Energy Musings - January 7, 2026
The U.S. maritime revival effort started strong last year, then it left center stage. A few weeks ago, a new MARAD administrator was confirmed. Hopefully the effort will regain its momentum.
Maritime Revival Needs Patience And Long-Term Vision
Several weeks ago, the U.S. Senate confirmed Stephen M. Carmel as the 21st administrator of the Maritime Administration (MARAD). The Mission Statement on MARAD’s website states: “To foster, promote and develop the maritime industry of the United States to meet the nation’s economic and security needs.” The agency’s reach is broad. It is responsible for the nation’s waterborne transportation system, including its infrastructure – ships and shipping, port and vessel operations, national security, environment, and safety. Its objective is to ensure that the waterborne transportation system interconnects with the nation’s other transportation systems.
Carmel is a licensed ship’s master and previously served as the President of US Marine Management, LLC, formerly a division of Maersk Line Limited, the U.S. subsidiary of the Danish shipping company. He graduated from the U.S. Merchant Marine Academy in 1979 and holds an M.A. in Economics, an M.B.A. in International Finance, and a PhD/ABD in International Studies.
Notably, he has experience serving on the Naval Studies Board of the National Academy of Sciences and as a former member of the Chief of Naval Operations Executive Panel, the Marine Studies Board of the National Academy of Sciences, and the NOAA Hydrographic Services Review Board.
Carmel becomes a key player in the government’s effort to revitalize the U.S. maritime industry. However, we need more champions within the administration, the bureaucracy, and Congress. Reviving a critical industry that has been ignored and allowed to atrophy for 50 years needs many champions. Carmel is the first, and his arrival comes none too soon.
He understands the industry, having commanded ships, run a U.S.-flag commercial operation, and possesses an understanding of Jones Act economics. He has operated at the intersection of labor, capital, and operations in the maritime industry.
Interestingly, during his confirmation hearing, Carmel told the Senators, “We are a formidable naval power, but we are not yet a true maritime power.” That shocking statement was an acknowledgement of the sorry state of our maritime industry and the massive challenges facing reviving it.
Why? Because a true maritime power controls how its mariners are trained, how its military forces are supplied, how its ships are built, how its energy flows, and how its goods move. Our political and bureaucratic regimes have demonstrated little knowledge of these issues. Thus, they are surprised when our ships take years longer to build than our competitors, cost 3-4, or even 10 times what our competitors can build them for, we cannot staff our emergency fleet, we are uncertain how many U.S. mariners exist, and our shipbuilding capacity has become a rounding error in the world market. These weaknesses are national security risks. They are legitimate operational risks. They need to be reversed.
The importance of this maritime revival effort cannot be overstated, and recent news from the global shipping industry underscores the need for it. The most recent news item is disturbing and likely points out why revitalizing the industry will be a long-term process, requiring vision and perseverance, and may require making compromises to get things done.
The Bay Area’s Mare Island Dry Dock, LLC, stationed in the oldest shipyard facility on the West Coast, announced it was closing and laying off more than 80 union and non-union workers. Reportedly, the facility lost a U.S. Coast Guard maintenance contract for its icebreaker, Healy, to a shipyard in Portland, Oregon.
The Mare Island Dry Dock was established in 1854 as the first naval base on the U.S. West Coast. It served as a major naval shipbuilding and repair facility for over 140 years and was critical during World War II. It was decommissioned after naval operations ended in 1996. In November 2013, Mare Island Dry Dock, LLC was established and reopened the facility to service repairs and overhauls for both commercial and government vessels.
Congressmen backing the SHIPS for America Act were horrified that the government sought the lowest price for maintenance work on the Healy and Polar Star icebreakers, which led to the “unfortunate circumstances beyond our control” explanation for the company’s closing. Should one arm of the federal government be chastised for exercising financial discipline? This is where the view of what we are attempting to do, with its national security implications, must be part of the long-term vision for the maritime infrastructure we need and want.
Only a few days earlier, the Coast Guard awarded two contracts to build new icebreakers. One contract was with Rauma Marine Constructions Oy for up to two ASCs [Arctic Security Cutters] to be built in Finland, with delivery of the first vessel expected in 2028. The second contract with Bollinger Shipyards Lockport, L.L.C., is for up to four ASCs to be built in the United States, with delivery of the first domestically built cutter expected in 2029. The idea behind these contract awards is that the U.S. can take immediate advantage of our Finnish partners’ icebreaker expertise while helping to onshore that expertise in the United States in the long term. This is an example of the vision needed to accelerate the maritime industry’s revitalization.
