Shipbuilding Comeback in the US: Promise or Pipe Dream?

By Amy McLellan

The Trump administration says it can revive U.S. commercial shipbuilding through new executive orders, port fees and legislation such as the SHIPS for America Act. But can the U.S. really deliver? And what would it mean for carriers, forwarders and global logistics?

From Issue 4, 2025 of Breakbulk Magazine

(7-minute read)

From tariffs to trade disruption, the first six months of the year have continued to throw curve balls at the shipping industry. Among the many policy announcements that made headlines earlier this year, the bi-partisan SHIPS for America Act and President Trump’s Maritime Executive Order of April 2025, directing the development of a Maritime Action Plan, have the potential to be truly transformational.

Together with the actions taken by the Office of the United States Trade Representative (USTR) following a year-long Section 301 investigation into what it called China’s “unreasonable acts,” these measures set out a long-term vision to revive and reshape the U.S. maritime sector, including rebuilding its domestic shipbuilding base and a goal to establish a fleet of 250 U.S.-flagged commercial vessels.

The USTR measures include phased fees on Chinese vessel owners and operators, calculated by net tonnage per U.S. voyage; fees on operators of Chinese-built ships, based on net tonnage or container volume; and fees on foreign-built car carriers, determined by capacity — all of which will increase incrementally in the coming years.

After three years, the second phase will see limited restrictions on transporting LNG via foreign vessels, which will be increased incrementally over 22 years. There are also proposed tariffs on ship-to-shore cranes and other port equipment, in line with the President’s Maritime Executive Order.

The comprehensive vision, and the level of detail, took many in the industry by surprise. Yet Matthew Paxton, president of the Shipbuilders Council of America, points out while the SHIPS for America Act may be new legislation, elements of it, including the Energizing American Shipbuilding Act, have been around for more than a decade.

Backers of the bill point out that China’s massive government support, through subsidies, below-market financing, tax preferences and state-directed steel supply, have created an unfair advantage, giving them the ability to produce ships at prices U.S. shipyards simply can’t match.

And this has security implications, since a strong commercial shipbuilding base underpins naval delivery. “The decline in commercial shipbuilding undermines the industrial base needed for naval shipbuilding, repair, and surge capacity, threatening both economic and national security,” says Paxton.

U.S. shipyards built just five units in 2024, compared to over 250 constructed in China’s shipyards.

“With aging fleets, outdated infrastructure and shrinking industrial capacity, the time for incremental change has passed,” said Jan Sramek, founder and CEO of California Forever, which has plans to build a new shipyard in the north of the state (of which more later). Speaking earlier this year, Sramek said the U.S. “must reestablish domestic production at scale – now.”

As highlighted in recent GAO and DoD reports, U.S. shipyards struggle with “boom and bust” cycles and underutilization from government customers. These demand signals often result in smaller orders and inconsistent requirements. “What our industry needs is a stable and predictable demand that enables investment in our facilities and people. The SHIPS Act would be critical to that effort,” says Paxton.

Challenges Ahead

The proposed revival of U.S. commercial shipbuilding has been welcomed by many, though there’s also caution about the details and the timeframe.

“I applaud this bipartisan initiative, there’s been nothing like this since the Merchant Marine Act,” says Captain Bill Schubert, who was U.S. Maritime Administrator 2001-2005, and is the founder of Houston-based consulting company International Trade & Transportation.

“How we get there and how fast, that’s the question. There’s been a lot of good advice from people in the maritime sector, which includes the importance of focusing not just on the supply side but also the demand side.”

Quite simply, there’s no point building 250 U.S.-flagged ships unless they are commercially viable. Captain Schubert anticipated a combination of measures will address the demand side, adding that the transition time needs to be practical, given the realities of where we are now.

“I have full confidence the yards are capable, we have proven this in the past, but we just need to be practical about the implementation timeframe.”

For John Hark, director of Bertling Logistics Services in Houston and adjunct professor at Texas A&M University College of Marine Sciences and Maritime Studies, one of the big challenges will be finding labor. “It requires people,” he says, pointing out that workforce skills gaps are not a new problem but they are becoming more intense due to long-term demographic trends.

