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Atlantic
28-05-2025
- Business
- Atlantic
Who Killed America's Shipbuilding Industry?
Tom Stimson / FPG / Getty Despite being economically and militarily reliant on shipping, the U.S. has an astonishing lack of maritime capacity. 'He who commands the sea has command of everything,' the ancient Athenian general Themistocles said. By that standard, the United States has command of very little. America depends on ocean shipping. About 80 percent of its international trade by weight traverses the seas. The U.S. needs ships to deliver nearly 90 percent of its armed forces' supplies and equipment, including fuel, ammunition, and food. Commercial shipyard capacity is essential for surge construction of warships and sealift-support ships that transport equipment and troops in times of national emergency. Yet the U.S. has an astonishing lack of maritime capacity. Of the tens of thousands of large vessels that dot the oceans, a mere 0.13 percent are built in the United States. China, by contrast, fulfills roughly 60 percent of all new shipbuilding orders and has amassed more than 200 times America's shipbuilding capacity. Not only do most U.S. imports and exports travel on foreign-built ships, but those ships are owned and crewed almost exclusively by nine giant carriers based in Europe and Asia. By the end of 2024, these carriers had organized into three cartels that controlled about 90 percent of the U.S. containerized-shipping trade. From the July 1870 issue: The shipping of the United States After a ship arrives at a U.S. port, the crane that lifts containers from its cargo hold will probably have been made by a single Chinese corporation that produces 80 percent of all ship-to-shore cranes in the United States. China also makes 86 percent of the truck chassis onto which containers are loaded. Some 95 percent of the containers themselves are built in China. In the early days of the pandemic, some consequences of America's loss of control over ocean shipping were suddenly thrown into relief. Foreign cartels raised the cost of spot contracts on certain shipping lanes by up to 1,000 percent while making a record $190 billion in windfall profits. They also rejected hundreds of millions of dollars' worth of U.S. agricultural exports, preferring to race back to China with empty containers to fill with more profitable Chinese imports while American-grown food rotted on the docks. The national-security implications of America's lack of shipbuilding and shipping capacity are also becoming dire. Because so few commercial ships fly the American flag and employ American mariners, the U.S. faces a critical shortage of civilian sailors needed to crew Navy support vessels. In November 2024, the Navy confirmed that it would lay up 17 support vessels, some delivered as recently as January 2024, because of crew shortages. More alarming are shortages of support ships themselves. The U.S. would need more than 100 fuel tankers in the event of a conflict in the Pacific. It has access to about 15. This should never have happened. In the middle of the 20th century, the U.S. had a thriving, well-regulated ocean-shipping industry. Then the country turned its back on the system that made it all possible. At the turn of the 20th century, the ocean-shipping industry was plagued by a phenomenon known as 'ruinous competition.' Carriers engaged in ruthless rate wars, reasoning that even if they moved cargo often at below-average cost, this would at least help defray the high fixed cost of operating a freighter. But the strategy was unsustainable. Years of continuous losses pushed many in the industry to the brink of insolvency. To avoid total collapse, the carriers banded together to form unregulated cartels in order to reduce supply and fix prices. The cartels provided some stability, but at the public's expense. They offered secretive rebates to large operators that agreed to ship exclusively on cartel vessels, and they often refused to deal with shippers that did business with competitors. The cartels also engaged in price discrimination, offering steep discounts and rebates to big shippers—and recouping their losses by charging higher prices to smaller shippers that lacked the power to demand favorable terms. The resulting unequal prices and access to transportation services harmed smaller manufacturers, farmers, and ports. At the same time that cartels were squeezing U.S. shippers, the U.S. government was neglecting maritime policy. Since the end of the Civil War, the United States had refused to allocate public resources to shipbuilding, while foreign governments, especially the British, subsidized their shipping and shipbuilding steeply. By 1901, U.S.