Should foreign maritime transportation competitors like China be permitted to ply U.S. commercial waters? For a century, the Jones Act has reserved that right for U.S. made ships and crews. Now the idea of ending the protection of the U.S. maritime is gaining traction. Bad idea, according to the vice president for legislative affairs at the Navy League, Jon Kaskin. He joined Federal Drive with Tom Temin to explain.
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Tom Temin: Mr. Kaskin, good to have you on.
Jon Kaskin: Yes, happy to be on board with you this morning.
Tom Temin: Alright, tell us what’s going on here. The Jones Act has been around for 100 years, but there are people that would like to see that rescinded or trimmed back or repealed or what’s going on?
Jon Kaskin: Laws like the Jones Act, which are cabotage laws, which require cargo moving between two us points to be on US built and US crewed ships have been around since the founding of the country. It was actually one of the Navigation Acts was the second law passed by Congress. Its current incarnation, the Jones Act was passed in 1920. And it was the lessons learned from World War One where we had issues and having a maritime capability in support of that operation. So has been in good stead for 100 years, we would like it to keep it going. However, there are a lot of commercial concerns out there that feel that the extra cost of US crews and US built ships is a burden on the economy and it should be repealed.
Tom Temin: And this has nothing to do with ships coming from foreign ports bearing goods, but rather what happens once the goods hit US shores and the local maritime industry takes over.
Jon Kaskin: Yes, foreign trade can be more than 98.5% of goods coming into this country are on foreign flagships. There’s only 86 ships under US flag that are in the international trades. So less than a half percent of the total ocean going ships. But cargo moving between US ports, particularly let’s say Alaskan oil, as well as oil from the fracking to the refineries, as well as to our non contiguous trades to Hawaii, Puerto Rico, and Alaska. That’s where the Jones Act trades exist.
Tom Temin: So it sounds like people that would change the Jones Act are looking at the fact that there’s no virtually no American presence in US international shipping to maybe be an indicator that the industry itself is maybe sclerotic or need some kind of a boost to make it more productive or more efficient.
Jon Kaskin: Well, the shipping is not going to be competitive internationally, because the cost of US citizen cruise, as well as the cost of us ships. And there are various reasons why those higher costs are warranted. Our ships manned by US citizens are paid by a competitive US wage, and are under all of the various social security and other programs that benefit our citizens. The US built ships, because we do not have a large shipbuilding industrial base, don’t produce ships in large enough numbers to generate the costs as they are in the Far East, either built in China, Korea or Japan. So in an international basis, we won’t be able to compete. So in order to ensure that we do have US shipping along our coasts and our non contiguous territories and states, we have to pay higher costs and premium, and that is what is being targeted. So well, why should the American public have that burden? And the answer is there’s benefit both from Homeland Security and national security of having the Jones Act that we wouldn’t have if we allow those trades to be opened up to foreign shipping.
Tom Temin: So this affects, in some ways, the Navy itself at some level where you worked for a long time. It also affects the Maritime Administration, as well as US shippers. So what are some of the national security and homeland security concerns that you feel are bolstered by having this us flagship Jones Act mechanism?
Jon Kaskin: Well, right now, foreign flag ships have to report to the Coast Guard before they come into our country, they have to go via Customs and Border Protection and through their processes. If we allowed foreign flag ships to go anywhere in this country, we would have to create a massive infrastructure to be able to handle such services at all of the ports up and down the river waves currently is where most of the Jones Act vessels. We have over 40,000 Jones Act vessels, as I said, 100 of them are ocean going. And you can imagine what it’d be like if you had all of these foreign vessels going up and down the rivers and the coastal waterways and the issues of concern of the crews on board what they would be doing, and so on. But the national security aspects of it, the defenses. Frankly, the Jones Act is the largest component of our US Merchant Marine. There’s only 184 ships all together in the US Merchant Marine and about 98 of them are Jones Act ships. And during a time of contingency, we could call upon these ships, particularly the tanker vessels in order to support military operations. And we have a massive shortfall right now that has to be addressed in supporting a major contingency in the Pacific, we’re probably more than 60 tankers short of what we need, and maybe even more, and the Jones Act has about 50 tankers that are military useful that could be potentially diverted for those operations.
Tom Temin: So there’s really two sides to it. One is the US capacity in time of war. And the other side is that a foreign flag ship that has ill intent could get as far as Buffalo, New York to do its bad work from coming from the Atlantic.
Jon Kaskin: Yes, sir. That is true. And it’s also the Jones Act is a major stimulus for our shipbuilding industries, particularly the small and medium shipyards with those 40,000 vessels that keeps hundreds of thousands of Americans employed. So there’s industrial base capabilities that are provided and for the larger ships, those are the shipyards that build our naval auxiliaries. In some countries who else maintain such strict cabotage with domestically built as well as flagships such as Canada. I mean, they have allowed ships to come into Canada and re flag them with Canadian flag, but their whole shipbuilding industry basically atrophied to the point where when they had to rebuild their Navy and the Coast Guard, they had to reconstruct their whole shipbuilding industry, and it’s cost them billions of dollars over the last several years to be able to do those types of ships. The United Kingdom actually had to get their oilers built in Korea because they no longer had the industrial capacity anymore to build their auxiliaries.
Tom Temin: And even in the United States, there’s only a couple of really blue water to use the term that the Navy League uses shipbuilding companies, and they’re mostly I think 100% engaged in military construction, correct?
Jon Kaskin: Well, there’s a couple of them such as in Philadelphia, the Philly shipyard as well as NASSCO and San Diego, there is a halter in the Gulf Coast. These are shipyards that can build military and Coast Guard vessels as well as commercial vessels, and you need a combination of both in order to sustain those shipyards. Some years those Philadelphia shipyard, NASSCO shipyard built several dozen tankers for the the fracking trade over the last several years. Now, those yards are going to depend on government work for a few years until the Jones Act needs to be rebuilt, or we find ways to expand the Jones Act. Frankly, I think we don’t have enough ships under US flag to be actually able to crew, our reserve fleet ships for protracted operations in time of war. So we need a ways of being able to expand the US Merchant Marine. And one opportunity would be if we move the trailers or 53 foot containers along the coast and take them off the interstates on trailer ships just like we move them from the west coast to Alaska on trailer ships. So there’s ways of trying to expand it may require government support, but we really need to expand the Jones Act rather than having it go away.
Tom Temin: Jon Kaskin is vice president for legislative affairs at the Navy League. Thanks so much for joining me.
Jon Kaskin: You’re very welcome, sir.