International Economics and Geopolitics Seminar with Jesús Fernández-Villaverde (University of Pennsylvania)
Shipping to America
The Columbia International Economics & Geopolitics Seminar, organized by Jeff Frieden and Alan Taylor and supported by the Center for Political Economy, the Institute for Global Politics, and the Institute for Social and Economic Research and Policy (ISERP), is pleased to host Jesús Fernández-Villaverde (University of Pennsylvania) to present a work in progress entitled “Shipping to America.”
Abstract:
We study the macroeconomic impact of route-specific shipping disruptions on the U.S. economy and their implications for trade policy. Using high-frequency satellite data on the universe of U.S.-bound container vessels between 2016 and 2025, we construct novel measures of potential and effective shipping capacity that account for disruptions arising from port congestion, Suez and Panama Canal bottlenecks, slow steaming, and vessel rerouting. These measures allow us to document new facts about the evolution of U.S.-bound shipping capacity, the sources of capacity losses, and changes in shipping efficiency. We develop a multi-route general equilibrium model to quantify the impact of shipping disruptions. The 2021 West Coast port congestion during the COVID-19 pandemic reduced welfare by 0.9% of GDP, while the security threats from the 2023–2024 Houthi attacks led to a welfare loss of 0.4% of GDP. The U.S. Navy's intervention in the Red Sea helped contain the effect of these attacks, yielding a benefit of 0.2% of GDP at a fiscal cost of 0.02%. Tariffs, by alleviating route congestion, can mitigate or even reverse the standard inflationary effect, although the effect on welfare depends on the degree of retailers' market power.
