Know The Facts
There are 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. Additionally, it does not prevent foreign flagged vessels from delivering goods to the island. Below are true facts about the Jones Act, also known as the Cabotage Law, and U.S.-Puerto Rican maritime.
FOREIGN FLAGGED VESSELS CAN DELIVER GOODS TO PUERTO RICO
Any foreign vessel can call on Puerto Rico. 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, a Government Accountability Office (GAO) report cited, nearly 70% 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.
THE JONES ACT ENSURES SERVICE BETWEEN THE UNITED STATES AND PUERTO RICO IS ON-TIME, CONSISTENT AND RELIABLE
The domestic American maritime industry has 25 Jones Act vessels delivering cargoes to the island efficiently and cost effectively. Domestic carriers routinely use 53-foot containers, which increase load capacity by more than 40 percent compared to standard international containers.
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. On the way to Puerto Rico, foreign carriers serve Puerto Rico as part of multiple-stop trade routes – and do not provide dedicated service. 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.
THE JONES ACT DOES NOT DRIVE UP THE COST OF CONSUMER GOODS
The cost of ocean shipping is a tiny fraction of the consumer price to Puerto Rico. A can of soup that retails in Puerto Rico for $1.81 costs just $.04 to ship. If consumer goods are sometimes more expensive in Puerto Rico, it is not because of the Jones Act. Consumers buy goods from retailers and grocers, not from shipping companies. Retailers buy the goods from shippers and determine the price of the goods to make a profit. This price mark up reflects labor and real estate costs as well as supply, demand and profit margin for retailers. These costs are not affected by the Jones Act.
THE JONES ACT DOES NOT IMPACT THE COST OF SHIPPING GOODS TO PUERTO RICO
Some may claim the Jones Act drives up the cost of shipping – and that import costs are twice as high in Puerto Rico as neighboring islands. There is no study that supports this statement in any way. In fact, evidence about shipping rates indicates that the opposite is true. Shipping rates from the U.S. mainland to Puerto Rico are lower than to any other place in the Caribbean. One analysis shows it is 40% more expensive to ship goods from the U.S. mainland on foreign vessels to the U.S. Virgin Islands (not subject to the Jones Act) than on Jones Act vessels to Puerto Rico. Learn More.
U.S. – PUERTO RICAN MARITIME KEEPS FOOD AND GOODS FRESH AND ON TIME
With numerous weekly sailings to and from the U.S. mainland, a local business can improve inventory control by buying smaller quantities more often, which decreases warehouse costs, increasing critical cash flow and lowers property taxes, among other savings. The schedule for these sailings is measured in hours, not days, as is the case with most foreign-flagged maritime companies. Few, if any, jurisdictions in the world have that kind of service level.
EXEMPTING PUERTO RICO FROM THE JONES ACT WOULD OUTSOURCE AMERICAN SHIPPING COMPANIES AND PUERTO RICAN JOBS TO FOREIGN INTERESTS
A long-term Jones Act waiver is nothing more than a scheme to replace American companies and workers with foreign companies and workers in the Puerto Rican shipping trades. It would hurt Puerto Rican workers, who have dedicated themselves to keeping cargo moving during the hurricane recovery, and American shipping companies that have invested hundreds of millions of dollars in Puerto Rico.
CONTRASTING U.S.-FLAG JONES ACT VESSELS AND FOREIGN-FLAG VESSELS IS NOT AN EQUAL COMPARISON
Most trading nations have cabotage laws applied to aviation, maritime, rail, and trucking. 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.”
AMERICAN MARITIME INDUSTRY IS DEDICATED TO PUERTO RICO
Jones Act carriers have provided regular, dedicated service to Puerto Rico for decades. The Jones Act fleet servicing Puerto Rico includes modern, environmentally friendly, state-of-the-art vessels, such as the world’s first LNG-powered container ship. The domestic maritime industry recently invested nearly $1 billion into Puerto Rican infrastructure. As part of these investments, Jones Act carriers support thousands of jobs in Puerto Rico. The domestic maritime industry is committed to meeting the needs of the island while also supporting the long-term recovery requirements of the people and communities of Puerto Rico.