1. Ships have changed from artillery fires of naval guns to missile fires. One doubts if the extended range affords improved survivability considering advancement in missile speed and targeting capability. Superpower Navies are now better at eliminating their peers, thus overall security has decreased.
2. Would Agincourt have turned out the same if those long bowmen only had 2 full quivers each? Naval resilience whilst still technologically determinable will be based on quantitative depth. The USA has only in 2024 for the first time, on a single ship, begun replenishing missiles from a supply ship at sea instead of returning to home port. A significant Achilles heel of the ship borne missile age.
3. More important is the effect on foreign policy in the Arab world regards Suez. Egypt has lost several billion dollars in revenue during 2024. Egypt faced religious led government as a result of the Arab Spring. Its authoritarian RW/military elements used repression to regain power under El Sisi. Has the USA stepped up its aid to overcome Egyptian revenue loss and improve socio-economic conditions alleviating Muslim Brotherhood ferment? Are the Houthi, as welded Iranian surrogates, really engaging in an action solely against Western shipping? Or is it a destabilisation operation by Iran against a Western ally, Egypt?
4. The role of the Suez is a tad under appreciated. Whilst "The closure of the Suez canal has, indeed imposed higher insurance costs on shippers using the canal, and has led much of the traffic to be diverted to the longer route around the Cape of Good Hope. But the overall impact on freight rates has been modest, and any effect on global economic activity has been too small to be observable" is proper comment. It is a short term (SR) description. MR freight costs in shipping reflect not only scarcity or oversupply of container/fuel capacity but also ship replacement costs. In Prof's SR description it holds (Adland, Haiying & Strandenes,) "Ships with a vessel’s capacity utilization - defined as the ratio of cargo size divided by DWT - should be positively correlated with freight rates, as poor market conditions will force vessels to compete for lower-than-optimal stem sizes," , i.e. "...capacity utilization is a key driver of economic and environmental performance in the maritime supply chain."
Simply put, freight rates to Europe at least has fallen due to oversupply of capacity and new shipping. "In 2023, 2.3 million TEU (twenty-foot equivalent unit) of container ship capacity entered service, which was a 37% increase over the previous record. In the first four months of 2024, over 1 million TEU were delivered, which was an 80% increase over the previous record." To the USA freight rates increased.
4.ii. The MR/LR on freight rates are normalised in respect of Suez however ship construction now faces less lag time and better response to cyclic equilibrium than ever before. Voyage duration also impacts freight rates for evident reasons and increases costs due to reduction of circuit frequency.
Why is Noah Smith's comment not overly important? "Commercial shipbuilding in the U.S. is virtually nonexistent: in 2022, the U.S. built just five oceangoing commercial ships, compared to China's 1,794 and South Korea's 734. The U.S. Navy estimates that China's shipbuilding capacity is 232 times our own. 9/2024" There is the point in regard to naval shipbuilding and symptomatic with the West's fall in competitiveness if you don't produce, manufacture, where is your innovation going to come from? It will not remain software derived let alone found in the (lengthening) future wonder of AI. The limitations of the physical world are not end bounded and overcome. Software innovation requires hardware functionality. Offshoring production elsewhere as if it justified comparative advantage does little for future economic growth.
Currently, Jan 2025, we have an oversupply of DWT yet with ships undertaking longer distances (from apx 30/45 days CN to EU via Suez, to now apx 44/60 days via CoGH) requiring more ships as a time function to provide supply, even with higher operating/depreciation costs due to that distance, and demand returning to pre-Covid levels, has resulted in a maintained price equilibrium. Why was shipbuilding ahead of the curve and automobile production suffering supply shortages. It was not due to ship building's lucky position in the cycle. With the Suez foreseeably limited, the UA/RU war continuing until Trump forces UA's hand, the continued longer routes, demand improving, it will be interesting to see what factors adjust to creating equilibrium. We know what tariffs do, however, US policy will not be straightforward and unilateral. Will Germany's car makers seeing the end of export growth be symptomatic for greater focus on domestic production and markets.
Economists are well aware exports contributed far less growth to the US economy than domestic production, 9.25% in 1990. A maximal 13.64% in 2012 with 10.89% in 2021. The US has the world's largest commercial rail network, 260,000 km, and explains why domestic stimulus for commercial shipping is limited and why the US navy will decline. The idea that shipping is important for the US, let alone naval forces, and will dramatically affect its future are based on arguments falsely perceiving the US as a necessary maritime power accepting opportunity costs elsewhere. Contextually, China's attempt to force its way to the nine dash line demonstrates why naval expansion is difficult short of war, yet is the world's pre-eminent shipbuilder providing the means for its economic success via exports. The US for all the reams written about it as the 20th Century double headed eagle looking to the Pacific and Atlantic (ostensibly due to WWII but also its imperialism re: Philippines, China) faces the reality why Prof is right to degrade the importance of naval power. The US is a sea locked continent that has been mostly self-sufficient, as its economic compositional growth has shown. Apols for the ramble.
