What Is the Jones Act?

What Is the Jones Act?

Let me explain the Jones Act to you directly: it's a key piece of U.S. maritime law from 1920 that requires ships transporting cargo between domestic ports to be American-made, owned, and operated. I see it as protectionist legislation designed to strengthen the U.S. shipping industry after World War I, but you should know it also carries economic consequences, particularly for non-continental territories like Hawaii, Alaska, and Puerto Rico.

Specifically, the Jones Act is Section 27 of the Merchant Marine Act of 1920, which was all about maintaining the American Merchant Marine.

Key Takeaways

Here's what you need to grasp: the Jones Act, embedded in the Merchant Marine Act of 1920, insists on U.S.-built and operated ships for goods transport between U.S. ports to back the domestic shipping sector. It's protectionist by nature and drives up shipping costs, hitting hard on places like Hawaii, Alaska, and Puerto Rico. Critics point out how it balloons expenses for U.S. islands, with Puerto Rico bearing heavy economic loads from pricier goods transport. You can get waivers in emergencies like natural disasters to ease supply problems, but the Secretary of Homeland Security scrutinizes them closely. While it mainly covers cargo, there's a similar effect on passengers via the Passenger Vessel Services Act, affecting foreign-flagged cruise ships.

The History and Impact of the Jones Act

U.S. Senator Wesley Jones from Washington introduced this Act to secure a shipping monopoly for his state to Alaska, and Congress enacted it to revive the shipping industry after World War I. As a protectionist measure, it deals with maritime trade, including cabotage, which is domestic shipping. The rules demand that goods between U.S. ports travel on ships built, owned, and operated by U.S. citizens or permanent residents, and this setup increases costs for Hawaii, Alaska, Puerto Rico, and other import-dependent non-continental areas.

Importantly, the Jones Act stands as protectionist legislation that substantially hikes the costs of shipping goods between U.S. ports.

Objectives Behind the Jones Act

The Act's main goals were to revitalize the U.S. maritime shipping industry, which was depleted after World War I, and to support the sector while avoiding reliance on foreign-built ships. It generates jobs and revenue, backing around 650,000 American jobs and producing $150 billion annually.

Conditions for Jones Act Waivers

In the aftermath of natural disasters like hurricanes, the Act can be waived to bring in more ships for supplying affected areas. The Secretary of Defense can request waivers for national defense interests, and there's a process for non-defense cases, but ultimately, the Secretary of Homeland Security holds the final say.

Controversies and Criticisms Surrounding the Jones Act

The Jones Act gets blamed for worsening Puerto Rico's economic and budget issues by complicating trade with the island. A 2019 report showed that costs for Puerto Rico are 41% to 62% higher for bulk cargo and 29% to 89% for containerized freight compared to foreign carriers, adding up to nearly $1.2 billion in extra costs, or about $374 per resident.

For instance, after Hurricane Fiona in 2022, the Biden administration waived it to allow a non-U.S. flagged ship to deliver fuel amid shortages, ensuring generators could run for electricity and critical facilities. Opponents push for repeal to cut shipping costs, lower prices, and ease government budgets, while supporters include states with navy yards, defense firms, shipping industries, and port workers.

In early 2022, it drew attention amid the U.S.-Russia oil dynamics after Russia's invasion of Ukraine and the U.S. ban on Russian imports. Hawaii, which relied on Russian crude for up to a quarter of U.S. shipments, faces limits from the Act on domestic oil transport, pushing reliance on foreign sources.

How Does the Jones Act Affect Puerto Rico?

One clear effect is that it mandates U.S. shipping for cargo between Puerto Rico and the mainland, which raises development costs and burdens the island's economy.

How Does the Jones Act Affect Cruise Ships?

Though it doesn't directly cover passenger vessels, the related 1886 Passenger Vessel Services Act mirrors it by barring foreign ships from transporting passengers directly between U.S. ports. This means foreign-flagged cruises—most of them—must include foreign stops in itineraries starting and ending in U.S. ports, often leading to passenger confusion or fines for violations.

How Long Can a Waiver of the Jones Act Be Implemented?

In 2020, Congress ended the ability to issue long-term waivers except when needed to address immediate adverse effects on military operations; otherwise, they're handled case by case.

The Bottom Line

To wrap this up, the Jones Act from the 1920 Merchant Marine Act regulates maritime commerce by requiring U.S.-built, owned, and operated ships for goods between U.S. ports. It was meant to boost the shipping industry after World War I, but critics say it drives up costs, especially for islands like Puerto Rico and Hawaii. Supporters value its job creation and economic contributions, while detractors highlight higher prices and challenges. Understanding this helps you make informed calls on maritime policies and commerce.