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International cooperation

Revitalizing US Shipbuilding Capacity: A Model of Allied Cooperation

Strategic Insights

— 2 min read

The Trump administration has introduced demand-side measures to revitalize US shipbuilding capacity, including port fees on subsidized Chinese vessels. However, supply-side investments, such as renovating dry docks and expanding facilities, will require several years. In the meantime, top foreign shipbuilders from South Korea and Finland have partnered with American shipbuilders, transferring their production techniques and providing a potential short-term solution to upscale US shipbuilding.

The decline of US shipbuilding is attributed to the lack of vertical integration, leaving intermediate components dependent on subcontractors, which creates bottlenecks and extends lead times. As a result, the number of active US shipyards capable of building large vessels has declined by 80%. US shipbuilding firms sell commercial ships at four to five times the global market price, sustained by an artificial demand floor imposed by the Jones Act.

Global competitors, such as China, employ industrial policies to stay ahead. In 2024, China's share of the global orderbook was 71%, with 3,419 ships comprising 260.8 million deadweight tonnage (DWT). China's shipyards are heavily subsidized, potentially receive exaggerated orders, and produce simultaneously for commercial shippers and the People's Liberation Army Navy.

A US shipbuilding strategy must account for time, as reopening, expanding, and commissioning new US shipyards could take years. Supply-side investments cannot occur overnight, including in available dry docks, facility renovations, acquiring land, or upskilling a shipbuilding workforce. A model of allied cooperation is already in play, with Hanwha's acquisition of Philly Shipyard and the US-Finland icebreaker deal showcasing how the US and allied shipbuilders can team to solve their respective problems.

Key Takeaways:

  • The Trump administration has introduced demand-side measures to revitalize US shipbuilding capacity, including port fees on subsidized Chinese vessels.
  • Supply-side investments, such as renovating dry docks and expanding facilities, will require several years.
  • Top foreign shipbuilders from South Korea and Finland have partnered with American shipbuilders, transferring their production techniques and providing a potential short-term solution to upscale US shipbuilding.
  • The decline of US shipbuilding is attributed to the lack of vertical integration, leaving intermediate components dependent on subcontractors, which creates bottlenecks and extends lead times.
  • The number of active US shipyards capable of building large vessels has declined by 80%.
  • US shipbuilding firms sell commercial ships at four to five times the global market price, sustained by an artificial demand floor imposed by the Jones Act.
  • China's share of the global orderbook was 71% in 2024, with 3,419 ships comprising 260.8 million deadweight tonnage (DWT).
  • China's shipyards are heavily subsidized, potentially receive exaggerated orders, and produce simultaneously for commercial shippers and the People's Liberation Army Navy.
  • A US shipbuilding strategy must account for time, as reopening, expanding, and commissioning new US shipyards could take years.
  • Supply-side investments cannot occur overnight, including in available dry docks, facility renovations, acquiring land, or upskilling a shipbuilding workforce.
  • Hanwha's acquisition of Philly Shipyard and the US-Finland icebreaker deal showcase how the US and allied shipbuilders can team to solve their respective problems.

Statistics:

  • 80% decline in the number of active US shipyards capable of building large vessels.
  • 71% share of China's global orderbook in 2024.
  • 3,419 ships in China's global orderbook in 2024, comprising 260.8 million deadweight tonnage (DWT).
  • $6.1 billion in the US-Finland icebreaker deal.
  • $5 billion in Hanwha's investment to expand Philly Shipyard facilities.
  • 10 vessels expected to be produced by Philly Shipyard by 2030.
  • 4-5 times the global market price at which US shipbuilding firms sell commercial ships.

Sources:

  • "The Decline of US Shipbuilding, in Context" by Thomas Goldstein Steptoe LLP
  • "A US Shipbuilding Strategy Takes Shape, Leveraging Partnerships" by Thomas Goldstein Steptoe LLP
  • "The US-Finland Icebreaker Deal" by Thomas Goldstein Steptoe LLP
  • "Hanwha Acquires Philly Shipyard" by Thomas Goldstein Steptoe LLP
  • Section 301 investigation by the Biden-era USTR

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