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Strategic Competition Demands America Up Its Game in Maritime Commerce

Mark Kennedy

In today’s worldwide strategic contest, with peer competitors seeking to reshape global norms in their favor, it is imperative that the US bolsters the foundations of its economic power. One important element is maritime transport, the backbone of globalized trade and the manufacturing supply chain. It supports more than 30 million US jobs and 26% of its total GDP. Maritime transport carries more than 80 percent of global merchandise trade by volume. Some 95% of the cargo entering the US arrives by ship.

Post-pandemic bottlenecks heightened the focus on the resilience of supply chains. This has given greater priority to regional trade. The prosperity and security of all nations in the Western Hemisphere relies on the efficiency and resilience of ports in the Americas (North and South) relative to other regional trading blocs. Further, America has a large stake in whether ports within and beyond the Americas remain free and open. Ports owned by rival powers or those incorporating rival technologies that control rather than empower, risks supply lines being disrupted during periods of crisis.

The Wilson Center’s Wahba Institute for Strategic Competition (WISC) hosted a roundtable discussion to better understand how ports in the Americas are positioned today to efficiently facilitate global commerce and to assess their resilience during times of catastrophe, cyber-attack, or conflict. WISC assembled a range of experts in partnership with the World Trade Center of Miami. Our goal was to gather insights from those on the front lines, examine what actions can lead to improved efficiencies and resilience, and consider how government programs can better align to act on opportunities. This paper provides an overview of the seaborne commerce system and embodies the insights, challenges and suggested solutions shared during the roundtable.

Executive Summary

The national interests of the US require not only that its own ports are efficient and secure, but that global maritime systems remain free and open. The efficiency of maritime transportation is vital to economic competitiveness and growth. The more than 360 ports in the US are varied in terms of governance and mix of cargo transited, whether petroleum, bulk goods, containers, or people (via cruise ships). Their sources of funding are equally varied – federal, state, and local government support supplementing commercial revenues.  Demographic, economic, geopolitical, technological, and environmental trends are altering both the flow of commerce and the demands on maritime transport systems.

The national interests of the US require not only that its own ports are efficient and secure, but that global maritime systems remain free and open. The efficiency of maritime transportation is vital to economic competitiveness and growth.

While the trend toward larger vessels drove some improvements in the efficiency of maritime commerce in the past, the roundtable anticipated that further efficiency improvements will more likely come from improving intermodal connections and the adaptation of technology and automation. Its recommendations for policy makers in this regard included the federal government targeting investments based on an updated national freight strategy that reflected a post-pandemic surge in e-commerce. It also recommends a need for greater cohesion among modes of transportation. Roundtable participants also note that further investments in autonomation and cultivating the human capital are essential to facilitating maritime commerce.

Several factors make the need for resilience in maritime transportation more important. The International Maritime Organization (IMO), the United Nations’ global maritime regulator, is leading multiple efforts to address climate concerns as the shipping industry is exploring alternative fuels to meet IMO goals. It is essential that ports have the ability to screen cargo efficiently while also combatting transnational crime. Additionally, they must maintain their ability to support crisis response or, if necessary, force deployment. Increased cybersecurity threats and China having investments in more than 100 ports in 63 countries are elevating concerns about preserving free and open maritime commerce. The challenge is compounded by the lack of a prominent US industrial base in either global shipping or operating international ports. 

To address resiliency concerns, roundtable participants emphasized the need to convert land-based shipping of products to a combination of rail and ships to achieve significant environmental benefits. The roundtable also stressed the need for ports to complete resiliency planning. For the US and its allies to offer more meaningful support for infrastructure investments to support maritime commerce globally, the roundtable noted that geo-strategic considerations should be prioritized in providing such support. Additionally, it recommended a greater focus on encouraging private capital investment in such infrastructure.

...roundtable participants emphasized the need to convert land-based shipping of products to a combination of rail and ships to achieve significant environmental benefits.

US National Interests Relative to Seaborne Commerce

The perspectives and recommendations contained herein aim to help policy makers in Washington DC promote strategies that make ports more of a competitive advantage for the nation and hemisphere. With that goal in mind, the roundtable focused on how maritime commerce aligns with the US national interests. Priority interests considered include:

  • Efficient maritime transportation network within the US to make imports less expensive, exports more competitive, and supply chains more reliable.
  • Efficient maritime network within the Americas, especially with our free trade agreement partners, to make the Americas more competitive relative to other regional trading blocs.
  • Advancing climate goals, resiliency, and energy transition.
  • Security:
    • Efficiently evaluating the flow of goods to ensure they do not threaten national security.
    • Secure ports that do not facilitate transnational crime or corruption.
    • Resilience of ports to assist the community during natural disasters and with military deployments.
    • Ensuring a free and open international maritime system.
    • Maritime commerce free of control by rivals.
    • Ports powered by technology meant to empower, not control.

Factors Impacting Maritime Commerce

Importance of Seaports to Economy

Port performance has a ripple effect nationwide, not just for the port of entry. The cost of any delays is a financial burden passed on to other parts of the supply chain, such as shipping, trucking or rail rates, and finally to consumers. All parts of the economic value chain are affected by the efficiency and resilience of ports.

