The United States Did Not Just Outsource Shipbuilding. It Outsourced Demand.

Why America’s Cargo Demand Is Building Maritime Capacity Everywhere but at Home

By Bruce Kimbrell (Policy Op-Ed)   I spent last week at the Sea-Air-Space Conference at the Gaylord in Maryland listening to discussions about American shipbuilding.

Across panels, the focus was consistent: improving efficiency and throughput. McKinsey & Company also released a shipbuilding report during the event, reinforcing the emphasis on extracting more from the yards we already have—cost, output, and performance. In other sessions, including a panel led by Admiral Jamie Foggo, the focus shifted to partnerships, allied capacity, and operating within a global system.

Taken together, those conversations pointed in the same direction. The priority was clear: make the existing system more efficient, more resilient, and more responsive to government demand.

But something was missing.

The conversation centered on how the system performs once it is already in motion. It spent far less time on what determines whether that system grows in the first place. Efficiency can stretch existing capacity. It cannot determine how much capacity exists to begin with.

That distinction matters because it points to a different starting point—one shaped by upstream decisions, not downstream optimization.

Start with Commercial Demand

That is what made one Wednesday morning panel, moderated by Sara Fuentas from the Transportation Institute, stand out. It shifted attention away from performance and toward what actually drives the system.

Maritime Administrator Stephen Carmel and Director Robert Andrews from the National Security Council made a simple but often overlooked point: before shipyards, workforce pipelines, or industrial policy, the system starts with demand.

Cargo is the physical expression of that demand moving through the system, and most of that demand is commercially generated by private firms making daily decisions about how their cargo moves.

The chain is straightforward: cargo demand drives carrier selection; carrier selection drives fleet investment; fleet investment drives shipbuilding; and shipbuilding determines where industrial capacity accumulates, which is today heavily concentrated in East Asia, where China, South Korea, and Japan account for roughly 90 percent of global shipbuilding output.

Put simply: when demand is steady, ships stay in use, companies invest, and more ships get built. If that logic holds, shipbuilding is not the starting point—it is the result.

Is Demand Enough?

At about that point in the discussion, a nearby shipbuilding insider quietly noted that demand for the U.S.-flag does not mean carriers will build ships in the United States.

That observation gets to the heart of the issue. Demand capture is not total demand in the economy, but it is where that demand is directed and ultimately converted into industrial capacity.

Commercial demand will generate ships. But it does not determine where those ships are built. A carrier can meet U.S.-flag demand for international trade by acquiring foreign-built vessels more easily than investing in domestic shipyards, reflecting structural differences in the global shipbuilding industry.

The implication is that demand initiates the system, but it does not determine where its effects accumulate. That outcome depends on who carries the cargo and where that capacity is sourced.

Which leads to a more precise conclusion:

The United States does not lack demand. It lacks the ability to consistently direct that demand in ways that build domestic capacity.

Two Demand Systems—Only One Scales

The nature of the problem becomes clearer when looking at how demand is generated.

Government demand—through cargo preference requirements, programs like the Maritime Security Program, and naval shipbuilding budgets—are intentional. This type of demand is designed to support national security outcomes.

But it is limited in scale.

Government demand operates in the billions. Commercial demand from global seaborne trade operates at a vastly larger scale, measured in the trillions annually. Comparatively, government demand can sustain capacity at the margins, but only this much broader global commercial demand can scale the market.

Government tools influence margins, but they do not rewire how commercial demand is allocated at scale. The result is a dual system: one designed for national security, and another that ultimately determines where maritime capacity is built.

Both global demand, and U.S. specific commercial demand, is allocated through firm-level decisions: contracts, carrier selection, routing, and sourcing. Those decisions follow economic logic; cost, speed, and flexibility. Security, resilience, and control are unevenly priced into routine decisions and tend to emerge only when conditions deteriorate.

As a result, cargo flows toward the most efficient option available. Over time, those decisions determine where demand is captured and where fleets, shipbuilding, and workforce capacity accumulate. 

In summation, markets tend to allocate globally, while capacity concentrates where demand is consistently captured.

The Illusion of Advantage

From that perspective, the imbalance becomes easier to see.

The United States remains the world’s largest marketplace. A significant share of global trade is driven by U.S. consumption, yet that demand moves predominantly on foreign-flag fleets built in shipyards beyond our shores.

