60 Minutes to have a segment on the miserable state of US shipbuilding

Maritime News
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US commercial shipbuilding in 2024 was 0.04% of global output. From 2020-2024 it was 0.09%. From 2015-24, 0.24%. How likely is it that, absent the JA, output of the world’s #2 manufacturing country would be even lower? Is it not even conceivable that the JA has been a poisoned chalice to the industry and that it would be in a better position today if it faced more competitive pressure to specialize and innovate? At what point do we declare that the policy is no longer working? Is the standard that, so long as a single ship is built (in reality, assembled with mostly foreign parts) over the space of a few years that it is working?

Regarding alternatives, the US government could bid out contracts to build three commercial-style sealift ships per year for infinity, and it would equal or surpass the amount of oceangoing JA tonnage currently delivered. And would cost waaaay less.

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Energy. The proposal to use costly US-flagged shipping amounts to an export tax. And crude oil tankers have no national security utility outside of providing mariner billets.

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Since I started this thread I guess I had better comment on the 60 Minute piece which was great at telling us that the Chinese and South Koreans have eaten the U.S.'s lunch when it comes to merchant shipbuilding but did not in any way tell us why they have nor did it go into how the U.S. had a strong albeit shrinking industry well through the 70’s. Not one peep from them how there once had been the CDS which in those days meant merchant ships for foreign commerce were still built domestically and how in the early 80’s when those subsidies were eliminated by Reagan Republicans the building of such ships in the U.S. immediately evaporated.

Can anyone tell me if any single cargo liner for foreign trading has been built in the United States in 4 decades because I can’t think of one?

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I will answer my own question…the last dry cargo merchant vessels built in the US specifically for foreign trading were the PRESIDENT(s) WASHINGTON, LINCOLN & MONROE which were built between 1982 and 83 at Avondale Shipbuilding for the American President Lines so more than 40 years ago!

Not one since…the only dry cargo merchant ships built after 1983 in the US were strictly for the Jones Act trades so kill that and then a whopping ZERO will be built here…I mean a big NADA, ZILCH, GOOSE EGG

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Mr. Grabow

You state that to use US flagged and manned tankers for us produced oil would be an export tax but aren’t the buyers of that crude foreign entities and are they not the ones who would pay for the transportation so how on Earth does that impact the American public?

It is the producers of this crude oil in the United States that don’t want to have to be forced to use a US flagged ship because that means they’ll have to take just a little bit less for the oil they sell thus impacting their profits and you can cry me a river over that one!

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Yes, just like the US buyers of foreign goods pay the tariffs that is being imposed by “order of the President”

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Of course YOU feel the need to reply but you are simply and plainly WRONG!

Try again there sparky

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An export tax would make US crude more expensive. Therefore it will become less desirable. So ultimately the US producers have to pay by lowering their price to stay competitive. It’s a similar concept as tax incidence: Tax incidence - Wikipedia

Understood that you want the energy folks to be poorer so you can be richer.

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I had said that but in no way is this something which the American people end up paying for which was your clear implication

And you are certainly correct that I want the US energy producers exporting their products to be poorer although can’t see however that it makes me any richer? I pay for the fuels I use the same as the next guy. No more nor less. What I seek is a much larger fleet of US flagged merchant ships and many more employment opportunities for US citizen mariners

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Of course, Americans pay. The piper has to get paid somehow.

That’s weird to root against an American industry. And I’m the one who is “anti-U.S.”?

31

I’ll group your points together and answer for succinctness (hopefully some here will pay attention to this concept):

Currently, how many Militarily Useful Commercial Ships (MUCS) operating under US flag were built/are being built in the US? Ans: Not many as there is not the proper incentive structure in place to make that happen. Pure supply/demand economics should not be applied here as this is a national security issue (as noted by 60 min and the US Congress {i.e., the SHIP’s Act}).