Port facilities vary widely in terms of productivity, footprint, customers, and governance. The more than 360 seaports in the US and many more in other countries reflect the commerce they facilitate. They differ widely. This is reflected in which ports rank as the largest, depending on the metric chosen. The largest ports in the US measured by cargo tonnage are those that handle large quantities. In liquid bulk cargo, such as petroleum or chemicals, Houston comes out on top. In that the US is now a net exporter of energy, such ports are vital to national competitiveness in this sector. In tonnage for dry bulk cargo, such as grain or coal, the port of South Louisiana in New Orleans leads as it facilitates shipping the heartland’s products down the Mississippi. The US also has a trade surplus in agriculture. Approximately 35 percent of total volumes and more than 60 percent of commercial value is carried in containers. In terms of commerce shipped in containers, Los Angeles, Long Beach, and New York and New Jersey are the largest US ports. When you think of ports supporting cruise ships, Miami, a roundtable participant, and Port of Canaveral near Orlando come out on top.

Yet whatever their specialty, ports often conduct a variety of operations, even if conducted at different terminals within the port. For example, Port Miami, being the US’s closest deep-water port to the Panama Canal, is also one of the largest container ports in the US It has trade connections with 100 nations and 250 ports across the globe.

The condition and efficiency of ports are important to local commerce and competitiveness in global markets. In the short run, inefficient ports can lead to shortages of essential goods and higher prices, as we saw early in the pandemic. Longer term, inefficient ports will result in slower economic growth and less employment as higher costs for importers and exporters steer business elsewhere.

The condition and efficiency of ports are important to local commerce and competitiveness in global markets. In the short run, inefficient ports can lead to shortages of essential goods and higher prices, as we saw early in the pandemic. Longer term, inefficient ports will result in slower economic growth and less employment as higher costs for importers and exporters steer business elsewhere.

Funding for Port Infrastructure

Just as there is great diversity of governance of ports, with some private and others public, so too are their sources of funding. Funding for ports comes from federal, state, and local support, as well as private sector revenue streams. Within the US federal government, a dizzying array of federal agencies are involved in funding and regulating seaborne commerce. Concerns were raised in the roundtable that because “freight doesn’t vote,” related funding often is overlooked.

Despite some progress toward port upgrading, port security, and supply chain maintenance, US port infrastructure is still in less-than-optimal condition, especially given the economic and strategic importance of the industry. The American Society of Civil Engineers (ASCE) rated the quality of US ports at B- in 2021. They noted an estimated funding gap over the next decade of more than $12 billion for waterside infrastructure such as dredging, with additional billions needed for land-based port infrastructure.

The roundtable also discussed the benefits of raising community awareness of the importance of freight movement to the economy through such actions as port open houses and hosting school groups. Suffice it to say that sufficiently funding maritime commerce, including the recommendations herein, is vital to prosperity and security. 

Trends Impacting Shipping Volumes and Patterns

Current demographic, economic, geopolitical, technological, and environmental trends will impact overall shipping volumes and will shift patterns of trade flows.

Demographic. Declining populations in China and much of Europe and rapidly growing populations in Africa and India will impact shipping patterns, including the relative importance of ports in the US.

Economic. Relative competitiveness of regions shifts the location of production and material sourcing. One example is rising wages in China that reduce its competitiveness, resulting in manufacturing reliant on low-cost wages shifting to Southeast Asia. This has made reaching eastern US ports via the Suez Canal more competitive relative to traditional trade routes.

Geopolitical. Greater tensions between the US and China have resulted in increased restrictions on trade, such as with advanced semiconductor equipment, that require a shift in supply chains and therefore trade flows. Companies are increasingly addressing any overreliance on China or other nations, diversifying their sourcing. One example is Apple, now looking to India as an added source of production for its iPhones. As this is resulting in a portion of production shifting to South and Southeast Asia, this adds to the trend of greater shipping through the Suez Canal to eastern US ports. The reshoring of select production, in part driven by government subsidies for chips and green technologies, will also alter trade flows. So will friend-shoring. With the greater flexibility near-shoring provides, this holds the promise of greater flows of commerce within the Americas.   

Technological. Even as greater usage of advanced manufacturing / 3D printing and automation technologies makes onshoring more economical, the need to import raw materials for such production continues. The rapid expansion of digital commerce during the pandemic put a lot of pressure on freight infrastructure as it heavily focused on speed to market and speed to the consumer. Much of this commerce comes in by port and moves via distribution centers. Ports that aligned with an efficient extended distribution network will benefit from the rise of digital commerce.

The rapid expansion of digital commerce during the pandemic put a lot of pressure on freight infrastructure as it heavily focused on speed to market and speed to the consumer. Much of this commerce comes in by port and moves via distribution centers. Ports that aligned with an efficient extended distribution network will benefit from the rise of digital commerce.

Environmental. As the world’s energy transition advances, it should be accompanied by a shift in trade flows among fossil fuels and the critical minerals for electric vehicle production. In that two-thirds of the US population lives east of the Mississippi River, with today’s greater focus on carbon footprints, we may see increased volumes coming into eastern US ports to reduce the need for cross-continent shipping. In terms of their greenhouse gas (GHG) emissions, rail and waterborne transport have significantly lower emissions than aviation and land transport. Therefore, a greater environmental focus could spur more maritime transport. With global warming advancing and Arctic Sea lanes becoming more viable, they could draw traffic since they are 30–50% shorter than taking the Suez Canal, reducing Asia to America travel time by more than 2 weeks, depending on vessel speed.

