Colin Grabow
Colin Grabow
Last week, the Philly Shipyard announced the ceremonial start of construction on three Aloha class containerships. While typically a celebratory occasion, the cutting of steel for these ships should be more accurately viewed as marking a grim milestone for American shipbuilding. At $333 million each, the vessels symbolize a stunning lack of competitiveness and the failure of US maritime protectionism.
The ships’ price tag is almost difficult to fathom. For perspective, the same shipyard was contracted to build two Aloha class containerships—i.e., almost the exact same vessel (the new ships feature a more advanced LNG propulsion system)—in 2013 for $209 million each. That’s an increase of well over $100 million in nine years (the new vessels were ordered in 2022).
Further, consider that two LNG-powered containerships were ordered from a South Korean shipyard in 2022 for over $200 million less per ship than the new Aloha class vessels despite having more than double their cargo capacity.
Why the vast price difference? As one Danish maritime publication put it, “It’s not because the ships are built from gold plates instead of steel plates, but the US shipbuilding industry is way, way too expensive because it’s not competitive.”
This lack of competitiveness is a natural outcome of not having to compete. Instead of carving out a specialized niche within the global market, US shipyards almost exclusively operate within a captive domestic market created by the 1920 Jones Act (large Navy and Coast Guard contracts restricted to US shipyards also encourage this domestic orientation). Among its provisions, the law requires that vessels transporting goods within the United States be constructed in domestic shipyards.
In theory, such protectionism ensures the existence of capable shipyards to meet the country’s national security needs. Indeed, Jones Act advocates insist the law helps provide a “modern” and “robust” shipbuilding industrial base. » Read More
https://www.cato.org/blog/new-ships-offer-case-study-protectionist-dysfunction