Kelly/Waltz SHIPS Act Seeks to Elevate the Value and Numbers of U.S. Commercial Ships
The MOC
By
Dr. Steven Wills
December 19, 2024
Bipartisan, bicameral legislation is now in play on Capitol Hill to give U.S. commercial shipbuilding industry the boost it needs to both compete with China and better serve national security needs. Introduced on December 19th, the SHIPS for America Act, sponsored by Senators Mark Kelly (D-AZ) and Todd Young (R-IN) and Congressmen Mike Waltz (R-FL) and John Garamendi (D-CA) seeks to make major changes in the organization, funding, and focus of federal government programs that support the commercial maritime industry in the United States. By bringing maritime leadership closer to the President, securing greater funding, and setting a goal for increasing the U.S. seagoing commercial fleet from 80 to 250 vessels, the SHIPS for America Act is the radical change the United States needs to regain control of shipping as both a commercial and national security imperative. The United States Navy has struggled for over a decade to increase its size and value proposition to the nation and could learn from the SHIPS Act and apply it toward the goal of building the Navy to the statutory goal of 355 warships.
Putting Shipping Adjacent to National Leadership
One of the first precepts of the SHIPS Act is to put U.S. government shipping advocacy much closer to the President. The act establishes a Maritime Security Advisor in the Executive Office of the President akin to the National Security Advisor. The position is supported by a Maritime Security Board consisting of representatives from all federal agencies with responsibilities for the maritime industry. This board would also be responsible to the President for the creation and execution of National Maritime Strategy and all aspects of commercial maritime transportation within the United States.
The board will be charged with oversight of numerous aspects of the U.S. maritime commercial industry including target numbers for the size of the maritime security fleet (vessels directly supporting U.S. Transportation Command), conducting independent oversight of cargo preference requirements, coordinating national efforts to develop a robust maritime workforce, establishing national priorities for research and development of next-generation technologies in the shipbuilding and maritime industries. This board would replace the current U.S. Committee on Marine Transportation System, an unwieldly combination of representatives from fourteen cabinet-level offices reporting to the Department of Transportation.
Elevating the leadership of commercial maritime initiatives to the office of the President significantly raises the visibility and authority of the Maritime Security Board and its Presidential-appointed advisor. Streamlining the leadership and membership of the Maritime Security Board is also in line with President-elect Trump’s desire to reform the structure of federal agencies.
Funding for a Larger U.S. Commercial Fleet and More
The SHIPS Act creates a Maritime Security Trust Fund to better support multiple maritime security initiatives. This effort allows for “Sustained federal support for national transportation priorities, independent of the annual appropriations process.” It includes support to a number of programs:
Figure 1: List of Programs Supported by the Maritime Security Trust Fund
The shipyard and people programs in particular are vital for the growth of the U.S. maritime security force. The other initiatives should help assist in the recruiting and retention of civilian mariners vital for the planned growth in the nation’s maritime security fleet. The legislation aims to increase the overall size of the seagoing merchant fleet from 80 to 250 vessels and focuses in particular on militarily significant ships including tankers that support the refueling of warships at sea, and cable repair ships vital for the maintenance and repair of undersea cables.
Growing a Strategic Commercial Fleet and Supporting Strategic Sealift
The SHIPS Act rightly focuses on the need to substantively grow not only the nation’s commercial fleet but also the aging strategic sealift force. The act would create a United States Vessel Investment Credit, a 33 percent investment tax credit to construct or reconstruct an eligible ocean-going ship. The fund also provides $250 million for each of the fiscal years (2025-2034) for qualified investments in U.S. shipyards and facilities that produce shipyard subcomponents. Funding to support smaller shipyards also gets a boost of $100 million available again from fiscal years 2025-2034.
Targeting Competitors
The SHPS Act prevents the Presidential suspension of tonnage taxes and light money for vessels which are owned or operated by a foreign entity of concern or registered to a foreign country of concern (defined as Russia, China, Iran, and North Korea). In effect, this will impose a new duty on goods imported on Chinese-owned or Chinese-flagged vessels, a provision likely in line with President-elect Trump’s tariff plans. The Act also increases the duty to 200 percent for any repairs to U.S.-flagged vessels made in shipyards in foreign countries of concern such as China, and establishes a commercial cargo preference, requiring that within 15 years, that 10 percent of all cargo imported into the United States from the People’s Republic of China be imported on U.S.-flagged vessels. The SHIPS act’s strong measures on China will help to make U.S. shipping more effective and secure in the event of conflict.
