government Accountability Office (GAO) found that: “Foreign carriers operating in the U.S. coastwise trade could be required to comply with other U.S. laws and regulations which could increase foreign carriers’ costs and may affect the rates they could charge.”

The Jones Act ensures service between the United States and Puerto Rico is consistent and reliable

Many imported goods by PR are perishables therefore on-time delivery is important. Jones Act shippers meet the real-time demands of island import inventory managers who rely on prompt shipping to stock shelves, in lieu of warehousing. According to a GAO study on the Jones Act impact on Puerto Rico, “If the Jones Act were exempted, foreign carriers that currently serve Puerto Rico as part of multiple-stop trade route would likely continue this model to accommodate other shipping routes to and from other Caribbean destinations or world markets rather than provide dedicated service between the United States and Puerto Rico, as the current Jones Act carriers provide.” Longer multi-port trade routes make it difficult to ensure that scheduled service will be consistently reliable, because carriers are more likely to experience weather delays or delays at ports, and could even intentionally bypass ports on occasion to make up lost travel time.”

Transportation costs are not necessarily more expensive in Puerto Rico when they are shipped using Jones Act vessels, according to the GAO

The GAO study found that there were far too many factors impacting the cost of transportation and ultimately the cost of consumer goods in Puerto Rico to identify a specific cost of the Jones Act, if any. GAO completed the most significant study of the Jones Act in Puerto Rico by an independent, non-partisan source ever and specifically said it could not quantify any specified increase in transportation cost because of the Jones Act. With foreign carriers Puerto Rico customers would have to arrange and pay for their own inland transportation. In addition, because U.S. carriers receive preferential delivery dates, the cost to the end customer could be substantially more with foreign shippers.

The Puerto Rican domestic shipping trades are among the most fiercely competitive in the United States, investing in new vessels to meet the growing demands of the Commonwealth 

GAO said the rates in the Puerto Rican shipping trades actually dropped between the years 2006 – 2010. The primary domestic shipping companies serving Puerto Rico are among the largest, most successful in the United States. The companies are now investing hundreds of millions of dollars in new, state-of-the-art vessels and infrastructure to better serve the Commonwealth. Puerto Rican businesses and citizens are the beneficiaries of this intense competition and commitment by American shipping companies.

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Full List: http://www.gao.gov/assets/660/653046.pdf

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