The significance of the icebreaker contract is amplified by a recent report from the Bellona Foundation that identified 100 sanctioned ships, mostly tankers and liquefied natural gas (LNG) carriers, using Russia’s Arctic shipping lanes. This is a shorter route connecting Asia and Europe. The number of vessels transiting the Arctic route increased from just 13 vessels in 2024.
Because of the sanctions on Russia’s ships, the fleet transiting the Arctic was composed of Russian and Chinese vessels, demonstrating how geopolitical isolation has reshaped Arctic shipping patterns. Many of these vessels, especially Russian ones, are older and often lack proper ice-class classification or reliable insurance. They often sail under compromised flags of registry and frequently switch off their transponders, obscuring their locations and routes, thereby increasing the risk of an environmental disaster. Russia also announced the first voyage of its domestically built LNG carrier.
The Russian Arctic route connecting Europe and Asia.
The U.S. and European nations have grown increasingly concerned in recent years about the increase in Chinese vessels traversing the Arctic and entering the North Sea and beyond. Many of these ships are believed to be collecting maritime and military information and mapping underwater cables and pipelines connecting nations within the European Union and between the European Union and North America. That is undoubtedly a national security risk.
Another maritime development was the announcement of the reopening of the Nanjing Dongze Shipyard, a modest facility on the Yangtze River. The shipyard primarily constructed small cargo vessels until it halted operations in 2017 due to financial difficulties and operational debts. China Merchants, one of China’s leading shipbuilding conglomerates, acquired the yard via a judicial auction and the settlement of the yard’s $33 million in outstanding liabilities. The yard is capable of building ships with a deadweight of up to 50,000 tons (dwt).
In mid-December, Nanjing Dongze launched its first newbuild, the SC Emerald, a chemical tanker. The reopening of Nanjing Dongze is part of a larger trend in China’s shipbuilding industry. As global demand for new vessels continues to rise, many previously closed shipyards are being reactivated. In recent years, over a dozen mothballed facilities have resumed operations in response to surging orders, extending delivery times into the late 2020s.
Increasing global trade and the need for modern, efficient shipping tonnage are driving shipowners to find new construction options. The revival of Nanjing Dongze, alongside other shipyards, reflects the growing demand for new tonnage, and it highlights China’s strategic position in the global maritime industry. China is reinvigorating its shipbuilding capabilities to assert its dominance in the sector and meet the evolving needs of its international clients.
The final significant international maritime industry development in 2025 was the establishment of a long-term plan for India to become a major shipbuilding nation. India approved a massive subsidy package combining $3 billion in direct shipbuilding subsidies with $2.4 billion for shipyard infrastructure. The government’s goal is to move from being the 20th-22nd shipbuilding nation, controlling barely 0.06% of world output, into the global top 10 by 2030 and the top five by 2047.
India is adopting China’s early-2000s industrial playbook, which propelled Beijing from 14% of global shipbuilding to over 70% today. China dominates the commercial shipbuilding market, with a 55%-74% share, depending on how it is calculated. South Korea’s share is 25%-28%, and Japan’s is around 13%-17%. All the other nations fight for the remaining scraps.
India’s plan follows the familiar formula of the other major shipbuilding nations. This means subsidies of 15%-25% per vessel to help demand, while making shipyard infrastructure investments to improve supply and timelines. Lastly, India will provide government credit guarantees to match the export financing that makes Chinese and Korean yards so competitive. India’s message to the global maritime industry is: “We offer China-level pricing and state backing minus the geopolitical risk”.
With India stepping up its commitment to its shipbuilding industry, and China’s industry in recovery mode, there are serious questions about what the U.S. can do to boost its shipbuilding market share. Stephen Carmel will be a key player in this effort, but he will need support. Reviving the U.S. maritime industry will require a vision and plan that can be set out with a reasonable timetable for measuring progress. It will, however, require a ton of money, which will be a challenge given the nation’s budgetary and debt conditions. Is America willing to make this commitment, or will it fade as the Trump administration’s time in office draws to a close?