The Clear Case for More U.S. Flag Ships Operating Internationally
The MOC
By
John D. McCown
August 21, 2025
A recent book comprised of essays by noted maritime authors mainly associated with the Center for Maritime Strategy and published in March 2025 by the Marine Corps University Press provided an excellent account of the history and current state of the U.S. flag merchant marine and why it is still important today. Entitled “Returning From Ebb Tide,” the book is available free on the MCUP website. It should be added to the summer reading list of anyone with an interest in sealift capacity and its necessary role, even today, related to national security.
Over the last few years there has been a figurative tailwind emanating from Washington D.C. on the importance of sealift that continues to grow. The catalyst for this has been China and the growing awareness of the possibility of an invasion of Taiwan. It is generally agreed that if that were to occur, a U.S. military response would be inevitable. The Taiwan Relations Act (TRA) was passed by Congress in 1979. The act states that “the United States will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability” and “shall maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or social or economic system, of the people of Taiwan.” While not an ironclad guarantee like Article 5 of NATO, the TRA reinforces the understanding that there would be a full-throated defense of Taiwan by the U.S. if such an invasion occurred. That understanding was in effect acknowledged by China when it referred in 2021 to the TRA as “illegal and invalid.”
The sealift requirements related to any projection of U.S. military forces to counter such an invasion would be significant. Military planning involves going into detail on potential major conflicts that will hopefully never occur. When those scenarios are played out involving China, one of the major differences is the marine distances that would be involved. During WWII as well as the postwar scenario planning involving Russia, that typically meant transatlantic voyages in the 3,500 nautical mile range. In planning involving China, the scenarios involve distances in the 11,000 nautical mile range from East/Gulf Coast ports and in the 6,000 nautical mile range from West Coast ports. We had a direct experience seventy years ago on the sealift needs for a conflict in a similar faraway land during the Korean War. At the peak, some 255 U.S. flag ships were used to provide military sealift during that conflict. That is more than the current total number of 188 U.S. flag ships. The majority of those are involved in Jones Act lanes whose utilization for sealift would result in immediate domestic consequences. Only 70 U.S. flag commercially viable, militarily useful ships are operating internationally under government programs that provide an incentive in return for their availability during times of need. U.S. flag ships operating internationally should be viewed as the first responders in any material sealift requirements.
The Center for Strategic and International Studies (CSIS) just published an article related to a blockade of Taiwan by China. The project ran 26 wargames and a shortage of merchant ships was a critical shortfall in those wargames. The study concluded that “[r]apidly acquiring ships to run the blockade was critical because regular shipping companies would not take the risk of getting involved if China begins a blockade.” That observation by a highly regarded policy research organization underscores that in any sealift requirement related to military action by China, the only ships that can be relied upon are ones registered under the U.S. flag.
An early tangible indication of Washington’s increased awareness of the critical shortage of U.S. flag ships was focused on product tankers. The Tanker Security Program, established in 2022, resulted in 10 product tankers that operate in international trade and provide assured access to supply the armed forces with fuel during times of armed conflict or national emergency. Modelled after the Maritime Security Program that involves 60 ships, it provides a subsidy of $5 million annual subsidy for each such vessel to offset the higher crewing cost of U.S. flag ships.
Another federal government initiative that is indicative of the growing focus on maritime industry was the early 2024 commencement of an investigation by the Office of the United States Trade Representative (USTR) on China’s practices targeting the maritime and shipbuilding sectors. This investigation would conclude that China was engaged in unfair trade practices in these sectors. Among the initiatives that would follow were proposed legislation to support more U.S. involvement in those sectors as well as proposed fees aimed at Chinese shipping companies and Chinese built ships calling at ports in the U.S.
The key legislative initiative is the SHIPS For America Act, initially introduced in December 2024 in the Senate and the House by a bi-partisan group of sponsors. The proposed legislation was reintroduced in 2025 as a result of the new Congress that commenced in January. While similar, the new bill contained revisions including linking it with the investigation by the USTR and establishing a Trust Fund with certain fees collected. The goal of the bill is to revitalize the U.S. flag merchant marine by increasing the number of such ships. The legislation aims to build 250 ships in the U.S. over 10 years that will be operated internationally. That is a goal that is not without its challenges, but it is certainly refreshing to see policymakers on both sides of the aisle actively support growing our merchant marine.