After US ports processed a record 50.5 million shipping containers in 2021, in 2022 they experienced “plunging exports, falling freight rates and mounting suspense over whether the industry is headed for a price war.” Except for the ups and downs caused by the pandemic and its aftermath, the longer-term trend in shipping volumes has been up. While it is always difficult to forecast the future, collectively there is no evidence that shipping activity will diverge from its historical growth trends.

Given the urban location of many ports and continued urbanization placing demands for spaces for development, the physical footprint of many ports in the US and in other nations has little room to expand. While new ports may add capacity, especially in developed countries, increased efficiency at current ports is going to be vital to accommodate larger volumes.

Factors that Impact Efficiency

Ability to Receive Larger Ships

The trend towards larger ships in recent years has been a key development in striving for greater productivity and efficiency. Maximum vessel capacity has doubled over the past 15 years, from 10,000 20-foot equivalent units (TEUs) in 2005 to almost 20,000 TEUs today. The expanded Panama Canal opened for business in June 2016. It was as much of a game changer as the opening of the original canal, doubling the canal’s capacity by accommodating much larger container vessels. Ships that were the maximum size that could fit through the original Panama Canal were dubbed Panamax. With the advent of the neo-Panamax vessels, classic Panamax ships were relegated to intra-regional and intra-Asian trades routes, north-south routes, and routes to and from Africa, Latin America, and Oceania, as well as transatlantic services. The larger neo-Panamax vessels are mostly used on east-west routes through either the Panama or Suez Canals. Ultra-large container ships (ULCS), an even larger class, are mainly deployed on routes from Asia to Europe and North America’s west coast ports.

The result was that ports in America had to decide whether to expand to accommodate these larger vessels. This spurred a great deal of dredging to a channel depth of 45 feet or more, as well as raising the heights of bridges, including raising the navigational height of the Bayonne Bridge in New Jersey from 151 feet to 215 feet. The surge of cargo coming off larger vessels also strains outdated landside infrastructure. Berths and cranes also required investment to keep pace.

The roundtable did not anticipate another significant spurt in efficiency due to larger ships in the future. Indeed, recent trends toward a greater focus on the resilience of supply chains would seem to push back against the drive for larger ships.

Operational Efficiency of US Ports

Just as there are many types of ports, efficiency can be measured many ways depending not just on the type of cargo, but on whether you are the shipping company, importer, or exporter. One of the more rigorous studies of port efficiency is the Container Port Performance Index produced by the World Bank and S&P Global Market Intelligence. It measures port efficiency as it relates to container ships from the perspective of the shipper. In that container ships are normally scheduled to complete a fixed sequence of port calls with berthing scheduled in advance during specific time windows, the index determined that the best gauge of efficiency was time in port. If a ship is delayed in port, it will have to press to travel faster to its next destination to make up time, using more fuel, with economic and environmental consequences. Shippers may also incur additional contingency costs.

Several factors determine port efficiency – channel access, water depths, port width, pilot or tug availability, efficiency of clearances and service scheduling, readiness and efficiency of the mooring gang, availability and efficiency of cranes, timeliness in clearing of the loading dock, refueling, and conducting of needed repairs. Several of these factors can be impacted by the level of the adaptation of technology, together with the efficiency and flexibility of the workforce.

Efficiency of Intermodal Connections

A complex web of transportation connections radiates among and beyond seaports. Smaller intercoastal and inland ports facilitate movement of goods between local communities and major seaports. The intermodal transportation that moves cargo among different kinds of transport modes are vital to the efficiency of ports. These include rail tracks that connect either directly to a port or near-dock or off-dock rail connections that require shuttling by truck. For truck traffic from the port, the number of stoplights between the port and freeways has a big impact.

A complex web of transportation connections radiates among and beyond seaports. Smaller intercoastal and inland ports facilitate movement of goods between local communities and major seaports. The intermodal transportation that moves cargo among different kinds of transport modes are vital to the efficiency of ports.

Often, warehousing or consolidation of loads are required before transshipping, such as what occurs at the distribution centers in the Lakeland, Florida area that receive freight from the Port of Savanah, Port Jacksonville, Port Miami, Port Everglades, and others. At times, this transportation system intersects with air transportation. Inland ports can greatly enhance the productivity of connected seaside ports. So can bottlenecks that impact trucking. While they can be miles away from a port, they can still impact port efficiency. The efficiency of the collective logistic systems has a profound impact to the competitiveness of a seaport. A port’s success relies on infrastructure outside its gates, which is often congested or in poor condition. For example, just 9% of intermodal connector pavement — the portions of roadway that connect a port to other modes — are in good or very good condition.

Adaptation of Technology and Automation

The rapid advance of technology is transforming every human activity. It is no different with maritime commerce. It is vital that US ports adopt new technologies to reduce wait times at docks, boost efficiency, improve resilience, and increase security.

