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1 1 (November 15, 2023)

handle is hein.crs/govenlh0001 and id is 1 raw text is: nforming ii dona Rese r h Service le isIative deate sin ce 1914 November 15, 2023 U.S. Commercial Shipbuilding in a Global Context Introduction Congress has long-standing concern with the state of the U.S. commercial (i.e., non-Navy) shipbuilding industry. Now that China has become the world's leading shipbuilder, that concern has intensified. Cargo ships typically transport 90% of the military equipment needed in overseas wars. Although there are longtime federal financing programs and import restrictions intended to boost domestic commercial shipbuilding, the U.S. industry remains globally uncompetitive. A 2021 Department of Defense (DOD) report states the following: While China's naval buildup has been able to piggyback on its rapidly expanding commercial shipbuilding industry, U.S. shipbuilding, by contrast, has become a key vulnerability in the U.S. defense industrial base.... Chinese-built ships are prevalent in the world fleet, and the U.S. military relies on them. Three of the ten commercial oil tankers selected to ship fuel for DOD as part of the newly enacted Tanker Security Fleet are Chinese-built. As for dry cargo supplies for DOD, 7 of the 12 most recently built ships in the Maritime Security Fleet are Chinese-built. Apprehension over a possible Chinese invasion of Taiwan, the expanse of the Pacific Ocean, and recognition that China and Russia are capable of contesting the U.S. sealift capability have accentuated the national security implications of the shrunken U.S. commercial shipbuilding sector. The COVID-19 pandemic and the war in Ukraine have also led some policymakers to focus on repatriating manufacturing to secure U.S. supply chains and the U.S. defense industrial base. Global Context As Table 1 shows, China is building hundreds of ships per year, and the United States is building five or fewer. Table 1. Year-End Orderbook for Large Oceangoing Ships (# of ships under construction) Shipbuilder 2022 2021 2020 China 1,794 1,708 1,216 South Korea 734 626 441 Japan 587 612 533 Europe 319 288 284 United States 5 3 4 Source: BRS Shipbrokers, Annual Review, https://brsshipbrokers.com/ publications. In terms of gross tons, which is a measure of a ship's volume, China, Korea, and Japan build over 90% of the world's tonnage; the United States builds about 0.2%. The mantle of the world's leading shipbuilder passed from the United Kingdom to Japan in the 1950s, from Japan to South Korea around 2000, and from South Korea to China in 2010. In 1999, in gross tons, China accounted for 5% of cargo ships built that year; Japan and Korea accounted for 42% and 34%, respectively; and the United States accounted for 0.25%. In 2006, China's 1 h National 5-Year Economic Plan (2006-2010) was the first of its economic plans to specifically mention shipbuilding with a plan to become a world leader. In 2007, China built about 18% of world tonnage, but it received about 30% (in tonnage) of new ship orders that year, second to Korea. U.S. Shipyards The minuscule U.S. market share in shipbuilding long pre- dates China's ascent. The United States was a peacetime world leader in shipbuilding when ships were made of wood in the early 1800s. During World Wars I and II, the United States built thousands of cargo ships. These were sold to merchant carriers after the wars, including foreign buyers, but were soon replaced by more efficient ships built in foreign yards. In the 1970s, U.S. shipyards were building about 5% of the world's tonnage, equating to 15-25 new ships per year. In the 1980s, this fell to around five ships per year, which is the current rate of U.S. shipbuilding. As Table 2 indicates, a shipyard in Philadelphia and one in San Diego have built the majority of domestically built commercial cargo ships in recent years. Table 2.U.S. Shipyards Constructing Large Commercial Cargo Ships, 2010-2023 Shipyard Location Ships built Philly Shipyard Philadelphia, PA 16 tankers 2 container ships General Dynamics San Diego, CA 12 tankers NASSCO 4 container ships VT Halter Marine* Pascagoula, MS 2 container ships I roll-on/roll-off Keppel AmFELS Brownsville, TX 2 container ships BAE Systems Mobile, AL** I tanker (2012) Fincantieri Bay Sturgeon Bay, WI I dry bulk laker Shipbuilding Source: U.S. Maritime Administration, Jones Act fleet listing. Notes: *acquired by Bollinger Shipyards in 2022; **closed in 2018.

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