Inspired by these various initiatives coming out of Washington, there has been a noticeable increase in interest by companies based in allied countries in building ships in the U.S. In December 2024, Hanwha Group acquired Philly Shipyard, the builder of more commercial ships over the last couple of decades than any other U.S. shipyard. The Hanwha Group is Korea’s seventh largest business group and is engaged in shipbuilding and an array of defense related industries. In March 2025, CMA CGM, a French carrier that is the third largest container shipping company in the world, said it would build 20 ships in the U.S. More recently, CMA CGM reflagged one of its existing 9,300 TEU ships to U.S. flag, becoming the largest container ship to fly the U.S. flag. The CMA CGM Phoenix represents the first of four new U.S. flag vessels that the company will introduce in 2025.
The situation became even more interesting when, as part of discussions on trade, officials from both Japan and Korea indicated that large shipbuilding investments in the U.S. would be made. In a July 2025 trade announcement with Japan, the White House distributed a handout showing planned investments in the U.S. that indicated Japanese companies would invest in new yards and the modernization of existing facilities. On the heels of what Japan indicated, South Korea indicated that it would invest $150 billion in shipbuilding in the U.S.
Three countries dominate world shipbuilding and collectively produce ninety four percent of total tonnage. While China leads with fifty one percent, both South Korea at twenty eight percent and Japan at fifteen percent are major shipbuilders. China became the largest shipbuilder in the world in 2017 by largely following the same paths that Japan and South Korea had in earlier decades. Building ships primarily involves taking one element, steel, and processing it with labor hours into a finished vessel. Each of the major shipbuilding countries start with a key advantage due to the cost-efficient steel they produce. Japan became the largest shipbuilder in the world in 1956 by adopting practices developed in the U.S. during WWII. They would hold that title for some 30 years until it passed to South Korea, marked by the contract by U.S. Lines to build twelve of the then largest container ships in the world. In another 30 years, the mantle of the world’s largest shipbuilder would then pass to China.
It would be exciting to see a major Japanese or Korean shipbuilder start a greenfield shipyard in the U.S. and even more exciting if both did so. They are close allies who have shipbuilding expertise that could dramatically increase U.S. efficiency and activity in the sector. For ships that would be operated in international trade, such a yard could assemble major components brought in from existing yards in Japan or South Korea. That process would be very similar to what automakers from both countries have done for decades with the growth in cars assembled in the U.S. from components arriving in containers. With ships, it would be major hull sections and subassemblies coming in via heavy-lift vessels.
Five percent of the world’s steel production is used in building ships, containers and transport equipment exclusive of automobiles that use twelve percent. Given the importance of that material, the current fifty percent tariff on steel is at cross purposes with U.S. shipbuilding goals. While domestic steel should be utilized, the tariffs will put upward pressure on those prices also. To countermand that, consideration should be given to a proposal that any domestic steel purchased by a U.S. shipyard result in it getting a rebate equal to the average monthly tariff per ton based on the number of tons purchased that month. This rebate would be funded by Customs out of tariff collections and would have the effect of mitigating the impact of the steel tariffs on the shipbuilding sector.
Just as the first ships to move containers were built and modified in the U.S., the first actual containers were built here. Fruehauf was an innovative U.S. manufacturer with the early lead in building the first containers in quantity. At the same the U.S. is initiating proposals to build more ships in the U.S. it should do the same with containers that will be needed for those ships. Those boxes are critical infrastructure that becomes even more important as the transition to smart containers continues. In some respects, the challenges of building containers in the U.S. are less than those posed with ships, and the digital technology aspects play to domestic strengths. As the steel used in building boxes can rival what goes into a ship, builders also need to get the rebate referenced earlier.
It is refreshing to see the growing support for renewing the U.S. maritime enterprise. In addition to the initiatives above, there is a critical and more immediate need to expand the size of our merchant marine. One efficient way to accomplish that it to identify existing militarily useful ships and incentivize their switching to U.S. flag by offering a subsidy that mitigates the higher crewing costs. One hundred such ships would bring the total number of U.S. flag merchant vessels to just above the peak sealift need during the Korean conflict. That would seem to be a minimum in terms of any sealift requirement resulting from China invading Taiwan. While $500 million annually using the current $5 million per ship stipend would be needed to support such an addition, that amount needs to be put in the context of a total defense budget that is now $859 billion per year. With sealift being a real potential Achilles Heel for the projection of military force in the event of China’s invasion of Taiwan, giving priority to something representing just over five hours of defense budget spending seems wise.
John D. McCown is a Non-Resident Senior Fellow at the Center for Maritime Strategy. Mr. McCown has four decades of experience related to the shipping industry. His research, analysis and writings for the Center for Maritime Strategy focus on the intersection of merchant shipping and maritime commerce with national security.
