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SCA Weekly Report | April 5 - 9, 2021

Shipbuilders Council of America

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SCA Weekly Report | April 5 - 9, 2021





SCA Chairman Ben Bordelon Authors Op-Ed on the Resiliency of the U.S. Shipbuilding Industry

By Ben Bordelon

April 09, 2021


The U.S. maritime industry is resilient, and as the backbone of America’s national and economic security, has delivered despite significant trials from natural disasters to foreign conflict. However, 2020 brought unprecedented challenge. Reduced demand and the increased operational costs that have accompanied some harsh new operating realities dampen hopes for an industry that will be critical if we are truly going to "Build Back Better."


To ensure the maritime industry’s long-term viability as a critical engine of the U.S. economy, our country is in need of decisive leadership. From regulations, to shipbuilding, to port development, there are many areas that are in dire need of attention. It is our hope that the Biden administration will put the personnel and policies in place to make that a reality.


Read the full article HERE.




Biden Unveils ‘Skinny Budget’ Offering Blueprint for Spending Priorities; $715B for Pentagon  

President Biden on Friday released his first blueprint for discretionary spending, a precursor to the annual budget known as the "skinny budget." The document sheds light on how the new president plans to prioritize federal spending after four years of a Republican administration. The $1.5 trillion discretionary funding request looks to end the tradition of “parity” between defense and non-defense spending by boosting non-defense spending by 16%.


President Joe Biden plans to request $715 billion for his first Pentagon budget, a decrease from Trump-era spending trends. The $715 billion Pentagon “top-line” is likely to be presented as a compromise to Democrats pressing for cuts in defense spending, as some funds would be slated for the Pentagon’s environmental initiatives. The Pentagon-only budget doesn’t include defense-related spending that goes to other agencies, such as to the Department of Energy, which maintains the nation’s nuclear weapons.


In a change from previous administrations, Biden will also forgo labeling funding for current military operations as “overseas contingency operations,” or OCO, according to one official. Lawmakers from both parties have criticized OCO as a “slush fund” of money that should be spent as part of the regular Pentagon budget.


In the request, the Biden Administration specifically cites the need to “optimize. U.S. naval shipbuilding” saying, “Maintaining U.S. naval power is critical to reassuring allies and signaling U.S. resolve to potential adversaries. The discretionary request proposes executable and responsible investments in the U.S. Navy fleet. In addition, the discretionary request continues the recapitalization of the Nation’s strategic ballistic missile submarine fleet, and invests in remotely operated and autonomous systems and the next generation attack submarine program.”


Additionally the request highlights the need to “divest legacy capacity and force structure” saying, “The discretionary request supports DOD’s plan to divest legacy systems and programs to redirect resources from low- to high-priority programs, platforms, and systems. Some legacy force structure is too costly to maintain and operate, and no longer provides the capabilities needed to address national security challenges. The discretionary request enables DOD to reinvest savings associated with divestitures and other efficiencies to higher priority investments.”


The request doesn't indicate whether the Biden administration will stick with the Trump administration's plan to increase the size of the Navy to more than 500 manned and unmanned ships by 2045. The service had run into funding obstacles to achieve its previous goal of 355 ships set near the end of the Obama administration.


Pentagon officials have indicated they plan to study the Trump shipbuilding goal, unveiled near the end of the last administration. The detailed president’s budget request will be released at an unknown later date. 




China State Shipbuilding Discloses $1.5 Billion Newbuild Order for 13 Big Containerships

China State Shipbuilding Corporation (CSSC) says it has landed its single-largest containership order valued at over $1.5 billion. CSSC did not disclose the buyer but reports indicate the order was placed by Swiss-based MSC Mediterranean Shipping Company, the world’s number two shipping line. CSSC said the order encompasses thirteen newbuild containerships of 16,000 TEU capacity each. Seven will be constructed by Dalian Shipbuilding Industry Group and six by Guangzhou Shipbuilding International Co., both of which are CSSC subsidiaries. 




High Stakes at Sea in Global Rush for Offshore Wind Power

Global competition for offshore wind power is continuing to increase to the point where license auctions now resemble the oil and gas competitions of just a few years ago, and some of the names are familiar as global oil majors move aggressively into renewable energy. The drive among top fossil fuel producers to make fast inroads into lower-carbon businesses comes as more and more countries roll out plans to boost wind power in an effort to reduce their carbon footprint. Several European oil firms including Total, BP, and Shell plan to rapidly increase their renewable power portfolios, reducing reliance on oil and gas to satisfy investors who want to see viable long-term low-carbon business plans and governments which are demanding reductions in emissions. The oil majors, with deep pockets, are willing and able to pay up for a foothold in the market, even though margins are much smaller than for their traditional operations.





CDC Issues New Cruise Ship Guidance

The U.S. Centers for Disease Control (CDC) and Prevention issued a new guidance to the cruise ship industry last Friday, including the need for COVID-19 vaccinations, a necessary step before passenger voyages can resume. The new technical instructions, the first update since October, include increasing from weekly to daily reporting frequency of COVID-19 cases and implementing routine testing of all crew. It did not specify a date for the resumption of cruise operations from U.S. ports despite calls from the industry for planning for a phased resumption by the beginning of July. The CDC said it will issue additional guidance before it will allow cruises to resume.


Suez Canal Weighing Expanding Southern Channel, Chairman Says

The Suez Canal Authority is considering expanding the southern section of the waterway where the container ship Ever Given became stranded, its chairman said on Tuesday. The 1,310 ft long Ever Given became grounded diagonally across the southern section of the canal during high winds on March 23. It remained stuck for six days, preventing hundreds of ships from passing and significantly impacting global trade flows.


Carnival Considers Shifting Home Ports if US Sailing Ban Not Lifted

Earlier this week, Carnival Corporation’s Chief Executive Officer said they are considering shifting the home ports of its cruise ships to other parts of the world if the ban on sailing from the United States is not lifted. Cruise ships in the United States remain under a “no-sail order”, and Carnival has said recent guidelines from the CDC on resuming voyages, including ensuring all passengers are vaccinated, are “largely unworkable”.



If you have any questions, please do not hesitate to contact Paula Zorensky on the SCA staff.