U.S. Commercial Shipbuilding in a Global Context
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November 15, 2023
U.S. Commercial Shipbuilding in a Global Context
Introduction
In terms of gross tons, which is a measure of a ship’s
Congress has long-standing concern with the state of the
volume, China, Korea, and Japan build over 90% of the
U.S. commercial (i.e., non-Navy) shipbuilding industry.
world’s tonnage; the United States builds about 0.2%.
Now that China has become the world’s leading
shipbuilder, that concern has intensified. Cargo ships
The mantle of the world’s leading shipbuilder passed from
typically transport 90% of the military equipment needed in
the United Kingdom to Japan in the 1950s, from Japan to
overseas wars. Although there are longtime federal
South Korea around 2000, and from South Korea to China
financing programs and import restrictions intended to
in 2010. In 1999, in gross tons, China accounted for 5% of
boost domestic commercial shipbuilding, the U.S. industry
cargo ships built that year; Japan and Korea accounted for
remains globally uncompetitive. A 2021 Department of
42% and 34%, respectively; and the United States
Defense (DOD) report states the following:
accounted for 0.25%. In 2006, China’s 11th National 5-Year
Economic Plan (2006-2010) was the first of its economic
While China’s naval buildup has been able to
plans to specifically mention shipbuilding with a plan to
piggyback on its rapidly expanding commercial
become a world leader. In 2007, China built about 18% of
shipbuilding industry, U.S. shipbuilding, by
world tonnage, but it received about 30% (in tonnage) of
contrast, has become a key vulnerability in the U.S.
new ship orders that year, second to Korea.
defense industrial base….
U.S. Shipyards
Chinese-built ships are prevalent in the world fleet, and the
The minuscule U.S. market share in shipbuilding long pre-
U.S. military relies on them. Three of the ten commercial
dates China’s ascent. The United States was a peacetime
oil tankers selected to ship fuel for DOD as part of the
world leader in shipbuilding when ships were made of
newly enacted Tanker Security Fleet are Chinese-built. As
wood in the early 1800s. During World Wars I and II, the
for dry cargo supplies for DOD, 7 of the 12 most recently
United States built thousands of cargo ships. These were
built ships in the Maritime Security Fleet are Chinese-built.
sold to merchant carriers after the wars, including foreign
buyers, but were soon replaced by more efficient ships built
Apprehension over a possible Chinese invasion of Taiwan,
in foreign yards. In the 1970s, U.S. shipyards were building
the expanse of the Pacific Ocean, and recognition that
about 5% of the world’s tonnage, equating to 15-25 new
China and Russia are capable of contesting the U.S. sealift
ships per year. In the 1980s, this fell to around five ships
capability have accentuated the national security
per year, which is the current rate of U.S. shipbuilding.
implications of the shrunken U.S. commercial shipbuilding
sector. The COVID-19 pandemic and the war in Ukraine
As Table 2 indicates, a shipyard in Philadelphia and one in
have also led some policymakers to focus on repatriating
San Diego have built the majority of domestically built
manufacturing to secure U.S. supply chains and the U.S.
commercial cargo ships in recent years.
defense industrial base.
Table 2.U.S. Shipyards Constructing Large
Global Context
Commercial Cargo Ships, 2010-2023
As Table 1 shows, China is building hundreds of ships per
year, and the United States is building five or fewer.
Shipyard
Location
Ships built
Table 1. Year-End Orderbook for Large Oceangoing
Phil y Shipyard
Philadelphia, PA
16 tankers
Ships
2 container ships
(# of ships under construction)
General Dynamics
San Diego, CA
12 tankers
Shipbuilder
2022
2021
2020
NASSCO
4 container ships
China
1,794
1,708
1,216
VT Halter Marine*
Pascagoula, MS
2 container ships
1 roll-on/roll-off
South Korea
734
626
441
Keppel AmFELS
Brownsvil e, TX
2 container ships
Japan
587
612
533
BAE Systems
Mobile, AL**
1 tanker (2012)
Europe
319
288
284
Fincantieri Bay
Sturgeon Bay, WI
1 dry bulk “laker”
United States
5
3
4
Shipbuilding
Source: BRS Shipbrokers, Annual Review, https://brsshipbrokers.com/
Source: U.S. Maritime Administration, Jones Act fleet listing.
publications.
