Revitalizing the US commercial shipbuilding industry will likely be a complex and time-consuming process. Clerc suggests that relying solely on protectionist measures, such as tariffs, may not be sufficient to quickly revive the industry, reports World Cargo News.
Reviving The Industry
As part of its broader efforts to revitalize its manufacturing sector, the US is prioritizing the revival of its shipbuilding industry. This move is crucial for national security, given the dominance of Chinese state-owned shipbuilders in the global market, accounting for over 70% of the world’s shipbuilding capacity.
Vincent Clerc, CEO of Maersk, emphasized that shipbuilding is not solely about commercial shipping but also encompasses technology, military power, and the ability to project influence. He acknowledged the US’s desire to rebuild its shipbuilding capacities and “know-how” in the face of China’s dominance in this critical sector.
However, Clerc highlighted the significant challenges involved in rebuilding the US shipbuilding industry. He emphasized that undoing decades of global supply chain development is a complex and long-term endeavor.
Clerc pointed out that even with the introduction of tariffs on Chinese-built ships, it would take at least six to seven years to produce the first commercial ship in a US shipyard, a timeframe that extends beyond typical political cycles.
Complex Endeavor
While the US has over 150 shipyards, most specialize in smaller vessels like tugs and barges. A few, like KeppelAmFELS and Philly Shipyard, are capable of building larger commercial vessels. However, the acquisition of Philly Shipyard by Hanwha Ocean highlights the challenges faced by the US shipbuilding industry.
Clerc emphasized the complexity of rebuilding the US shipbuilding industry due to the intricate global supply chain. He pointed out that even with tariffs on Chinese-built ships, it would take years to establish a fully domestic shipbuilding industry. Clerc cautioned against the potential economic consequences of tariffs, including inflationary pressures, increased shipping costs for American producers, and potential labor market disruptions.
Regarding the Inflation Reduction Act (IRA), Clerc noted that its passage as a budget act requires 60 Senate votes for repeal, making significant changes unlikely. Clerc acknowledged that while the IRA benefits red states, fossil fuel use is likely to increase to maintain energy affordability. This suggests that the US may pursue a path of energy diversification, incorporating both renewable and fossil fuel sources.
Despite potential opposition, Clerc pointed out that the overall direction of the US towards green energy is likely to continue. However, he also acknowledged the possibility of future adjustments to the IRA through another budget act.
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Source: World Cargo News
