Hawaii’s World

By A.A. Smyser

Tuesday, January 6, 1998

Prospects for repeal of Jones Act are dim

WHEN Sen. Ted Stevens of Alaska visited Hawaii last month he said it will be years - at least - before Congress might repeal the Jones Act. He said cabotage protection for American shipping is as old as Congress and unlikely to be dropped easily for all the objections that might be heard against the Jones Act from businesses in his own state of Alaska and from Hawaii.

The basic objection is that shipping costs could be lower if foreign ships could carry cargo between American ports.

Stevens' opinions are of enormous significance since he now heads both the Senate Appropriations Committee and the Defense Appropriations Subcommittee.

National defense is one of the justifications for the Jones Act. It helps assure we will have a merchant marine of our own to rely on in the event of war and won't be at the mercy of foreign owners.

Matson Navigation Co., for example, recently tested its defense readiness by embarking a regiment of troops for a trip down the West Coast on one of its cargo ships.

There is no question that costs are higher on ships built in American shipyards and manned by crews paid American salaries plus extensive fringe benefits.

But how much higher is a source of considerable argument.

The Jones Act Reform Coalition says every Hawaii family is subject to a $4,000-a-year add-on because of the Jones Act. Hogwash. It may be that our overall cost of living is that much higher than the mainland but there are a lot of factors in that besides shipping - real estate prices being among them. Perhaps $1,000 is more like it.

Under the Jones Act two shippers, Matson and Sea-Land, have a virtual monopoly on cargo shipments between Hawaii and the mainland. There were years of price stability after the conversion to container shipping and the construction of special ships and wharf facilities to speed up loading and unloading. But in recent years tariffs have been ratcheted up regularly and a lot of local businessmen are angry.

Their anger has been fanned recently because of Matson delays attributable to labor troubles at Los Angeles.

When things are working smoothly Matson brings four giant ships a week to Hawaii and Sea-Land brings two. Matson further has a system for handling transshipment by truck and rail to mainland and Pacific points with "one-stop shopping." It claims electronic tracking can identify where its containers are at just about any minute of any day.

Matson also delivers to the neighbor islands for the same tariffs it charges to Honolulu. It absorbs the barge reshipment costs in its overall rate structure. No foreign competitor would be apt to offer this.

MATSON is a strong profit center for its parent, Alexander & Baldwin, in which I own some shares of stock, but profit is no crime and A&B overall has been one of the most sluggish stocks on the Honolulu exchange. It doesn't seem to have heard about the big market boom of recent years.

Neither Senator Stevens, a Republican, nor his Hawaii ally, Democrat Daniel K. Inouye, seems to see any early relaxation of the Jones Act just for passenger ship travel.

The Jones Act Reform Coalition is nationally based and picking up momentum but it has an uphill battle. Its current value may be in that it will help keep the protected shippers like Matson and Sea-Land on their toes to deliver quality service at a fair price.

A.A. Smyser is the contributing editor
and former editor of the the Star-Bulletin
His column runs Tuesday and Thursday.

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