“About 10,000 people turn 65 every day, so we have to work hard to get people interested in joining the industry,” says Hark.

Port Houston has taken a proactive approach, with a decade-old program involving businesses and education stakeholders, helping to develop career pathways into the industry for young people. “It’s been proactive and forward thinking, which gives this area a jump start when it comes to talent and skills,” he says.

Industry watchers are now closely observing the extent to which workforce development, permitting and capital formation will keep pace with policy ambition.

Many are asking how an industry that has been outpaced by international yards, most notably in China but also in South Korea, Japan and some EU countries, can be rebuilt in the timeline set out. Many believe it will take international partnerships for American yards to catch up.

“The U.S. shipyard industry has long had partnerships with foreign companies, dating back to the late 1990s, and we welcome the continued investment in our industry,” says Paxton of the SCA. "However, the best way to revitalize U.S. shipyards and to expand capacity is to provide work to U.S. shipyards, with stable and consistent demand.”

Demand Signals

Those demand signals may already be working. In March 2025, French shipping giant CMA CGM, the world’s third-largest container line, announced a US$20 billion investment in the U.S. maritime economy and signaled more may be to come with contracts to build container ships in U.S. yards.

Speaking in March, chairman and CEO Rodolphe Saadé announced plans to significantly grow its U.S.- flagged fleet, expand the capacity of key container ports on both coasts, including New York, Los Angeles, Dutch Harbor, Houston and Miami, develop state-of-the-art warehousing across the country, and establish a significant air cargo hub in Chicago.

A spokesperson for the Paris-headquartered group, which operates in 40 states and employs more than 15,000 Americans, said the US$20 billion investment over four years “reflected a sustained strategic commitment to supporting and advancing United States maritime sovereignty and industrial resilience.

“Active discussions are underway regarding the potential construction of medium-sized container ships in the U.S., and while industrial readiness remains a challenge, the group is open to both public and private cooperation models to move the initiative forward.”

Indeed, Saade had earlier said it had been looking at the scope for vessels with a capacity of 6,000 containers, larger than ships currently built at U.S. shipyards, though smaller than the giant-sized 24,000-container vessels now on the market. Any U.S. ship orders would be in addition to the headline US$20 billion.

Growth Through Acquisition

Even so, there’s much work to be done to expand domestic capacity, which is why foreign partnerships are seen as key. The 2024 acquisition of Philly Shipyard in Philadelphia by South Korea’s Hanwha Ocean, described by then Secretary of the U.S. Navy Carlos Del Toro as a “game-changing milestone,” could be a model for further inward investment.

For Hanwha Ocean, the US$100 million Philly takeover was swiftly followed by a contract to overhaul a U.S. Navy ship, the first South Korean shipyard to secure such a contract.

The newly named Hanwha Philly comes with a long pedigree, having delivered more than half of the U.S.’s large Jones Act commercial vessels since 2000. But U.S. commercial shipbuilding has lagged in recent decades, and there’s a clear capacity gap to close.

Hanwha Ocean is investing heavily in expanding Philly Shipyard’s capabilities with technological advancements, workforce training and smart systems. While its qualification as a contractor to the U.S. Navy is important, Hanwha is also digging into another critical sector: domestic energy. It is, for example, the largest shareholder in NextDecade, an LNG developer advancing a major export terminal in South Texas, and has invested US$2.5 billion in its Qcells solar factories in Dalton and Cartersville, Georgia.

In June, another international shipbuilder announced plans to buy up U.S. shipbuilding capacity. Quebec-headquartered Davie, a private international shipbuilding group majority-owned by UK citizens, is buying shipbuilding assets in Galveston and Port Arthur from Gulf Copper & Manufacturing Corporation, a Texas-based leader in ship repair, construction and marine services.

Each location has two dry docks, with Galveston offering 4,000 feet of dock space and Port Arthur 1,000 feet. The facilities will focus on ship repair, offshore services and marine infrastructure for the oil and gas, marine transport, petrochemical and government sectors. When the news was announced, Davie’s CEO James Davies declared Texas was “ready to lead a new Golden Age of American shipbuilding.”

