CEO Of Tampa Oil Shipper Sees Possibilities in An Energy Transition

Credits: Galen Crout/Unsplash

The U.S. must rejuvenate its shipbuilding capacity in order to take advantage of any emerging technologies, Sam Norton said, reports Business Jounel.

A new era of cleaner fuels 

Overseas Shipholding Group (NYSE: OSG) currently ships oil on its tanker ships, delivering vast quantities from refining centers in Texas, Louisiana and Mississippi to Port Tampa Bay. The operation — which employs roughly 1,000 workers on ships and on shore — is vital to the economy of West Central Florida and Central Florida as a whole.

But President Joe Biden’s administration envisions a new era of cleaner fuels to quell climate change, pumping billions of incentives to electric vehicle and semiconductor manufacturing plants. Most recently, the Department of Energy provided a record $9.2 billion loan to Ford Motor Co. and its battery manufacturing supplier for facilities in Tennessee and Kentucky.

That prompted Norton to write a LinkedIn post explaining his thoughts on why federal money should also be used to revive a dormant shipbuilding industry. Like other port cities, Tampa once had a robust shipbuilding industry before and during World War II. Now, shipyards are mostly focused on repair. (Tampa Ship LLC, owned by Edison Chouest Offshore, does have construction capabilities.)

“If industrial policy is being used to incentivize the replacement of internal combustion engines in the automobile sector, why can it not be considered in a similar manner to allow the construction of a new breed of maritime assets to be led by domestic companies?” Norton wrote. “What might be possible if the capital to build a world-class commercial shipbuilding facility were made available upfront …?”

The business of transporting oil domestically via ships will stagnate or decline in the coming decades, Norton told the Tampa Bay Business Journal. New possibilities with other liquid bulk commodities may exist — if only the country could figure out how to build ships again.

“When I look at the challenges for OSG for the next several years, we’re probably OK,” Norton said. “But if you start to project 10 years or 20 years in the future, the types of ships that would be operated by our company are going to look different than they do today.”

Putting the controversial Jones Act in a new light

OSG is one of the largest Jones Act tanker operators in the country. That means it must comply with the rules set forth in the Merchant Marine Act of 1920, which requires all vessels transporting cargo between United States ports to be built in the U.S., registered under the U.S. flag and manned by U.S. crews.

Nowadays, that’s a niche industry. Costs are high, due to both labor and ship acquisition costs. U.S. shipbuilding prices are higher than in other countries, and most shipbuilders are focused on fulfilling military and other government orders.

“There’s not much competition. And the people that are engaged in that are not really focused on trying to develop a market,” Norton said. “To try and build a more commodity-like ship that has applications in the commercial world isn’t on their radar. That’s been the case for some time. And that creates an obstacle for the growth of a robust merchant marine [industry].”

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Source: Business Journal