Us Shipbuilding Relaunched - The Cons And Pros Such As They Are

In his first address to Congress since his second term got under way in January, US President Donald Trump was at his blustering best, bristling with righteous fervour about big-ticket issues such as the Panama Canal, which he said his administration would reclaim.

While on the topic of the liner trade, he said plans were afoot to 'resurrect the American shipbuilding industry, including commercial shipbuilding and military shipbuilding.

'For that purpose, I am announcing that we will create a new office of shipbuilding in the White House and offer special tax incentives to bring this industry home to America, where it belongs.

With the usual amount of fervent self-congratulation, Trump proclaimed: 'We used to make so many ships. We dont make them any more very much, but were going to make them very fast, very soon. It will have a huge impact.

If the US did indeed succeed in relaunching its shipbuilding industry, a huge impact will most certainly ripple through the global liner trade, but will it necessarily benefit ocean freight?

Last year, fair trade advocate Senator Sherrod Brown warned that a US challenge for Chinas dominance of the shipbuilding industry could have significant implications for the container trade.

For starters, research used by Brown and the Centre for Strategic and International Studies CSIS confirmed that rebuilding the US shipbuilding industry would require substantial investment in infrastructure, workforce training and technology.

This could lead to higher production costs compared with China's heavily subsidised shipyards, where vessels are often 50-60 cheaper to build due to state support.

Higher costs for US-built ships may translate into increased freight rates, potentially impacting global trade competitiveness.

Supply chain experts have warned that such policies could drive up ocean freight rates, with consumers ultimately bearing the cost, the World Shipping Council and International Chamber of Shipping have warned.

However, US global affairs magazine Foreign Policy has reported that a revitalised US shipbuilding sector could reduce reliance on Chinese-built vessels, mitigating risks associated with overdependence on a single supplier. This aligns with broader efforts to create Western-proof supply chains.

Be that as it may, shipbuilding diversification by the worlds leading economies could disrupt the container trade by affecting shipping routes and costs.

Some of what the CSIS has found, underpinning Trumps argument, is that Chinas dominance of the sector is seen as a dual threat monopolising commercial construction interests while integrating its 'military-civil fusion' strategy into its private-sector shipbuilding capability.

Trump may also have the support of labour unions that strongly advocated for rebuilding America's shipbuilding capacity, citing job losses and national security risks due to China's 'predatory actions'. Brian Bryant, president of the Machinists and Aerospace Workers Union, told ABC News : 'For decades, we've seen everything, from layoffs to shipyard closures to atrophy of our domestic shipbuilding industrial base.

Industry experts have highlighted that China's dominance stems from extensive government subsidies and preferential policies. Matthew Funaiole, vice president of the iDeas Lab at the CSIS has said that China's state-driven approach has enabled it to capture over 50 of global merchant tonnage annually. With assistance from various sources.