BY MICHAEL HANSEN – Congresswoman Mazie Hirono, D-Hawaii, who is currently running for the seat being vacated by the retiring U.S. Senator Dan Akaka, issued a statement on May 22nd commemorating National Maritime Day and used the occasion to justify the Jones Act with grand exaggerations straight out of Wonderland. Is Cong Hirono attempting to advance her political aspirations by reaffirming her support for the Jones Act shipping industry?
We all wish to commemorate the American Merchant Marine’s heroic role during many of our nation’s conflicts dating back to the American privateers during the Revolutionary War. More recently, they deserve our grateful remembrance for their selfless participation during World War II, when they took such a heavy toll during the Battle of the Atlantic from attacks by the Nazi U-boat Wolf Packs.
The Merchant Marine Act of 1920 commonly known as the Jones Act requires a vessel to be U.S.-built, U.S.-flag, U.S.-crewed and U.S.-owned to transport cargo between domestic points within the United States. The Jones Act is widely used to refer to the larger body of U.S. shipping laws and regulations.
Congresswoman Hirono states that the Jones Act has created 10,000 maritime jobs in Hawaii, and the Hawaii maritime industry generates an annual turnover of more than $4.7 billion and provides wages of $1.1 billion. These are extravagant numbers for Hawaii’s small maritime industry can’t possibly be true.
In the mid-1990’s the Hawaii State Department of Business, Economic Development (DBED) included an Ocean Industry Branch for which they developed statistical information. Based upon 1992 data, in the mid1990’s DBED estimated the Hawaii Ocean Industry generated revenues of approximately $3 billion and that was projected to increase to nearly $4 billion by 2000. DBED estimated Hawaii Ocean Industry employment in 1992 to be 17,939, which included everyone from beachboys to fishmongers and ship captains. Of that, the maritime subsector employment was 5,830 and primarily comprised of shore-based workers such as stevedores, shipyard workers and others providing port services. DBED advises that they have not compiled Ocean Industry data since the Branch was eliminated more than a decade ago.
To put these numbers further in context, Matson Navigation Company Inc. and Horizon Lines Inc. have an annual turnover of just over $1.0 billion each, and this is generated from the Hawaii, Guam, Alaska, Puerto Rico and Trans-Pacific trades. These two ocean carriers represent the largest companies with the greatest shipboard employment operating in the Hawaii trade. It should be noted that the majority of the crewmembers on their ships are U.S. mainland residents, meaning their salaries are not counted in Hawaii’s income statistics.
The relationship between the Jones Act and domestic employment is limited to the shipboard employees and to a much lesser extent shipbuilding yard workers – however, the shipyards in Hawaii are ship repair facilities. The number of shipboard jobs in Hawaii that protected by the Jones Act is quite limited as the law only applies to crewmembers actually working aboard ship. Those workers engaged in port services are not affected by the Jones Act.
Also, Congresswoman Hirono makes the logical misstep of viewing the cost of ocean transportation as a positive addition to the Hawaii economy. Although ocean transportation expense does become part of the Gross State Product (GSP), it is in fact a cost that must be borne by the businesses and consumers of the State.
One can only conclude that Congresswoman Hirono pulled her Hawaii Jones Act employment and revenue numbers out of thin air.
Finally, Congresswoman Hirono asserts that the American Merchant Marine is responsible for carrying U.S. exports around the world. This is simply not true. Nearly all of the shipborne cargo moving in the international trade of the United States is carried by Foreign-flag ships manned by foreign crews – U.S.-flag ships may carry a negligible 1 or 2% of this international trade cargo.
Congresswoman Hirono has created a Jones Act Wonderland, which only exists in her imagination. Go ask Alice, I think she’ll know.
Michael Hansen is President of the Hawaii Shippers Council