Hawaii’s high travel costs are no secret, but what if there’s a relatively unknown reason behind them? A new legal battle from the iconic Koloa Rum Company aims at one of the oldest shipping laws in the country, arguing that it unfairly drives up the price of goods in the islands. If successful, this lawsuit could have a ripple effect on Hawaii’s travel costs.
The Jones Act and why it matters to Hawaii travel.
At the heart of this controversy is the Jones Act, a law dating back to 1920 that requires cargo shipped between US ports to be transported on American-built, owned, and crewed vessels. While this was initially designed to support the US maritime industry, critics argue that it has led to disproportionately higher costs for non-contiguous states like Hawaii and Alaska, where nearly everything must be imported.
For Hawaii travelers, this law affects more than just shipping companies. The extra costs filter down into everything from hotel construction and resort supplies to food, beverages, and even rental car availability. Airlines and hospitality businesses pass these increased expenses to customers, resulting in Hawaii being among the most expensive travel destinations in the entire world.
A Kauai business challenges Hawaii’s high costs.
A well-known company on Kauai, recognized for its Hawaii-made products, is now stepping into an entirely different battle that could impact far more than just its own industry. Koloa Rum recently filed a federal lawsuit against the Jones Act, arguing that the law violates the Port Preference Clause in the US Constitution.
According to attorneys for the plaintiffs, the Jones Act unfairly favors mainland businesses by making it significantly more expensive for companies in Hawaii to import needed raw materials and export finished products. CEO Bob Gunter explained how the law affects both businesses and families in Hawaii, saying:
“We pay more for everything we import, from bottles to packaging, just like all families across the state. And then we are hit a second time, paying exorbitant costs for exporting our products to our fellow Americans.”
This lawsuit also has a personal connection with the editors at Beat of Hawaii. Jeff and Rob have known Bob Gunter for decades, watching his company grow from a fledgling startup into an internationally recognized brand while still remaining deeply rooted in Hawaii. Bob’s perspective on the Jones Act is, of course, about the success of his business, but it’s also about ensuring that Hawaii companies can compete on equal footing.
This isn’t the first time the Jones Act has faced scrutiny, but this lawsuit takes a new approach by focusing on its constitutional implications. If successful, it could set a precedent for other industries that depend on shipping, potentially reshaping how goods move in and out of Hawaii.
How could this affect Hawaii travel?
While the lawsuit focuses on shipping, the potential consequences extend beyond cargo. If the Jones Act were overturned or altered, it could open the door to increased competition in Hawaii’s supply chain, lowering costs for businesses and consumers.
This could translate into lower hotel and resort costs for our Hawaii visitors as supplies and materials become cheaper to import. If vehicle shipments to Hawaii become more cost-effective, rental car availability and pricing could also improve.
Also of key significance are the potential airfare savings if airlines benefit from reduced fuel and operational costs tied to imported goods.
One significant area where Hawaii visitors could see a difference is in food and drink pricing. Restaurants and bars in Hawaii rely heavily on imported products, and outrageous shipping fees play a major role in setting menu prices. It’s simply a hidden cost that visitors are largely unaware of.
If this legal challenge succeeds in loosening these shipping restrictions, it could lead to cheaper cocktails, more competitive pricing on locally made spirits, and an overall reduction in food and dining expenses. Thus, more affordable dining and grocery options could also be on the table.
Will this lawsuit succeed where others have failed?
While the Jones Act has faced prior reform efforts, strong political resistance has always stood in the way. Some lawmakers argue that protecting the domestic shipping industry is crucial for national security and job preservation. However, this lawsuit is fundamentally different, focused on a constitutional standpoint rather than an economic one, which could give it new legal traction.
Despite this, even if the lawsuit succeeds, change might not happen overnight. Court battles like this can take years, and any alterations to shipping laws would then be met with intense lobbying from maritime interests. Additionally, while eliminating the Jones Act brings the potential for long-term price reductions, some experts caution that businesses in Hawaii still might not be inclined to lower prices for consumers immediately.
What Hawaii visitors are saying.
Travelers to Hawaii have long voiced concerns over rising costs, with many wondering if the prices they pay are justified. Some believe a challenge to the Jones Act is overdue, while others question whether this lawsuit will truly result in savings.
David, a frequent Hawaii visitor from Seattle, shared his perspective from another article we wrote about The Jones Act. “I love coming to Hawaii, but it’s getting harder to justify the cost. If the Jones Act is really driving up prices, then it’s time for a change. Hopefully, this lawsuit makes a difference.”
On the other hand, Susan from San Diego is skeptical. “I’ve been visiting Hawaii for twenty years, and prices keep rising no matter the laws. Even if the Jones Act changes, will businesses lower their prices?”
These mixed opinions highlight a key concern: whether businesses will pass savings on to visitors or simply absorb the benefits for themselves.
The bigger picture is what happens next.
This legal challenge is still in its early stages, and the case will take time to unfold. However, the company’s challenge is to bring renewed attention to this issue, directly affecting Hawaii’s travel costs and all visitors and residents. If successful, it could reshape pricing structures across tourism, hospitality, and the broader economy of Hawaii.
