More “foreign aid”:
PS> Any potential JA conflict here?
There’s considerable reason for skepticism around this Hanwha announcement. Consider:
- Expanding annual production to as many as 20 vessels per year makes no sense. Current demand for US-built cargo ships over the last 25 years has averaged less than 3 per year. The proposed Ships for America Act would try to expand production by 15-20 ships/year. For 20 ships/year, Hanwha would have to capture basically all domestic orders (assuming Ships for America passes and works as intended) or build for the export market. With inflated steel costs, the lack of a domestic supply chain, and labor shortages/costs, Hanwha Philly — even if Hanwha can remedy its technological and infrastructure deficiencies — is in no way prepared to compete internationally with leading Asian yards.
- The two “U.S.-ordered, export-market-viable” LNG carriers ordered this year by Hanwha Shipping make no sense. They will be overwhelmingly built in South Korea, with Hanwha Philly only responsible for “U.S. regulatory compliance and safety certification.” So they won’t be Jones Act compliant, nor meet the US-built definition of the Section 301 action requiring a percentage of US LNG exports to take place using US-built/flagged LNG carriers starting in 2029 (they only have to be US-flagged for 2028-29), so what’s the point?
- Hanwha says the MR tankers will “help drive the capability of U.S. businesses to reach foreign export markets.” Again, nonsensical. US exporters can use significantly less costly foreign builds for exports, so why use these vessels?
- Last year, OSG’s Sam Norton stated his skepticism about any near-term orders for a large number of MR tankers, given high capital costs. I believe others have stated that charter rates of $100K/day are needed to justify new construction (believe they are currently at ~$85K). Furthermore, tankers (an I think MR tankers in particular) are the youngest segment of the JA fleet. But now Hanwha thinks that ten are needed? Also note the lack of specifics here beyond the first one being delivered in early 2029, with no word on when subsequent deliveries will take place.
- Hanwha also states the MR tankers and LNG carriers will serve as a “strategic platform to support U.S. energy security and global energy reliability.” This suggest exports, but again, why would anyone use US-built and/or flagged ships or this? What is the business case?
- Using Google Translate, the Korean language version of Hanwha’s press release states that the order from Hanwha Philly Shipyard is “in response to the proposed amendments to Section 301 of the U.S. Trade Act and the Jones Act, which mandate the use of U.S. vessels for U.S. energy exports.” I have no idea what amendments this could be referring to. As best I can figure, it might be a reference to the Ships for America Act.
- The Korean language version also states that the $5 billion investment to ramp up production to 20 ships/year is for the “medium to long term.”
My bet is that this is mostly PR vaporware meant to generate positive buzz and, to the extent there is real substance behind it, is a bet on the passage of Ships for America (if the legislation doesn’t pass, no big deal. There is nothing here that Hanwha can’t walk back). Another possible scenario I see is Hanwha getting rewarded for its commitment to domestic commercial construction — a stated goal of the Trump administration — with a contract to buy Navy ships from SK’s Korea yard (Trump himself mentioned buying ships from Korea earlier this week).
You can also read some informed commentary here from shipping financier James Lightbourn: Korean-American Shipbuilding: Will Actions Live Up To Words?
Type 26 Frigate:
Illustrasjon: BAE Systems
From NRK today:
This is what you need to know about the new frigate purchase
Norway is to spend billions of kroner on five new frigates. But what is a frigate, why are they being purchased now, and what does Israel have to do with the purchase?
Video: Dette er Norges nye fregatt – NRK
Norwegian authorities will purchase at least five new frigates from the United Kingdom
Source: Dette må du vite om det nye fregattkjøpet – NRK Vestland
Experts have questioned whether these Frigates are suitable for the naval warfare of the future:
(Google translation)
PS> The question is if ANY existing Naval vessels (or designs) are prepared for the rapid changes that is happening right now.
(As shown by ongoing conflicts in the Black Sea and Red Sea)
Here is a comment on Facebook:
David Earl Williams III
Norway bypassed U.S. offers, striking a $13.5B deal with Britain for new frigates, citing NATO pressure and defense needs. It deepens UK-Norway ties while sidelining U.S. shipbuilders.
Geez, I wonder why? Maybe Trump’s economic policies and his “pay up or defend yourselves” stance. 
Australia is ordering its next generation frigates from Japan and it makes a lot of sense. There was a time in Aussie history that buying a Japanese car would have you cashiered from the Golf Club.
There were a time when Holden Standard and Ford Falcon ruled the roads in Oz.
PS> That was about the only cars on the hire car market in the late1960s and early 1970s, when I was a frequent hirer there.
Soon you can just give a brief verbal description of the ship you want to build and AI will produce the design and specification for your “dream ship” (Efficient, environmentally sustainable and CHEAP) within seconds:
The old HQ Holden was the ideal vehicle for rural people in Australia and New Zealand.