-built vessels carried a mere 8 percent of national trade, and U.S. shipyards were left with little business aside from naval contracts. The combined results of cartelization and government inaction were perilous. After World War I broke out in Europe in 1914, Great Britain, France, and Italy immediately diverted most of their shipping capacity to support their war efforts. Because the United States was so reliant on European shipping, freight rates soared. Foreign lines increased the rate to charter a vessel or ship key goods by about 20 times. The United States was effectively cut off from the rest of the world. As the maritime historian Salvatore R. Mercogliano noted in Sea History magazine, 'The domestic economy went into a recession as goods piled up on the docks and imports stopped arriving in American ports.' In response to the emergency, Congress passed a series of bills that poured public funds into bolstering U.S. shipping and shipbuilding capacity. Both the immediate and long-term results were spectacular. Extensive public investment led to the construction of more than 2,300 vessels for World War I and more than 5,500 vessels during World War II. The United States became the world's preeminent shipbuilder, assembling vessels at a scale and speed previously unheard of. The U.S. built the Liberty-class cargo ship SS Robert E. Peary, for example, in a little more than four days during the height of World War II. But Congress recognized that simply pouring money into maritime capacity was not enough. It needed to set market rules for ocean shipping, both to forestall destructive competition and to ensure that ocean carriers operated in the public interest. To do this, Congress created a new agency, the United States Shipping Board (later replaced by the Federal Maritime Commission), which was charged with regulating the industry like a public utility. Cartels were required to submit their operating agreements to the government, which in turn disapproved or altered agreements it found to be discriminatory or unfair. Carriers were not allowed to engage in price discrimination, offer deferred rebates, or employ other underhanded tactics that excluded competition. These laws were not always effectively enforced, but they were a significant improvement over the status quo. During the 1980s, however, Congress and Ronald Reagan abandoned the regulated-competition approach. Reaganites argued that the FMC, which at the time had a budget of just $11.8 million, had become a bloated bureaucracy, and reasoned that the U.S. could achieve economic efficiency and lower shipping prices if ocean carriers were not required to treat all shippers equally. To that end, Congress passed a series of bills during the Reagan and Clinton administrations that stripped the FMC's ability to regulate ocean-carrier cartels. The first-order effect was a return to the destructive competition and underhanded exploitation that had characterized the early-20th-century market. As the rise of containerization led to ever larger ships, fixed costs grew. This increased carriers' incentives to fill empty space on ships, even at steep discounts, because at least they would lose less money than if the space were unsold. Still, profits fell, and carriers turned to waves of mergers made possible by the federal government's simultaneous retreat from antitrust enforcement. In the seven years after President Ronald Reagan signed the Shipping Act of 1984, seven major carriers were snapped up by the competition, compared with just one during the entire period from 1966 to 1983. American-flag carriers, which had higher costs than foreign counterparts, were particularly hurt by the rate wars, especially after the Reagan administration withdrew subsidies that had helped U.S. carriers defray the costs of paying crews livable wages. Foreign corporations acquired American President Lines and SeaLand, the two largest U.S. carriers at the time, in 1997 and 1999 respectively, leaving the United States with no globally competitive ocean carriers. Meanwhile, shipyards in Asia began to enjoy massive government subsidies. From the April 1943 issue: We build ships The consequences were nearly identical to the pattern in the early 1900s. Shipbuilding all but disappeared in the United States. Today, the U.S. produces five or fewer large commercial vessels a year, and shipyards almost exclusively rely on naval contracts. Worse, at a time of escalating tensions with China, the United States has virtually no surge capacity to build naval or sealift ships. In fact, China builds all the commercial ships that the U.S. government contracts to provide military support. A bipartisan bill in Congress and a recent executive order seek to address the problem. The plans aim to levy tariffs on Chinese-owned ships and create new tax incentives to spur investment in shipyards, among other provisions. These ideas, though helpful, are too simplistic and small-bore. The central problem is not just inadequate investment or insufficient tariffs. It is the abandonment of a system of regulated competition that structures the industry to meet public purposes. Restoring a robust version of that system would revive the government's ability to direct cartels to operate in the public interest. Carriers would be required to offer all shippers, big and small, similar prices and terms of service. This would ensure that market competition focuses on who provides the best products at the best prices instead of who enjoys the favor of a handful of foreign cartels. Government regulation of carriers would prevent them from excessively raising prices in times of tight capacity and engaging in ruinous price wars during times of slackening demand. Combined with robust public investment in shipping, shipbuilding, port services, and mariner training, this system would re-create the market rules we once used to address the challenge of unregulated monopolies in ocean shipping. A new era of American maritime greatness is possible. Support for this project was provided by the William and Flora Hewlett Foundation.
