In response to a new mandate from the United States Trade Representative (USTR), Hanwha Shipping, a South Korean company, plans to construct the first U.S.-made liquefied natural gas (LNG) carriers. The regulation, which will take effect in three years, requires a portion of U.S.-exported LNG to be transported on domestically built carriers, prompting Hanwha to invest in Philly Shipyard, acquired in 2024.
New USTR Mandate Sparks Domestic LNG Carrier Production
The USTR’s recent directive mandates that by 2030, the U.S. will need 5 to 7 LNG carriers flagged under the U.S. flag. This shift aims to bolster domestic shipping capabilities for LNG exports, a move driven by national security and economic interests. Hanwha Shipping’s acquisition of Philly Shipyard positions the company to meet this emerging demand, which will be a critical part of U.S. LNG export strategies.
Challenges and Industry Reactions
While the new mandate is seen as a boost for the U.S. shipbuilding industry, it faces criticism from LNG industry leaders. Critics argue that the regulation could disrupt existing contracts, increase transportation costs, and make compliance challenging due to the lack of U.S. infrastructure and expertise in LNG carrier construction. Currently, South Korea, Japan, and China dominate the global LNG carrier market, with less than 1% of LNG carriers flying the U.S. flag.
Hanwha Shipping’s Strategic Move
Hanwha Shipping’s decision to focus on building LNG carriers domestically aligns with the USTR’s new regulations and could position the company as a key player in the U.S. LNG shipping market. The company plans to leverage its acquisition of Philly Shipyard to facilitate the construction of these specialized vessels, marking a significant shift in U.S. maritime industry capabilities.
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Source: BUSINESS KOREA