Why not have allied nations build our MUCS for us? Ans: As the 60 Minutes piece succinctly stated, this doesn’t solve the problem. For the US, we need to be able to produce our own MUCS on our own soil. As the recent pearl clutching from NATO has shown, our “allies” can’t always be depended upon. Specifically in this case, S. Korea’s and Japan’s geographic proximity to China makes them particularly unreliable as producers of ships during the inevitable conflict with China.

“Most JA tonnage are not MUCS” Ans: You are correct. Which is why I found it curious that you would later post a graphic showing how the US is the 4th largest ship owner in the world by ship value. If you’ll analyze you own graphic just a bit, you’ll see that ~74% of that value is derived from cruise ships, OSVs, OCVs, and MODUs; N/A to this conversation.

US shipyards have foreign ownership. Ans: Doesn’t matter. In any type of crisis, they can’t box up the yard and go home when it’s on US soil. Once again, the key being the yard being in the US.

Can the US crew a bunch of ships? Ans: Show me the money. Sure there are other factors, but #1 is money. The relative value of seafarer pay in the US has eroded significantly in the past 40 years and everybody can’t seem to figure out why there’s a shortage of mariners. (???)

Would a fully US built/owned/crewed ship be competitive or would subsidy be required. Ans: No it wouldn’t as first world standards bring first world costs. Once again, that question is applying pure economics to an issue that has non-economic goals and factors.

How about foreign crews? Ans: No, not because of lack of ability, but because of potential lack of availability in a crisis. Once again, we need to be independent on this. Make the career attractive, and people will come.

How much cost is the US taxpayer willing to pay when foreigners will do it cheaper? Ans: To be determined. All we can do is make the case of why it’s important and the process will proceed from there.

In general, it seems you’re trying to apply concepts employed by other nations to the US. Other nations don’t have the military we do and all the logistical needs that come with it. The closest comparison is China and you can bet they’re not in any hurry to depend on another nation for something as important as shipbuilding.

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As far as this, I can only hope this is Cato’s official strategy to gain traction with the American public: “Oh, save the poor, downtrodden energy companies”.

Weren’t you quoted as saying the 60 day JA suspension would only result in a couple cents per gallon savings at the pump?

You’re very good and gathering data and presenting it, so please, tell us how much extra it will cost the oil majors to use US built/flagged/crewed ships and try to fit it in on the below spreadsheets showing XOM’s 2025 results. Where would they have to tighten their belt? From the 28.8 billion in earnings? From the 37.2 billion in shareholder distributions? Please, make your case how this will put the likes of XOM out of business.

ExxonMobil Announces 2025 Results :: Exxon Mobil Corporation (XOM)

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I appreciate the lengthy response, but none of these points answer the questions I posed. However, in response:

  • “this doesn’t solve the problem” — Of course it solves the problem. If you buy ships, then you have ships. Being able to build ships is nice, but having them from the get-go when hostilities commence is essential. And if Americans could buy ships at vastly lower prices, we’d have more ships. Also, let’s not pretend that we aren’t already dependent on our allies for our shipbuilding needs. Heck the last US-built containership delivered, Janet Marie, had Chinese components. Even if that supply chain isn’t interdicted, consider how long it takes to build ships here. The Janet Marie took over 3 years from the keel laying, and I’d peg average times at 2-2.5 years for containerships and 12-18 months for product tankers.

  • “first world standards bring first world costs.” If it’s all about quality, why does the Paris MOU rank the US flag #22? White, Grey and Black List | Paris MoU

  • “In general, it seems you’re trying to apply concepts employed by other nations to the US.” Totally agree. That the US has logistical needs that are so much more extensive than other countries — not just in wartime but peace as well given our vast geography — it’s even more insane that we have adopted such a retrograde maritime policy.

I think literally no one disagrees that US national security and economic needs must be met (almost by definition, although we might disagree over what those needs are). The question before us is how best to do so. And I challenge anyone to argue that the Jones Act has proven itself to be the answer.

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Maybe you think more highly of corporations than I do, but I think that added costs are borne by workers and consumers way before the bill gets passed to shareholders or the C-suite.

