The administration of Donald Trump is pushing for the revival of the domestic shipbuilding industry in the United States to counter China's 'maritime aspirations,' which boasts the largest shipbuilding capacity in the world. While related policies are pouring in, the New York Times (NYT) noted on the 27th (local time) that there are many obstacles to overcome for U.S. shipbuilding to become revitalized.
Last month, President Trump signed an executive order for the reconstruction of the U.S. shipbuilding industry. At that time, he said, "We will invest enormous amounts of money into shipbuilding," adding that "we are far, far, far behind (other countries)." Subsequently, the Office of the United States Trade Representative (USTR) announced sanctions on Chinese vessels and regulations mandating that certain commercial ships be built in the U.S. Congress is also pursuing a broad bill that includes subsidies for the shipbuilding industry.
However, to revive the shipbuilding industry, it needs to receive new orders, but the U.S. shipbuilding industry has declined for a long time, leading to a drop in its construction capacity. Most shipyards are overwhelmed handling naval orders, making it difficult to produce commercial vessels. Furthermore, building a ship in the U.S. takes significantly longer than in Asia, with costs reaching five times as much, NYT pointed out.
The Philadelphia shipyard, acquired by South Korean corporation Hanwha Ocean, also lacks the capacity to receive new orders until 2027. David Kim, the CEO of the Philadelphia shipyard, said, "The U.S. shipbuilding industry is now ready to leap forward," but noted that constructing a single ship in the Philadelphia shipyard takes about a year and a half, compared to just a week at South Korean shipyards. Hanwha Ocean plans to introduce advanced technologies such as automated welding to improve productivity at the Philadelphia shipyard.
Many shipbuilding companies are also struggling with labor shortages. Deputy Minister Brett Sayers noted during a congressional hearing in March that employees at shipyards building naval vessels often experience high turnover in their first year. The Philadelphia shipyard is also making a concerted effort to address labor shortages by doubling the number of apprentices to 240 next year.
The competition in the global shipbuilding industry is so fierce that there is hardly any room for the U.S. to intervene. Most cargo transport vessels currently traveling to and from the U.S. are built in China, Japan, or South Korea. Particularly, with China's ship production rapidly increasing, according to statistics from the shipbroking firm BRS, Chinese shipyards delivered a staggering 6,765 vessels, accounting for half of the global deliveries in the past decade. Japan delivered 3,130 vessels, South Korea 2,405 vessels, while the U.S. managed just 37.
NYT explained, "The few American-built ships purchased by shipping companies are typically used only for transporting cargo between U.S. ports," adding, "This is dictated by the Jones Act, enacted over 100 years ago, which requires that vessels operating on domestic routes be built in America." The Jones Act, established in 1920, stipulates that only U.S.-built ships can operate between American ports, and it is cited as one of the reasons for the decline of U.S. shipbuilding.
Critics argue that the subsidies bill currently promoted by Congress is no different from pouring enormous amounts of money into the uncompetitive U.S. shipbuilding industry. The price of a container ship built at the Philadelphia shipyard is about $330 million, almost five times the price of a ship built in Asia, which is $70 million. Opponents of the subsidies claim that to counter China's dominance, it would be better to build a strategic fleet with ships made in U.S. allies, Japan and South Korea, which are proven.
Colin Grabow, deputy director at the Cato Institute, said this shipbuilding revival policy gives an uneasy déjà vu. Since the closure of the Philadelphia Naval Base in 1995, there have been attempts to increase the production of commercial vessels, but most ended in failure. Grabow added, "We have already walked down this road before."