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Ernst & Young report makes the case for the Jones Act

In a fillip to backers of one of the US’s most controversial maritime regulations, the Transportation Institute, a Washington DC-based think tank, has released a study by Ernst & Young (EY) evaluating the Jones Act and its implications on freight rates, container availability, port congestion, and carrier performance in the Caribbean region relative to global averages. The study evaluated the timeframe between January 2019 and December 2021 and captured the heightened volatility of freight movement during the peak of the covid pandemic.

“Across multiple metrics, shippers overwhelmingly associated better carrier performance with Jones Act carriers than non- Jones Act ones,” the study states. It also concluded that in addition to providing stability and security in the region, the Jones Act shipping industry continues to provide substantial economic benefits to Puerto Rico.

“Jones Act carriers are dedicated to Puerto Rico and help local businesses make goods more affordable and the supply chain more reliable compared to our global competitors,” said James Henry, chairman and president of the Transportation Institute. “While the entire global supply chain was disrupted during the pandemic, our Jones Act carriers proved to be 27 times more affordable and eight times more reliable than non-Jones Act carriers.”

EY engaged in primary data collection through a survey of 49 companies that ship to and from the continental United States and the Caribbean. The survey gathered information from shippers on advantages or impediments that they experienced while shipping via Jones Act and non-Jones Act carriers with respect to freight and shipping cost, the availability of containers, and the resiliency and adaptability in carrier customer service models to meet the pandemic and supply chain challenges. The study also evaluated the economic contribution of the Jones Act shipping industry in Puerto Rico based on direct, indirect and induced contributions.

Backers and opponents of the Jones Act have been making headlines on Splash a great deal of late with the Washington DC-based Cato Institute arguing it inflicts economic harm, while others such as Blue Alpha Capital’s John McCown have insisted the protectionist measure that prioritises US tonnage is necessary, principally on national security grounds.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

Comments

  1. First you had AGW and science denying Cato, now scandal riddled Ernst & Young. Are you trying to outdo The Onion?

  2. EY’s finding about “27x more affordable” is a complete crock – what are they comparing to, Asia inbound?? The finding doesn’t even make sense for that comparison. Anyone shipping in this trade would see through that one!

    Sure, the service is better because the Jones Act carriers have higher revenue and run simple loops between two ports that take a few days to transit. Its true, bookings are easier and they are on-time most of the time.

    The issue is the cost. There is a lack of competition and costs are much higher as a result, comparing to similar lanes in the global network (i.e. Caribbean for Puerto Rico). As an exporter I would accept the lesser service for the costs savings that should be there. It’s like hailing an Uber and only being given the UberBlack or UberLux options…

    1. You were wroing lasttime and you are wronmg again.
      You can always buy cheaper goods from outside the Continental USA and shipped/transshipped via ports outside the Continental USA. Freeport for example.
      “longer haul routes”? 900 nm?

    2. A complete crock is right. The 27x comparison is the difference in rate increases between the *Caribbean region* (JA routes to Puerto Rico and non-JA routes from the East Coast to Jamaica and the Dominican Republic) and the global average. When the study does a more apples-to-apples comparison between JA routes and non-JA routes within the Caribbean it finds the rate increases to be similar. But of course the JA rates are starting from a much higher price point.

      1. “A complete crock is right.”

        Given that Cato has done more than their share of “crockery” in past discussions and “studies” of the JA trade, I find it hilarious now, that you make the allegation about others having a contrarian view of your own.

        John McCown has done an excellent job of analyzing the obfuscation and embellishment of past claims made by Cato. His published reports are great reading, accurate, and are not inflammatory towards a preconceived, biased opinion.

  3. Thank you Colin for that detail.

    Mr. Boffey, I may be wrong about many things, but about JA costs being higher than comparable non-JA costs, I assure you after 20 years of shipping in the trade, I am not wrong.

    Telling me that my plant should just buy material from another source outside the US is not helpful, not a viable option for our business, and certainly not in the US’s greater interest.

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