Colin Grabow
Colin Grabow

While it’s no secret that vessels built in US shipyards to comply with the protectionist Jones Act are far costlier than those constructed overseas, some recent numbers provided by an industry insider are nonetheless stunning. Last fall, the CEO of Overseas Shipholding Group, a company that operates Jones Act-compliant tankers, estimated that the price of a US-built product tanker currently approaches $250 million. A few weeks later, he amended that figure to $200-$250 million. 
Either way, it’s extraordinary.
To understand why, consider that the price of such vessels built overseas is somewhere between $45 million and $52 million. Further consider that the $200 million figure for a US-built tanker was only first floated in late 2022, and as recently as mid-2020 the cost of such a vessel was placed at approximately $150 million (estimates are due to the lack of tankers being ordered or delivered since 2017). That’s a $50 million-$100 million increase in less than five years. 
But what about the longer-term price trajectory of US-built tankers? And how does this trend compare to equivalent vessels constructed abroad? To answer these questions, Cato intern Kristen Xiao and I used data from open sources to produce a chart showing the prices of US and internationally built medium-range tankers over the last two decades.

As the chart shows, US-built tanker prices have trended steadily and significantly upward. At the same time, tankers built abroad are only slightly more expensive than twenty years ago (and about $20 million higher starting from 2014). Over the last decade, the relative price of US-built tankers has only marginally increased (from about 4.3x the foreign price to 4.5x). Still, the absolute price delta has grown from approximately $110 million to $175 million. 
Notably, product tankers offer a fairly apples-to-apples comparison given their similar sizes and capacities (indeed,  » Read More
https://www.cato.org/blog/competitiveness-protected-us-shipyards-continues-erode