The Merchant Marine Act of 1920, commonly known as the Jones Act, was passed primarily to protect the United States shipbuilding industry and maintain a robust merchant marine force following World War I. However, its long-term economic consequences have disproportionately affected non-contiguous US territories, most notably Puerto Rico. Section 27 of the Act mandates that all goods transported by water between US ports must be carried on vessels built in the US, flagged in the US, owned by US citizens, and crewed mainly by US permanent residents.
Because US shipbuilding costs are among the highest in the world and the domestic merchant fleet is relatively small, shipping goods to Puerto Rico becomes drastically more expensive than shipping to neighboring non-US Caribbean islands. Foreign-flagged vessels carrying foreign goods can dock in Puerto Rico, but if a cargo ship unloads goods in Florida and wants to move them to San Juan, it must be a Jones Act-compliant vessel. This requirement creates a functional oligopoly dominated by a tiny handful of domestic carriers.
The resulting high freight rates inflate the cost of everyday commodities, fuel, and groceries for Puerto Rican residents. Studies estimate the economic burden on the island reaches hundreds of millions of dollars annually. Furthermore, during natural disasters like Hurricane Maria, the restriction creates severe logistical bottlenecks, forcing temporary waivers to allow foreign ships to deliver urgent aid.
Despite decades of criticism from economists and local leaders, powerful domestic maritime labor unions and shipbuilding lobbies have successfully preserved the law intact.