What Can the U.S. Navy Take Onboard from the SHIPS Act?
There is also a Department of Defense section to the SHIPS act that requires the Navy to use civilian shipyard best practices where possible and provides the Secretary of the Navy additional support to recruit and retain civilian mariners for the Military Sealift Command, a force that recently announced the probable layup of 17 of its vessels due to lack of crew. The SHIPS Act also commands the Navy Secretary to develop the ability to re-arm U.S. warships at sea, but does not say specifically how to do that, giving hope that a system that delivers more than just 3 missiles per hour can be developed, perhaps through the use of uncrewed ships as supporting missile magazines.
Passage of the SHIPS Act might also be the first salvo in a barrage of new requirements to fix naval shipbuilding. Adapting civilian best practices might include less changes by Naval Sea Systems Command to known, good foreign designs and prevent future debacles such as that surrounding the hidden re-design of the Constellation class frigate to less than 15% of the Franci-Italian frigate on which the class is based. Another civilian best practice is the vessel construction manager program, currently in use in the Philly Shipyard by TOTE Services. The Navy would do wise to get ahead of the curve and start implementing some of these best practices ahead of SHIPS Act approval.
The Value of the SHIPS Act
A bipartisan, bicameral group of legislators has recognized the ongoing degradation of the U.S. commercial maritime industry and the inability of the United States to build civilian or naval vessels at the speed of geopolitical relevance. It moves leadership on U.S. maritime issues closer to the president. It details strong measures to improve the U.S. shipbuilding infrastructure, provide support to Military Sealift Command for both personnel and increased ship numbers. It takes strong actions against unfair advantages of U.S. competitors like China and puts strong financial effort in support of these measures. This is the kind of legislation that should pass Congress with overwhelming bipartisan support as the Goldwater Nichols Act did in 1986. The challenges of the U.S. commercial maritime industry will not start to turn around absent the strong support provided by the SHIPS Act.
Dr. Steve Wills, Navalist
The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.
Center for Maritime Strategy
By Dr. Steven Wills
Bipartisan, bicameral legislation is now in play on Capitol Hill to give U.S. commercial shipbuilding industry the boost it needs to both compete with China and better serve national security needs. Introduced on December 19th, the SHIPS for America Act, sponsored by Senators Mark Kelly (D-AZ) and Todd Young (R-IN) and Congressmen Mike Waltz (R-FL) and John Garamendi (D-CA) seeks to make major changes in the organization, funding, and focus of federal government programs that support the commercial maritime industry in the United States. By bringing maritime leadership closer to the President, securing greater funding, and setting a goal for increasing the U.S. seagoing commercial fleet from 80 to 250 vessels, the SHIPS for America Act is the radical change the United States needs to regain control of shipping as both a commercial and national security imperative. The United States Navy has struggled for over a decade to increase its size and value proposition to the nation and could learn from the SHIPS Act and apply it toward the goal of building the Navy to the statutory goal of 355 warships.
Putting Shipping Adjacent to National Leadership
One of the first precepts of the SHIPS Act is to put U.S. government shipping advocacy much closer to the President. The act establishes a Maritime Security Advisor in the Executive Office of the President akin to the National Security Advisor. The position is supported by a Maritime Security Board consisting of representatives from all federal agencies with responsibilities for the maritime industry. This board would also be responsible to the President for the creation and execution of National Maritime Strategy and all aspects of commercial maritime transportation within the United States.
The board will be charged with oversight of numerous aspects of the U.S. maritime commercial industry including target numbers for the size of the maritime security fleet (vessels directly supporting U.S. Transportation Command), conducting independent oversight of cargo preference requirements, coordinating national efforts to develop a robust maritime workforce, establishing national priorities for research and development of next-generation technologies in the shipbuilding and maritime industries. This board would replace the current U.S. Committee on Marine Transportation System, an unwieldly combination of representatives from fourteen cabinet-level offices reporting to the Department of Transportation.
