Shipbucket

International Salt, a major salt company, has just about run out of salt to supply the State of New Jersey. The salt is used to control ice on the roads, and to run out in the middle of a very snowy winter is very, very bad. The company does have lots of salt in Maine, roughly 40,0000 tons, but apparently did not make arrangements to ship it to New Jersey in a timely manner. Was this just a logistical foul-up by the salt supplier? Not if you read the newspapers, the internet or watch television. The villain, at least according to what one hears in the press, is the Jones Act.

The Jones Act is a law which reserves the carriage of goods between US ports to US flag vessels. It is an easy scapegoat. It allows the state officials, who might not have been paying proper attention, as well as the salt provider, which is owned by a German multinational, to blame a nearly 100 year old law for their lack of planning. Simply put, everyone can say, “It’s not our fault. It is the Jones Act!”

This has been a nasty winter in the US Northeast. Indeed, it has a been a nasty winter in lots of places. In the state of New Jersey, near record snowfalls have depleted the state’s supply of rock salt used to melt icy roadways.

One of the state’s largest salt depots in Newark is close to being out of salt. The depot is run by International Salt, a subsidiary of the K+S Group, a German multinational, which is one of the world’s leading fertilizer suppliers and also the world’s leading producer of salt. While International’s Salt’s Newark depot may be close to empty, they have a depot in Searsport, Maine, which reportedly has 40,000 tons of salt available. The problem is that Searsport is roughly 400 miles to the northeast of Newark.

Here is where the Jones Act and the bulk carrier, Anastasia S, come in. The Anastasia S is a 58,000 DWT bulk carrier which could have carried all the Seaport salt. The story gets a bit muddled from here. OK, more than muddled.

The Christian Science Monitor reported yesterday : “In the meantime, New Jersey officials say a 40,000-ton shipment of salt remains stuck in port in Maine, due to a 1920 maritime law that requires ships to fly a US flag to deliver goods between American ports. According to Mr. Dee, state officials have not been able to obtain a waiver for the law, so the salt, now on the Anastasia S, registered in the Marshall Islands, must be shipped to New Jersey by slow-moving barges.”

NJ.com has similar and sadly typical reporting, “A large shipment of rock salt is not allowed to enter the Port of Newark because the ship does not fly an American flag…”

This reporting has to be wrong, for several reasons. If the salt “now on the Anastasia S” was being delivered to Maine from a foreign port, it could have been diverted to Port Newark without violating the Jones Act. If the salt originated in Searsport, no one would have been foolish enough to load it onto a foreign flag bulk carrier to sail to Newark because of the Jones Act, which is no secret to anyone involved in shipping. And finally, saying that the salt is “ now on the Anastasia S” is obviously wrong because the ship is now in Jersey City to load scrap metal and could not have been in Searsport, loaded with salt, yesterday.

So even though the press reports say that the salt could be carried by the Anastasia S, that ship has, quite literally, sailed.

The salt company has now arranged for a 9,500 DWT barge to carry the salt from Searsport, Maine, to Newark. Unfortunately, the barge was delayed by the winter weather. The first 9,500 tons of salt is expected to arrive in Newark next week.

It is possible to get a Jones Act waiver if no US tonnage is available and if it is a matter of national security. Waivers were granted after Hurricane Sandy, for example. As a US flag barge is on its way to Searsport now, it seems hard to make the case that no US tonnage was on hand. Likewise, as the Anastasia S is no longer available, it is difficult to see how foreign tonnage could necessarily deliver the salt any faster.

So rather than say, “we screwed up and didn’t arrange for transport early enough,” the salt company and state officials are blaming the Jones Act.

The 1920 Maritime Act, better known as the Jones Act, is known in admiralty law as cabotage, from the French caboter meaning to sail “between the capes.” Cabotage laws require that only local ships can enter into the nation’s coastal trade. Cabotage dates back to the 16th century France, though in practice may be much older.

The Jones Act was by no means the first cabotage law in the United States. The Tariff Act of 1789 provided for protection of domestic coastal shipping.

The problem with US cabotage law is that it is more far-reaching than similar statutes of most other nations. Whereas cabotage usually applies only to coastal shipping, the US Jones Act extends to Hawaii and Puerto Rico as well. Applying coastal shipping protection to islands 2,500 and 1,100 miles from the mainland, respectively, is a rather expansive interpretation of protecting shipping “between the capes.” Business interests in Puerto Rico and Hawaii argue that the Jones Act and the higher cost of US shipping put an unreasonable burden on the island economies.

There has been a long-term battle between these business interests, who oppose the Jones Act, and the maritime labor unions, whose members’ jobs would be at risk if the Jones Act was abolished. In this regard, much of the scapegoating of the Jones Act because a salt supplier didn’t schedule barges in time, might be seen as a subset of that larger argument.