Energy Musings - June 11, 2026
We are seeing the first signs that politicians and shipping industry people are recognizing that the decades of neglect of the industry has left us with a growing national security risk.
Shipbuilding Recognized As A National Security Issue
There have been several Congressional committee hearings dealing with the shipping industry, especially amid the uproar over the Jones Act waivers secured by the Trump administration. We wrote about the waiver debate in our last Energy Musings. We don’t normally have two sequential articles addressing the same topic. However, several other comments, illustrations, and studies associated with the hearings highlight the dynamics surrounding the sorry state of the U.S. shipbuilding industry.
A recent article in Foreign Affairs by Mary Bridges about the U.S. shipbuilding industry began with the following:
“In the roughly six weeks from Operation Epic Fury’s start until the April 8 cease-fire, more than 20 commercial vessels were hit in or around the Persian Gulf. If U.S. shipyards had to replace the gross tonnage, the process would likely take more than 12 years. China could build that capacity in about eight days. In this way, the war in Iran has put a spotlight on declining U.S. maritime power and the U.S. industry’s inability to produce and repair the ships needed to fight a long-term conflict.”
The math suggests that the U.S. can build roughly 1.5 ships per year. While U.S. shipyards produced new vessels in hours during World War II, even as recently as the 1970s, they were delivering 15 to 25 new vessels a year, about 5% of the world’s annual output. Today’s output is barely a rounding error in the world’s new tonnage being built.
We are talking about basic ships – dry bulkers, container ships, and tankers. If you are thinking about more technologically challenging vessels such as liquefied natural gas (LNG) carriers, they require 51 months to build, according to the International Gas Union, the industry’s association. If those 20 damaged vessels were LNG carriers, the industry would be looking at over four years for the first to arrive, or 2030.
Today, the shipbuilding industry operates 20 facilities, with five primarily building naval warships and the remainder dedicated to commercial ships, ship repair, and smaller vessels. The existing operating yards represent only a quarter of the total yards that have built U.S. ships since the end of World War II. Not only has shipyard capacity declined, but the skilled workforce that constructed the ships has shrunk significantly.
The chart below clearly shows how we mobilized the U.S. population to build ships during World War II. While the workforce dropped sharply after the war, it slowly recovered, only to reach its modern peak in the early 1980s, when President Ronald Reagan ended the ship construction subsidies that had helped keep our shipyards globally competitive for the prior 30 years.
Between 1940 and today, the total U.S. population expanded by 2.5 times, reaching 330 million people. The peak shipyard workforce reached 1,380,900 in 1943, but today it is only 148,500, 11% of the peak. It is amazing to realize that we had 1% of the U.S. population during the war employed in building ships, while at the same time, we had millions of men and women fighting wars on two fronts. Today’s shipyard workforce represents 0.00045 percent of the American population!
We barely have a shipbuilding workforce.
Addressing our shipyard labor situation will be challenging. Working conditions in shipyards are difficult, even if some components are built indoors and then assembled on the outdoor ways. Many of the skills needed in shipyards are also in demand in other sectors of the economy and often have higher wages. Shipyards are also located on the coasts, which are areas of population concentration that elevate the cost of living, making shipyard work less attractive.
Revitalizing the shipbuilding industry may require serious rethinking of construction processes. We are waiting for more ideas to be floated to boost shipyard productivity and dramatically reduce newbuild costs. We do not employ many robots or have much automated welding. These productivity-enhancement tools are costly, and shipyard owners have opted not to invest in them due to their impact on capital costs. Overcoming the drag on profits would require even higher ship prices, making U.S. yards that much less competitive globally.
U.S.-built ships are reportedly 3 to 5 times more expensive than those built at subsidized shipyards in Asia. Because of subsidies, the three major Asian shipbuilding nations – China, Japan, and South Korea – built 95% of the world’s ship tonnage in 2025. China followed the economic growth playbook of Japan after World War II and of South Korea after the Korean War, making shipbuilding a key part of its national economic strategy.
Although there is bipartisan Congressional and administrative support for efforts to revitalize the U.S. maritime industry, we have witnessed one component of the financing plan negotiated away in trade talks. We are referring to the proposed fee that was to be assessed on Chinese ships calling at U.S. ports. While we see various congresspeople calling for the fee to be revived, we worry that they will view it as another source of government funding for their social spending plans, rather than a dedicated fund for shipbuilding.
James Lightbourn of Cavalier Shipping recently noted that American shipping companies have revolutionized the world’s shipping industry in the past. He cited the following four revolutionary efforts.
“1807 | Steam Navigation — North River Steamboat Company,
1850 | The Clipper Ship — McKay Shipyard,
1941 | Industrial Shipbuilding — Kaiser Shipyards,
1956 | Containerization —Sea-Land Service.”
He believes the U.S. may be about to lead the next revolution in the shipping industry by building ships powered by small nuclear reactors. He pointed to comments by the Maritime Administration’s Administrator, Stephen Carmel, before Congress last week.
“[Maritime nuclear reactors] could be as transformative as containerization and a real path to compete with China on terms we set. Whoever architects the new system will hold a dominant position in global trade for decades.”
Clearly, we have a Navy with extensive experience with nuclear propulsion, which began with the commissioning of the U.S.S. Nautilus in 1954. Today, all the submarines and aircraft carriers in the U.S. Navy fleet are nuclear-powered. However, none of the other surface ships are nuclear-powered, requiring them to be refueled frequently when sailing in support of aircraft carrier groups. A 2018 paper by a Stanford student noted that a cruiser traveling at 20 knots has a range of 6,000 nautical miles. The distance between San Diego and just east of Taiwan is 5,933 nautical miles, so the ship would require refueling soon after arriving to support an aircraft carrier group.
The student found that if all 56 ships in the surface fleet were replaced with nuclear-powered vessels, the cost would be $120 billion. If all these ships were replaced with conventionally-powered vessels, the cost would be $100 billion. However, nuclear-powered ships have greater range and speed and can operate more advanced equipment, such as larger radars.
Another analyst has argued that nuclear-powered commercial ships would be as revolutionary as the shipping industry’s transition from sail to steam power, much as Carmel equated the impact of containerization with that transition. We would agree that nuclear would have a similar impact as the development of containerization.
However, in our opinion, the sail-to-steam transition was more impactful. It revolutionized global shipping and trade by enabling ships to travel on a schedule. They were no longer dependent on the tides and the winds. Routes could become shorter and quicker. That opened the possibility of moving goods that could spoil if trips were too long or too uncertain. We would argue that this was more impactful than the incremental benefits of a fuel change, even as significant as nuclear power.
More people outside of the shipping industry are beginning to understand that our lack of shipbuilding capacity and our tiny U.S.-flagged fleet have put the U.S. national security at risk. Overcoming that reality should be a high priority with our political leaders, but we worry that they still do not appreciate the risk.
The larger problem is that solutions will require a long time, be costly, and be open to criticism and future political neglect. Much as people with addictions must go through a personal conversion if they are to deal with their problem successfully, the public needs to understand the issue and risks, and be prepared for the challenge of what it will take to correct the decades of neglect the shipping industry has endured.