The High Price of Outmoded Laws

article top

Photo: Emily Metcalf

BY MALIA HILL – You know what always gets me about living on the Mainland?  Cereal prices.  And gas, and milk, and toilet paper.  But more than anything else, it’s the Frosted Mini-Wheats.  (I confess that I love the Mini-Wheats.)  And on the mainland, you don’t have to take out a second mortgage on your house in order to indulge in them on a regular basis.

The price of living in paradise?  Ok, fair enough.  After all, when you live on an island, pretty much everything that can’t be produced on your (limited) available land has to be brought in by sea or air.  And that will affect the price.

The thing that many people don’t realize, however, is that in Hawaii, that price is affected even more by the Jones Act, a anachronistic piece of maritime legislation that requires (among other things) that our goods coming from other US ports must arrive here on US flagged ships manned by US flagged crews.

The net result is a duopoly where Matson and Horizon bring the vast majority of goods into the islands and the ultimate victim is the Hawaii consumer.  (For the record, it has been possible in the past for states to get exclusions from the Jones Act–as Louisiana did after Hurricane Katrina–but to do so requires, well, a state government willing to fight for that kind of thing.

And I once saw our current Governor try to claim during an election debate that an exclusion from the Jones Act would mean that my Mini-Wheats would be shipped to Honolulu in a rusty old freighter manned by a shifty crew–which was interesting in the way it evoked a melodramatic 19th century novel, if slightly lacking on the accuracy front.)

And now, according to a recent article in Hawaii Reporter, Hawaii’s citizens are going to continue to feel the burden of the Jones Act as (in contrast to the rest of the country) our shipping costs will be going up.  While shipping rates from Asia to the U.S.  fell 6.7% in the last week (with an average rate of $1636 for a loaded 40-foot container from Hong Kong to Los Angeles), Matson and Horizon have been raising their prices:

Discussions with shippers, and reviews of Matson’s tarrifs, show Hawaii’s rates are at least $5,000 to $6,000 per 40-foot container and often several thousand dollars higher.

So far this year, Matson increased:

  • The terminal handling charge from $900 to $1,075 per container, a 19 percent increase;
  • The base rate by $120 per container, a 3.8 percent increase;
  • The fuel surcharge more than doubled.  It was 21.75 as recently as February 2011 and is now 47.5 percent.
  • and Matson added a $52 charge per container as of July 1, 2011, after the state revoked a tax exemption.

Horizon, Matson’s only major container shipping competitor operating between the Continental United States and Hawaii, has followed every one of these increases.

Matson’s published rate for a 40-foot container with “freight all kinds” or a mixed load of goods, is $8,736.62.

The Grassroot Institute (and other concerned citizens) has been trying for years to help spread the word that the Jones Act is detrimental to Hawaii’s consumers and small businesses.  But real change will have to come through Congress.  And that will mean persuading a Congressional delegation that has so far been cool to the idea that it’s time to petition for a Jones Act exclusion for Hawaii’s economic health.