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I was replying to bugge’s points, but I welcome all feedback.

Not sure if you’re intentionally missing the point or not, but I’ll play…the ‘problem’ not being solved by just buying ships instead of building them is that it doesn’t promote our domestic shipbuilding, i.e., would move our existing yards from inadequate to non-existent. The rest of your first bullet point is all true and highlights why legislation like the SHIPs Act came about and hopefully will move forward.

I didn’t say anything about quality. I said costs. With our myriad of regulations from labor to environment plus no direct shipyard subsidies (benefits enjoyed in part or full in these high volume shipbuilding nations), of course our costs will be higher. Add to that the economies of scale which we don’t currently have, and you get your 3x-5x differential.

BTW, I looked at your Paris MOU list and methodology. First, I’d say there’s a sample size issue. Only 135 PSC inspections on US vessels in the three year period examined. Ok fine, that makes sense; not so many US ships in international trade. But then I see China only has 265 PSC inspections in the same period??? And how many Chinese flagged ships are there??? So yeah, pardon me if I’m skeptical of the usefulness of their list.

I can’t speak for everyone, but I’m not saying the JA is the answer. I’m saying removing the protections of the JA is NOT the answer without something to replace it that better meets the JA goals.

36

You’re the one who said meeting our pro-JA goals was going to make energy companies poor. :man_shrugging:

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Ha, egg on my face.

Re: shipbuilding and the SHIPS for America Act, etc: Washington’s Misplaced Shipbuilding Obsession | Center for International Maritime Security

Re: quality, you referenced “first world standards” which seems a reference to quality.

I can’t speak for everyone, but I’m not saying the JA is the answer. I’m saying removing the protections of the JA is NOT the answer without something to replace it that better meets the JA goals.

That’s great to hear. Geniunely.

38

I was saying that the proposal for US-flagged shipping for energy products is aimed at making energy companies poorer so the maritime industry can be richer. And to avoid being poorer, my supposition is that they will pass along costs to workers and consumers.

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Utter nonsense since the buyers are not selling to US consumers unless it is US produced crude going foreign, being refined and then imported back into the US which needs to be banned outright!

It would be good to know how much US produced crude does return?

40

Thanks for the link to the article you wrote.

Many of the points you make there are things already discussed here. There are a few things I take issue with like comparing the 2013 Aloha Class cost with the 2026 version without noting the fact that the new versions include a full LNG fuel system suite including the storage tanks which was not included on the 2013 ships. Additionally, stating what worldwide shipbuilding inflation been during that time would be helpful/more transparent.

Also, the $1/year lease assertion about the Philly shipyard. The article you linked for that was dated 2010. Is that still the case today? You imply it is in your writing.

I get it. You have an agenda you want to promote and you’ll tell enough half truths and partial stories in support of the agenda with confidence that the casual reader won’t check your links or know enough nuance to see the slant. I don’t claim you are alone in doing this nor fault you for this as it is your job.

I would like your feedback on this however: If we outsourced our shipbuilding to ROK or Japan, do you see it as a real threat that China could disrupt that vital supply line through either soft or hard power if the US and China get into a conflict? If yes, is it acceptable for the US to not have the ability to make our own ships independent of external influences?

I predict your answer will mention the lack of “maritime industrial ecosystem” (mentioned in your article), and you’d be right. But this is the ‘chicken/egg’ problem…how can we develop a robust maritime industrial ecosystem without US flagged/manned ships? How can we get US flagged/manned ships without policy in place to incentivize their employment?

Yes, it is a big, expensive problem to face. Much like most of the big expensive problems the US is facing, it is due to multiple decades of neglect and greed in placing financial and political profits over what’s in the best long-term interest of the country. The question is are we ready to do anything about it? SHIPs Act is the first salvo. What (if anything) is eventually passed will surely look different, but we can only hope it addresses 50-100 year needs not 2-6 year election cycle needs and/or quarterly profit reporting needs.