Puerto Rico launches bill to ease US-built ship Jones Act provision

Puerto Rico launches bill to ease US-built ship Jones Act provision

PUERTO RICO representative to the US House has introduced a bill that would exempt vessels carrying fuel, agricultural products and other bulk cargo from provisions of the Jones Act that stipulates the ships must be American-built.

But the protectionist law is defended by shipbuilders who say it provides business to shipyards, by defence planners who say it employs mariners who may be needed in time of war; and by and unions who say it provides well-paying jobs.

However, the Jones Act has long been under attack by shippers who feel it forces up costs and shipping companies who would like to enter the coastal trades at lower cost.

The higher costs of building ships in the US and crewing them with Americans is cited as one reason why coastal container or roll-on roll-off services have been slow to develop in the US, noted American Shipper.

Michael Hansen, president of the Hawaii Shippers Council, said his organisation "supports Representative Pierluisi's legislation as a first step to exempting all the noncontiguous trades - Alaska, Guam, Hawaii and Puerto Rico - from the US-build requirement of the Jones Act for all deep-draft ships."

Said Puerto Rico Resident Commissioner Pedro Pierluisi: "My bill relaxes a component of the Jones Act - the US-build requirement - for particular vessel types operating in the Puerto Rico trade, namely self-propelled ships and tankers that transport bulk cargo, including liquified natural gas, liquified propane gas, jet fuel, gasoline, oil, chemicals, and agricultural products like fertiliser and animal feed."

Mr Pierluisi said a study prepared at his request by the US Government Accountability Office (GAO) held that "there are not enough Jones Act-compliant vessels available to transport refined petroleum and gas products from the US mainland to Puerto Rico to meet current and emerging demand and, as a result, companies in Puerto Rico are importing most fuel from foreign countries like Venezuela rather than from refineries in the United States."

The Jones Act requires that maritime transportation of cargo between ports in the United States be carried on vessels that are owned by US citizens and registered in the United States, built at shipyards located in the United States, and operated with predominantly US citizen crews.

"There is a well-founded concern that the Jones Act is hindering domestic maritime commerce in the case of Puerto Rico. This hurts businesses and consumers in both the 50 states and the US territory of Puerto Rico. That is why I am introducing this targeted bill," Mr Pierluisi said.

Brent Dibner, the president of Dibner Maritime Associates in Chesnut Hill, Massachusetts, said rates between Jones Act and foreign flag tonnage are far apart.

Current rates are falling to less than US$8,000 per day in some cases against US-flag charter rates of $60,000 or $70,000 per day or more.

In better times $15,000 a day rate were typical for an international-flag tanker against $50,000 a day for a US flag tanker.

Said Mr Pierluisi: "Because of Puerto Rico's excessive reliance on oil, island households and businesses are paying twice as much for electricity as the US national average. The high cost of electricity strains family budgets and is regularly cited as the main burden facing current and prospective island businesses."