Hindustan Times
02-05-2025
- General
- Hindustan Times
Quite a lot to crow about: Mridula Ramesh has some good news about chicken
'Chicken.' What ideas does the word bring to mind? I doubt 'saviour of Western civilization' tops the list. Yet, that's how Jerry Adler and Andrew Lawler described the chicken, writing in Smithsonian Magazine in 2012. The story they refer to, one of history's turning points, goes like this: In 480 BCE, the Athenian general Themistocles was on his way to what would become known as the Battle of Salamis. Earlier that year, the Persian ruler Xerxes I had attacked Greece. At Thermopylae, King Leonidas's Greek forces valiantly held back the vastly larger Persian army. When they were betrayed and the Persian army began to outflank them, Leonidas sent most of his army away and remained, with a small force, to slow the Persian advance. Their heroic sacrifice inspired and united the Greek city-states. Still, Greek morale was low ahead of the battle at Salamis. They knew they faced a stronger foe. Enroute, Themistocles and his army saw two roosters fighting. The birds were going at it — no fear, no hesitation, immersed in fierce combat. 'Look at them,' Themistocles reportedly said. 'They don't fight for their country, their gods, or glory. They fight only because neither will yield to the other. When animals are so brave, what's our excuse?' None, apparently. The Greeks prevailed. In the decades that followed, the Greek civilisation produced giants such as Socrates, Plato and Aristotle, whose ideas and values laid the foundations of Western civilisation. The rooster's fierceness is unsurprising; after all they, like the ostrich, are the closest living relatives of the Tyrannosaurus rex. Sadly, as Adler and Lawler note, 'the civilization that [they helped save] today honors those same creatures by breading, frying and dipping them into one's choice of sauce.' How did the human-chicken connection change over time? The modern chicken appears to have descended from the red jungle fowl native to India, South-East Asia and China. Chicken bones have been found in these regions dating back thousands of years. Researchers believe the fowl were drawn to the grains cultivated by ancient farmers, and were then domesticated. Scientists believe domestication began in Thailand, but the yellow skin of many domestic chickens, which comes from the grey jungle fowl found only in Peninsular India, complicates this theory. Fortunately, the origin debate isn't central to our story; what matters is that hens were well-adapted to the Indian climate. Over time, the chicken spread westward, probably as a ritual offering or for use in cockfights. They infiltrated human diets because they were easy to transport and rear, tasted delicious, and laid eggs. The evolving language around chickens reflects their transformation from fighters to food. Around 1000 CE, chicken meat got a boost after the Catholic church banned the consumption of four-legged animals during fasts. Over the next few centuries, as chicken farming became more widespread, proverbs such as 'Don't put all your eggs in one basket' and 'Don't count your chickens before they hatch' entered the English language. The term 'spring chicken', a clever nod to naivety, harks back to the days when chickens hatched only in springtime. Since humans favoured the tender meat of younger birds, 'no spring chicken' meant a person was past their prime. America's first chicken census, in 1880, recorded 102 million of the birds. In 10 years, that number had doubled. The invention of incubators enabled year-round hatching, calming price swings. With the rise of larger farmed flocks, the term 'pecking order' emerged in the 1920s, describing social power within organisations. As commercial chicken farms expanded, the demand for specialised chicken feed grew alongside. Chickens had graduated from scavengers to consumers. Commercial farms did not value the fighting spirit of their chickens. Indeed, a mutation that allows chickens to lay more eggs through the year also makes them less aggressive. So, today, to call someone 'chicken' is to label them a coward. This usage can be traced to the 17th century. Indians, meanwhile, have been eating chicken for a long time. Tandoori chicken, believed to have been invented by the restaurant chain Moti Mahal, may be much more ancient, with clay tandoors found at Harappan sites. Chicken finds frequent mention in Sangam-era poetry from about 2,000 years ago. And the 14th-century Moroccan traveller Ibn Battuta, in his writings, describes chicken pulao as part of a feast in Muhammad Bin Tughlaq's court. *** Why discuss chicken? Because it is the world's most-produced land-based