An industry that hasn’t been rocked since the 1920s, the shipping industry is feeling major effects, good ones though, thanks to the energy boom that is rocking America.
Over ten supertankers are currently being built at major shipyards in the United States with plans for another 15 on the way. Being that there are only about 75 of these tankers in the United States, increasing this amount by a third is a major development.
“We haven’t seen something like this since the 1970s,” Matthew Paxton, president of the Shipbuilders Council of America says. “The movement of more oil has built up a real commercial shipbuilding renaissance.”
This ship building boom comes in direct correlation with an economy that continues to struggle. Mainly because of another sector in the economy that is thriving: natural gas production. Due to the 1920s Merchant Marine Act also known as the Jones Act, any fuel that is transported by ship must be American-made and American-manned.
Paxton estimates that up to 3.3 million barrels will be shipped out daily from the Gulf Coast, destined for ports along the east and west coasts, creating a huge demand for tanker ships.
“It could be higher as more and more tankers are built,” said Paxton.
Through the process of fracking, record amounts of oil and gas are being extracted from shale. That process has created an energy boom that some are calling the United States the Saudi Arabia of natural gas. While a good portion of the fuel is being exported across the world, most is remaining domestic and being distributed here in the United States.
Recently, the Aker Philadelphia Shipyard announced that they invested $115 million with plans to construct 8 supertankers.
“The shale revolution is creating industrial opportunities throughout the United States and specifically here in Philadelphia,” Kristian Rokke, President & CEO of AKPS, said in a recent statement. “This strategic opportunity allows us to capitalize on the increased demand for Jones Act tankers in a way that will transform APSI in the years ahead.”
One tanker alone which could be 600 feet long and 200 feet wide comes with a price tag of nearly $100 million. Once the ships are built, they return an investment better than the one that was made to build it. Transportation companies pay around $100,000 per day locked into a five-year contact to lease them.
“We need another shipyard or two,” said Bob Flynn, president of shipbroker MJLF & Associates in Stamford, Conn., at the recent TradeWinds Jones Act Shipping Forum in New York.
$36 billion, that’s how much the shipping industry contributes to the economy.