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 John D. McCown
A recent book comprised of essays by noted maritime authors mainly associated with the Center for Maritime Strategy and published in March 2025 by the Marine Corps University Press provided an excellent account of the history and current state of the U.S. flag merchant marine and why it is still important today. Entitled “Returning From Ebb Tide,” the book is available free on the MCUP website. It should be added to the summer reading list of anyone with an interest in sealift capacity and its necessary role, even today, related to national security.
Over the last few years there has been a figurative tailwind emanating from Washington D.C. on the importance of sealift that continues to grow. The catalyst for this has been China and the growing awareness of the possibility of an invasion of Taiwan. It is generally agreed that if that were to occur, a U.S. military response would be inevitable. The Taiwan Relations Act (TRA) was passed by Congress in 1979. The act states that “the United States will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability” and “shall maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or social or economic system, of the people of Taiwan.” While not an ironclad guarantee like Article 5 of NATO, the TRA reinforces the understanding that there would be a full-throated defense of Taiwan by the U.S. if such an invasion occurred. That understanding was in effect acknowledged by China when it referred in 2021 to the TRA as “illegal and invalid.”
The sealift requirements related to any projection of U.S. military forces to counter such an invasion would be significant. Military planning involves going into detail on potential major conflicts that will hopefully never occur. When those scenarios are played out involving China, one of the major differences is the marine distances that would be involved. During WWII as well as the postwar scenario planning involving Russia, that typically meant transatlantic voyages in the 3,500 nautical mile range. In planning involving China, the scenarios involve distances in the 11,000 nautical mile range from East/Gulf Coast ports and in the 6,000 nautical mile range from West Coast ports. We had a direct experience seventy years ago on the sealift needs for a conflict in a similar faraway land during the Korean War. At the peak, some 255 U.S. flag ships were used to provide military sealift during that conflict. That is more than the current total number of 188 U.S. flag ships. The majority of those are involved in Jones Act lanes whose utilization for sealift would result in immediate domestic consequences. Only 70 U.S. flag commercially viable, militarily useful ships are operating internationally under government programs that provide an incentive in return for their availability during times of need. U.S. flag ships operating internationally should be viewed as the first responders in any material sealift requirements.
The Center for Strategic and International Studies (CSIS) just published an article related to a blockade of Taiwan by China. The project ran 26 wargames and a shortage of merchant ships was a critical shortfall in those wargames. The study concluded that “[r]apidly acquiring ships to run the blockade was critical because regular shipping companies would not take the risk of getting involved if China begins a blockade.” That observation by a highly regarded policy research organization underscores that in any sealift requirement related to military action by China, the only ships that can be relied upon are ones registered under the U.S. flag.
An early tangible indication of Washington’s increased awareness of the critical shortage of U.S. flag ships was focused on product tankers. The Tanker Security Program, established in 2022, resulted in 10 product tankers that operate in international trade and provide assured access to supply the armed forces with fuel during times of armed conflict or national emergency. Modelled after the Maritime Security Program that involves 60 ships, it provides a subsidy of $5 million annual subsidy for each such vessel to offset the higher crewing cost of U.S. flag ships.
Another federal government initiative that is indicative of the growing focus on maritime industry was the early 2024 commencement of an investigation by the Office of the United States Trade Representative (USTR) on China’s practices targeting the maritime and shipbuilding sectors. This investigation would conclude that China was engaged in unfair trade practices in these sectors. Among the initiatives that would follow were proposed legislation to support more U.S. involvement in those sectors as well as proposed fees aimed at Chinese shipping companies and Chinese built ships calling at ports in the U.S.
The key legislative initiative is the SHIPS For America Act, initially introduced in December 2024 in the Senate and the House by a bi-partisan group of sponsors. The proposed legislation was reintroduced in 2025 as a result of the new Congress that commenced in January. While similar, the new bill contained revisions including linking it with the investigation by the USTR and establishing a Trust Fund with certain fees collected. The goal of the bill is to revitalize the U.S. flag merchant marine by increasing the number of such ships. The legislation aims to build 250 ships in the U.S. over 10 years that will be operated internationally. That is a goal that is not without its challenges, but it is certainly refreshing to see policymakers on both sides of the aisle actively support growing our merchant marine.
