SCA Alert | GAO Releases Long Expected Jones Act Report

March 21, 2013
Yesterday, March 20th, the Government Accountability Office (GAO) released a highly anticipated study requested by Delegate Pedro Pierluisi of Puerto Rico over a year and a half ago. It is the first study of its kind in over 25 years. 
In its report, titled “Characteristics of the Island’s Maritime Trade and Potential Effects of Modifying the Jones Act,” the GAO was charged with looking at the impacts of the Jones Act on Puerto Rico. It concluded that "so many factors influence freight rates and product prices that the independent effect and associated costs of the Jones Act cannot be determined. Finally, the original goal of the Act remains important to military preparedness and to the shipbuilding and maritime industries, but understanding the full extent and distribution of the costs that underlie these benefits is elusive." (pg. 29) The study confirms that the Jones Act is not responsible for raising consumer prices in Puerto Rico.
The SCA and several member shipyards worked closely with the GAO to explain some of the differences in U.S.-shipbuilding and foreign shipbuilding costs and the numerous factors that must be considered in this analysis. Thank you to all who provided valuable input. (see GAO Report pgs. 25-28)
Despite the reports findings, Delegate Pierluisi released a press release calling for a relaxation of the Jones Act for Puerto Rico allowing foreign vessels to transport bulk commodities and LNG from the U.S. mainland to the island. The GAO report was very thin on it's analysis of the bulk and LNG markets. In response, the American Maritime Partnership (AMP) released the following statement:
“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.  (p.20) 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 bulk or LNG 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.’
The full AMP statement can be found HERE. To view the Journal of Commerce's story on the study, titled "GAO's Jones Act Report is Inconclusive" click HERE