Salt or sailors: Old law and big money

Allen Wastler

Which is more important: Salt for icy roads in New Jersey or a ready pool of American sailors and ships for wartime?

Wow. Tough question. Weird one, too.

A tugboat passes a container ship in the Port of Los Angeles.
Getty Images

But it's the question that came up following a maritime kerfuffle this past week.

In case you haven't noticed, it's been a tough winter on the East Coast. All the snow and ice has led to shortages of road salt at various towns. Jersey City, N.J., is one of those towns. As luck would have it, Jersey City secured a load of 40,000 tons of salt in Maine. But the only ship immediately available to move it to Jersey City was foreign. And that would be against the law.

What law? Why, the Merchant Marine Act of 1920, commonly referred to as the Jones Act (after its sponsor). It requires that all cargo carried between U.S. ports be on ships flying the U.S. flag, with American crews and American owners (mostly).

So the salt sat.

And you heard a lot of grumbling about archaic laws standing in the way of pragmatic solutions to real-world problems.

Lost in the debate was the reason the law is there in the first place: to protect jobs and what's left of the U.S. maritime industry.

Without the Jones Act restrictions, foreign carriers, which use much cheaper labor and ships, could offer discount cargo services between U.S. ports and drive U.S. carriers out of business.

Great freeze on the Great Lakes

That has already happened over the last few decades in international shipping routes. American ship lines either have gone out of business, like Lykes Brothers Steamship Co., or have been absorbed by foreign carriers, like American President Lines (owned by Neptune Orient Lines of Singapore).

As a result, no American carriers are listed among the world's top shipping lines.

But, thanks to the Jones Act, American shipping lines, like Crowley Maritime and Matson Navigation, still operate domestically, particularly in routes serving Alaska, Puerto Rico and Hawaii. And those lines keep American sailors employed and American shipyards operating.

All told, this segment contributes $35.5 billion to U.S. gross domestic product and accounts for nearly half a million jobs, directly and indirectly, according to the pro-Jones Act Transportation Institute. It also maintains a U.S. foothold in maritime assets and know-how, which many believe is vital to national defense since a strong merchant marine is vital to military supply chains. This is why the U.S. Navy typically opposes any effort to eliminate the Jones Act.

But there are negatives. American sailors and American ships cost more. As a result, they charge higher freight rates, much to the chagrin of their customers. Indeed, businesses in Puerto Rico and Hawaii have led the charge lobbying Congress for Jones Act changes. Of course, ship lines and shipyards dependent on the Jones Act have countered with lobbying efforts of their own (see chart).

"The Jones Act cuts both ways," said Bob Frump, a Jones Act expert and author of "Until the Sea Shall Free Them: Life, Death and Survival in the Merchant Marine." "It assures that American seamen and merchant marine officers have jobs—and that is important for defense. But it assures also a shortage of safe, modern vessels because shipowners can't afford expensive American shipyards. At some point, the alliance of seafarers and shipbuilders needs to be re-examined. At one point in our history, the Jones Act and other 'American Bottom' laws helped assure that old, unsafe ships sailed and sank, with great loss of life."

Negatives and positives. It's good to understand both sides of the issue.

In the meantime, here in New Jersey, we're waiting on our salt. We hear its on its way, on an American barge.