Significant productivity increases are possible, given significant advances and the declining costs in network connectivity, availability of cloud services, systems integration, and device hardware. More efficient and transparent processes are enabled by greater use of the Internet of Things (IoT), radio-frequency identification (RFID) tagging, Global Positioning System (GPS), big data analytics, robotics, drones, remotely operated vehicles, machine to machine communications, 3D printing, and collaboration tools. These can lead to improvements in fleet routing, cargo processing, tracking and management, predictive maintenance, smart energy management, supply chain and vendor optimization, compliance, facilitation of remote work and more. Increased electronic visibility allows better advanced decision-making.

Other Factors

Clearly the efficacy of the procedures employed by the public agencies involved in container clearance makes a big difference. Inefficiencies or nontariff barriers driven either by corruption or protectionism will result in higher costs, reduced competitiveness, and therefore, lower trade. A lack of predictability and reliability, two variables vital to shippers, will be highly detrimental to the attractiveness of a port.

As with most activities, scale drives efficiency. The large Asian ports have long benefited from their scale. Ports that maintain or achieve scale will benefit.

Recommendations Regarding Efficiency

Target Investments Based on Updated National Freight Strategy

Aligning investments with an updated national freight strategy is imperative, given the multitude of transportation modes, whether on the waterside or landside of seaport facilities, and factors impacting their collective efficiency, as well as the myriad units of federal, state and local governments involved in some aspect of the maritime transportation system. The national freight strategy must consider the optimal interplay among modes and units of government vital to ensuring a maritime transportation system that is a competitive advantage to the nation. To strengthen the entire freight system and reduce congestion that is costly to the economy when moving goods, the various public and private sector actors must cooperate more closely to improve freight and landside connections. Such a national freight policy should consider cargo flowing through ports, both large and small, and the integration of existing connectors between the interstate highway system and intermodal facilities, rail, and other seaports.

Aligning investments with an updated national freight strategy is imperative, given the multitude of transportation modes, whether on the waterside or landside of seaport facilities, and factors impacting their collective efficiency, as well as the myriad units of federal, state and local governments involved in some aspect of the maritime transportation system.

While a National Freight Strategic Plan (NFSP) was issued in 2020, and subsequent studies of national supply chains have commenced following the pandemic, an updated integrated plan incorporating post-pandemic changes, including expanded e-commerce, is needed. Further, the impact of NFSP depends on how it coordinates and aligns federal, state, and local actions toward achieving key strategic priorities to improve competitiveness. While such a national freight strategy would not direct local action, it could help advance more freight-friendly actions by local Metropolitan Planning Organizations (MPO). Roundtable participants recounted experiences of MPO redirecting money allocated to address an acute shortage in truck parking to instead fund a community park and ride and decisions to make turn radiuses incompatible with efficient freight transport.  Perhaps stricter guidelines for tapping into federal funds for freight efficiency projects would ensure they truly improve freight movement instead of being diverted to simply freight-adjacent investments.

Fund National Freight Strategy

Ideally, the strategy would pinpoint priority unmet needs in intermodal freight (highway, maritime, rail) vital to port efficiency and cargo mobility. Alleviating these bottlenecks would undoubtedly have significant economic and environmental paybacks They should be promptly funded.

Advance Automation

The US generally trails other nations in the adaptation of automation at ports. As of 2021, around 53 container terminals, representing some 4% of the total global container terminal capacity, were automated. All had automated their yard operations, using automated rail mounted gantry, rubber-tired gantry, or other automated stacking cranes. Around a third used automated transfers from the quayside to the yard, either with automated guide vehicles, automated straddle carriers, or other automated transfer equipment. None of the automated container terminals had completely automated quay cranes. The majority were new terminals. Only a few existed as manual terminals before becoming automated. Of these terminals, 32% were in Asia, 28% in Europe, 13% in Oceania and 11% in the US. 

The US has only about a third as many automated ports as Asia (11% vs 32%) or Europe and trails much smaller Oceania in terms of port automation. This is likely a factor in why many of its ports rank so low on the above referenced Container Port Productivity Index. Clearly, embracing automation has implications for the workforce and port communities. It requires recognizing the social costs and dialogue among terminal operators, trade unions, and governments. Europe’s greater embrace of automation suggests that addressing these concerns is consistent with a greater embrace of the benefits of technology.

The US has only about a third as many automated ports as Asia (11% vs 32%) or Europe and trails much smaller Oceania in terms of port automation. This is likely a factor in why many of its ports rank so low on the above referenced Container Port Productivity Index.

Non-intrusive inspection (NII) technology at our major ports of entry offers opportunities to reduce staffing requirements while enhancing facilitation and security.  As Artificial Intelligence (AI) is layered onto these machines in the cargo arena, they promise further efficiencies in targeting efficacy and enforcement. More consistent funding and formal US Customs and Border Protection (CBP) criteria for such algorithms would enhance the opportunity for long-term planning and increased deployment of NII. 

The US is moving forward with autonomous vehicles. The National Conference of State Legislatures reported that Arkansas became the 30th state to allow autonomous vehicles through legislation, with several more states permitting autonomous vehicles by executive order. US Transportation Secretary Pete Buttigieg observed that policy frameworks had not fully caught up with technological developments and suggested that federal policy on autonomous vehicles will undergo "meaningful" developments in the coming years. Impacting the movement of interstate freight also requires further development of advanced telecommunications along key corridors.

Address Human Capacity Gap

The operation of shipping vessels, ports, and other forms of transportation critical to an efficient maritime transportation system requires skilled labor. As with many industries today, it also requires a greater focus on cultivating talent.

