Since the end of World War II, the United States has taken the lead in protecting the world’s shipping lanes and ensuring freedom of the seas. That era may be coming to an end, and the implications — including, but not limited to, higher costs for consumer goods — will be profound, says Michael Gravier, Ph.D., professor of Marketing and Global Supply Chain Management at Bryant University.
“You can't sustain a global society based on trade without open seas, at least not at the same level of quality of life that we have gotten used to,” says Gravier, who formerly was a U.S. Air Force supply chain logistics officer.
Ocean shipping has dominated trade for over 3,000 years. Even after a century-plus of air travel, more than 80 percent of all goods traded globally move by cargo ship.
The United States has a long history of fighting to keep sea lanes clear for commerce. The “shores of Tripoli” in the U.S. Marine Corps’ “Marines’ Hymn” references the battle against North African pirates in the First Barbary War in 1801-05. That fight has continued well into the 21st century, with the U.S. Navy engaging Somali pirates who have been attacking shipping from the Gulf of Aden to the Indian Ocean since the 1990s.
“You can't sustain a global society based on trade without open seas, at least not at the same level of quality of life that we have gotten used to."
The U.S. also has long been committed to ensuring freedom of navigation in international waters from the South China Sea to the Persian Gulf.
“For example, so much of the world’s trade goes through the Strait of Malacca, close to Singapore,” says Gravier. “Those places are very easy to close off and were guarded for centuries by local nations or threatened by pirates. After World War II, the United States said these are international waters and we are going to keep them open.”
Projection of power
The size and reach of the U.S. Navy, as well as its bases around the world, give the U.S. a unique ability, says Gravier.
“The global order we set up after World War II was very much to America’s favor, providing stability and trade,” he notes. “How can you argue with a world where Americans can go into a Walmart or a mall and see a variety of things that we can buy at such cheap prices?”
However, there are increasing signs of a waning U.S. commitment to keeping sea trade routes around the world free and safe, even as threats to global shipping increase.
“The global order we set up after World War II was very much to America’s favor, providing stability and trade. How can you argue with a world where Americans can go into a Walmart or a mall and see a variety of things that we can buy at such cheap prices?”
The ongoing war between Iran, the U.S., and Israel has crippled shipping through the Strait of Hormuz — a critical route for Middle East oil tankers — and has expanded to threats against sea trade via the Red Sea, including Iran’s Houthi allies in Yemen taking control of that country’s Red Sea coastline earlier this month.
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After the U.S.’s NATO allies in Europe refused to join the war against Iran, U.S. President Donald Trump suggested the U.S. might walk away from policing shipping lanes in the region, arguing that Europe is much more dependent on the Middle East for its energy needs than the U.S.
Shipping ‘toll booths’
The conflict also has prompted proposals for Iran, the U.S., or both to toll shippers in exchange for safe passage through the strait. In July, Trump proposed levying a 20 percent toll on cargo going through the Strait of Hormuz before backing away from the plan. However, Iran has reportedly charged some shippers $1 million or more in exchange for security guarantees.
If that arrangement is allowed to stand, similar “toll booths” will undoubtedly pop up in other parts of the world.
“It wouldn't surprise me if countries like India —which has a large navy of its own — started charging tolls to pass its shores,” Gravier says.
On some levels, the U.S. stepping back from its role of policing the high seas makes sense.
"Compared to most developed countries, the U.S. is much less dependent on global trade,” says Gravier, noting that it’s one of the few nations capable of feeding its own population and meeting its own energy needs.
“The U.S. is the most able to take care of itself,” he says, although the nation’s comparative independence also relies on free and easy commerce with Canada and Mexico, which itself is under the threat of a Trump-administration initiated trade war.
And while the U.S. Navy has an unmatched ability to project power globally, the strain of such operations has started to show, says Gravier.
“Historically, most of the U.S.’s international trade was with Europe, with a little from Asia,” he notes. “The volumes involved were much smaller, meaning that patrolling and enforcing open seas was much easier. When you look at where trade volumes are now, especially since China joined the World Trade Organization in 2001, it’s well beyond even the U.S.’s capability to assure open seas.”
The ripple effects of increased uncertainty around seaborne trade will most likely be felt by Americans in increased cost and decreased availability of manufactured goods, says Gravier.
“If we're not investing in keeping trade routes open for the whole world, we're probably just going to do it for ourselves,” says Gravier. “I don't think any Americans are going to go hungry, but I do think things will be more expensive if we don’t have that pool of cheap labor to draw on across the world."
“I don't think any Americans are going to go hungry, but I do think things will be more expensive if we don’t have that pool of cheap labor to draw on across the world."
U.S. manufacturing will have to rebuild in order to provide goods that were previously imported, he says, “but things won't be as cheap, especially if you want to pay American workers good salaries.”
Seeking calmer seas
It's not entirely wrong to say that the U.S. has been taken advantage of in its role of international policeman, says Gravier.
“People have had enough decades under the old way of doing things to find ways to game the system,” he says. "It cost a lot of U.S. jobs and definitely shifted manufacturing to China.”
However, he asks: Is it the best policy to restructure and reform or to completely abandon what we’ve built?
“Instability and uncertainty tend to make businesses hoard their cash and not invest until they see a clear path to getting a payoff for their investments,” Gravier says. “Right now, where's the clear path?”