meat, according to UN Food and Agriculture Organization data. Barring Europe and China (where more pigs are farmed, by weight), the rest of the world prefers chicken overwhelmingly. That may not be a bad thing. From a health perspective, a 100-gm roast-chicken dish offers 32 gm of protein and just 3 gm of fat. In contrast, a comparable serving of lean roast beef holds 11 gm of fat and 15% less protein. A 100-gm lean cut of pork roasted without fat has 30% less protein and twice the fat of chicken, while mutton has the worst protein-to-fat ratio. Of course, a good meal is about more than protein-to-fat ratios, but these statistics are still intriguing. On to economics, a 500-gm portion of boneless chicken costs 30% less than a comparable portion of beef or pork, and 66% less than a comparable portion of lamb. What about climate? Chicken would appear to be the greenest of the popular meats. Beef uses three times as much water as chicken (per 100 gm of protein produced), emits nine times as much carbon, and takes up 23 times as much land. Lamb is almost as bad, while pork, the closest climate rival, emits 30% more carbon, uses 70% more water and requires 50% more land than chicken. Now for a thought experiment. Consider a four-person urban Indian household that gets their 220 gm of daily protein from chicken. Switching to pork costs them ₹1 lakh more per year and exacts a higher price in terms of water, carbon and land. Switching to beef costs them ₹65,000 more per year, while raising their emissions by 36 tonnes of CO2-eq. That's as much as the total emissions of five Indian households. The switch also costs as much water as 14 families would use a year. Switching to lamb is expensive (an additional ₹3.3 lakh a year) and almost as climate-unfriendly as beef. The easiest way to get one's protein component and yet save carbon and cash would be to eat dal only (without rice), which is impractical. Replacing chicken with a combination of rice and dal reduces carbon emissions and land area used (an important consideration in India), but potentially uses more water (also an important consideration). Overall, if one prefers animal protein, chicken (and eggs) offer the best trade-off across cost, climate and land use. Industrial broiler chicken, which uses far less water than lentils and rice, is even more climate-friendly. But here's the trade-off: From the chicken's perspective, this sucks. What a comedown for the descendant of the T-rex and the saviour of Western civilisation. Chicken is cheap thanks to factory farming, but a broiler's (or layer's) life makes Dante's fifth circle of hell seem tame: Hatched, tossed into a trash conveyor if less than perfect or crammed into a closed shed, dosed on antibiotics for a few short weeks before being slaughtered. Sadly, climate impact rises with the degree of freedom. *** Can this change? An animal's climate impact is shaped by its food-conversion ratio (FCR), a measure of how many kg of feed it takes to add 1 kg of body weight. Cattle have an FCR of 8, chickens an FCR of 2; pigs and sheep fall somewhere in-between. FCR suffers in higher temperatures, B Soundararajan, chairman of Suguna Foods (one of the largest poultry manufacturers in India), tells me. So, the changing climate affects FCR, which will in turn worsen the climate impact of poultry. To lower climate impact, we can choose more-climate friendly feed, such as the insect-protein discussed in my last column (on eggs). Or, as in the past half-century, we can improve FCR through selective breeding. Another alternative is to dispense with farms altogether and eat lab-grown meat. This is the picture Isaac Asimov paints in his 1953 novel, The Caves of Steel, where yeast strains are bred into cake or chicken to feed a global population that has crossed 8 billion. Growing meat in a lab begins by harvesting stem cells from an animal and growing them in bioreactors. A chemical signal then causes these cells to transform into muscle, fat and other parts of meat, which are fashioned into desired cuts. We're getting to the point where lab-grown meat is getting positive feedback from consumers. Sensing an opportunity, more than 150 companies globally are working to expand this segment. My sense is, considering the trade-offs between cruelty, climate-impact and farmer livelihoods, lab-grown meat may work better as a substitute for beef than for chicken. This could be the future, and it is here. Could the chicken eventually bid adieu too, leaving just its essence behind? There's a lot to think about while tucking into that stew. (Mridula Ramesh is a climate-tech investor and author of The Climate Solution and Watershed. She can be reached on tradeoffs@