The operation of shipping vessels, ports, and other forms of transportation critical to an efficient maritime transportation system requires skilled labor. As with many industries today, it also requires a greater focus on cultivating talent.

The pandemic made challenging jobs aboard vessels less attractive. The lack of stability for ship crews was accentuated by scheduling issues and backlogs in trying to enter ports. COVID restrictions and the shortage of international flights left hundreds of thousands of seafarers stranded at sea, far beyond the expiration of their contracts.

Similar shortages, particularly during the pandemic, were experienced at ports and with their multi-modal partners among truck drivers and railroad workers.

Even as such shortages have “turbocharged” the digital transformation of ports, the availability of talent to facilitate this transformation is in short supply. This is common across many industries, but particularly challenging for ports as “maritime logistics is rarely the first career choice of high-skilled and digital talent.”

A roundtable participant noted several high school, college and university programs with which he was engaged are stepping up to provide training uniquely relevant to maritime transportation. Examples include Miami Dade High School’s Prologis Trade and Logistics Academy, Miami Dade College’s School of Global Business, Trade and Transportation, Florida International University’s Master of Logistics Engineering and the University of Miami’s 3D Lab at the School of Engineering working with one of the three largest concentrations of state of the art equipment to make Miami a potential manufacturing hub for 3D printed products at the doorway to export. Such programs contribute greatly to providing the talent that will drive seaborne commerce.

It is important that government agencies regulating the flow of commerce are properly staffed. A study by the University of Southern California estimated that for “every additional [CBP] officer, if placed at ports of entry with high traffic volume would, on average, lead to 33 additional jobs being stimulated indirectly in the US economy.”

Factors that Impact Resiliency

Increased Environmental Expectations

Maritime commerce must face up to the impacts of climate change, as well as how it can contribute to climate action and the energy transition.

Research from the University of Oxford’s Environmental Change Institute finds that “nearly nine in ten major ports globally are exposed to damaging climate hazards, resulting in escalating economic impacts on global trade.” The study found that the “largest climate risks are faced by large ports in Asia, the Gulf of Mexico and those in Western Europe.” One climate risk ports need to address is projected rising sea level. Relocating ports to higher ground will be cost-prohibitive in most cases, but port owners may decide to raise docks or relocate some facilities offshore. Connecting modes, such as on-dock rail and service roads, could similarly require updates to continue providing access to ports.

The Port of Long Beach’s Climate Action Planis an example of how some ports are acting to address adaptation to climate change, including the installation of concrete barrier walls to protect against flooding, and addressing environmental concerns.

Overall, shipping makes up about 3% of global greenhouse-gas emissions.  While the maritime sector was not included in the Paris Agreements, policies advancing more sustainable operations are well underway. While many ports have committed to lower the carbon footprint of their own operations, the major factor at play in maritime commerce is completing an energy transition among shipping vessels. This is reflected in the fact that when the Port of Los Angeles announced a partnership with the Port of Shanghai and others active in C40 Cities, a global network of mayors working collaboratively to address climate issues, its goal was focused on shipping between ports. The partnership seeks “to create the world’s first transpacific green shipping corridor between ports in the United States and China.”

While many ports have committed to lower the carbon footprint of their own operations, the major factor at play in maritime commerce is completing an energy transition among shipping vessels.

The IMO is targeting the reduction of CO2 emissions from international shipping by at least 40% by 2030 and a 70% by 2050, while seeking to reduce GHG by at least 50% by 2050 compared to 2008. The IMO is not sitting idly by just hoping that these goals are achieved. The IMO energy efficiency design (EEDI) index sets standards for new ships and associated operational energy efficiency measures for existing ships. The new IMO 2020 regulation brings down the Sulphur cap in fuel oil for ships from 3.50 per cent to 0.50 per cent.

A new IMO 2023 regulation, effective at the beginning of 2023, has two parts: 

The Energy Efficiency Existing Ship Index (EEXI) is a rating system to assess the energy performance of vessels currently in operation. It uses energy consumption data, along with speed, power, and engine size based on a vessel’s specifications. The IMO will impose penalties and/or restrictions on vessels whose EEXI rating is below required standards.

The Carbon Intensity Indicator (CII) will rank and monitor the efficiency of vessels. It will link greenhouse gas emissions and the quantity of cargo carried with the distance travelled to grade vessels from A (good) to E (poor).  A corrective action plan would be put in place if a vessel receives a D grade for three years, or an E grade for one year.

As shippers seek a greener alternative to bunker fuel for ocean vessels, methanol appears to be taking the lead.

As shippers seek a greener alternative to bunker fuel for ocean vessels, methanol appears to be taking the lead. “Proponents say methanol has several advantages over other low-carbon or no-carbon fuels for shipping. It can be stored at room temperature, while hydrogen and ammonia, the other two green-fuel candidates, need pressurized tanks and face a range of safety and technical concerns. And while ship engines that can burn hydrogen and ammonia are still being developed, about 100 ships that can burn methanol have been ordered by some of the industry’s biggest names.”

And while ship engines that can burn hydrogen and ammonia are still being developed, about 100 ships that can burn methanol have been ordered by some of the industry’s biggest names.”

