Washington Monthly - How to Fix Our Dangerous Dependency on Foreign Ships and Save American Shipbuilding
Transportation analyst Arnav Rao argues that restoring the Jones Act and enforcing antitrust laws are essential to reviving American shipbuilding and reducing dependence on foreign shipping cartels .
On April 9, President Donald Trump used his Sharpie to sign an executive order titled Maintaining Acceptable Water Pressure in Showerheads. But while Trump’s shower order was showered with headlines, the commander-in-chief signed another water-related directive of greater import during the same ceremony. Trump directed his administration to find ways to save American shipbuilding by rebuilding the nation’s nearly defunct maritime industry. This order may have been inadequate to the problem, but at least it addressed an issue of serious bipartisan concern.
America relies on ocean shipping to transport nearly 80 percent of its international trade. Yet so few large U.S. shipyards remain that they produce only about 0.04 percent of the world’s oceangoing commercial vessels. Meanwhile, nearly 99 percent of our exports and imports are carried by foreign-owned shipping companies—almost all of them operating as cartels. Some of the dangers of this dependency became evident during the pandemic, when U.S. reliance on foreign shipping cartels led to deep supply chain disruptions while fueling inflation. Since then, the United States has continued to cede maritime dominance to China, which controls over half of global shipbuilding capacity and the world’s fourth-largest ocean carrier, COSCO Shipping.
The effects of shrinking commercial shipping and shipbuilding capacity on U.S. military logistics are equally frightening. The United States no longer has sufficient sailors or ships to move military supplies. Nearly 90 percent of our military equipment travels by ship, yet a 2019 test activation of sealift ships showed a little more than a third met their mission capability, due to their age and wear. Consequently, as the Washington Monthly previously reported, “it would require more than 40 days for a brigade to unload equipment, get organized, and move to the front.”
This decline in military readiness is closely related to the deterioration of commercial shipbuilding, as the loss of domestic shipyards leaves the U.S. without the facilities and skilled workers to build and repair naval ships and support vessels efficiently.
How did we get here? For decades, a bipartisan chorus has blamed the decline of the U.S. maritime sector on a 105-year-old law, the Jones Act. Invoked in various policy debates, the legislation is purportedly an egregious example of government overregulation. Colin Grabow, a policy analyst with the libertarian Cato Institute, for example, tweeted about the Jones Act nearly 1,000 times in just a three-month span in 2020, blaming it for a slew of problems ranging from auto traffic congestion in the Northeast to high gas prices. Senator Mike Lee, the Utah Republican, has blasted the act, saying, “What could be more fitting than a dumpster fire full of manure and flames to represent the Jones Act?”
And it’s not only self-styled market libertarians who have attempted to turn the Jones Act into a symbol of industrial policy gone amok. Many who hold themselves out as “Abundance Liberals” have criticized it. Matthew Yglesias, for example, published a broadside against the act during his tenure at Vox, calling it “protectionism and exploitation at its worst.” Derek Thompson, the co-author of Abundance, has also voiced his opposition to the legislation. There is no greater example of the received wisdom of the neo-liberal consensus than its denunciations of the Jones Act.
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