With so few U.S.-Flagged ships and carriers, is America still a maritime power?
A.T. Mahan is perhaps the most widely quoted and authoritative strategic thinker on the relationship between commercial shipping and maritime power. That is probably because today any discussions of maritime power outside of those promoted by parochial industry interests rarely touch on any dimension of maritime power other than naval. Thinkers today just don’t ponder that relationship in any serious way. Consequently there is no discussion of the actual condition of the foreign going US flag merchant marine or whether or not that has any bearing on our maritime power or meaning to the overall welfare of the country. This is a discussion that needs to be refreshed based on the world we are faced with today, not the world Mahan lived in. While the opening question is one way to explore the issue, perhaps a more relevant phrasing of the question would be "Is it necessary for the US to have a US flag merchant fleet to be considered a maritime power?" To the first question I answer yes, and to the second I answer no.
In The Influence of Seapower Upon History Mahan is emphatic that the basis of a strong Navy is a vibrant commercial fleet since “…in a representative government any military expenditure must have a strong represented interest behind it, convinced of its necessity”. A few today might echo that general sentiment, although without the conviction of Mahan, such as the recent article by Ron O’Rourke in Proceedings wherein he stated that “Maritime power is a broad term that includes not just the Navy and Marine Corps, but also the Coast Guard, the Merchant Marine, the supporting technological and industrial base, and other elements” . But his article then deals exclusively with naval matters. The USN/USMC/USGC Cooperative Strategy for a 21st Century SeaPower, which emphasizes the vital role the global maritime commons plays in world economic activity, describes the six capabilities that are core to US maritime power. All six are naval capabilities, none, contrary to Mahan, are related in any way to the carriage of the nation’s foreign commerce . It would seem then that Mahan is due for serious reconsideration and revision, on how, or if, the merchant marine fits into the concept of maritime power in this country. If Mahan remains relevant, then the US is no longer a maritime power and, according to Mahan’s analysis, the level of expenditure on a foreign going Navy is not sustainable in the long run in peace time. If, on the other hand, Mahan’s analysis is applicable to the version of globalization that he experienced, but not the one we are experiencing today, then the US remains the world’s dominate maritime power. What is then needed is a revision to Mahan and a redefinition of what it is to be a maritime power. A new, overarching strategy, on the order of Mahan in authority, explicitly tying our Naval power to the country’s economic interests across the maritime commons that is more reflective of the world as it is today and likely to be in the next hundred fifty years rather than the world 150 years ago is in order.
Trade is of course central to the overall economic well being of the US. The US is one of the worlds dominate trading nations, and trade makes up a significant portion of our total economic output. The US Business Roundtable estimates that over 30 million US jobs are attached to trade, about 18.2 percent of total employment. The US is the world’s third largest exporter, behind Germany and China, but the US domestic market is so large that only a very small portion – somewhere around 1 percent - of US businesses view exports as a potential market. That percentage is likely to grow under the current administration’s National Export Initiative which seeks to double this country’s exports over the next few years. Further, the US actually runs a trade surplus with the group of countries with which it has free trade agreements. Contrary to what appears to be a commonly held misperception and erroneous studies reported in the mainstream press, the US has not completely outsourced its manufacturing base to China and remains the world’s largest manufacturer. In fact the US manufacturing sector is expanding and the combination of high productivity and comparatively low energy costs will ensure the US manufacturing sector remains the world’s most vibrant for many years to come. The US has certainly moved up the value chain in terms of what is manufactured here so much low value manufacturing has indeed moved offshore but in its place we manufacture, and export, complex high value goods. Manufacturing employment therefore is steadily shifting from low skill assembly line type work to high skill, high tech, and high paying work requiring significant experience, education, and training.
Ocean shipping is a central link in our complex global supply chains. About 1.5 billion tons of import and export cargo moves through US ports each year, an amount that is roughly 20 percent of total world merchandise trade and after a dip due to the global recession, that number is again growing. The US is a world leader in the export of agricultural products which move primarily by bulker (although containerized bulk agriculture products are becoming more common). China is one of our largest customers in this area. Our oil imports move by tanker, and as US domestic production of natural gas ramps up through development of shale gas it is entirely probable, absent untoward political interference, the US will become a major exporter of LNG on par with Russia and Qatar. This is a development no-one would have bet on only 10 years ago. Those exports, which will aid significantly in reducing our merchandise trade deficit, will move by ship, and license applications are already pending to put liquefaction plants in at what were originally designed to be import terminals in the US. But even though nearly three quarters of US trade is in bulk commodities, perhaps the most visible reminder to the average citizen of the role maritime commerce plays in their daily life is the container. Containerization and parallel developments in information technology have led directly to the form of globalization we see today. Disaggregation of supply chains, trade in intermediate goods, and leveraging of comparative advantage at ever more granular levels to the point where the distinction between goods and services is blurred, or trade in tasks as the WTO calls it, has afforded the average consumer a range of goods almost unimaginable not long ago. Prices are lower than could otherwise be the case making those goods accessible to more people and contributing directly to an increasing standard of living in the US. In addition, the cost of many types of goods declines rapidly from initial introduction to the marketplace as manufacturing matures and the product is adapted to and exploits a global supply chain. The range of types of goods we trade, and the geographical range of countries we trade with, is far greater than ever before. The US Maritime Administration has 173 countries in its data base with which the US has containerized trade. In 2010 roughly 45,000 containers entered the US by water every day, 365 days per year. China was the source of 48 percent of them. China (including Hong Kong), on the other hand, is also the single largest destination of US containerized exports, taking over 2.3 million TEU of goods from the US each year, an amount nearly triple the next largest, which is Japan and six times larger than the largest single importer in Europe.