Inspired by these various initiatives coming out of Washington, there has been a noticeable increase in interest by companies based in allied countries in building ships in the U.S. In December 2024, Hanwha Group acquired Philly Shipyard, the builder of more commercial ships over the last couple of decades than any other U.S. shipyard. The Hanwha Group is Korea’s seventh largest business group and is engaged in shipbuilding and an array of defense related industries. In March 2025, CMA CGM, a French carrier that is the third largest container shipping company in the world, said it would build 20 ships in the U.S. More recently, CMA CGM reflagged one of its existing 9,300 TEU ships to U.S. flag, becoming the largest container ship to fly the U.S. flag. The CMA CGM Phoenix represents the first of four new U.S. flag vessels that the company will introduce in 2025.
The situation became even more interesting when, as part of discussions on trade, officials from both Japan and Korea indicated that large shipbuilding investments in the U.S. would be made. In a July 2025 trade announcement with Japan, the White House distributed a handout showing planned investments in the U.S. that indicated Japanese companies would invest in new yards and the modernization of existing facilities. On the heels of what Japan indicated, South Korea indicated that it would invest $150 billion in shipbuilding in the U.S.
Three countries dominate world shipbuilding and collectively produce ninety four percent of total tonnage. While China leads with fifty one percent, both South Korea at twenty eight percent and Japan at fifteen percent are major shipbuilders. China became the largest shipbuilder in the world in 2017 by largely following the same paths that Japan and South Korea had in earlier decades. Building ships primarily involves taking one element, steel, and processing it with labor hours into a finished vessel. Each of the major shipbuilding countries start with a key advantage due to the cost-efficient steel they produce. Japan became the largest shipbuilder in the world in 1956 by adopting practices developed in the U.S. during WWII. They would hold that title for some 30 years until it passed to South Korea, marked by the contract by U.S. Lines to build twelve of the then largest container ships in the world. In another 30 years, the mantle of the world’s largest shipbuilder would then pass to China.
It would be exciting to see a major Japanese or Korean shipbuilder start a greenfield shipyard in the U.S. and even more exciting if both did so. They are close allies who have shipbuilding expertise that could dramatically increase U.S. efficiency and activity in the sector. For ships that would be operated in international trade, such a yard could assemble major components brought in from existing yards in Japan or South Korea. That process would be very similar to what automakers from both countries have done for decades with the growth in cars assembled in the U.S. from components arriving in containers. With ships, it would be major hull sections and subassemblies coming in via heavy-lift vessels.
Five percent of the world’s steel production is used in building ships, containers and transport equipment exclusive of automobiles that use twelve percent. Given the importance of that material, the current fifty percent tariff on steel is at cross purposes with U.S. shipbuilding goals. While domestic steel should be utilized, the tariffs will put upward pressure on those prices also. To countermand that, consideration should be given to a proposal that any domestic steel purchased by a U.S. shipyard result in it getting a rebate equal to the average monthly tariff per ton based on the number of tons purchased that month. This rebate would be funded by Customs out of tariff collections and would have the effect of mitigating the impact of the steel tariffs on the shipbuilding sector.
Just as the first ships to move containers were built and modified in the U.S., the first actual containers were built here. Fruehauf was an innovative U.S. manufacturer with the early lead in building the first containers in quantity. At the same the U.S. is initiating proposals to build more ships in the U.S. it should do the same with containers that will be needed for those ships. Those boxes are critical infrastructure that becomes even more important as the transition to smart containers continues. In some respects, the challenges of building containers in the U.S. are less than those posed with ships, and the digital technology aspects play to domestic strengths. As the steel used in building boxes can rival what goes into a ship, builders also need to get the rebate referenced earlier.
It is refreshing to see the growing support for renewing the U.S. maritime enterprise. In addition to the initiatives above, there is a critical and more immediate need to expand the size of our merchant marine. One efficient way to accomplish that it to identify existing militarily useful ships and incentivize their switching to U.S. flag by offering a subsidy that mitigates the higher crewing costs. One hundred such ships would bring the total number of U.S. flag merchant vessels to just above the peak sealift need during the Korean conflict. That would seem to be a minimum in terms of any sealift requirement resulting from China invading Taiwan. While $500 million annually using the current $5 million per ship stipend would be needed to support such an addition, that amount needs to be put in the context of a total defense budget that is now $859 billion per year. With sealift being a real potential Achilles Heel for the projection of military force in the event of China’s invasion of Taiwan, giving priority to something representing just over five hours of defense budget spending seems wise.
John D. McCown is a Non-Resident Senior Fellow at the Center for Maritime Strategy. Mr. McCown has four decades of experience related to the shipping industry. His research, analysis and writings for the Center for Maritime Strategy focus on the intersection of merchant shipping and maritime commerce with national security.
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.