Notes: *acquired by Bol inger Shipyards in 2022; **closed in 2018.
https://crsreports.congress.gov
U.S. Commercial Shipbuilding in a Global Context
Up until 2018, Philly Shipyard built only commercial
vessels, diminishing motivation to build a domestic fleet
vessels, but, running out of orders and facing closure, it
that can serve as a naval auxiliary. On the other hand, a
pursued and was awarded the construction of five maritime
synergy could be pursued between military ships and
academy training ships funded by the federal government.
domestic coastal cargo ships. The military seeks versatility,
Despite those orders and subsequent commercial orders, the
such as ships that can carry a variety of cargoes and of
shipyard continues to operate at a loss. The NASSCO
medium size with their own cranes and ramps for unloading
shipyard primarily relies on Navy shipbuilding for revenue.
cargo at damaged or undeveloped ports. In the domestic
Keppel AmFELS is a new builder of container ships, with
coastal trade, such ships could exploit less-developed (and
deliveries in 2022 and 2023, but it has been a longtime
less-expensive) port property.
builder of offshore oil rigs.
Worldwide Overcapacity
Compared with U.S. shipyards that build large vessels,
Worldwide, overcapacity plagues the shipbuilding sector,
there are many more U.S. shipyards that build smaller
though the number of active shipyards in 2022 was 301
vessels such as tugs and barges; supply vessels for offshore
compared with a peak of 699 in 2007. Current worldwide
oil, gas, and wind development; and tour boats and ferries.
shipyard capacity is about 1,200-1,300 ships per year
Although these yards support shipyard workforce skills,
compared with about 2,000 ships per year between 2005
they lack the infrastructure (e.g., larger dry docks, deeper
and 2010. The three largest shipbuilding firms in China,
channels) needed to construct large oceangoing ships.
Korea, and Japan (nine firms in total) account for 75% of
world shipbuilding capacity. In 2022, the European
Federal Support Programs
Commission scuttled merger plans between Korean
The termination of the Construction Differential Subsidy
shipbuilders Hyundai and Daewoo on the grounds that such
program in the 1980s is viewed by some observers as being
plans would create a monopoly for LNG tanker
the principal cause of a reduction in the number of ships
construction.
built in the 1980s. This program was intended to provide
ships to U.S. owners at the world price. Still existing is a
Despite consolidation, even the most successful
federal loan guarantee program (46 U.S.C. Ch. 537) and tax
shipbuilding firms in Korea and Japan often operate at a
shelters for new ship construction (46 U.S.C. Ch. 533, 535).
loss. According to an annual market review, ship sale prices
Also, the Jones Act of 1920 (P.L. 66-261, §27) requires that
seldom exceed their building costs. Korean and Japanese
all vessels used in domestic commerce (not foreign trade)
shipbuilders are traditionally part of large manufacturing
be U.S.-built. This requires ship assembly in the United
and financial conglomerates (e.g., Samsung, Hyundai,
States, although some components, such as the engines, can
Mitsubishi, Kawasaki) where other profitable segments can
be imported.
help weather the poor profitability of their shipbuilding
sector. Even so, Korean shipbuilders have repeatedly
The Jones Act’s domestic construction requirement likely
required large government bailouts, which have prompted
underpins the entirety of U.S. commercial ship
World Trade Organization disputes from Japan and Europe.
construction. None of the U.S.-flag international trading
In China, 36 of the 100 largest shipyards are owned by the
fleet is domestically built, though shipbuilders could take
national government, 10 are owned by local governments,
advantage of both the loan guarantee and tax shelter
and 54 are privately owned. The government-owned yards
programs discussed above. No overseas purchase of large
accounted for 64% of ship tonnage built in China in 2021.