Are you familiar with Peter Zeihan? He had a different take long before this conflict broke out.
His view is that since the Second World War, the US has been defending sea lanes at its own cost.
But since it is now less dependent on trade than other countries, it should stop.
He would say it is contrary to the US interest to subsidize Chinese maritime trade with its fleet.
With his reasoning, abandoning the Red Sea doesn't hurt the US that much and saves its fleet for much more important national interests, like deterring more imperialist expansion by Russia or China.
So, the US could ask China to pay the USN to stay in the Indian and Pacific oceans, and leave if China said no? I think China would happily call that bluff.
It depends who you are fighting a war with. Yep, the Navy lost the war with the Houthis. But it has been pretty successful in wars with commercially-motivated pirates off the coasts of Africa, and in the straits around Indonesia. Which only goes to show that nationalism is a force more powerful than the almighty dollar. Which is another lesson that should be learned.
Maybe you can find an alternative route if your adversary blocks the best one.
But what if your adversary can also block the second, third and fourth best routes? What if all you have is deep water routes where a powerful navy’s subs can prowl?
Big navies will develop innovative counter measures to the drone threat.
And while Trump is urging to oilers to drill, China has developed electric vehicles and batteries to a degree that is beyond the competency and capacity of the US and the EU. De carbonization is the great disruption and culture wars are an unnecessary distraction. If Trump succeeds in removing the IRA the US will only slip further behind - it’s a race they can’t afford to lose.
I don't want this discussion derailed by a general debate about US policy in the region. I will write something about this when i can get over my horror at it all. Please don't comment again, except with specific reference to the Houthis and the canal
Interesting. Perhaps aircraft carriers are now as obsolete as dreadnoughts.
Kinzhals, anyone?
;)
Right on. And Australia is spending globs of money on nuclear submarines instead of education and health care. When do we wise up ?
Our nuclear powered submarines will be so useful!
1. Ships have changed from artillery fires of naval guns to missile fires. One doubts if the extended range affords improved survivability considering advancement in missile speed and targeting capability. Superpower Navies are now better at eliminating their peers, thus overall security has decreased.
2. Would Agincourt have turned out the same if those long bowmen only had 2 full quivers each? Naval resilience whilst still technologically determinable will be based on quantitative depth. The USA has only in 2024 for the first time, on a single ship, begun replenishing missiles from a supply ship at sea instead of returning to home port. A significant Achilles heel of the ship borne missile age.
3. More important is the effect on foreign policy in the Arab world regards Suez. Egypt has lost several billion dollars in revenue during 2024. Egypt faced religious led government as a result of the Arab Spring. Its authoritarian RW/military elements used repression to regain power under El Sisi. Has the USA stepped up its aid to overcome Egyptian revenue loss and improve socio-economic conditions alleviating Muslim Brotherhood ferment? Are the Houthi, as welded Iranian surrogates, really engaging in an action solely against Western shipping? Or is it a destabilisation operation by Iran against a Western ally, Egypt?
4. The role of the Suez is a tad under appreciated. Whilst "The closure of the Suez canal has, indeed imposed higher insurance costs on shippers using the canal, and has led much of the traffic to be diverted to the longer route around the Cape of Good Hope. But the overall impact on freight rates has been modest, and any effect on global economic activity has been too small to be observable" is proper comment. It is a short term (SR) description. MR freight costs in shipping reflect not only scarcity or oversupply of container/fuel capacity but also ship replacement costs. In Prof's SR description it holds (Adland, Haiying & Strandenes,) "Ships with a vessel’s capacity utilization - defined as the ratio of cargo size divided by DWT - should be positively correlated with freight rates, as poor market conditions will force vessels to compete for lower-than-optimal stem sizes," , i.e. "...capacity utilization is a key driver of economic and environmental performance in the maritime supply chain."
Simply put, freight rates to Europe at least has fallen due to oversupply of capacity and new shipping. "In 2023, 2.3 million TEU (twenty-foot equivalent unit) of container ship capacity entered service, which was a 37% increase over the previous record. In the first four months of 2024, over 1 million TEU were delivered, which was an 80% increase over the previous record." To the USA freight rates increased.
4.ii. The MR/LR on freight rates are normalised in respect of Suez however ship construction now faces less lag time and better response to cyclic equilibrium than ever before. Voyage duration also impacts freight rates for evident reasons and increases costs due to reduction of circuit frequency.
