US considering new ship registry in US Virgin Islands, sources say
By Jonathan Saul and Jarrett Renshaw
President Donald Trump's administration is considering a proposal to create an international shipping registry in the U.S. Virgin Islands as part of efforts to enlarge the tiny commercial shipping fleet flying the American flag, according to four sources familiar with the matter. Increasing the number of U.S.-flagged vessels is important for Trump's administration because it would enhance the ability of the U.S. commercial shipping fleet to provide logistical support for the military in time of war, and ease Washington's dependence on foreign ships to transport supplies and equipment across sea lanes.
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The U.S.-flagged fleet currently numbers around 187 vessels, of which only 80 are involved in international trade. This contrasts with at least 5,500 of vessels under China's control, according to industry estimates and assessments from U.S. lawmakers.
The U.S. flag registry has struggled to attract ship owners for decades due to higher costs, a bigger tax burden and multiple requirements such as having a crew of U.S. citizens. China has become the world’s top shipbuilding and shipping nation with 230 times more shipbuilding capacity than the U.S., a congressional report, opens new tab showed last year.
Using the U.S. Virgin Islands (USVI) could be the most efficient way to "strengthen American maritime posture" because the island territory could provide a U.S.-controlled flag without the costly restrictions associated with a straight U.S. flag registration, according to Eric Dawicki, president of the Center for Ocean Policy and Economics (COPE) research body, which submitted the proposal to U.S. officials. All commercial ships must be registered, or flagged, with a particular country or jurisdiction to comply with safety and environmental rules.
A U.S. official said the proposal had been submitted to the National Security Council, adding it was unclear on the status. Another U.S. official confirmed that the National Security Council was aware of the proposal.
White House and USVI officials did not respond to requests for comment.
In previous conflicts, such as the 1991 Gulf War, the U.S. relied upon foreign, opens new tab-flagged vessels to bolster shipping access. «The ongoing reliance on voluntary charter arrangements with foreign-flagged vessels to supplement America’s sealift capacity poses a strategic vulnerability to U.S. maritime interests," said COPE's Dawicki, a U.S. maritime industry veteran who co-founded the Dominica flag registry. While some lawmakers support the idea of a U.S. Virgin Islands registry, the proposal is likely to face opposition from unions, opens new tab and others keen for a revival in domestic shipbuilding.
"The USVI is an alternative, but it probably will not get much support with the drive to enlarge the U.S. fleet," said Salvatore Mercogliano, associate professor of history at North Carolina’s Campbell University and adjunct professor at the U.S. Merchant Marine Academy.
NATIONAL FLAG
The majority of U.S.-flagged ships operate under a century-old regulation called the Jones Act. That law requires that U.S.-flagged vessels be built in the U.S., employ a U.S. crew, and be owned by an American individual or entity.
Those requirements were meant to help U.S. shipowners but they ultimately limited growth of the U.S. fleet, said Basil Karatzas, U.S.-based consultant with shipping specialists Karatzas Marine Advisors & Co.
"As a national flag, it can never compete on cost with foreign nationals' labor."Unlike with the U.S.-flag, which is vetted by the U.S. Coast Guard, the USVI authority would administer and regulate an international registry that imposes fewer requirements, according to COPE. The vessels, for example, could be foreign built and crewed by non-U.S. nationals, it said.
The U.S. Coast Guard and union officials did not respond to requests for comment.
During World War II, the U.S. Merchant Marine - a civilian organization of the commercial fleet - played a vital role in defeating the Axis powers, with over 10,000 ocean-going vessels involved in operations, according to U.S. data.
The U.S. fleet current represents under 1% of global shipping by value, separate U.S. data showed.
The idea to create an international flag in the USVI was first discussed by industry officials and COPE, opens new tab in 2022 although it was not submitted to the previous administration under former President Joe Biden, COPE said.
Trump's administration is pushing for a regeneration of U.S. shipbuilding as well as attracting more ships to the U.S. flag registry.
There are around 20 shipyards in the U.S. - many ageing and in need of major investment, down sharply from over 80 at the end of World War II, according to U.S. lawmakers. On April 30, U.S. Congress members from both parties launched the SHIPS for America bill that seeks to bolster and secure consistent funding for the U.S. maritime industry. Dawicki said a USVI registry would complement the SHIPS Act, "without affecting cabotage (coast to coast shipping) or the Jones Act». Senator Todd Young's office, one of the lawmakers involved in the bill, did not respond to a request for comment.
Source : Reuters Reporting by Jonathan Saul and Jarrett Renshaw; editing by Simon Webb, Richard Valdmanis and David Gregorio
US energy groups request exemption for LNG rankers from new shipping requirements
US energy groups are asking President Donald Trump's administration to exempt liquefied natural gas tankers from a new rule that will require producers to move an increasing percentage of their exports on US-built vessels as part of a broader push to revive domestic shipbuilding.
