A Perfect Storm for Maritime Policy: The Jones Act Five Years after Hurricane Maria
Atmospheric pressure readings plummeted. At 5:00 AM, the National Hurricane Center issued a bulletin: Hurricane Maria, transformed from a Saharan dust storm into a major Category 4 hurricane careening across the Caribbean Sea, would make landfall in Puerto Rico within the hour. It was September 20th, 2017. Separated by nearly a thousand miles of blue water from the mainland, the island’s plight is too often overlooked. The hurricane’s imposing wall with storm surge driven by 155 mile-an-hour winds should have been impossible to ignore. Today, with Hurricane Fiona battering Puerto Rico, it’s sadly apparent that American policy imposes unconscionable costs on its territory. Five years ago, I saw it firsthand.
A private plane flipped upside down in a treetop was the first sign of overwhelming devastation I saw on arrival in Puerto Rico with a relief team on October 2nd. The ten days I spent in Maria’s aftermath were eye-opening. Electricity and cell service were down across the island. Inland near Corozal, with hillsides stripped bare of their foliage, I watched an old man hack at downed power lines with a machete. Gasoline, lumber, tarps, and generators were virtually unobtainable; prices were skyrocketing. Sewage ran over concrete outside our makeshift bunkhouse, necessitating a bleach wash for work boots. Bridges were out. Blackhawk helicopters raucously scouted the remains at treetop height. After nightfall within municipal limits, roving Policia Estatal squad cars scattered prismatic blue and green lights through intersections with blank traffic signals.
The federal response generated controversy. The Department of Defense took an early lead, executing missions diverse as aerial photography, emergency route clearance, and strategic airlifts. But scaled-up efforts by other federal agencies brought waste and fraud. Government aid sat abandoned palletized in stacks on runways or locked inside warehouses for years. FEMA officials were bribed by corrupt (and inept) electrical grid contractors. At the same time, private relief organizations like the Red Cross began massive recovery programs. Telecom companies deployed drones carrying cell antennas. Ordinary Americans shipped essential goods to Puerto Rico. In a suburban San Juan strip mall, we knocked out walls to form a makeshift warehouse that would store and distribute those donated goods. Shipping containers full of bottled water, canned Goya beans, and instant potatoes arrived from the cargo terminals at Isla Grande or Puerto Nuevo.
Unknown to me at the time, a legislative anchor was dragging down the disaster response. The Jones Act, a section of the Merchant Marine Act of 1920, requires that all ships moving cargo from one US port to another must be US built, crewed, owned, and flagged for “national defense and for the proper growth of…foreign and domestic commerce.” The act’s intent was to grow and preserve a robust merchant fleet, but in a globalized world the opposite has occurred. Since 2000, containerized cargo has increased by 238 percent to 816 million twenty-foot equivalent units (TEUs). But the Jones Act fleet has steadily declined. In January 2022, only 93 ships remained – 56 tankers, 22 container ships, 9 general cargo ships, and 6 roll-on, roll-off transports. The existing fleet is so aged that one Great Lakes freighter operating today earned battles stars in World War II. New American-built vessels are prohibitively expensive.The MV Isla Bella, a 3,100 TEU Jones Act container ship operating on the Puerto Rico route, cost $187.5 million dollars – $120 million more than comparable 5,500 TEU containerships built in South Korea. Vessels built by the Isla Bella’s Korean designers DSME can carry 23,000 containers and still cost $30 million less per vessel.
The history of maritime trade restrictions on Puerto Rico stretches back 500 years to an era when the Spanish Empire sought to establish primacy over its rivals in the West Indies. To fill its armadas, the royal House of Trade established ordinances requiring trade fleets to be composed of uniformly-designed Spanish-built ships, with a complex hierarchy privileging Biscaine-built vessels over Andalusians. With infrequent sailings, the practice wasn’t maintained for efficiency. Mercantilist policies enabled imperial powers to extract resources at the expense of far-flung colonies – practices largely reversed by nineteenth-century liberalism.