U.S.-built ships has occurred in decades because U.S.-built
ships can be four or more times the world price. Differences
In the 1990s, an effort to end shipbuilding subsidies
in wage rates, particularly for welders, and currency
worldwide through an Organisation for Economic Co-
exchange rate policy are factors leading to higher prices in
operation and Development (OECD) agreement was not
the United States. The lack of exports prevents U.S.
ratified by the United States (S. 1216, 105th Congress). A
shipyards from achieving economies of scale.
subsequent attempt initiated in 2002 was abandoned in
2010, but the OECD continues to track subsidy
Domestic purchase of U.S.-built ships is limited by their
developments.
high price relative to alternatives where available. Jones
Act trade lanes for oceangoing ships are predominantly
Policy Considerations
limited to Hawaii, Puerto Rico, and Alaska—where
If Congress were to seek a more robust commercial
overland connections (truck, rail, pipeline) to the
shipbuilding sector, heavy worldwide subsidization, dim
contiguous United States are not available—as well as to
profitability, and deeply-rooted federal programs would
Gulf Coast fuel deliveries to Florida because Florida is not
raise questions on how to proceed. Congress has requested
connected to the eastern seaboard pipeline network. As a
the executive branch formulate a national strategy toward
Jones Act workaround, shippers import on foreign ships
achieving a competitive maritime industry four times in the
rather than source product domestically and employ
last decade, most recently in December 2022 (P.L. 117-263,
seagoing barges because they cost less to build and crew
§3542) and has requested three Government Accountability
per unit of cargo. However, the barges are slower than
Office reports on the subject.
ships, which limits their range. Barges are also more
restricted by sea-state conditions, staying closer to shore.
John Frittelli, Specialist in Transportation Policy
On the one hand, seagoing barges carry as much cargo as
the Jones Act ship fleet and are nearly double in number of
IF12534
https://crsreports.congress.gov
U.S. Commercial Shipbuilding in a Global Context
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF12534 · VERSION 1 · NEW
November 15, 2023
U.S. Commercial Shipbuilding in a Global Context
Introduction
In terms of gross tons, which is a measure of a ship’s
Congress has long-standing concern with the state of the
volume, China, Korea, and Japan build over 90% of the
U.S. commercial (i.e., non-Navy) shipbuilding industry.
world’s tonnage; the United States builds about 0.2%.
Now that China has become the world’s leading
shipbuilder, that concern has intensified. Cargo ships
The mantle of the world’s leading shipbuilder passed from
typically transport 90% of the military equipment needed in
the United Kingdom to Japan in the 1950s, from Japan to
overseas wars. Although there are longtime federal
South Korea around 2000, and from South Korea to China
financing programs and import restrictions intended to
in 2010. In 1999, in gross tons, China accounted for 5% of
boost domestic commercial shipbuilding, the U.S. industry
cargo ships built that year; Japan and Korea accounted for
remains globally uncompetitive. A 2021 Department of
42% and 34%, respectively; and the United States
Defense (DOD) report states the following:
accounted for 0.25%. In 2006, China’s 11th National 5-Year
Economic Plan (2006-2010) was the first of its economic
While China’s naval buildup has been able to
plans to specifically mention shipbuilding with a plan to
piggyback on its rapidly expanding commercial
become a world leader. In 2007, China built about 18% of
shipbuilding industry, U.S. shipbuilding, by
world tonnage, but it received about 30% (in tonnage) of
contrast, has become a key vulnerability in the U.S.
new ship orders that year, second to Korea.
defense industrial base….