The blunt answer to the question of the role of the foreign going US flag merchant marine in our economic security is that it is insignificant. While much visibility is given to our dependence on foreign oil wells in nasty parts of the world for a significant part of our oil needs, much less visibility is given to the fact that we depend 100 percent on foreign tankers to deliver it. There are no US flag crude tankers in international trade, and have not been for many years. Crude oil deliveries to the Strategic Petroleum Reserve during the last fill program which ended in Dec of 2009, technically subject to cargo preference, were all done via foreign flag tankers. Likewise agricultural exports, a crucial component of our overall exports, also all go via foreign flag bulkers. While there are a few US flag bulkers in the fleet, they are engaged in food aid, an extension of US foreign policy, not the foreign commerce of the US. Overall US flag ships carry less than two percent of the foreign commerce of the US according to the US Maritime Administrator in testimony to Congress. But even that number is artificially high and a spillover from military programs. In truth there are no US flag ships purely in the foreign commerce of the US.
There are currently just fewer than 100 US flag ships in non-domestic service. There are over 20,000 ships of over 10,000 tonnes in the international merchant fleet, so the US has less than one half of one percent of the global fleet. Sixty of the US flag ships are in the Maritime Security Program, which provides an operating stipend to partially offset the higher cost of operating under the US flag in exchange for making the ship available to the US military in times of need. That stipend is not enough to fully offset the higher US flag costs so access to US Government (largely military) cargo preference volumes, a separate US government funding stream, is also required. In short, these ships exist to service the US military, not the foreign commerce of the US, and to the extent they carry commercial foreign trade it is not enough to make a living. From the perspective of Mahan, those ships, like MSC and RRF, should arguably be excluded from the analysis. The balance of most remaining US flag ships in non-domestic service also are dependent on US cargo preference programs such as food aid, and spot military work. Even the now famous Maersk Alabama was not, and is not, in the foreign commerce of the US. That ship is fully employed in food aid programs. Being completely dependent on government funds these ships are not genuinely in the foreign commerce of the US, they are extensions of US government programs. The only ships that could arguable be considered in the foreign commerce of the US would be the handful of ships focused on cargo subject to cargo preference through Ex-Im bank financing which are pure commercial cargos. But even those are still dependent on government money to survive. None of these programs, either individually or collectively, have been successful in sustaining a commercially viable US flag merchant marine.
When we combine the two major parts of the foregoing discussion what emerges is a United States, a US economy, and US globalized production processes that are deeply interconnected with the rest of the world, and the maritime commons is a primary pathway for those interconnections. The US is a dominant global manufacturer and trader. We have one of the world’s highest standards of living, built on an international system of trade that the US itself is the primary architect and defender of. The US has been as successful as any country in the world, including China, at leveraging and exploiting the global maritime commons, and we have done so with no US flag merchant fleet of any significance. The US economy has never suffered supply chain disruptions as a result of foreign registered shipping being unavailable to carry foreign commerce. In short, the US has no overarching Maritime Strategy which addresses the US flag merchant marine’s role in our Nations maritime power, nor does one appear to be necessary given the obvious and overwhelming success we have experienced across the years between the end of WWII – the beginning of this age of globalization – and today. Therefore, returning to the original questions, The US remains the world’s dominate maritime power despite having no US flag merchant marine of any significance. And in answer to the second, a flag state merchant fleet is no longer necessary to be classed as a maritime power. A maritime power must be a globally significant naval power supporting the ability to first consistently and reliably exploit an international trading system across the surface of the ocean in furtherance of national economic well being, and second be a force in shaping the rule set and international institutions within which maritime trade is conducted. The US clearly meets that definition. In short, Mahan is in need of revision.
 A.T. Mahan The Influence of Seapower Upon History 1660-1783 American Century Series 1957 edition. Page 76
 Ronald O’Rourke. US Naval Institute Proceedings. Jan, 2012
 “Trade and American Jobs; The Impact of Trade on U.S. and State Level Employment” The Business Roundtable, Feb, 2007. http://trade.businessroundtable.org/trade_americanjobs.pdf
 For an excellent discussion of US manufacturing prowess see “Made in America Again” Boston Consulting Group. 2011 at http://www.bcg.com/documents/file84471.pdf
 “Assessment of the Marine Transportation System (MTS) Challenges” Volpe National Transportation Systems Center, USDOT. Dec, 2009
 See for example “Export floodgates are ready to burst” LNG Unlimited, Tradewinds, 14 May, 2012
 For a more detailed account see Stephen M. Carmel, “Globalization, Security, and Economic Wellbeing” Naval War College Review forthcoming winter 2012/2013
 US Maritime Administration data http://www.marad.dot.gov/library_landing_page/data_and_statistics/Data_and_Statistics.htm
 The Jones Act is the US cabotage law reserving for US built, US owned, and US crewed ships all cargo moving from one US port to another
 US Maritime Administration. http://www.marad.dot.gov/library_landing_page/data_and_statistics/Data_and_Statistics.htm
 Data on the US fleet complied from the US Maritime Administration statistics. Data on the foreign fleet is from UNCTAD Review of Maritime Transport, 2011 http://unctad.org/en/docs/rmt2011_en.pdf and Bloomberg “No Slower Steaming as Container Lines Run Like Clippers : Freight” http://mobile.bloomberg.com/news/2012-01-25/container-ships-at-clipper-speed-run-out-of-option-to-stem-losses-freigh