In the fall of 2017, the relatively-unknown Jones Act posed a serious problem for disaster relief in Puerto Rico. As an island territory, It relies heavily on maritime transportation for the bulk of its trade with the mainland United States. Only a handful of shipping companies with a small number of vessels are allowed to service these routes – including lines which previously pleaded guilty to price fixing on Puerto Rico routes. Virtually all the containers we unpacked with a vintage Yale forklift were primer gray 53-foot boxes emblazoned with the totem-like logo of TOTE Maritime, the Jones Act carrier operating the Isla Bella. Demand spikes coupled with an artificially-limited container ship fleet contributed to accusations of price gouging. A plan to house displaced Puerto Ricans on cruise ships had to be scrapped because the liners were not constructed in the United States. Belatedly, the Trump administration issued a Jones Act waiver on September 28th which allowed foreign vessels for a 10-day period. But this proved too little, too late. When the waiver expired, almost no ships had completed their movements. So goods came in any way they could. I was on hand to unload a pallet of groceries from a Learjet at San Juan’s regional airport before its return flight ferrying away someone’s fortunate grandparents.
Already in gradual decline, Puerto Rico’s population dropped by tens of thousands after Maria. Poverty, a preexisting condition exacerbated by the storm, remains widespread. The island’s unemployment rate rises above the national percentage. The Jones Act’s twin effects of stalling recovery and increasing prices continue to chip away at the territory’s future prosperity. With fresh destruction in the wake of Hurricane Fiona, congressional Democrats have requested a year-long waiver for the island. A foreign-flagged tanker sits offshore unable to offload 300,000 barrels of diesel without it.
The situation has quietly grown critical across the rest of the country. Supply chain disruptions fuel record inflation. During last year’s Colonial Pipeline cyberattack, no viable alternative existed to carry Gulf Coast petroleum products to the Eastern Seaboard absent a Jones Act waiver. Though a net exporter of natural gas, the US has no LNG carriers and must import foreign gas to New England or risk losing power generation capability – conditions exacerbated by supply shocks from Russia’s invasion of Ukraine. The construction of offshore wind turbines is hampered by the lack of American-made offshore support vessels. For the 70% of our planet covered by oceans, coastwise trade restrictions are just the beginning of American policy shortcomings. The Foreign Dredge Act extends domestic build requirements to the vessels needed for deepening shipping channels. Congress’ refusal to ratify the UN Convention on the Law of the Sea prevents American companies from exploring the seabed for critical rare earth minerals. American ports lag behind the rest of the world in adopting automation for improved efficiency.
Defenders of the status quo argue it protects American shipbuilders and mariners, and therefore national defense. But this isn’t the case. American commercial shipbuilders need to reinvent themselves to compete globally, like domestic aircraft, railway, and automobile manufacturers. For individual mariners, the Jones Act does enable employer negligence claims against shipping lines – initially reserved for railroaders under the Federal Employers Liability Act – but this alone can’t justify continued coastwise trade restrictions. The advent of autonomous ships will further change the labor equation. On the defense front, South Korean containerships and Norwegian offshore supply vessels aren’t a threat to the United States; in fact, the US military currently prefers leasing foreign-built cargo vessels over purchasing US-built ships. It is prohibitively expensive construction costs that will dangerously limit our naval sealift capability. None of these justify the costs imposed at the behest of anticompetitive associations.
Viejo San Juan, the colorful postcard face of Puerto Rico’s capital, boasts idyllic cobblestone streets and historic architecture. At its point stands the massive Castillo San Felipe del Morro, built under Charles V of Spain, which protected the bay from the marauding Sir Francis Drake. Departing for stormy South Florida at the end of my brief time in Puerto Rico, I watched “El Morro” pass under the wing of a South African-rebuilt C-47A Skytrain.Today all inbound and outbound marine traffic parades past the colonial fortress with rusted 18-pound cannons watching from the walls. The Jones Act is another fortification rendered obsolete by the passing of time. “What possible similarity can there be between a warship that comes to vomit missiles, fire, and devastation on our cities,” asked French economist Frederic Bastiat, “and a merchant vessel that comes to offer us a voluntary exchange of goods for goods?” Ocean trade is a lifeline for Puerto Rico, even if it’s unobtrusive for the rest of us. As world maritime trade increases, and the ocean’s critical role in human affairs grows, the United States will continue to fall behind. Congress should end or fundamentally alter the Jones Act. To do otherwise would be unjust.
This piece solely expresses the opinions of the author, and not necessarily the Classical Liberal Caucus as a whole.
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