which requires a domestic shipyard with a drydock, cranes, and the like capable of handling large ocean going vessels. That is the point, to keep our shipyards in business so that when China becomes (realized as) the enemy and our shipbuilding supply from Asia is cut off, we will be able to build our own ships. Seems like we’ve covered this before…
Yeah I mentioned that as well. If not a flag requirement, then certainly a requirement to meet the “cabatoge eligible” designation.
However, tying it to a flag requirement would be easier than the things I mentioned which would require changing the Jones Act (congressional action needed-HA!).
From the USCG: In order for the Vessels to be documented in the United States with coastwise endorsements entitling them to be operated in the domestic trades of the United States they must be deemed to have been built in the United States. In order for that to be the case, their construction must satisfy both of the requirements of 46 C.F.R. § 67.97; namely:
“To be considered built in the United States a vessel must meet both of the following criteria:
(a) All major components of its hull and superstructure are fabricated in the United States; and
(b) The vessel is assembled entirely in the United States.”
In addition, the following definitions at 46 C.F.R. § 67.3 are pertinent to the application of those requirements:
“Hull means the shell, or outer casing, and internal structure below the main deck which provide both the flotation envelope and structural integrity of the vessel in its normal operations … (portions omitted)”
and
“Superstructure means the main deck and any other structural part above the main deck.”
I am pretty sure the percentage of foreign steel can not exceed 1.5%. That said there are a number of exceptions. If certain members are not available they can be imported. Also Hatch Covers and certain cell guides are considered “Outfitting” and do not count towards that percentage.
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What is your basis for this assertion? If the US build requirement is relaxed (or eliminated), it would result in a significant reduction in new ship price (let’s say hypothetically 50%, maybe more?!?). This would result in the purchase of more ships, which would increase capacity, which would lower prices.
Manning costs are variable (and a small percentage of the big picture). Capital cost is the reason so many old clunkers are still sailing.
One places enough ships to cover the market, not for the sole purpose of increasing capacity. You want ships reasonably full on a passage, not half or less. Crowley and Tote for example each have 2 ships running to Puerto Rico. Putting 6 ships on that run doesn’t automatically increase the market for the goods being shipped.
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Maritime Executive reports Crowley’s new ships cost 180 million each. They’re 2,400 TEU, carry 400 cars, and make one round trip per week. Let’s say that they average 1,500 TEU per trip (62.5% container capacity) with no cars and average 50 trips per year over a 20 year lifetime. That’s 75,000 TEU per year = 1.5 million TEU in their lifetime. That comes out to a conservative estimate of the ENTIRE construction cost equaling $120 per TEU, or $60 per 40ft container.
Assuming an equivalent ship built foreign would be half the cost, how much do you think the extra $30 per 40ft container raises the cost of a can of beans at the grocery store? Not enough for the consumer to ever notice.
Your analysis and logic are completely sound. But here’s the deal, your cost per TEU does not really matter. What matters is how the people in the boardroom feel when approving the capital budget. They see the figures of a US built ship for foreign and say “NO WAY!”
Right. Which is why:
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There are some boardrooms where they see that price and say; We want a piece of that.
That is the boardroom of the foreign companies that own the yard that build those expensive ships for the captive US market.
The profit margin may not be good enough for US investors, but in the shipbuilding business it is marvelous. With the tax incentives and support on offer it is a hell of a lot better than what they can get at their other yards.
PS> The same goes for shipowning and operation under US flag outside the Jones Act market. Just have a look at the names of the companies that is active in that market.