Hawaii Reporter: Hawaii Reporter

Jones Act Lawsuit Will Test Control of Hawaii’s Shipping Monopoly

By Malia Zimmerman, 10/20/2009 5:52:42 AM

Big Island small business owner Jim O’Keefe operated the O’Keefe & Sons Bread Bakers in Hilo, Hawaii for 13 years before shutting down his extensive operation in 2008. His popular bakery closure left 50 people out of work, retail customers searching for other restaurants to buy deli and baked goods from, and several area businesses, grocery stores and resorts scrambling for other local places to buy wholesale baked foods.

The cost of doing business in Hawaii was just too high for O’Keefe to continue operating. Through his own research, he discovered that a large part of his expenses were for shipping flour and other food ingredients to the island of Hawaii.

“I would buy a 50 pound bag of flour for $6 or $7 in the mainland, and by the time it landed in Hilo, it cost me $12.50 a bag,” O’Keefe says.

O’Keefe, like virtually every other business person in Hawaii, sees the cost of goods skyrocket by the time they reach Hawaiian shores because of the Jones Act, a federal law that says all products shipped between American ports must be shipped in American made vessels by a crew that is 75 percent American. That law limits competition from world shippers, and raises the cost of doing business here, in O’Keefe’s case, by six figures over the life of his business.