Further, the United Nation’s Sustainable Development Goal 14 focused on "Life below water" with a goal to "Conserve and sustainably use the oceans, seas and marine resources for sustainable development" is driving action. This includes the IMO requiring vessels to install ballast water treatment systems no later than the first renewal of their International Oil Pollution Prevention (IOPP) certificate. Additionally, it means the European Union (EU) requiring large commercial seagoing vessels flying an EU member state flag to only be recycled in designated ship recycling facilities.

Cargo Screening /Combatting Transnational Crime

Keeping goods that could pose a threat to the nation, such as radioactive material or drugs, from passing through while still allowing an efficient flow of goods is an important priority. Just as 9/11 enhanced increased scrutiny of luggage in airports, so too has the focus on cargo coming through ports. This challenge is more difficult given efforts by organized crime groups to infiltrate ports to facilitate theft or illicit goods transiting without detection. The US is not only focused on security arrangements within its own ports, but also those of partner nations. This is why one of the roles of US combatant commands is to offer assistance to partner nations in bolstering their port security capabilities.

The CBP Container Security Initiative (CSI) is an example of a multilayered security programs that also benefits facilitation at certain strategic international ports. CSI depends on strategic agreements with host nations for targeting and examinations, requiring adequate insider threat controls at locations where partners assist CBP Officers in the process of executing inspections. Attention must be paid to ensure that increased Chinese investment in ports and terminals does not impact the efficacy of these security arrangements at foreign ports, and that these programs are better integrated into US strategic foreign policy. This is best achieved with close coordination among CBP and the Departments of State and Defense (in particular, TRANSCOM).  

Ports’ Role in Supporting Crisis Response and Force Deployment

Companies and countries are implementing other policies to address security concerns in a manner that expedites the movement of their products. For example, at the Port of Brownsville, CBP has implemented a process of conducting regionalized review of cargo images through a command center approach to review.  This regional command center approach has led to a 30% savings in CBP Officer time, and a 25% increase in cargo traffic throughput.  A port in Guatemala has also piloted the concept of providing images of their containers taken before the ship leaves port to CBP via a direct, port-to-port data feed. This facilitates expedited CBP review, especially important where time-to-table matters as with fruit and vegetables.  

The National Port Readiness Network (NPRN) is a cooperative designed to ensure readiness of commercial ports to support force deployment during contingencies and other national defense emergencies. The NPRN includes nine federal agencies and 18 ports along both coasts and in Guam. Each of these ports has a Port Readiness Committee with representatives from each federal agency and chaired by the US Coast Guard Captain of the Port. The committee provides the means to coordinate efficient port operations during peacetime and national defense emergencies.

Risks to Free and Open Maritime Commerce

The infrastructure program of China seeks to “belt” sources of supply and ensure “roads” lead to and from its markets and Japan’s Free and Open Indo-Pacific strategy seeks to ensure east-west channels of commerce flowing to and from Japan, instead of the region solely focused on north-south commerce with China. So too it is natural that the US would seek to ensure free and open maritime commerce globally.  In this regard, US officials are concerned that China investing in a growing array of overseas port infrastructure could make commerce less free and open. Beijing now has investments in more than 100 ports in 63 countries. Given China’s growing tendency to fuse political, business, and military interests under the Chinese Communist Party (CCP) umbrella, port and select other infrastructure investments are increasingly viewed in the US and allied defense communities as boosting the CCP’s potential for power projection.

US officials are concerned that China investing in a growing array of overseas port infrastructure could make commerce less free and open. Beijing now has investments in more than 100 ports in 63 countries.

Risks of concern include the CCP’s ability to disrupt US supply lines and reduce contingency options for its military during periods of crisis or conflict, while possibly expanding the CCP’s supply lines. It is natural to expect that the PLA Navy (PLAN), whether performing an antipiracy mission in the Gulf of Aden or engaging in military diplomacy that advances the political relationships between China and host countries, would procure commercial husbanding services for fuel and supplies at hundreds of ports around the globe, including many Chinese-invested ones. The concern is that during a time of conflict, Chinese ownership may make those ports inaccessible to American vessels and more likely to be accessible to Chinese vessels than would be the case without such ownership. Port or terminal ownership also gives more options for prepositioning supplies and transiting goods without detection.

As with China’s recent support of a Cambodian naval port expansion, a strategically important military outpost on the Gulf of Thailand, the US military is concerned that even if this does not support PLAN activities, that it still offers an intelligence gathering outpost in a vital geography, whether gathered by human observation or embedded electronic monitoring. There are similar concerns with commercial ports.

Port ownership also accentuates concern about submarine (undersea) cables, vital to communications among countries. An aggressor would likely target the most vulnerable parts – the last mile of the cable and its landing station. For example, all of Greece’s submarine cables share Athens as their landing point. With China controlling the nearby port of Piraeus, its ability to threaten those cable systems is a concern.

Further, concerns raised by some in the EU include “the apparent pro-China course of Greece since COSCO’s (a Chinese state-owned enterprise) investment in the Port of Piraeus as an example” of how it confers political influence. They see “gaining political leverage over Greece as an objective of COSCO.”