The US is the world's No. 1 LNG exporter at $34 billion annually and the Trump administration has been a supporter of the industry in his push for energy dominance.
In a move that shocked the industry, the US Trade Representative (USTR) announced April 17 that LNG producers would have to transport 1 per cent of their exports on US-built ships starting in April 2028. That percentage would escalate to 15 per cent in April 2047 and beyond.
That could put the US LNG industry at a disadvantage to its peers around the world because there aren't enough US-built ships to meet the requirement, the American Petroleum Institute (API) said in an April 23 letter to US Energy Secretary Chris Wright and National Energy Dominance Council Chair Doug Burgum seen by Reuters. Burgum is also US Interior Secretary. It 'risks counteracting the significant progress the Trump Administration has made towards reducing uncertainty and unleashing US LNG,' API CEO Mike Sommers wrote in that letter. API counts as members some of the world's largest energy companies, such as Exxon Mobil, Chevron and Cheniere Energy. Individual exporters that do not comply could lose their export licenses, even though the percentages apply to the overall industry and to ships that exporters do not own or control, industry groups warned. ‘They have little control over their ability to comply with USTR's new requirements but ultimately face the consequences of not doing so,' Sommers said in the letter.
'We will continue working with USTR and the Department of Energy in support of feasible and durable policies that benefit consumers and advance American energy dominance,' Aaron Padilla, API's vice president of corporate policy, told Reuters in a statement late on Tuesday. Representatives from the USTR and White House press office did not immediately respond to requests for comment. USTR proposed the rules as part of a larger effort to counter China's growing commercial and military dominance on the high seas. There are now 792 LNG carriers in operation globally, according to shipping consultancy AXSMarine.
LNG ships from South Korea and Japan dominate that group with 703 combined. China, which aims to become a LNG tanker powerhouse, built 58. Five come from US shipyards - though those 1970s-era American made vessels are laid up and not currently in use, AXSMarine said.South Korea remains the dominant builder with 232 LNG carriers currently on order. China, while still behind, is rapidly expanding its footprint with 101 LNG carriers on order, AXS Marine said.US shipyards cannot turn out vessels fast enough to meet the USTR deadline, the Center for LNG told Reuters in a statement.
'There are no such vessels in existence today, and building them would take decades, making compliance impossible for the industry,' Charlie Riedl, executive director at the Center for LNG, said in a statement on Wednesday. The USTR requirement for 1 per cent of LNG exports to be transported on US-built vessels would require as many as five American-built ships by the end of the decade, which is not feasible, API CEO Sommers said in the letter. That’s because it would take as long as five years to build one LNG carrier at either of the two US shipyards with docks long enough to build such a ship, Sommers said. ‘We urge the Administration to exempt crude oil and refined product imports and exports - consistent with this Administration's approach to exempt these same products from baseline and reciprocal tariffs,' Sommers wrote. Vehicle carrier operators also hope to win relief from new rules that would levy hefty US port fees on all of their foreign-built vessels. USTR also announced those unexpected rules on April 17.
Update to Navigation and Inspection Circular (NVIC) -01-13, Inspection and Certification of Vessels Under the Maritime Security Program (MSP)
The USCG has streamlined the process for foreign ships to be certificated under the American Registry without compromising safety. By doing so, the USCG has consolidated the reflag process under a single program based on international standards. Benefits include:
Reducing pre-inspection plan review and national equivalency process,
Avoiding schedule delays & minimizing modification costs for closing regulatory gaps,
Expediting the RRF recapitalization with foreign-built vessels, and
Providing more job opportunities for American mariners to grow the workforce.
This effort supports executive actions as well as the national policy for the U.S. Merchant Marine to carry waterborne commerce at all times and to serve as a naval auxiliary during national contingencies. To assist vessel owners and operators, the USCG is announcing the availability of Change-2 to Navigation and Vessel Inspection Circular (NVIC) 01-13, Inspection and Certification of Vessels under the Maritime Security Program (MSP).
Under this streamlined reflagging program, the USCG has clarified the enrollment process, streamlined plan review, and further explained the eligibility for foreign-built vessels to be inspected and certificated in accordance with NVIC 01-13. Specifically, this update acknowledges that while some commercial vessels may receive a payment as part of their MSP enrollment, it is not a precondition for certification.
Accordingly, other foreign-built vessels may enroll in voluntary sealift support programs established by MARAD and utilize this guidance to obtain a Certificate of Inspection provided they meet the enrollment criteria as specified by MARAD. This includes vessels reflagging as part of the Ready Reserve Force recapitalization. In the revised guidance, all vessels will be generally referred to as “MSP vessels” regardless of the sealift support program for which MARAD has determined that the vessel is eligible. For more information on reflags visit www.uscg.mil/reflag