Elevating the leadership of commercial maritime initiatives to the office of the President significantly raises the visibility and authority of the Maritime Security Board and its Presidential-appointed advisor. Streamlining the leadership and membership of the Maritime Security Board is also in line with President-elect Trump’s desire to reform the structure of federal agencies.
Funding for a Larger U.S. Commercial Fleet and More
The SHIPS Act creates a Maritime Security Trust Fund to better support multiple maritime security initiatives. This effort allows for “Sustained federal support for national transportation priorities, independent of the annual appropriations process.” It includes support to a number of programs:
The shipyard and people programs in particular are vital for the growth of the U.S. maritime security force. The other initiatives should help assist in the recruiting and retention of civilian mariners vital for the planned growth in the nation’s maritime security fleet. The legislation aims to increase the overall size of the seagoing merchant fleet from 80 to 250 vessels and focuses in particular on militarily significant ships including tankers that support the refueling of warships at sea, and cable repair ships vital for the maintenance and repair of undersea cables.
Growing a Strategic Commercial Fleet and Supporting Strategic Sealift
The SHIPS Act rightly focuses on the need to substantively grow not only the nation’s commercial fleet but also the aging strategic sealift force. The act would create a United States Vessel Investment Credit, a 33 percent investment tax credit to construct or reconstruct an eligible ocean-going ship. The fund also provides $250 million for each of the fiscal years (2025-2034) for qualified investments in U.S. shipyards and facilities that produce shipyard subcomponents. Funding to support smaller shipyards also gets a boost of $100 million available again from fiscal years 2025-2034.
Targeting Competitors
The SHPS Act prevents the Presidential suspension of tonnage taxes and light money for vessels which are owned or operated by a foreign entity of concern or registered to a foreign country of concern (defined as Russia, China, Iran, and North Korea). In effect, this will impose a new duty on goods imported on Chinese-owned or Chinese-flagged vessels, a provision likely in line with President-elect Trump’s tariff plans. The Act also increases the duty to 200 percent for any repairs to U.S.-flagged vessels made in shipyards in foreign countries of concern such as China, and establishes a commercial cargo preference, requiring that within 15 years, that 10 percent of all cargo imported into the United States from the People’s Republic of China be imported on U.S.-flagged vessels. The SHIPS act’s strong measures on China will help to make U.S. shipping more effective and secure in the event of conflict.
What Can the U.S. Navy Take Onboard from the SHIPS Act?
There is also a Department of Defense section to the SHIPS act that requires the Navy to use civilian shipyard best practices where possible and provides the Secretary of the Navy additional support to recruit and retain civilian mariners for the Military Sealift Command, a force that recently announced the probable layup of 17 of its vessels due to lack of crew. The SHIPS Act also commands the Navy Secretary to develop the ability to re-arm U.S. warships at sea, but does not say specifically how to do that, giving hope that a system that delivers more than just 3 missiles per hour can be developed, perhaps through the use of uncrewed ships as supporting missile magazines.
Passage of the SHIPS Act might also be the first salvo in a barrage of new requirements to fix naval shipbuilding. Adapting civilian best practices might include less changes by Naval Sea Systems Command to known, good foreign designs and prevent future debacles such as that surrounding the hidden re-design of the Constellation class frigate to less than 15% of the Franci-Italian frigate on which the class is based. Another civilian best practice is the vessel construction manager program, currently in use in the Philly Shipyard by TOTE Services. The Navy would do wise to get ahead of the curve and start implementing some of these best practices ahead of SHIPS Act approval.
The Value of the SHIPS Act
A bipartisan, bicameral group of legislators has recognized the ongoing degradation of the U.S. commercial maritime industry and the inability of the United States to build civilian or naval vessels at the speed of geopolitical relevance. It moves leadership on U.S. maritime issues closer to the president. It details strong measures to improve the U.S. shipbuilding infrastructure, provide support to Military Sealift Command for both personnel and increased ship numbers. It takes strong actions against unfair advantages of U.S. competitors like China and puts strong financial effort in support of these measures. This is the kind of legislation that should pass Congress with overwhelming bipartisan support as the Goldwater Nichols Act did in 1986. The challenges of the U.S. commercial maritime industry will not start to turn around absent the strong support provided by the SHIPS Act.
Dr. Steve Wills, Navalist
The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.