Cybersecurity Risks

Port data security is a growing and increasingly pressing challenge for port officials in the US and abroad. The Jones Walker LLP 2022 Ports and Terminals Cybersecurity Survey, which included responses from 125 senior executives of ports and maritime terminals across the US, noted cybersecurity as a top concern. Seventy-four percent of respondents indicated that their systems or data had been the target of an attempted or successful breach within the past year. Participants blamed solo hackers and organized criminal groups for most incidents, but listed nation-state affiliated groups as a close third. 

Given the multiple possible use cases for hacked international port data, the actions of state actors (as opposed to ransomware attacks carried out by individuals or criminal groups) have been of greatest concern recently to many US government and military officials, prompting several Congressional testimonies and inquiries by the US-China Security and Economic Review Commission.In 2023, the Department of Transportation Maritime Administration issued an advisory alerting maritime stakeholders of potential vulnerabilities to maritime port equipment, networks, operating systems, software, and infrastructure. Of specific concern were certain foreign companies that manufacture, install, and maintain port equipment. Though not mentioned explicitly in the advisory, technologies such as Chinese owned LOGINK, a global logistics information platform, NucTech scanners, and ZPMC port cranes, are increasingly viewed in Washington as introducing vulnerabilities into global maritime information and operational technology systems.

Officials are worried that even without Chinese miliary involvement in port investments, all Chinese companies can be required by Chinese law to share sensitive data from US and foreign ports with CCP leadership, which would then use key takeaways to advance any number of commercial, strategic, or military objectives. The US-China Security and Economic Review Commission has warned that China is interested in gathering information on trends and early warnings for US logistics, since the US Department of Defense uses commercial transportation and ports around the world to ship military equipment. Additionally, as US Naval War College assistant professor Isaac Kardon explained, “If you control the information, you can move things around without others knowing, or jumble up someone else’s information.”

Officials are worried that even without Chinese miliary involvement in port investments, all Chinese companies can be required by Chinese law to share sensitive data from US and foreign ports with CCP leadership, which would then use key takeaways to advance any number of commercial, strategic, or military objectives.

International Infrastructure Support Insufficient, Lacks Geostrategic Focus

The Export–Import Bank of the United States is the same size as Finland’s. China’s EXIM bank is ~50 times bigger. Prodded by the scale of China’s Belt and Road Initiative, the US amplified previous efforts with the formation of the US International Development Finance Corporation (DFC). Yet the DFC is a fraction of the combined EU Development Finance Institutions (DFI), either of Japan’s two internationally focused banks or China’s efforts.

Prodded by the scale of China’s Belt and Road Initiative, the US amplified previous efforts with the formation of the US International Development Finance Corporation (DFC). Yet the DFC is a fraction of the combined EU Development Finance Institutions (DFI), either of Japan’s two internationally focused banks or China’s efforts.

When the Solomon Islands – China security agreement was signed in April 2002, it was met with great alarm by the US, Australia, and other partners in the Pacific. The deal welcomed China’s armed police, military personnel, and other law enforcement forces to the Solomon Islands to ensure domestic “social order,” while also allowing China’s ships to stop over and carry out “logistical replenishment.” 

Even as President Joe Biden hosted the first US-Pacific Island Country Summit last fall, seeking to repair Pacific relations, the Solomon Islands remains on the list of countries where the DFC is not allowed to provide support because they are deemed high income. This reflects American engagement in international infrastructure support failing to fully take into account geostrategic goals, a concern of the roundtable. DFC is also prohibited from supporting Antigua and Barbuda, where Chinese funding and a Chinese construction company recently built a new airport.

Further evidence of a lack of strategic focus on global ports, in a key logistic chokepoint vital to US commerce such as the Panama Canal, which hosts several Chinese state-owned company projects. Companies from the US and allied partners failing to prioritize infrastructure investments in Panama allowed China to fill the vacuum.

US Lacks Port Management Industrial Base

Gaps in its industrial base may be part of what contributes to America finding itself lagging in these areas of critical infrastructure. None of the world’s top 10 shippers or top 10 port operators are American owned. The third largest shipper and the second and fourth largest port operators are Chinese state-owned enterprises (COSCO and China Merchants Group). The sixth largest port operator – Hutchinson – is based in Hong Kong. None of the world’s top 10 international contractors is American (Fluor and Bechtel rank 15th and 19th).

The US joined its G7 partners in launching the Partnership for Infrastructure and Investment (PGII). Given the gaps in the US industrial base, greater collaboration with allies will likely be required to achieve geostrategic objectives such as ensuring free and open seaborne commerce. This will be complicated by the parochial nature of the US international infrastructure support activities.

Recommendations to Enhance Resiliency

Convert Land Transport to Rail / Seaborne Transport for Environmental Benefits

A recent study found that the GHG emission from transporting cargo via truck is six times greater than for rail and 20 times greater than for maritime shipping. Therefore, diligently pursuing opportunities to convert land transport with a combination of rail and maritime transport has significant environmental benefits.

Encourage Resiliency Planning

The US Coast Guard leverages the Department of Homeland Security Science and Technology Directorate’s  Port and Waterway Resiliency program to help ports and waterways develop risk-based strategies. Yet lacking a mandate to do so, many ports have not developed a plan for contingencies. Indeed, a study last year by the University of Rhode Island found only 10 of 300 US ports have developed a resiliency plan. Ports should be encouraged to adopt such plans.

