Ocean cargo: Jones Act still looks sacrosanct despite DoJ investigations

Patrick Burnson, Executive Editor -- Logistics Management, 5/15/2008

SAN FRANCISCO—Internet chat rooms and financial sites are buzzing with investor concerns regarding the ongoing U.S. Department of Justice investigations of Jones Act ocean carriers. But industry analysts remain skeptical that the “Act” itself will be put in jeopardy.

“There have been several attempts to scrap the Jones Act in the past, and they have not paid off,” said Paul Bingham, principal of global trade and transportation practice for Global Insight. “It’s an emotional issue with many people in this business, and I would not bet against the ‘Act’ even if the DoJ comes up with more damning evidence against the carriers.”

At issue here is the suspicion that pricing practices in a market controlled by the Jones Act—a 1920 federal law that requires container ships sailing between U.S. ports to be U.S.-owned—have been fixed.

Horizon Lines, Crowley Maritime, Sea Star Line, and Trailer Bridge are all being investigated for possible abuses in the U.S. mainland-Puerto Rico trade. Matson Navigation, which operates vessels between the U.S. West Coast and Hawaii, is also being examined closely for pricing irregularities.

Rob Quartel, a former member of the Federal Maritime Commission, created a stir several years ago, when he founded the Washington-based Jones Act Reform Coalition. Despite the support given by a number of prominent shippers and economists, his mission never attracted the necessary political support.

“And given the current makeup of Congress and what’s happening during an election year, this would be bad time to launch a similar challenge,” said Bingham.