Last month, I had the chance to sit down with 60 Minutes correspondent Lesley Stahl for a piece on the moribund state of US commercial shipbuilding. That story, “Turning the Ship Around,” aired last weekend, and having now seen it, I’d like to offer a few thoughts.
The segment opens with Stahl describing the US commercial shipbuilding industry as “nearly extinct.” The numbers back her up. As she points out, US shipyards produce around three ships per year. That’s less than what South Korean shipbuilder Hanwha produces in a month. But even that may be too charitable. Three is the US average over the last 25 years. This decade, US shipyards are on track to average roughly one per year.
But that’s just oceangoing cargo ships. Widening the aperture to include other vessel types does little to improve the picture. The most recent data show that the United States, the world’s second-largest manufacturing country, accounts for just 0.04 percent of global commercial shipbuilding output—good enough for 19th place. Over the past decade, the US has averaged 0.24 percent of global output. And it’s trending down.
South Korean firm Hanwha, however, says it will reverse the matter. According to the CEO of its Philly Shipyard, which the company purchased in 2024 for $100 million, the yard is set to transform into a 21st-century enterprise:
David Kim: Our aspiration is to get to up to 20 ships a year here at the shipyard.
Lesley Stahl: So we come back in two years. How different will it look?
David Kim: You’ll see robots. You will see automation equipment. And we’re looking to grow the workforce by, call it, 7,000 to 10,000 people.
No one should hold their breath. As 60 Minutes makes clear, the obstacles are enormous.
Finding and keeping workers is a challenge. The shipyard’s technology and infrastructure are woefully outdated. Whereas top Asian yards benefit from dense local supply chains, US yards must import many of their components from thousands of miles away. And the economies of scale—one ship annually at the Philadelphia yard compared to dozens at its South Korea sister facility—are entirely different.
The result is predictable: US-built ships cost approximately five times as much as those constructed in South Korea. The Philly Shipyard is currently building three container ships, each capable of carrying 3,600 twenty-foot containers, at a cost of $335 million per vessel. In leading Asian yards, ships with a 24,000-container capacity cost less than $270 million. Despite their relatively small size, the Philly-built vessels are the most expensive containerships in the history of the world.
Hanwha says it intends to hire up to 10,000 workers, but it is unclear what they will do. There is little appetite in competitive global shipping markets for vessels priced several times higher than Asian-built alternatives. Without a plausible answer to that question, the ambitions Kim describes are difficult to take seriously.
US policy compounds the problem rather than solving it. Immigration could help address labor shortages—leading shipyards in Japan and South Korea heavily rely on foreign labor—but that approach runs counter to the Trump administration’s stance. Tariffs on steel inflate the price of one of shipbuilding’s most important inputs. These are self-imposed headwinds that make an already steep path to competitiveness even steeper.
Given their intertwined nature, it’s no surprise that the shipbuilding discussion included a mention of the Jones Act. After all, the law requires that vessels used in domestic water transportation be constructed in US shipyards. According to the Jones Act’s defenders, this helps bolster US shipbuilding. But given the industry’s enervated state, that’s an increasingly difficult case to make.
For well over a century, observers have pointed out that such protectionism has sapped the industry’s drive and competitiveness.
But the Jones Act has had considerable economic consequences as well. Jones Act-compliant ships are extraordinarily expensive to build, costly to operate, and few in number. This significantly raises the cost of water transportation. In some cases, the law eliminates it as an option entirely.
New England relies entirely on imported liquefied natural gas (LNG) to meet its energy needs. Although the United States is the world’s leading LNG exporter, New England cannot access domestic supplies because no Jones Act-compliant LNG tanker exists to transport the gas. And one never will. With the cost of building such a ship estimated at $1 billion—more than $700 million above the foreign price—the economics simply don’t work. Even the CEO of a company operating Jones Act-compliant tankers recently acknowledged as much.
This constraint extends beyond New England. Alaska cannot replace declining Cook Inlet production with LNG from its North Slope. Hawaii’s government has identified the Jones Act as a barrier to the state’s ability to access American natural gas. Puerto Rico, despite a partial exemption for LNG transportation, still faces limitations in sourcing natural gas from the mainland.
These are only the most glaring costs. The law’s distortions ripple throughout the US economy, from higher consumer prices in island communities to impeding domestic energy logistics.
This helps explain why the Trump administration recently issued a temporary Jones Act waiver amid mounting economic pressures and why 60 Minutes deemed the issue worthy of attention.
The case for reforming, and ideally repealing, the Jones Act has never been stronger. Whether the political will exists to act on it, however, is another matter.