In steady conditions, the leverage of America’s consumer market provides influence through market size, financial reach, and global integration. Capital can be deployed to access shipping when needed.

But access is not the same as control. The system appears to function. Goods move. Capacity is available. That is what creates the illusion.

The Illusion Breaks Under Pressure

That illusion becomes visible when the system is under stress.

Recent disruptions—from the pandemic to Red Sea attacks to constraints in the Suez or Panama Canal—show a consistent pattern. The system continues to operate, but with less slack, tighter margins, and greater volatility.

Cargo does not stop moving, but it is rerouted, delayed, and repriced. Access becomes conditional. In those moments, the system is not governed by demand alone. It is governed by control over capacity. Under stress, the system does not fail, it reveals its hierarchy.

Capacity does not guarantee control but without it, outcomes are limited to access negotiated on someone else’s terms. Because much of that capacity sits outside the United States, control shifts with it.

Exporting Demand, Importing Dependence

This vulnerability is not episodic. It is built over time through how demand is applied.

Every day, American firms move enormous volumes of cargo through global shipping networks. These flows reflect concrete decisions—contracts signed, carriers selected, routes established, and fleets sourced.

Those decisions are rational. They optimize for cost, speed, and reliability within the system that exists. But at scale, they determine where capacity develops and who controls it.

Consider a large U.S. retailer or manufacturer entering a multi-year contract with a global carrier. The decision is rational: the carrier offers lower costs, integrated logistics, and reliable global coverage. But that contract does more than move goods.

It underwrites that carrier’s fleet expansion and, indirectly, the shipyards that supply it. Repeated across industries and over time, these decisions channel American demand into foreign maritime systems, reinforcing their scale and cost advantages. Individual rational procurement decisions aggregate into system-level capacity concentration.

Seen this way, cargo is not just movement, it is a signal. Where that signal is captured determines where the economic and industrial effects of that demand accumulate.

Today, American demand is largely captured outside the United States.

America’s Grand Maritime Bargain

That pattern has produced a de facto maritime bargain. The United States provides both the demand that sustains the system and much of the security that allows it to function. In return, it benefits from efficiency, scale, and low-cost shipping.

But the system does not ensure that demand, security provision, and capacity development remain aligned. It rewards efficiency. It does not preserve control.

Dependence as a Strategic Constraint

The issue is not episodic disruption. It is structural dependence. Markets do not separate economic decisions from strategic outcomes. They connect them.

Individual firms make rational decisions about cost and efficiency. But at scale, those decisions shape the structure of the maritime system itself.

The result is an unpriced national risk. 

Markets tend to price disruption after it occurs, not before. Over time, this creates a reinforcing cycle: U.S. demand continues to build maritime capacity outside the United States, increasing reliance on external systems for access, flexibility, and control.

Aligning Demand and Capacity

The United States is not short on demand. It is short on directing that demand in ways that build domestic maritime capacity. America can continue allowing its demand to build capacity elsewhere, or it can begin capturing a portion of it within its own maritime system. That does not require abandoning global markets. It requires recognizing that the way demand is allocated shapes where capacity develops.

In practice, that means closer alignment between government and industry on how a portion of U.S. commercial cargo demand is routed: through long-term contracting, dedicated shipping lanes, or deliberate use of U.S.-flag, U.S.-built, and U.S.-linked carriers.

This year’s Sea-Air-Space Conference panels forced me to recognize this simple truth: shipbuilding capacity follows utilization, and utilization follows where long-term cargo commitments are made. The market works, but on its own, it does not ensure that demand and control remain in the same place. 

Commander Bruce Kimbrellis a career naval officer with deployments in Europe, Africa, the Middle East, and Asia. He has deployed with U.S. Carrier and Expeditionary Strike Groups. He previously served as a Director with the National Security Council at the White House and has supported strategic maritime initiatives as staff for the Office of the Chief of Naval Operations and the Office of the Secretary of the Navy. He also served as a national security and defense staffer for U.S. Congressman Michael Waltz of Florida’s 6^th Congressional District.

The views expressed are those of the author and do not reflect the official policy or position of the U.S. Navy, the Department of Defense, or the U.S. Government.

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