The Plan to Get America Building Big Ships Again

Tracy Alloway (0:00)

Hey there, Odd Lots listeners, it's Tracy Alloway.

Joe Weisenthal (0:03)

And Joe Weisenthal.

Tracy Alloway (0:04)

We are very excited to announce that Odd Lots is going to Washington.

Joe Weisenthal (0:09)

That's right, for the first time, we're going to do a live public Odd Lots recording in our nation's capital. That's going to be March 12th in Washington, DC at the Miracle Theater. And guests will be announced in the coming days. But in the meantime, you can find a ticket link at bloomberg.com/oddlots.

Todd Young (0:31)

Bloomberg Audio Studios, podcasts, radio, news.

Joe Weisenthal (0:46)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:52)

And I'm Tracy Alloway.

Joe Weisenthal (0:53)

Tracy, let's get back on the supply chain shipping and industrial policy beef.

Tracy Alloway (0:59)

I love it. I've been waiting for us to get back on that. Although actually, okay, so I'm excited about this for two reasons. One is I enjoy talking about supply chains and talking about how goods are actually transported. And I think I've told you before, I actually wanted to be a commodities reporter because there's this element of romanticism to shipping actual things, moving actual stuff around the world. But then secondly, the reason I'm excited for this conversation is because this is a rare example or instance of something that has bipartisan support.

Joe Weisenthal (1:33)

Yes, that's right. And so obviously, during the last administration, we saw these things through the CHIPS Act, through the Inflation Reduction Act, which primarily focused on energy, a lot of alternative energy.

There's been some question, obviously, with the changing of the guard in DC. Are we going to see some more activist efforts to shore up certain aspects of the US industrial capacity? There's a lot of anxiety about that right now, but it's obviously an open question where that's going to go. But one of the things that has come up in some of our conversations that we haven't dived too deep into it is American maritime capacity specifically. And it comes up when we reference the Jones Act, and it comes up when we talk about port automation, and we've talked a little bit about icebreakers and things like that, and how sort of atrophied US capacity has become. And so then there's this question like, A, what can we do about it? And B, how urgent is there a reason to rebuild this capacity?

Tracy Alloway (2:35)

I was kind of wondering how long it would take for us to bring up the Jones Act in this conversation, and the answer is about one or two minutes. But I think this is a really interesting topic from an Odd Lots perspective. We have done shipping episodes in the past, and obviously everyone learned during the pandemic that shipping costs are really important. But also I'm just interested in this discussion from a sort of policy design perspective. How do you go about actually designing something like this that at first glance seems absolutely sprawling and complicated and touching on all these different things?

Joe Weisenthal (3:09)

Well, I'm excited to say we really do have the two perfect guests for this conversation. We're going to be speaking with Republican Senator Todd Young from Indiana, and Democratic Senator Mark Kelly from Arizona. Senator Kelly is a trained Merchant Marine. I see a class of 86, the Merchant Marine Academy. So like I said, truly the perfect guests, Senators Kelly and Young, thank you so much for coming on Odd Lots.

Todd Young (3:38)

Thanks for having us.

Mark Kelly (3:39)

Yeah, thank you, Joe and Tracy, for having us on.

Joe Weisenthal (3:42)

Why don't we just start, what do you describe, one of you or both of you, describe the existing state of America's maritime capacity, and just like why it's something that we need to, in your views, address?

Mark Kelly (3:57)

Hey, Joe, this is Mark Kelly. You know, just to start, I would say, big picture, the state of our maritime industry is really, really poor. I was in a brief just yesterday with the admiral, the four-star admiral, Admiral Paparo, who's the head of Indo-Pacom, and we're talking about the Western Pacific, and he was talking about the Military Sealift Command and how it is in bad shape materially and also from a workforce perspective. But when you consider where we were and where we are today, so when I graduated from the US Merchant Marine Academy in 1986, as you mentioned, we had about 400 US flagged ocean going vessels. And that was down, by the way, from thousands after World War II. Today, that number has fallen to 80 So 80 US flagged vessels in international commerce flying the US flag. China, our peer or near peer adversary, has 5,500.