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The most recent vulnerability brought to light by the conflict in Iran concerns sea commerce and safety. The obstruction of the Strait of Hormuz, combined with assaults on ports in Dubai and apprehensions that Houthi insurgents might intensify their attacks in the Red Sea, has caused worldwide seafaring in the area, alongside the conveyance of vital energy provisions, to cease abruptly. Consequently, it has revealed that neither the United States — nor the international community — is adequately equipped for the rapidity with which worldwide commerce can be jeopardized amidst geoeconomic upheaval.
It’s astonishing to me that we remain unprepared for this, considering we’ve observed this scenario unfold for nearly thirty years. We saw the 1999 Taiwanese tremor that interrupted semiconductor provision worldwide and led to the shutdown of manufacturing plants in California and Texas. Then came the Japanese tsunami in 2011, which paralyzed segments of the global car manufacturing supply network for several months. Naturally, there were numerous Covid-linked supply chain hitches, and the food and energy price surge caused by the conflict in Ukraine. Presently, President Donald Trump is delivering the ultimate supply chain upheaval — this instance involving petroleum — apparently with scant foresight on how to handle the disturbance. Despite all the post-pandemic discussions about constructing economic frameworks that are both robust and effective, it appears we have succeeded at neither.
Reflect on the circumstance that Trump was compelled last week to suspend the venerable Jones Act, which mandates that exclusively American-constructed and registered vessels are permitted to transport merchandise between US harbors. This has been a controversial legal provision for quite some time, as the decline of the US manufacturing foundation in shipping has reduced economies of scale in American vessel construction. Consequently, numerous international constructors are able to fabricate vessels and conduct sea operations more affordably than the American sector. Trump intends to lower petroleum and natural gas costs, at least for a period, by permitting overseas ships to transport merchandise among American harbors, thereby rendering the conveyance of these goods — whose prices have climbed significantly due to the Iran conflict — more economical.
It remains uncertain whether this measure will achieve more than marginally reducing oil costs. Nevertheless, it has at least rekindled discussion regarding the Jones Act. A 2026 policy brief from Vanderbilt University addressing the difficulties in ship construction observes that “the protected market of the Jones Act is incapable of spurring the industrial revival necessary for international rivalry without substantial reform and governmental expenditure”. As the writers elaborate, the legislation motivates operators merely to mend aged ships registered in the US instead of constructing fresh ones, which incur expenses three to eight times higher than those of internationally built vessels.
Yet, they point out, an “abrogation of the Jones Act presents a brief advantage, while amplifying enduring vulnerability. Devoid of national safeguarding stipulations, operators would simply acquire more affordable foreign-manufactured (and state-supported) vessels, thereby depriving the US of a production foundation.”
Indeed, that is largely what has transpired in every aspect of seafaring beyond the scope of the legislation — the sector is now chiefly controlled by Chinese vessels. Both the Vanderbilt academics and an Open Markets document concerning the preservation of US ship construction contend (and I concur) that the fundamental problem is the government’s inability to furnish robust demand indicators to the sector by guaranteeing assistance over numerous years and decades. Re-establishing the connection between public and private ship construction has historically been the sole method by which any nation has succeeded in developing a formidable navy, commercial sea industry, and oceanic security.
However, it’s beneficial to recall the original rationale for this statute. Early in the 20th century, the United States was perilously reliant on international shipping monopolies (including those in the UK, which received state aid). The monopolistic influence of such corporations escalated the expenses for transporting essential commodities by up to twentyfold. “While certain rationales existed [during the First World War] for these massive surges in charter fees, vessel expenses, and cargo rates, it was apparent that they had been artificially inflated,” stated Edward Hurley, who chaired the US Shipping Board then.
This closely parallels the monopolistic influence currently wielded by the globe’s largest shipping conglomerates, such as MSC, Maersk, Cosco, Hapag-Lloyd, and the few others that command ninety percent of worldwide shipping volume. Owing to the proliferation of supertankers and containerized transport, fewer, larger vessels are conveying the majority of global commodities (ninety percent of which are moved via ocean). That constitutes a framework designed for “efficacy” rather than adaptability — particularly in a contemporary era of conflict where a single inexpensive Iranian unmanned aerial vehicle can incapacitate a tanker within minutes.
If vessels are truly the new microchips, as the past two US administrations have claimed, then America will need to fundamentally re-evaluate its approach to stimulating and governing the construction of novel ships. What is required are fewer massive tankers and warships and more agile, multi-purpose vessels, possibly constructed collaboratively with allies (as few nations can entirely build ships independently).
Regardless of whether that occurs, the virtual closure of the Strait of Hormuz will further accelerate the impetus to discover novel shipping routes — for instance, through the Arctic. In an era of major power contention, adaptability equates to security.
rana.foroohar@ft.com