High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
By Andrea Shalal and Mike Stone
SIMI VALLEY, Calif., Dec 4 (Reuters) – The U.S. arms industry is ready and capable of boosting production of new ships if President-elect Donald Trump makes good his vow to expand the U.S. Navy to 350 ships, Chief of Naval Operations Admiral John Richardson told Reuters.
Shifting the current target of 308 ships upwards would be “remarkably easy” as long as there is funding to pay the bill, the top uniformed Navy official said in an interview at the annual Reagan National Defense Forum in southern California.
“If it’s resourced, it’s a matter of working closely with the industrial base, and they definitely are ready to do that,” he said, adding the only limiting factor would be hiring and training workers to build the new ships.
“If I do not have that capacity, I can create it faster than you can appropriate the money,” Mike Petters, chief executive of Huntington Ingalls Industries Inc, the largest U.S. military shipbuilder, said in a separate interview with Reuters.
Trump promised during his U.S. election campaign to expand the Navy to 350 ships, although lawmakers and military officials caution that any such boost would require big increases in staffing, training, maintenance and infrastructure.
Richardson said the incoming administration could smooth the way toward the increase by submitting a supplemental budget for fiscal 2017, which ends Sept. 30. “It seems to me that if you want to get something done, you get started.”
All eyes are on the funding for an expansion under the shadow of sequestration, the self imposed U.S. spending cap.
“The question is, can you get rid of sequestration, because that is going to cloud everybody’s judgment on how fast do I invest, how fast do I build that capacity.” Petters said.
Navy officials were still calculating how much it would cost to expand the Navy to 350 ships from around 290 now, but it would depend on the mix of ships and related costs.
A supplemental budget request could include munitions, aircraft, and other equipment that can be bought on short notice, followed by later orders for submarines, destroyers, amphibious ships and potentially even carriers, Richardson said.
“If you build those closer together, you get economic order quantities. The learning curve gets to be a much more relevant thing and the cost starts to drive down,” he said.
Building two carriers at a time would potentially save about $1 billion, Petters said. (Reporting by Andrea Shalal; Additional reporting by Mike Stone; Editing by Chris Reese)
(c) Copyright Thomson Reuters 2016.
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