The Venerable and Esteemed Shahram, Late Pundit of Samarkand

By Jock O’Connell

During my travels through what was then Soviet Central Asia nearly a half-century ago, I heard the tale of an early 16th century scribe named Shahram. Now this Shahram was chiefly known for standing in the public square loudly reciting poem after poem lamenting the decline of Samarkand as a vital link in the Silk Road between Asia and Europe.

Shahram’s verses, which were said to be little more than minor variations on each other, made no bones about why he thought the caravan trade passing through the Uzbek metropolis was faltering. By his lights, the villain was an obstreperous band of navvies who transloaded cargo from one camel train to the next.

These workers, as the story goes, were steadfastly opposed to a new rope and pully system that had been designed to make their labor more productive. So, in Shahram’s mind, their obstinate refusal to embrace new technology undermined Samarkand’s competitive position and resulted in the diversion of steadily larger shares of the Silk Road trade – measured in CEUs or Camel Equivalent Units – to rival transloading facilities at Dushanbe and Tashkent.

That, at least, was Shahram’s contention. However, as many of his contemporaries and every subsequent generation of historians have pointed out, Shahram’s apparently obsessive need to spread calumny about the local stevedores blinded him to any number of other factors behind his city’s decline as an international transshipment hub.

Chief among these other factors was the rapid emergence of an all-water route in the decades following Vasco da Gama’s voyage of discovery in the final years of the 1500s. For the first time, goods could be shipped profitably by sea between ports in Europe and the growing number of trading stations being established throughout Asia. Traders henceforth had no need to fret about Samarkand’s stevedores who, like Shahram, now hardly merit more than a footnote in history.

I am reminded of Shahram nearly every time I come across a news report lamenting (as they usually do) the diminishing share of today’s transpacific container trade that passes through U.S. West Coast (USWC) ports.

I certainly don’t mean to deny the trend shown in Exhibit A. There is no question that America’s Pacific Coast ports no longer handle three-quarters of containerized import tonnage from East Asia, as they did just a couple of decades ago.

What I find irritating, and not a little misleading, is the way many reporters chose to frame the shift in trade by giving it the appearance of a sporting event demanding the latest box scores and an ongoing play-by-play featuring churlish commentary on the daily drama.

Way too many analyses of today’s transpacific container trade begin (and often end) with the premise that the large scale “diversion” of containers from USWC ports to their East and Gulf Coast rivals has largely been due to problems at West Coast ports, with the favored journalistic hobbyhorse being the exhaustively chronicled history of occasionally tempestuous labor-management relations on West Coast docks. Hardly ever is a broader context offered.

At times, this knee-jerk penchant for attributing the nation’s supply chain woes to the presumed failings of USWC ports involves some astonishing logical gymnastics. Consider an August 17 article in The Wall Street Journal which manages – in the very same paragraph – to note that “growth has slowed at the Southern California ports, the main gateways for goods imported from Asia” before then blaming the recent phenomenon of congested East and Gulf Coast ports on retailers and manufacturers “diverting goods to avoid congestion on the West Coast.” Is it impossible to imagine that some East or Gulf Coast importers might simply find it more convenient to have their goods delivered to nearby ports?

Only with great infrequency are these “diversions” attributed to the entirely reasonable proposition that beneficial cargo owners might actually prefer to have their goods shipped through ports that lie adjacent to where most American consumers live and where most of America’s manufacturing capacity is located. That geography secured for USWC ports first rights to America’s trade with Asia does not automatically ensure that that privilege should remain permanent, any more than Aaron Judge will forever remain baseball’s top homerun hitter. There’s that competition thing that erodes momentary advantage.

Let’s stand back for a moment from the daily preoccupation with bemoaning supply chain congestion and examining the entrails of rumors about the status of the negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union. Instead, let’s look — if only briefly — at such tedious topics like geography and demographics and the history of America’s foreign trade over the past few decades.

For starters, there are eleven western states extending as far east as Colorado that comprise the immediate hinterland served by USWC ports. Collectively, those states account for 23.7% of the U.S. population and 24.6% of national GDP. Importantly, though, they only account for a relatively slender 17.0% of America’s manufacturing output, according to the U.S. Bureau of Economic Analysis.

By contrast, the states of the Northeast and the South, the natural hinterland of East and Gulf Coast ports, are home to 55.5% of all Americans, account for 53.8% of the nation’s GDP and 50.3% of its manufacturing output.

If you were to invest billions of dollars in developing America’s maritime trade infrastructure, where would you put your money? Willie Sutton famously explained that he robbed banks because that’s where the money was. Wouldn’t you sidle up to where most consumers live and where the majority of goods are made? This isn’t an academic question. It’s evidently what Congress has been asking itself.

If anything is remarkable about contemporary reporting on the nation’s logistical challenges, it is just how little realization there seems to be that it has taken decades and billions of dollars in investments before the maritime infrastructure on the East and Gulf Coasts caught up to the rapid emergence of East Asia as the world’s factory.

Over the long course of our history, the preponderance of America’s maritime trade was conducted with Europe. As recently as the mid-1980s, more of America’s seaborne trade crossed the Atlantic than the Pacific.

Since then, the balance has swung with remarkable speed to the Pacific as Japan’s export-driven economy surged such that, by the 1980s, it was not uncommon to hear predictions that Japan would shortly overtake the U.S. as the world’s largest economy. But Japan was only the first Asian nation to shoulder its way into the global trading system. It was soon accompanied by the rise of the so-called Asian Tigers (South Korea, Taiwan, Hong Kong, and Singapore). Even before China and the eventual arrival of a set of new Southwest Asia players (most notably Vietnam, Malaysia, Indonesia, and Thailand), the world’s economy geographic center had shifted dramatically.

That proved to be a boon for USWC ports, which enjoyed a decided geographic advantage. But it posed a serious and ongoing challenge for ports elsewhere in the country. As Exhibit B shows, the volume of containerized trade crossing the Pacific has continued to dwarf America’s transatlantic trade, leaving East Coast ports with the prospect of stunted growth, unless they captured more of the burgeoning trade with East Asia. There were serious obstacles to doing so, however, not the least of which was an outdated canal through Panama that limited the size of ships that could make the trip from Japan or China to East and Gulf Coast ports.

Even worse, the existing maritime infrastructure along the East Coast was lacking. Container ships had grown too large for many ports, and the equipment to handle increased container flows was inadequate. Channels would have to be dredged, turning basins widened, and bridges raised to accommodate the vessels that would eventually be able transit the expanded canal the Panamanians opened to traffic in 2016.

All this required money (measured in billions) and time (measured in years) to ready the infrastructure needed to go after more of the nation’s container trade with the Far East. Fortunately for East and Gulf Coast ports, local and state officials and their representatives in Congress proved mightily adept – much more than their colleagues from the West – at requisitioning the funds needed to undertake a massive expansion of port capacity along the East and Gulf Coasts. By some estimates, for every federal dollar allocated to USWC ports, ten dollars went to East and Gulf Coast ports.

None of this history is a secret, even if it may make for less compelling reading than hashing through the latest will-they or won’t-they gossip about longshore negotiations. Eventually, ports closer to where the nation’s population and manufacturing enterprises are clustered equipped themselves with the wherewithal to manage higher and higher volumes of the nation’s overseas trade.

So what some prefer to see as diverted cargo is actually a natural result of America’s maritime infrastructure finally reconfiguring itself to accommodate a decades-old shift in the global trading system.

Even Shahram might have eventually come to see this unfold.

Disclaimer: The views expressed in Jock’s commentaries are his own and may not reflect the positions of the Pacific Merchant Shipping Association.