Themistocles, an ancient Athenian general, once stated, “He who commands the sea has command of everything.” This assertion raises significant concerns about America’s current maritime capabilities.
The United States heavily relies on ocean shipping, with approximately 80 percent of its international trade by weight traveling across the seas. Moreover, nearly 90 percent of supplies and equipment needed by the armed forces, including food, ammunition, and fuel, are transported by ships. Thus, the capacity of commercial shipyards is crucial for constructing warships and sealift-support vessels during national emergencies.
However, the U.S. maritime capacity is alarmingly inadequate. Out of thousands of large vessels operating globally, a mere 0.13 percent are built in the United States. In stark contrast, China currently handles around 60 percent of all new shipbuilding orders and has developed a shipbuilding capacity over 200 times larger than that of the United States.
The implications of this lack of domestic maritime infrastructure extend beyond mere statistics. Furthermore, a significant proportion of U.S. imports and exports are shipped aboard foreign-built vessels owned and crewed by just nine major shipping companies, primarily based in Europe and Asia. As of the end of 2024, these companies formed three cartels controlling roughly 90 percent of the containerized shipping trade within the U.S.
After a ship docks at a U.S. port, it is likely that the crane used to unload containers was manufactured by a single Chinese corporation responsible for 80 percent of all ship-to-shore cranes used in America. Additionally, China produces 86 percent of the truck chassis used for loading containers, and an overwhelming 95 percent of the containers themselves are also made in China.
The onset of the pandemic dramatically highlighted the consequences of America’s diminishing influence over ocean shipping. During this period, foreign shipping cartels drastically increased shipping costs on certain routes up to 1,000 percent, while simultaneously earning $190 billion in windfall profits. In some instances, American agricultural exports valued in the hundreds of millions were rejected in favor of returning empty containers to China, leaving U.S. food products to decay on docks.
This chaotic state of affairs has dire national security implications as well. With so few vessels flying the American flag and employing American sailors, there exists a critical deficit of civilian mariners needed to operate Navy support vessels. As of November 2024, the Navy acknowledged it would be laying up 17 support vessels, some of which were delivered just months earlier, due to crew shortages. Even more concerning is the shortage of support ships; in the event of a conflict in the Pacific, the U.S. would require over 100 fuel tankers, yet only has access to about 15.
The current maritime crisis should not have reached this level. Historically, the United States managed a thriving, well-regulated ocean shipping industry throughout the mid-20th century. However, the country turned its back on the principles that allowed this industry to flourish.
In the early 1900s, the ocean shipping industry struggled with “ruinous competition,” as carriers engaged in destructive rate wars, believing that moving cargo at unsustainable rates would mitigate their high operational costs. This unsustainable approach led many carriers to the brink of insolvency, necessitating a shift toward forming unregulated cartels to stabilize the market.
While cartels somewhat provided stability, they did so at the expense of the public. Secretive rebates were offered to large operators that agreed to exclusively utilize cartel vessels, and competitors were often sidelined. These practices led to price discrimination, with larger shippers obtaining favorable rates while smaller entities faced inflated prices, exacerbating the competitive disadvantages for farmers, smaller manufacturers, and regional ports.
At the same time, U.S. government policy regarding maritime operations stagnated. Since the post-Civil War era, American authorities had refrained from allocating public funds for shipbuilding, while foreign nations, particularly the British, heavily subsidized their shipping industries. By 1901, U.S.-built vessels accounted for only 8 percent of national trade, leaving American shipyards struggling to remain viable without naval contracts.
The unfortunate merger of cartelization and governmental neglect led to perilous consequences. When World War I erupted in Europe in 1914, most European nations redirected their shipping capacities to support the war efforts. The U.S.’s reliance on European shipping lines meant skyrocketing freight rates; charter rates surged approximately 20 times higher.
America found itself isolated from the rest of the world, resulting in an economic recession driven by goods piling up in ports and a halt in incoming shipments. This crisis prompted Congress to enact a series of emergency bills aimed at bolstering domestic shipping and shipbuilding capacity.
