With American President Lines holding the flag for the US for such a long time, they ensured that the future of US shipping had a name on the global stage of shipping. Throughout history, the US didn’t play much of a role with the UK, Dutch, and various other European countries taking center stage when it came to shipping. After many years of this monopoly-like market, American President Lines (APL) finally made an impact and became one of the largest companies in the world.
Now, APL belongs to CMA CGM, which is a French company, after they purchased the majority shares in parent company Neptune Orient Lines (NOL). After this, Maersk is originally from Denmark and China has COSCO; what does this mean for the US? Although the US is still vital for the shipping industry, why is there no major flag carrier for the country?
The Finger of Blame – If we were to give a quick answer to this question, we could perhaps point the finger of blame in dozens of different directions including finances, politics, culture, economics, and regulations. Over the years, we’ve seen the introduction of some fantastic facilities right across the US. Compared to other countries, we can certainly compete in terms of fleet and the shipyards themselves. However, one factor will always shout louder than every other; money.
In order to run a shipping business, the owners need to be smart with their money and they need to have an endless base of knowledge regarding the shipping industry. Ultimately, many experts, therefore, believe that there are two factors to blame for the downfall of North America’s presence in the international shipping market; building ships and the cost of labor.
Labor – Before we go any further, we should point out that ‘cost of labor’ being too high does not mean that companies cannot afford US seaman. Instead, it means that domestic nationals are normally too expensive for their own countries including Japan and Europe. Nowadays, owners are saving money by having the crew almost entirely made up of Chinese nationals or countries where labor is more affordable.
Ships – Just with every other industry in the world right now, competition is growing stronger in the shipping niche which means the cheapest ships with the cheapest crews are the ones surviving. Of course, this comes with a risk because the equipment may not be as reliable and sometimes the crew might not be able to speak the dominant language but they provide the cheapest service for all companies looking to ship products abroad.
Why are US companies not thriving? Simply put, our services are just too expensive and we’re finding it hard to compete with every other company in the industry. Even after everything we’ve discussed, the US also has a number of weight restrictions which adds costs to the customer’s experience. For those looking to ship products for the cheapest price, sadly this is never going to be with the US shipping.
The Future – Looking ahead, it’s hard to see how any US companies could force their way to the top of the market. Currently, there aren’t any US-owned companies within the top ten shipping businesses and this isn’t likely to change anytime soon. Even with the US companies that already exist, they tend to register their vessels elsewhere to avoid the high taxes in the US so the industry is in a slump right now.
In order to offer the lower prices, shipping companies need to go where the costs are lowest and this isn’t something the US can compete with now or ever unless regulations are introduced elsewhere; this change would turn attention towards quality where the US could shine once more.