China has shipping to cripple U.S., warns HPU report

“China is testing us,” states a new report from Hawaii Pacific University that warns of a shortage of U.S.-flagged merchant ships and China’s ability to potentially withhold its own booming shipping to limit U.S. deliveries of consumer goods or troop supplies in a crisis.

An increasingly hostile China could use its growing domination of global shipping to enforce its strategic and military objectives, say the report’s authors — Patrick Bratton, chairman of the Department of History and International Studies at HPU, and retired Navy Capt. Carl Schuster, a visiting assistant history professor.

The United States is at risk of “sea strangulation” — also the name of the new report — in particular by China but also by other foreign powers, the two say .

“China now has the potential to implement a strategy we call ‘sea strangulation,’ cutting off the supply of critical military and civilian goods,” according to the 28-page report. “China could severely damage the U.S. economy, threaten our allies, hold our military hostage and perhaps even starve Americans in locations such as Hawaii without firing a single shot.”

While China continues to expand both its naval sea power and its fleet of merchant vessels — which are used in tandem by the government — the United States has adopted an “abandon ship” policy toward its merchant marine industry, Bratton and Schuster say.

The Merchant Marine crews civilian ships flying under the U.S. flag that are used to transport imports and exports during peacetime and serve as an auxiliary to the Navy during times of war, delivering both troops and supplies, the Navy said.

The Merchant Marine is a “shadow” of its former self, with about 80 U.S.-flagged ships engaged in foreign trade, the HPU report said. In addition, 85 to 90 vessels are engaged in Jones Act trade that requires U.S.-made, U.S.-flagged and U.S.-crewed ships for deliveries between domestic ports, according to the authors.

Over more than three decades, the number of U.S.-flagged vessels sailing in international trade dropped to its current level from 850, U.S. Rep. Duncan Hunter, R-Calif., said last year. Less than 2 percent of the world’s tonnage now moves on U.S.-flagged vessels, he said.

But the U.S. shipping industry also has received government subsidies and preferences for years that have failed to overcome the high cost of American labor and regulations.

Chinese vessels carry 90 percent of China’s seaborne trade, the HPU report noted. “Today, the 3,941 Chinese-flagged merchant ships engaged in global trade are active on all the world’s major trade routes,” the “Sea Strangulation” paper said.

The United States is especially vulnerable to hostile actions by foreign powers that could refuse to carry U.S. troops during a crisis and threaten to ban commercial shipments to U.S. states and territories such as Hawaii, Alaska, Guam, Puerto Rico and the U.S. Virgin Islands, the report said.

Bratton and Schuster advocate keeping the controversial Jones Act, expanding the Merchant Marine and strengthening the Maritime Security Program, which provides $3.1 million in annual subsidies to each American-flagged vessel used for transport in times of emergency.

A weak, American-flagged Merchant Marine “has become our Achilles’ heel,” the authors said.

However, Forbes in 2013 ran a story asking, “Is the American Merchant Marine a zombie?” citing cheap foreign shipping competition and reporting that the few remaining vessels that sailed under the American flag were, for the most part, not even under American control.

Mike Hansen, president of the Hawaii Shippers Council, sees the “sea strangulation” warning as being the “big, bad wolf theory of defending the Jones Act.”

“The argument’s totally without merit,” he said. “There are 40,000 ships in the world fleet. China’s got 4,000. There are still plenty left over to do whatever you need to do.”

About half of the U.S.-flagged ships in international trade are foreign-owned through a special U.S. trust arrangement, and all are foreign-built, Hansen said. A U.S.-build exemption from the Jones Act would allow U.S. ship owners to acquire foreign-built ships, register them under the U.S. flag and operate them in the domestic trade, Hansen said.

New ships built in South Korea and Japan are a fifth of the cost of comparable ships built in the United States, and reform of the Jones Act would “dramatically” lower capital costs, Hansen said.

Additionally, about 800 commercial ships are owned by U.S. corporations and individuals that fly what’s known as “foreign flags of convenience,” he said. Those ships could be placed on an international ship registry for national security purposes, he added.

“If you want to build up the fleet, that’s the way to do it,” Hansen said. “But it means you don’t impose U.S. crewing requirements on the ship.”

HPU’s Bratton said the “sea strangulation” theory has to be viewed in the context of scenarios “that are more likely to happen and ones that are more extreme, (which are) thankfully a little bit less likely.”

But the authors say the economic power of China’s huge merchant marine gives the country the ability to control shipping rates and service.

He said it’s possible to envision China declaring a “no-go” zone in the South China Sea and getting into a skirmish with the Philippines, and because China has control over mainland and Hong Kong shipping, those ships “wouldn’t be able to go into that area.”