Why does the United States rely on Chinese state-owned shipping?

In recent years, the Biden administration has favored need for resilient, diverse and secure supply chains and urged the identification of vulnerabilities that could affect the country's national security. Interestingly, one of the most visible elements of the national supply chain, shipping, fits this description but rarely gets the attention it deserves. This is a costly mistake, as Chinese public shipping is fully integrated into the logistics infrastructure of the United States and the West in general.

China Ocean Shipping Company (COSCO), which currently occupies a key position in this landscape, currently occupies fourth place. player by market share in global container shipping. Since 2017, COSCO’s maritime subsidiary has shape the Ocean Alliance with the third player, a French carrier, as well as two smaller carriers. At the start of 2025, this block should become the the biggest in the ocean freight industry, and their alignment (which was renewed this year) is expected to last at least until 2032. Together, the alliance controls approximately 30 percent of the shipping market, a considerable amount, considering that ocean freight accounts for 80 percent of the shipping market. all volume of world trade.

However, until today, the entire American and Western private sector treats COSCO as if it any other shipping line. Almost the entire logistics industry widely considers the company to be both reputable and price competitive. By and large, American and Western companies are ignoring the fact that the shipping company is owned by a Chinese state-owned company.

This contradicts a fundamental principle of supply chain resilience and may pose an economic security challenge for the United States. Indeed, as Western reliance on Chinese state-owned shipping increases, so does the scale of potential disruption.

In the short term, the ultimate ownership of its cargo ships may not seem to matter. This situation is, however, likely to change if relations deteriorate further and tensions increase between Washington and Beijing. If Western companies wait until real conflict erupts to diversify their shipping appropriately, there is a good chance they will face a significant freight price shock when they do, as well as a shortage of available global transport capacity. At this point, the U.S. supply chain for products ranging from raw materials to food to industrial products may face serious disruption, and precisely when it will be most inconvenient). This phenomenon is exacerbated by the fact that the construction of new cargo ships often takes years, with new orders often being directly multi-year. arrears and with more more than 50 percent of the new tonnage currently produced in China.

The next administration must start thinking creatively about mitigating these industrial vulnerabilities. The United States, working with partners like South Koreamust have the capacity to manufacture cutting-edge commercial ships in real time. America's manufacturing workforce must grow to meet this demand, with a concomitant investment in apprenticeships and non-traditional educational pathways to provide these needed workers.

While some may be reluctant about this type of industrial policy, only serious investment in such capabilities at the federal level can begin to reduce the dependence the West currently faces on Chinese ocean shipping. Furthermore, the United States would do well to reevaluate its general willingness to use Chinese state-owned enterprises for something as vital as overseas shipping. The status quo mindset, currently endemic in much of the West, creates a visible blind spot that is likely to grow over time. If ignored, it could well hamper the supply chain resilience it is necessary for the country's economic security, precisely when the United States can least afford it.

About the authors:

Alexander B. Graysenior fellow for national security affairs at the American Foreign Policy Council, served as deputy assistant to the president and chief of staff of the White House National Security Council (2019-21) and special assistant to the president for the defense industrial base ( 2017-18).

Andrew Liangfellow in Asian studies at the American Foreign Policy Council, is a private equity investor and investment banker specializing in the global industrial sector.

Image: Creative Commons.