U.S. Shipyards
Chinese-built ships are prevalent in the world fleet, and the
The minuscule U.S. market share in shipbuilding long pre-
U.S. military relies on them. Three of the ten commercial
dates China’s ascent. The United States was a peacetime
oil tankers selected to ship fuel for DOD as part of the
world leader in shipbuilding when ships were made of
newly enacted Tanker Security Fleet are Chinese-built. As
wood in the early 1800s. During World Wars I and II, the
for dry cargo supplies for DOD, 7 of the 12 most recently
United States built thousands of cargo ships. These were
built ships in the Maritime Security Fleet are Chinese-built.
sold to merchant carriers after the wars, including foreign
buyers, but were soon replaced by more efficient ships built
Apprehension over a possible Chinese invasion of Taiwan,
in foreign yards. In the 1970s, U.S. shipyards were building
the expanse of the Pacific Ocean, and recognition that
about 5% of the world’s tonnage, equating to 15-25 new
China and Russia are capable of contesting the U.S. sealift
ships per year. In the 1980s, this fell to around five ships
capability have accentuated the national security
per year, which is the current rate of U.S. shipbuilding.
implications of the shrunken U.S. commercial shipbuilding
sector. The COVID-19 pandemic and the war in Ukraine
As Table 2 indicates, a shipyard in Philadelphia and one in
have also led some policymakers to focus on repatriating
San Diego have built the majority of domestically built
manufacturing to secure U.S. supply chains and the U.S.
commercial cargo ships in recent years.
defense industrial base.
Table 2.U.S. Shipyards Constructing Large
Global Context
Commercial Cargo Ships, 2010-2023
As Table 1 shows, China is building hundreds of ships per
year, and the United States is building five or fewer.
Shipyard
Location
Ships built
Table 1. Year-End Orderbook for Large Oceangoing
Phil y Shipyard
Philadelphia, PA
16 tankers
Ships
2 container ships
(# of ships under construction)
General Dynamics
San Diego, CA
12 tankers
Shipbuilder
2022
2021
2020
NASSCO
4 container ships
China
1,794
1,708
1,216
VT Halter Marine*
Pascagoula, MS
2 container ships
1 roll-on/roll-off
South Korea
734
626
441
Keppel AmFELS
Brownsvil e, TX
2 container ships
Japan
587
612
533
BAE Systems
Mobile, AL**
1 tanker (2012)
Europe
319
288
284
Fincantieri Bay
Sturgeon Bay, WI
1 dry bulk “laker”
United States
5
3
4
Shipbuilding
Source: BRS Shipbrokers, Annual Review, https://brsshipbrokers.com/
Source: U.S. Maritime Administration, Jones Act fleet listing.
publications.
Notes: *acquired by Bol inger Shipyards in 2022; **closed in 2018.
https://crsreports.congress.gov
U.S. Commercial Shipbuilding in a Global Context
Up until 2018, Philly Shipyard built only commercial
vessels, diminishing motivation to build a domestic fleet
vessels, but, running out of orders and facing closure, it
that can serve as a naval auxiliary. On the other hand, a
pursued and was awarded the construction of five maritime
synergy could be pursued between military ships and
academy training ships funded by the federal government.
domestic coastal cargo ships. The military seeks versatility,
Despite those orders and subsequent commercial orders, the
such as ships that can carry a variety of cargoes and of
shipyard continues to operate at a loss. The NASSCO
medium size with their own cranes and ramps for unloading
shipyard primarily relies on Navy shipbuilding for revenue.
cargo at damaged or undeveloped ports. In the domestic
Keppel AmFELS is a new builder of container ships, with
coastal trade, such ships could exploit less-developed (and
deliveries in 2022 and 2023, but it has been a longtime
less-expensive) port property.
builder of offshore oil rigs.
Worldwide Overcapacity
Compared with U.S. shipyards that build large vessels,
Worldwide, overcapacity plagues the shipbuilding sector,
there are many more U.S. shipyards that build smaller
though the number of active shipyards in 2022 was 301
vessels such as tugs and barges; supply vessels for offshore
compared with a peak of 699 in 2007. Current worldwide
oil, gas, and wind development; and tour boats and ferries.
shipyard capacity is about 1,200-1,300 ships per year
Although these yards support shipyard workforce skills,
compared with about 2,000 ships per year between 2005
they lack the infrastructure (e.g., larger dry docks, deeper
and 2010. The three largest shipbuilding firms in China,
channels) needed to construct large oceangoing ships.