For now, travelers should expect Hawaii’s high costs to persist, but this fight offers some glimmer of hope. Whether it succeeds or not, it’s sparking a conversation about the true cost of paradise.
We welcome your thoughts!
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Costco with their own shipping, helps to keep prices reasonable. Still, prices are about 25% higher than the mainland. The cost to live on an Island in the middle of the ocean!
Good for Koloa Rum Company. While Hawaii politicians prattle on about the affordability crisis for our Kupuna, they ignore the obvious. A study by Hawaii’s own Grassroots Institute estimates the annual cost of the jones act amounts to $1,800 per Hawaiian Family. Imagine if flights to and from the mainland were only on American made Aircraft, and its easy to see what the jones act does shipping cost. Of course, most of Hawaii’s political class is beholden to the unions who thrive on restricted competition. And of course Hawaii travel cost are inflated as well, and sadly, the cycle repeats itself!
Port Preference Clause – An old argument already debunked:
“The 4/24/23 WSJ op-ed alleges that the Jones Act violates the U.S. Constitution’s Port Preference Clause, which states “[n]o Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another…”. The Jones Act applies to all ports and points in the United States. The law fundamentally does not prefer any one port over another.”
That being said I do support the modification of the law to allow foreign built hulls in the domestic trade. Keep the provisions of U.S. owned, U.S. operated and U.S. manned but eliminate the U.S. build requirement.
Sadly, the few remaining U.S. shipyards can’t build ships that are economically competitive.
The Jones act will be a tool in which if unloaded from an American made and operated ship no import tariff’s imposed. If Hanjin or other foreign shipping companies dock and longshoremen unload the normal tonnage fee is charged and IMO the import tariff. Don’t think cranes can weigh containers? Think again. Transport American made goods on foreign ships. Pay 25% more. Like the local Hawaiian’s can afford that. IMO maybe Hawaii needs to manufacture palm tree lumber for those construction projects. Just a thought as to see Hawaii without any palm trees left.
I don’t think import tariffs will apply to American-made goods shipped from one American port to another American port. The mode of shipment/transportation doesn’t make an American-made product an import in America. However, I’m sure that the U.S. shipbuilders, longshoremen, and shipping companies will definitely lobby to get some penalty (tax) applied to the foreign shippers in order to maintain their stranglehold on the islands and Alaska.
Kudos to Koloa Rum for filing this important lawsuit. It will be a long process as BOH has correctly indicated, but we wish them well in this pursuit of justice. Now, is there anyway Koloa Rum could get their delicious Mai Tai mix back on board Hawaiian Airlines? Years ago it was available, even on inter island flights in first class. The current Mai Tai offering on HA can’t even come close to Koloa Rum’s superior product!
Aloha to all.
If the Jones Act is repealed, the U.S. shipping companies servicing Hawaii will go out of business since they can’t compete in terms of the labor costs, regulations, and vessel operating conditions that U.S. flagged vessels are required to adhere to.
Foreign flagged vessels (which includes many U.S. owned ships registered under flags of convenience such as Liberia and Panama) are not required to meet those requirements and operate at a much lower cost. No good answer here – either lower shipping costs, or sign the death warrant of most of what little remains of the American Merchant Marine..
Even if, by some miracle or legal maneuvering, the Jones Act is repealed or modified, does anyone really believe prices will drop?
The harsh truth is that we now live in a monopolistic capitalist world where true market competition—the kind Adam Smith championed—no longer exists. Instead of lowering prices and expanding choices, today’s corporate giants—Amazon, Microsoft, Apple, Big Food, hotel chains—exist to squeeze every possible dollar from consumers and gov’t alike.
Even when costs fall, corporations pocket the profits and keep raising prices on the rest of us.
Case in point: Did prices drop once supply chain issues were resolved? Didn’t think so.
Supply chain issues and prices were only partially related. Can’t ignore the historically high inflation rates as a major factor.
On the other hand you’re generally correct that prices tend to stay high, but only as long as the demand is there because no business wants to lower their profit margin unless they have to.
As far as big corporations and market competition there are some exceptions. For example, when Amazon acquired Whole Foods the prices actually went down. Remember “Whole Paycheck” nickname? Now, their prices are actually competitive with some other grocery chains, both here and on Mainland. In Hawai’i they’re actually lower than, for example, Down to Earth which I really like but seldom shop there because identical items are more expensive than at Whole Foods.
I’m cautiously optimistic that in today’s political climate, Jones Act will eventually be repealed and improve overall cost of living here, whenever that might happen.
They dropped when airlines were deregulated, and the same old arguments were used to fight that. Your cynical view of competition is unfortunate. Americans, un burdened by oppressive government regulations will always fill a need at a lower price when given a chance! Adam Smith spoke of the invisible hand, and its time Maersk, Pasha, et al were slapped up side the head with a good old fashioned dose of competition!
Ya still have to fight the longshoremen union and if they support the Jones Act. Not all is law and depends on ILWU’s contract. Without longshoremen no ships will get unloaded and the islands will be out of luck. Besides who needs those cheap, crappy souveniers from China, Malasia, and the Phillipines anyway. Unions only support union made products and companies.