The immediate and long-term effects of those investments were transformative, resulting in over 2,300 vessels constructed for World War I and more than 5,500 ships during World War II, enabling the United States to emerge as a global leader in shipbuilding. Remarkably, the Liberty-class cargo ship SS Robert E. Peary was constructed in a mere four days during peak World War II operations.
Recognizing the need for sustained success, Congress acknowledged that investing solely in shipbuilding was insufficient. It was vital to establish market regulations governing ocean shipping that both prevented destructive competition and ensured that carriers operated in the public interest. Consequently, the United States Shipping Board was created—later replaced by the Federal Maritime Commission. This agency was entrusted with regulating the industry as a public utility, requiring cartels to submit their operating agreements for government evaluation to prevent discriminatory practices.
While not always effectively enforced, these regulations marked a significant improvement from the previous market environment. However, this necessary regulatory framework faced a drastic transformation during the 1980s as deregulation gained momentum under Congress and the Reagan administration. Many believed that the Federal Maritime Commission had become bloated and ineffective at its modest budget of just $11.8 million, and thus, the argument was made that the U.S. could achieve economic efficiency by loosening regulations.
Subsequently, Congress passed a series of deregulation bills during the Reagan and Clinton administrations, significantly impeding the FMC’s ability to regulate the ocean-carrier industry. This shift led to a resurgence of destructive competition and exploitation, reminiscent of the early 20th-century market turmoil.
As containerization advanced and carriers deployed larger ships, the rising fixed costs compelled competition that resulted in massive mergers, greatly destabilizing the market further. Within seven years after President Reagan enacted the Shipping Act of 1984, seven major carriers merged, a sharp contrast to just one merger during the previous 17 years.
Moreover, American-flag carriers, burdened with higher operational costs, faced tremendous challenges during this changing landscape. The elimination of Federal subsidies that had previously aided U.S. carriers in providing livable wages strained their competitiveness, while foreign corporations swiftly acquired influential American shipping entities. Notably, American President Lines and SeaLand, two of the largest U.S. carriers at that time, were bought in 1997 and 1999, leaving the U.S. without any globally competitive ocean carriers.
Amid this backdrop, the shipbuilding sector in the United States almost vanished. Present-day statistics indicate that the U.S. currently produces five or fewer large commercial vessels annually, mostly reliant on naval contracts. In light of escalating tensions with China, the ramifications extend beyond economic competition, as the United States lacks significant surge capacity to construct either naval or sealift ships, effectively relying on China for the commercial vessels needed for military support.
To remedy this significant shortfall, Congress is currently working on a bipartisan bill, while a recent executive order aims to address the pressing issues plaguing American shipping and shipbuilding. Proposed measures include imposing tariffs on Chinese-owned vessels and introducing new tax incentives to stimulate investment in domestic shipyards. However, these initiatives may fall short of addressing the system’s deeper issues.
The core problem is not merely inadequate investment or insufficient tariffs. Instead, it lies in the abandonment of a regulated competition framework that could structure the industry to meet public requirements.
Revitalizing a robust, regulated competition system would restore the government’s authority over cartels, ensuring they operate in the public’s interest. This regulation would mandate that all shippers, regardless of size, receive equitable terms and pricing, enabling fair competition focused on practicality and price efficiency rather than the leverage of foreign cartels.
Moreover, imposing stringent regulations on carriers would curtail the tendency for price surges during periods of limited capacity and prevent both predatory pricing and destructive competition during times of reduced demand. Coupled with substantial public investment in shipping, port services, shipbuilding, and mariner training, this approach could pave the way for the revival of market regulations successfully used to combat unregulated monopolies in ocean shipping.
Thus, rekindling a new era of American maritime greatness could well be within reach, as long as the U.S. seeks a comprehensive path forward that prioritizes the interests of its citizens and economy.
image source from：https://www.theatlantic.com/economy/archive/2025/05/american-shipbuilding-decline/682945/