Why is Noah Smith's comment not overly important? "Commercial shipbuilding in the U.S. is virtually nonexistent: in 2022, the U.S. built just five oceangoing commercial ships, compared to China's 1,794 and South Korea's 734. The U.S. Navy estimates that China's shipbuilding capacity is 232 times our own. 9/2024" There is the point in regard to naval shipbuilding and symptomatic with the West's fall in competitiveness if you don't produce, manufacture, where is your innovation going to come from? It will not remain software derived let alone found in the (lengthening) future wonder of AI. The limitations of the physical world are not end bounded and overcome. Software innovation requires hardware functionality. Offshoring production elsewhere as if it justified comparative advantage does little for future economic growth.
Currently, Jan 2025, we have an oversupply of DWT yet with ships undertaking longer distances (from apx 30/45 days CN to EU via Suez, to now apx 44/60 days via CoGH) requiring more ships as a time function to provide supply, even with higher operating/depreciation costs due to that distance, and demand returning to pre-Covid levels, has resulted in a maintained price equilibrium. Why was shipbuilding ahead of the curve and automobile production suffering supply shortages. It was not due to ship building's lucky position in the cycle. With the Suez foreseeably limited, the UA/RU war continuing until Trump forces UA's hand, the continued longer routes, demand improving, it will be interesting to see what factors adjust to creating equilibrium. We know what tariffs do, however, US policy will not be straightforward and unilateral. Will Germany's car makers seeing the end of export growth be symptomatic for greater focus on domestic production and markets.
Economists are well aware exports contributed far less growth to the US economy than domestic production, 9.25% in 1990. A maximal 13.64% in 2012 with 10.89% in 2021. The US has the world's largest commercial rail network, 260,000 km, and explains why domestic stimulus for commercial shipping is limited and why the US navy will decline. The idea that shipping is important for the US, let alone naval forces, and will dramatically affect its future are based on arguments falsely perceiving the US as a necessary maritime power accepting opportunity costs elsewhere. Contextually, China's attempt to force its way to the nine dash line demonstrates why naval expansion is difficult short of war, yet is the world's pre-eminent shipbuilder providing the means for its economic success via exports. The US for all the reams written about it as the 20th Century double headed eagle looking to the Pacific and Atlantic (ostensibly due to WWII but also its imperialism re: Philippines, China) faces the reality why Prof is right to degrade the importance of naval power. The US is a sea locked continent that has been mostly self-sufficient, as its economic compositional growth has shown. Apols for the ramble.
Thanks for these interesting thoughts.
Yours is an interesting take.
Are you familiar with Peter Zeihan? He had a different take long before this conflict broke out.
His view is that since the Second World War, the US has been defending sea lanes at its own cost.
But since it is now less dependent on trade than other countries, it should stop.
He would say it is contrary to the US interest to subsidize Chinese maritime trade with its fleet.
With his reasoning, abandoning the Red Sea doesn't hurt the US that much and saves its fleet for much more important national interests, like deterring more imperialist expansion by Russia or China.
But much of the claimed protection is against China. Australian satirical show commented on this a long time ago. https://www.youtube.com/watch?v=sgspkxfkS4k
Yes. Peter's point is that the US should stop paying to protect China's exports.
So, the US could ask China to pay the USN to stay in the Indian and Pacific oceans, and leave if China said no? I think China would happily call that bluff.
If something else is intended, what?
It depends who you are fighting a war with. Yep, the Navy lost the war with the Houthis. But it has been pretty successful in wars with commercially-motivated pirates off the coasts of Africa, and in the straits around Indonesia. Which only goes to show that nationalism is a force more powerful than the almighty dollar. Which is another lesson that should be learned.
The Somali pirates (formerly fishers) had national grievances about overfishing by foreign fleets. That was mostly resolved - it was this as much as enforcement that ended the wave of priacy. But now both overfishing and piracy are returning. https://www.crisisgroup.org/africa/horn-africa/somalia/roots-somalias-slow-piracy-resurgence
I analysed the costs and benefits of anti-piracy operations a while back https://johnquiggin.com/2016/05/02/pirates-militarism-whack-a-mole-173/
Navies obsolete? You go first.
Maybe you can find an alternative route if your adversary blocks the best one.
But what if your adversary can also block the second, third and fourth best routes? What if all you have is deep water routes where a powerful navy’s subs can prowl?
Big navies will develop innovative counter measures to the drone threat.
Which navies do you have in mind? And which countermeasures? Nothing seems to be working at present.
And while Trump is urging to oilers to drill, China has developed electric vehicles and batteries to a degree that is beyond the competency and capacity of the US and the EU. De carbonization is the great disruption and culture wars are an unnecessary distraction. If Trump succeeds in removing the IRA the US will only slip further behind - it’s a race they can’t afford to lose.
I don't want this discussion derailed by a general debate about US policy in the region. I will write something about this when i can get over my horror at it all. Please don't comment again, except with specific reference to the Houthis and the canal