20 inch wheels with standard radial tyres, uncomplicated six cylinder in line petrol engine, large and relatively comfortable cabin. Easily maintained by the village mechanic and perfect for unsealed and dusty roads.
Economy wasn’t a strong point.
Your own article at the bottom of your post addresses this. The first of OSGs Veteran Class Tankers was built in 2005 and will be very long in the tooth by tanker world standards by the time the first of these new builds is scheduled to come out in 2029. These (Veteran Class tankers) are the obvious candidates for replacement with the new ships.
From: Who’s betting big on America’s shipbuilding renaissance? Foreigners.
“While Philly Shipyard historically built for the commercial market, signals imply Hanwha intends Uncle Sam to be a major customer in the future. As Mike Smith, President and CEO of Hanwha Defense USA said,
“I do see us building the fleet the Navy needs next.”
Interestingly, David Kim, the appointed CEO of Hanwha Philly Shipyard, was previously an Executive Vice President at Hanwha Defense USA.”
By world standards, yes. But this is Jones Act world, where — according to OSG’s CEO — tankers get used until age 40: https://x.com/cpgrabow/status/1850891437405086083
A 2005-built tanker should still have another 15-20 years left in it. So again, where does the demand come from?
As for Navy construction, Philly isn’t going to be building 20 warships or even auxiliary ships per year.
I’m still left wondering how any of this makes sense.
Ego padding?
Excerpt from a recent Tradewinds interview with Hanwha Shipping CEO Ryan Lynch:
The shipowner announced on Tuesday that it had booked the 10 chemical and product tanker newbuildings at Hanwha Philly Shipyard, which Hanwha Group purchased last year. The order, placed during a visit to the US by South Korean President Lee Jae Myung, came as the Hanwha Group has been seeking to play a lead role in bringing the country’s shipbuilding capabilities to America.
“We wanted to make sure that we drew the line in the sand, they know we mean business, and we really want to put our money where our mouth is,” Lynch said.
“We want to be a meaningful partner in the US maritime system.”
Who is the “they” in Lynch’s first statement? Such talk indicates to me that this is being driven by politics, not profits in the JA sector. Guessing this is a long-term play for US Navy contracts and/or subsidies from the forthcoming US-South Korea trade deal struck with Trump to avoid higher tariffs.
Laughable. At least as it pertains to the Veteran Class.
The amount of money required to keep the Overseas Houston sailing at 40 at OCIMF standards will make a new build look cheap. Not to mention lower charter rates due to its age and non competitive fuel efficiency compared to younger ships (which is already the case now).
Feel free to place even a minimum bit of scrutiny on something a CEO claims prior to using as your basis for claiming there will be no demand for these proposed ships.
Fair point about discounting a CEO’s talk, but his comments aren’t out of line with past experience. Average age of the last 4 JA tankers scrapped (HOUSTON, CHARLESTON, SEAKAY SPIRIT, CHEMICAL PIONEER — only tankers I can find data for, not trying to cherry pick) was 40. If you subtract the oldest of those four, the CP, the average becomes 36. Certainly true that operating costs surge as vessels age, but so have newbuild costs. In 2019, ASC projected the cost of a JA newbuild MR tanker at $140-150m. Now it’s ~$220m. Unless Philly can significantly reduce those costs, it’s not hard to see tankers remaining in service until age 40.
From this article it appears that it is the Naval ship market, not the JA market that is of interest to Korean shipyard operators:
That’s where the money is: https://www.maritime.dot.gov/sites/marad.dot.gov/files/2021-06/Economic%20Contributions%20of%20U.S.%20Shipbuilding%20and%20Repairing%20Industry.pdf
The Korean interest in investing in US shipyards may be partly political, but quite obviously there are money to be made in US shipbuilding and repairs, especially when it is Government contracts to be had:
BTW; NASSCO and HII may be wholly US owned and operated, but how many of the US yard building capital ships for the Navy are wholly or partly foreign owned and managed?
Who own(ed) the US shipyards that is/has built ships for the US Merchant Ocean fleet, or large JA compliant vessels (not tugs and barges etc.) in the last 5 years?
Foreign-owned shipyards in the US are Fincantieri Marine Group, Austal USA, Seatrium AmFELS, and Hanwha Philly Shipyard. Bollinger Mississippi was Singaporean-owned VT Halter before Bollinger purchased it a few years ago.
How many US shipyards, aside from the above, built commercial ships over 1000 GT for the JA and foreign trade markets?
One of the above yards will changes foreign ownership at the end of 2025:
Seatrium offloads US shipyard to Karpowership
Source: Seatrium offloads US shipyard to Karpowership - Splash247
PS> With the delivery of the WTIV “Charybdis” what is left on the order book at Seatrium AmFELS?