Following Harvey and Irma, the Jones Act was waived briefly for fuel shipments to the southeastern United States, mainly Florida- which has no refining capacity and little in the way of product flows by pipelines, as policy makers determined that the US fleet of qualified vessels was out of position to fully support such liftings. The waivers were temporary in nature, and, once they expired, US tankers and Articulated Tug Barges were quickly able to resume their regular routes along the US coast.
In retrospect, much of the slack, as Jones Act ships were not in position, was handled by imports of petrol, gasoil, and jetfuel from non-US origins, and there were only a handful of international flag tankers chartered under the waivers.
Puerto Rico, a US “territory” and not one of the 50 states, is shaping up to be a humanitarian crisis, with a majority of the island without electric power. Aid and supplies are being moved into the island by the US military and Coast Guard, with commercial shipowner Crowley was also supplementing these efforts.
A small group of Jones Act qualified carriers, notably Crowley and Tote, serve the island. Several members of Congress, including Senator John McCain, a perennial Jones Act detractor, used the misfortunes to request a waiver on movements to Puerto Rico, in a request to the Department of Homeland Security (DHS) the agency tasked with Jones Act enforcement.
This time, the request for a waiver was denied. In essence, the agency took the view that inadequate vessel capacity - the case following Irma - was not the issue, but rather the precarious condition of the ports would be the constraint- preventing supplies from reaching the citizens. The oversupply of vessels in the Florida-Puerto Rico trades, which led to the demise of Horizon Lines, and SeaStar, along with financial difficulties for TrailerBridge, a smaller player now under the ownership of Seacor Holdings since a 2012 financial rescue, is well known.
Puerto Rico with its 3.5m inhabitants, who are U.S. citizens, differs from Texas and Florida- where infrastructures had been hardened, after previous disasters, to better withstand the impact of hurricanes. Puerto Rico, in contrast, will be suffering damage over a longer period of time due to less storm resilience, including its frail electrical grid.
But this lack of resiliency also applies to maritime facilities. Where ports in Texas and Florida could quickly return to almost normal operations, expectations are that Puerto Rico’s ports will be out of action for longer stretches of time.
What is likely is that the debate over the Jones Act will intensify in the coming months, and there may be additional requests for Jones Act waivers. What’s also likely is the fortunes of incumbents in the Florida-Puerto Rico trades will also see their stars brighten once the ports regain some modicum of operating capabilities. Rebuilding and restocking could take months, and more, likely, years.
Like nasty weather, the issue of Jones Act waivers for Puerto Rico, will likely blow though again, before too long. Washington, DC lawyers at Holland & Knight were advising that the request for waivers on vessels to Puerto Rico had not been formally denied. And indeed 24 hours after this article was first published President Donald Trump took the decision to waive the Jonese Act for Puerto Rico.
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