Korea, and Japan (nine firms in total) account for 75% of
world shipbuilding capacity. In 2022, the European
Federal Support Programs
Commission scuttled merger plans between Korean
The termination of the Construction Differential Subsidy
shipbuilders Hyundai and Daewoo on the grounds that such
program in the 1980s is viewed by some observers as being
plans would create a monopoly for LNG tanker
the principal cause of a reduction in the number of ships
construction.
built in the 1980s. This program was intended to provide
ships to U.S. owners at the world price. Still existing is a
Despite consolidation, even the most successful
federal loan guarantee program (46 U.S.C. Ch. 537) and tax
shipbuilding firms in Korea and Japan often operate at a
shelters for new ship construction (46 U.S.C. Ch. 533, 535).
loss. According to an annual market review, ship sale prices
Also, the Jones Act of 1920 (P.L. 66-261, §27) requires that
seldom exceed their building costs. Korean and Japanese
all vessels used in domestic commerce (not foreign trade)
shipbuilders are traditionally part of large manufacturing
be U.S.-built. This requires ship assembly in the United
and financial conglomerates (e.g., Samsung, Hyundai,
States, although some components, such as the engines, can
Mitsubishi, Kawasaki) where other profitable segments can
be imported.
help weather the poor profitability of their shipbuilding
sector. Even so, Korean shipbuilders have repeatedly
The Jones Act’s domestic construction requirement likely
required large government bailouts, which have prompted
underpins the entirety of U.S. commercial ship
World Trade Organization disputes from Japan and Europe.
construction. None of the U.S.-flag international trading
In China, 36 of the 100 largest shipyards are owned by the
fleet is domestically built, though shipbuilders could take
national government, 10 are owned by local governments,
advantage of both the loan guarantee and tax shelter
and 54 are privately owned. The government-owned yards
programs discussed above. No overseas purchase of large
accounted for 64% of ship tonnage built in China in 2021.
U.S.-built ships has occurred in decades because U.S.-built
ships can be four or more times the world price. Differences
In the 1990s, an effort to end shipbuilding subsidies
in wage rates, particularly for welders, and currency
worldwide through an Organisation for Economic Co-
exchange rate policy are factors leading to higher prices in
operation and Development (OECD) agreement was not
the United States. The lack of exports prevents U.S.
ratified by the United States (S. 1216, 105th Congress). A
shipyards from achieving economies of scale.
subsequent attempt initiated in 2002 was abandoned in
2010, but the OECD continues to track subsidy
Domestic purchase of U.S.-built ships is limited by their
developments.
high price relative to alternatives where available. Jones
Act trade lanes for oceangoing ships are predominantly
Policy Considerations
limited to Hawaii, Puerto Rico, and Alaska—where
If Congress were to seek a more robust commercial
overland connections (truck, rail, pipeline) to the
shipbuilding sector, heavy worldwide subsidization, dim
contiguous United States are not available—as well as to
profitability, and deeply-rooted federal programs would
Gulf Coast fuel deliveries to Florida because Florida is not
raise questions on how to proceed. Congress has requested
connected to the eastern seaboard pipeline network. As a
the executive branch formulate a national strategy toward
Jones Act workaround, shippers import on foreign ships
achieving a competitive maritime industry four times in the
rather than source product domestically and employ
last decade, most recently in December 2022 (P.L. 117-263,
seagoing barges because they cost less to build and crew
§3542) and has requested three Government Accountability
per unit of cargo. However, the barges are slower than
Office reports on the subject.
ships, which limits their range. Barges are also more
restricted by sea-state conditions, staying closer to shore.
John Frittelli, Specialist in Transportation Policy
On the one hand, seagoing barges carry as much cargo as
the Jones Act ship fleet and are nearly double in number of
IF12534
https://crsreports.congress.gov
U.S. Commercial Shipbuilding in a Global Context
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF12534 · VERSION 1 · NEW