Provide Geo-Strategic International Infrastructure Support

The US needs to take bold steps to reassume a leading role in those infrastructure areas and geographic regions important to its national interests. In addition to a leading role in supporting development and export promotion, priorities should include geostrategic imperatives such as securing seaports, airports, digital security, submarine cables, space communications and critical minerals. Assuming leadership will require the government catalyzing greater actions by private enterprise and, given gaps in the US industrial base, strengthening its collaboration with G7 partners in the Partnership for Global Infrastructure and Investment.

The US needs to take bold steps to reassume a leading role in those infrastructure areas and geographic regions important to its national interests. In addition to a leading role in supporting development and export promotion, priorities should include geostrategic imperatives such as securing seaports, airports, digital security, submarine cables, space communications and critical minerals.

Encourage Private Capital Investment in Infrastructure

The Global Infrastructure Hub periodically publishes a report titled InfraCompass that quantifies the strength of the infrastructure enabling environment in a country by aggregating data for eight key categories. One of the categories the report measures is “Activity” which they define as “The extent and nature of recent infrastructure investment activity and the extent of private sector involvement over the last five years, relative to the size of the economy.” On this measure, the US ranked 75th of 76. Besides chronic underinvestment that the Infrastructure Investment and Jobs Act was meant to address in part, this measure also reflects the reality that the US incorporates far less private investor involvement in infrastructure than most other nations.

As a result, Americans are less familiar with private investment in infrastructure or its greater prevalence in other nations, and the US has fewer companies engaged in building and operating privately operated infrastructure. The US must recognize that government support alone will not allow it to address international infrastructure needs. The focus of its support needs to be on encouraging and facilitating private investment and public-private partnerships.

Roundtable Participants

The involvement in the roundtable does not constitute each participant endorsing the recommendation list, nor the contents of this publication. Their input was invaluable in providing insights from those with intimate knowledge of seaborne commerce. The Wahba Institute of the Wilson Center is grateful for their contributions.

Moderator: Hon. Mark Kennedy, Director of the Wilson Center’s Wahba Institute for Strategic Competition, Member of Congress (MN 2001-07)

Eddy Acevedo, Chief of Staff and Senior Advisor to the President and CEO of the Wilson Center Ambassador Mark A. Green

Marta Alonso, Associate, Hazen and Sawyer, Member of America Society of Civil Engineers

Alice Ancona, Senior Vice President & COO, World Trade Center Miami

Ivan Barrios, President, World Trade Center Miami

Jennifer Blanco, Senior Aide, Office of Representative Mario Diaz-Balart

Captain Chris Cederholm, Sector Commander & Captain of the Port, US Coast Guard Sector Miami

Cary Davis, Vice President & General Counsel, American Association of Port Authorities

Christine del Portillo, South Florida District Director, Office of Senator Rick Scott

Rafael Diaz-Balart, Latin American Coordinator, American Association of Port Authorities

Lisa Fleischman, Chief Compliance Officer I Squared Capital Advisors (US) LLC

Bob Goldenberg, Vice President, Commercial Operations, Crowley Logistics

Gary Goldfarb, Chief Strategy Officer, Interport Group of Companies

Jerry Haar is Executive Director for the Americas in Florida International University’s College of Business Administration and a Global Fellow of the Woodrow Wilson Center

Andy Hecker, Assistant Port Director and CFO, Port Miami

Phil Levy, Chief Economist, Flexport

Kevin K. McAleenan, CEO, Pangiam

Manny Mencia, Chair, World Trade Center

Colonel Boyd Miller, Director of J4 Logistics, US Southern Command

René Puche, Director, Port of Barranquila, Columbia

Yamile Reyes, Chief of the Marketing Department, Port of Veracruz, Mexico

Darwin Telemaque, Chief Executive Officer of the Antigua Port Authority

Rep. Debbie Wasserman Schultz, US House of Representatives

Hydi Webb, CEO of Port Miami

Ronald Widdows, CEO of FlexiVan

Thanks as well to the contributions of:

William Campbell, Chief Counsel, I Squared Capital

Richard de Villiers, Assistant to the Director at Port Miami

Margaret Myer, Wilson Center Fellow and Director of the Asia and Latin America Program at the Inter-American Dialogue

Eric Olafson, Director of Global Trade & Business Development at Port Miami

Tom Plofchan, Chief Investment Officer of Pangiam

 

About the Author

Mark Kennedy

Mark Kennedy

Director, Wahba Institute for Strategic Competition

Mark Kennedy, Director of the Wilson Center’s Wahba Institute for Strategic Competition, is dedicated to strengthening America’s alliances and their mutually beneficial economic power projection. Kennedy applies experiences as a first-generation college graduate, Congressman, university president, senior roles in global commerce, presidentially appointed member of the Advisory Committee for Trade Policy and Negotiations, founder of the Economic Club of Minnesota and author of an Ivy League published book. He has engaged wide cross-sections of society in over 45 countries, including refugee camps and war zones. An appointed Civic Leader supporting the Secretary of the Air Force, Kennedy has visited over 40 military bases and three aircraft carriers at sea.

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Wahba Institute for Strategic Competition

The Wahba Institute for Strategic Competition works to shape conversations and inspire meaningful action to strengthen technology, trade, infrastructure, and energy as part of American economic and global leadership that benefits the nation and the world.  Read more