The US supply chain crisis is far from over. Persistent backlogs at west coast ports have led shippers to reroute their cargoes east. As a result, container ships are now sitting offshore in ports such as New York, Houston and Savannah, waiting in line to unload.
What first sparked the unknown phenomenon of our sterile shelves was COVID-19 and a series of ill-advised policies implemented to “stop the spread”. Suddenly there were too few dock workers, too few warehouse workers and too few truck drivers, creating what Lori Fellmer, chair of the National Industrial Transportation League’s ocean committee, called “a horror show.” .
But the ongoing problems at our ports and stores bring out an even more troubling truth: American prosperity and well-being have become far too dependent on China and the whims of the Chinese Communist Party (CCP).
Not only does China supply a huge amount of our consumer and commercial goods, medical supplies, pharmaceuticals and vital raw materials, but it also controls a huge share of the world’s maritime fleet and commercial shipbuilding capabilities. Beijing’s domestic policies therefore wield considerable influence both on the global shipping industry and on the production and distribution of Chinese exports. This creates a double vulnerability for the United States.
>>> US must renew pacts with Pacific island nations as bulwark against China
According to 2021 United Nations data, China had 7,318 merchant ships weighing more than 1,000 tons, or 13.6% of the world’s total tonnage. Moreover, 94% of all commercial shipbuilding in 2019 was carried out by just three countries: China, South Korea and Japan. A war in Asia would jeopardize these sources of commercial shipbuilding, significantly affecting international markets and the United States.
Similar concerns recently led Congress to pass the CHIPS Act, a misguided attempt to encourage domestic production of semiconductors. Unfortunately, not all shipbuilding production and resources can be offshored.
In the 1980s, Congress created the Commission on Shipping and Defense to determine the nation’s maritime needs. His second report to Congress recommended that the nation obtain a fleet of 650 ocean freighters to meet wartime military and economic needs.
Since then, the US economy has grown 479% and its population has grown 133%. But today, US-flagged merchant ships – the only ones you can really rely on in a crisis – number only 180 ships, of which 157 can be militarily useful. This is only a fraction of what was needed decades ago when the US market was much smaller.
America’s supply chain problems start across the Pacific. It’s not just Washington’s COVID policies that are the problem. China’s “zero-COVID” policies have locked down twenty-five cities, most recently Shenzhen and Shanghai, a city of forty million people and the site of many global manufacturers.
These blockages reverberate across China, causing logistical shocks at factories upstream of the Yangtze in Wuhan and at ports like Tianjin and Shenzhen, which transship products through Shanghai. This means that products en route to US markets are further delayed.
While zero-COVID is used as justification to shut down supply chains, the CCP has also shown itself willing to use its industrial might for political gain. Australians are under a steel embargo to thwart Beijing’s territorial claims to the South China Sea. Filipinos are being punished with a banana embargo for fending off China’s encroachment on its Scarborough Shoal. South Korean tourism has been hit by China travel bans imposed because Seoul is home to US missile defenses. And the Lithuanians face a complete Chinese embargo because they opened a diplomatic representative office using the title “Taiwan” instead of “Taipei”.
The war in Ukraine has heightened supply chain concerns about raw materials such as phosphates for fertilizers and neon gas, which are essential for manufacturing microchips. In the wider competition over access to these resources, China has the vessels and the economic means to ensure its needs are met. American consumers do not.
This situation is dire because, for too long, agencies like the United States Maritime Administration, charged with securing our market access, have been silent or unable to take action.
Today, it is imperative to address China’s use of national policies like zero-COVID that can hold international supply chains hostage. A first step is to build the resilience of our global supply chains, especially those important to sustaining a wartime economy.
>>> A partnership approach to American international economic relations
Part of the solution is to work with shipping partners in friendly countries, such as Germany (Hapag-Lloyd, 253 ships), Denmark (AP Moller Maersk, 730 ships), South Korea (HMM , 100 ships), Switzerland (MSC, 730 ships), France (CMA-CGM, 566 ships) and Taiwan (Evergreen Line, 205 ships) – to ensure access to commercial shipping and foreign markets.
We also need to address the potential for China to coerce and intimidate Filipino and Indian sailors who make up the majority of commercial ship crews that keep the US economy afloat.
Finally, increased inland shipping and shipbuilding are essential to both America’s national security needs and its economy. The US maritime industry must be able to compete globally. This will require creating a policy environment conducive to the necessary investment and innovation, while working with partners in allied countries to become less dependent on the Chinese supply chain.
The United States needs a larger commercial fleet to remain globally competitive. The nation also needs more shipbuilding and repair facilities to ensure access to foreign markets and support the nation and navy in times of war. As the empty shelves attest, what we have now is woefully inadequate.
This piece originally appeared in National Interest https://nationalinterest.org/feature/america%E2%80%99s-dependence-china-crisis-making-205132