Welcome to the U.S. Shipping Merry-Go-Round
Taking your children or grandchildren for a ride on the Merry-Go Round may be a pleasant past memory. With that memory, we are asking to think about your choice of the best horse as you board the platform. A decision resting upon what you want out of the ride. Now consider that selection to the current state of US shipbuilding.
Selecting the outside row of “jumpers” provides the greatest thrill as they move the fastest. When the Executive order for Maritime Dominance was issued on April 9, 2025, the U.S. maritime industry was ready to ride for the thrill of it. After all it was issued by the “Lead” horse, the one with historical flair while branded with the most progressive support of U.S. Maritime.
Prior to the Executive Order, we experienced the Ships for America Act issued on December 19, 2024. Understanding the speed of Congressional legislation, the horse selection would have been the center row for a calmer, gentler ride understanding that every trade association, lobbyist and labor group would be rushing up to Capitol Hill to protect their interests. And protect they did. Or so they thought.
If you take into account recent domestic Jones Act waivers issued for a period of over 150 days and the damaging market results of that decision to US owners and operators during a period of geopolitical National Security, the “promises” look to be lost.
The Executive Order, the Ship’s Act legislation and all of the industry positioning was based around the rebuilding of US commercial shipbuilding. If we take into account nearly two years passing since Washington announced the “programs,” nothing has moved forward. The horse selection should have been recognized early on. They are called “standers” and have all four feet on the ground of the platform and do not move up and down as the merry-go-round turns. At this point no one in shipbuilding has “saddled up” as the industry has no riders and the answer to why is simple: No customer can afford the price of the ride.
With the geopolitical unrest occurring in every corner of the world, it becomes difficult to understand how the U.S. domestic maritime industry can lift itself back up and fix our internal problems. We would suggest first look back at the language of Section 1 of the Executive Order:
“The commercial shipbuilding capacity and maritime workforce of the United States has been weakened by decades of Government neglect.” If we understand the fall is the result of Government, how does the industry expect government to solve a “commercial” problem? The emphasis of the EO is commercial shipbuilding. Yet trillions of Federal Government dollars and very limited shipyard capacity are being budgeted, sold, developed, committed and arranged to support Navy construction. We see daily reports of battleships, autonomous drones, frigates and a rush to fund a quick fix of spending to reduce delays of existing Navy construction and M&R projects.
Delays and cost overruns we have experienced for decades.
The alarm of National Security rings loud if we follow the geopolitical issues. What is missing from reports is the fact that the U.S. Navy was also weakened after decades of Government neglect. The truth is with all of the problems presented, the current U.S. shipyard capacity and depleted workforce, can’t be fixed to serve Navy & commercial shipbuilding in the same breath. There is a Washington DC misunderstanding concerning the difference between the two “industries.” Be that as it may, the effort needs to be better defined in order to attract investment, create jobs and solve the Nation’s infrastructure issues.
The ability to fix the commercial problem is simply understanding markets and the comparative costs to build in the U.S. or the Far East as those costs are the lead factor to understand the business model.
U.S. Shipyard: A Limited Customer Base
Two “markets” determine the analysis. Vessels built under the protection of Jones Act Legislation and military vessels built for the US Navy and USCG. New U.S. construction built for foreign commerce has been absent from the analysis for decades. You don’t need “AI” to dig deep into that research. With that let’s return to the language of the Executive Order: “Rectifying these issues requires a comprehensive approach that includes securing consistent, predictable, and durable Federal funding.”
Simply put, subsidize the yards in the same fashion our foreign competitors do if this is the “third” market you wish to enter.
Foreign and U.S. flag, commercial owners and operators determine newbuilding decisions on market research based upon cargo availability and age profile of a certain ship size & type. The decisions are based upon historical “supply & demand” balance or imbalance. Our current Government research is fixated on the “wet markets” from crude, gas & clean product. It is an obvious selection as the Administration is concentrated on energy. Add a U.S. Navy Indo Pacific wish list and particular attention moves to medium range product tankers or “MRs.”
A Heritage Foundation report tagged as “Tidalwave” circa April 2025 and January 2026, reported “to mitigate today’s overreliance on China-controlled shipping, the nation will need a total of 1,315 additional U.S.-flagged/U.S.-crewed vessels of six different classes: 960 container ships; 122 tankers; 33 liquefied natural gas (LNG) carriers; 77 roll-on/roll-off (RO/RO) ships; 106 bulk carriers.”
Globally, the one hundred MR estimate was discussed 10 years ago simply due to foreign fleets age profile and demand. The “ECO ship” design addressed that requirement a decade ago resulting in a building rush in the U.S and Far East. This current estimate is based solely upon logistic requirements to support an Indo-Pacific military theater.
The shipyard industry also follows its own market and cost evaluation. Put yourself in their place when they see a Navy oiler contracted for more than $850 million dollars, training ships at $330 million, an Aircraft Carrier at more than nine billion and countless M&R support programs at prices a commercial repair yard or operator can’t fathom. Ask yourself as a builder what path your investment strategy would follow. Better yet ask your bank and financial advisor and watch him stand and yell: Go Navy.
As of this article the Government has issued an Arctic Security new construction program, Requests for Information (RFI) and designs for Console tankers, RoRos, and hospital ships. A collective wish list estimated to cost billions.
Most if not all of them Government funded in some fashion and none based upon a commercial business model. Where is the US shipyard capacity to satisfy these proposed projects? Or are the RFI’s positioned to expose the lack of that required infrastructure and create the “bridge” discussions involving foreign Ally yards. Make no mistake, if the Navy requirements ring true, Far East shipyard support will be necessary to meet projected periods when the tonnage will be required. Amtech, as a builder in South Korea, supported the “bridge” to support the delivery periods.
Now understand the programs and Navy involvement has extended well beyond U.S. shipbuilding and into Far East Ally shipyards that are passing on “commercial” contracts and reserving slots for the promise of US Navy new construction and M&R. With that capacity “reserved” you will see a return of commercial construction to China. The demand affected by the blockade of the Straits of Hormuz, Asian markets pivoting to Russian and a push for the Northern Arctic route all supporting as new “supply & demand” analysis. Several US based and Korean based owner/operators who have historically built in South Korea have announced Chinese contracts despite the US government tariffs and restrictions. Others will follow.
Ignoring the global markets will only create more confusion. The recent 150-day Jones Act waiver allowed more than 100 foreign vessels to enter the Jones Act trades.
A decision made by the Department of War and Homeland Security despite the decades of determining the legislation supported National Security and the Maritime Administration issuing waiver decisions. The only logical discussion to determine if the waiver was necessary would be the movement of crude or refined product to California due to the lack of U.S.-Flag tonnage capable of meeting California environmental and emissions requirements.
The waiver did not affect gasoline prices and was certainly not pushed into place to deliver asphalt on the Jin Zhou Wan from New Orleans to New Haven Connecticut. Amtech has long been a proponent of waiving the U.S. build requirement of the Act for certain ship types and technical requirements. That opinion is again based upon the cost to build commercial tonnage in the U.S. shipyards. Current costs of new construction contracts reaching levels that cannot be supported. The cost to build is the issue and if this is not recognized, the Merry-Go-Round will quickly become a Roller Coaster.
