Agency Refutes Allegations of Jones Act “Cost”
WASHINGTON, DC – The long-awaited General Accountability Office (GAO) study on the Jones Act in Puerto Rico shows that the U.S. domestic container shipping fleet has provided regular, reliable service while offering significant rate reductions, according to the American Maritime Partnership (AMP), an industry trade group.
“GAO disproved charges that the Jones Act raises prices for consumers in Puerto Rico,” AMP said in a statement shortly after the release of the report today. “GAO specifically said, ‘[S]o many factors influence freight rates and product prices that the independent effect and associated economic costs of the Jones Act cannot be determined.'”
“As such, GAO’s report confirmed that previous estimates of the so-called ‘cost’ of the Jones Act are not verifiable and cannot be proven. The GAO report demonstrates that many of the most pointed criticisms of the Jones Act came from individuals or groups that did not offer data to back up their concerns. In many cases GAO cited allegations against the American fleet despite admitting that the claims could not be validated or verified.”
AMP said the GAO study is important because it is the rare Jones Act study that is detailed, comprehensive, and prepared by an independent government agency. AMP thanked Puerto Rico Delegate Pedro R. Pierluisi, who requested the study and released it today.
“In fact, container shipping rates in Puerto Rico for American companies dropped as much as 17 percent between 2006 and 2010, according to the study,” said AMP, noting that the vast majority of cargo to and from Puerto Rico moves by container. “GAO said there is no guarantee that shipping rates would go down further if the Jones Act was changed.”
Most satisfying, AMP said, was the finding that the American domestic fleet had provided reliable service in Puerto Rico.
“The GAO found that American domestic shipping companies have provided regular and reliable service that has been extremely beneficial to the economy in Puerto Rico and that changes to the Jones Act could result in a reduction in service to the Commonwealth,” AMP said. “GAO said ‘it is possible that the reliability and other beneficial aspects of the current service could be affected’ if the law is changed.”
AMP also said the GAO report highlighted the national security benefits of the Jones Act.
“In fact, the study quoted the Defense Department and the U.S. Maritime Administration as saying the contributions of American commercial shipyards is more important than ever as the number of new military vessels being constructed is reduced by federal budget cuts,” AMP said. “American ship construction for Puerto Rico is important for national security because it ‘help[s shipbuilders] sustain their operations, as well as help them to retain a skilled workforce and supplier base. Absent new orders, that workforce could be put at risk,'” GAO said.
AMP reserved its main criticisms for the GAO’s analysis of LNG and other bulk cargos in Puerto Rico.
“In contrast to its analysis of the container shipping market, GAO’s review of the LNG and other bulk shipping markets is anecdotal, incomplete, misleading, and one-sided,” AMP said. “In fact, there are already fully compliant American vessels available to transport LNG to Puerto Rico and, of course, others can be built in plenty of time. In addition there are special provisions of law that allow Puerto Rico to move LNG into the Commonwealth on foreign vessels from the U.S., and of course, LNG can be imported into Puerto Rico from overseas any time. If there is sufficient demand for LNG or other bulk cargoes, the American maritime industry will meet that demand, just as it has provided regular, reliable and cost-effective service for decades in other Puerto Rico shipping trades where a demand exists.”