Joseph Keefe, editor of Maritime Professional and MarineNews, has come out against recent claims that the Jones Act is to blame for Puerto Rico’s debt crisis. “Puerto Rico’s money woes have nothing to do with the Jones Act,” he argues in a recent edition of Maritime Professional.com. Keefe further claims that the U.S. territory would be worse off without it.
The Jones Act, formally known as Section 27 of the Merchant Marine Act of 1920, requires that freight carried between points in the U.S. (including Puerto Rico, in this case) be carried by ships built in the United States, owned and registered in the United States, and crewed by U.S. citizens.
Some commentators have suggested that the Jones Act causes freight costs to be higher in Puerto Rico than they otherwise would be, that those costs are passed on to consumers and that the extra expense makes it more difficult for Puerto Rican businesses to compete in the marketplace.
Keefe spent many years overseeing transit of freight for a maritime consulting group. “Along the way,” Keefe explains, “I vetted ships for suitability and safety, maintained loss accounting records and looked for ways to increase efficiencies for my local, refining and trading clients.” Much of this work took place in Puerto Rico.
“The vast majority of the countless vessels that I boarded and surveyed during my time spent on the island were foreign registered vessels, with U.S. flag product tankers arriving only to haul refined products to the U.S. East Coast,” Keefe says. “Sometimes, the client might even get a Jones Act waiver when no U.S. flag asset was available. Jones Act trade was actually quite a small percentage of the overall marine traffic in and out that port, and in the end, had little to do with economic success or failure of the operations ashore.”
Keefe further reports that the shipping industry is advancing in Puerto Rico, as he explains, “a massive, domestic, multi-shipper capital improvement program is underway for carriers in the Puerto Rico trades. The U.S. built vessels that will soon join this freight corridor will be among the best, most environmentally correct of any operating anywhere else on the planet.” In May, he notes, Crowley Puerto Rico Services announced a $48.5 million construction contract for a new pier at its Isla Grande Terminal in San Juan, and, in conjunction with the investment, the company and the Puerto Rico Ports Authority (PRPA) agreed to a 30-year lease extension for the Isla Grande property.
The Government Accountability Office (GAO) conducted a study in 2013 examining the consequences of the Jones Act in Puerto Rico and concluded that “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.” The Maritime Partnership and other national groups spoke out in opposition to potential changes in the Jones Act when the GAO released its 2013 report.