One of the opportunities is to leverage Davies’ expertise building icebreakers to help the U.S. bridge its icebreaking capacity gap, which has just three icebreakers in service, whereas Russia has heavily subsidized the construction of a fleet of nearly 50 Arctic-ready icebreakers.

“Our acquisition of Gulf Copper is directly aligned with the Ships for America Act and President Trump’s calls to rebuild U.S. shipbuilding, while delivering many new icebreakers,” says a spokesperson for Davie. “Uniquely, we will bring our Finnish capability and know-how to benefit American shipbuilding. Our Helsinki Shipyard has built around 50% of the entire global icebreaker fleet. It’s a fact that no other shipbuilder, in the East or West, comes anywhere close to this output.”

This is a long-term commitment. “In addition to buying Gulf Copper, we have put forward plans to invest around US$1 billion in its facilities and bring complex shipbuilding back to Texas in a big way,” says the spokesperson. “If the full extent of our plans are realized, it will generate around 4,000 skilled American jobs and deliver critical assets – including Arctic-ready icebreakers – faster and more affordably than current programs.”

Davie may be investing in a long-established shipyard, but in Northern California a new venture has ambitious plans for a greenfield facility. Backed by a group of businesses, California Forever has a vision to build a new clean-energy city in Solano County, which it says will bring 53,000 permanent jobs and US$16 billion annual economic impact to the area.

And while its plans for a new city aroused local opposition, its announcement earlier this year to invest in a new shipyard had a warmer reception.

The company has cited analyses conducted in 1979 and 1989, showing the location on the confluence of the Sacramento River and San Francisco Bay is uniquely suited for large-scale shipbuilding with a deepwater site, an expansive footprint, significant existing infrastructure including transmission lines, wind turbines, and gas pipelines, and a largely artificial shoreline built from dredge spoils.

Cautiously Optimistic

Those involved in the breakbulk and project cargo sectors are still weighing the impact. The OEM power market seems to have responded with what Rocco Piccirillo III, Americas ITR logistics manager, gas power at GE Vernova, calls “cautious optimism,” though he stresses these are his personal observations, rather than his employer’s views.

“While there is broad recognition that revitalizing domestic shipbuilding could strengthen critical supply chains, sentiment is tempered by uncertainties surrounding skilled labor availability, cost competitiveness and capacity constraints.”

So far, cautious optimism does appear well-judged. There’s provision for investment in a maritime workforce in the SHIPS ACT and the inclusion of a more tailored-approach to the Section 301 port fee policy has been welcomed as a pragmatic and critical adjustment, in light of the evolving U.S. power market.

“Ensuring the breakbulk shipments, in particular, associated with power development projects are treated with policy nuance helps support timely infrastructure delivery, mitigate logistics bottlenecks and maintain the pace of the energy system buildout,” says Piccirillo.

“This is certainly an exciting time for shipping, particularly at the nexus of energy, logistics and industrial policy, especially for power OEMs facing a significant surge in electricity demand and a rapid scale-up of energy investments,” he says.

“The extraordinary demand signals in North America driven by data centers, electrification and domestic manufacturing are certainly reshaping infrastructure needs.”

Logistics expert Grant Wattman, president of Jade Management Group, says the USTR Section 301 measures won’t impact project cargo and breakbulk as much as expected. “Containers will be more impacted because they are mainly built in China.”

Like others, he expects U.S. shipyards to form joint ventures with “friendly” countries, such as the Europeans and South Korea. “They are already ahead, and we can learn from them. The objective is great and the vision too, but now we need the plan on how to deliver.”

For Paxton of the SCA, this is an exciting time for the industry. “The SCA believes that what we have right now is a special ‘moment in time.’ We have an Administration committed to revitalizing the industry, and we have bipartisan legislation in the SHIPs for America Act to get it done.

“The biggest challenge is not to miss this opportunity to make a long-term, generational investment in the growth and sustainment of a proud shipyard industry in the U.S.”

Read more: 10 US Policies Under Trump: Which Matter To Project Cargo

Top photo: Welding operations at Hanwha Philly shipyard, Philadelphia. Credit: Hanwha Philly Shipyard