Hanwha's U.S. Shipyard Orders Highlight Cost Gap as EV Shift Looms for Oil Demand

South Korea’s Hanwha Group owns the Philadelphia shipyard that has become a centerpiece of Washington’s attempt to rebuild American commercial shipbuilding. Its Hanwha Ocean and Hanwha Systems subsidiaries acquired the US yard in December 2024. The investment creates and sustains American production capacity and jobs while transferring shipbuilding expertise, technology and training from South Korea to US workers. The facility is in America, but its corporate ownership remains South Korean. The company’s published orderbook, however, tells a more complicated story: two liquefied natural gas carriers, four firm orders for oil and chemical tankers, and options for another six tankers. Three LNG-fueled container ships ordered by Matson in 2022 predate the current administration. The newer LNG and tanker orders come from Hanwha’s own shipping affiliates. They can help restart production, but buying ships from another company in the same group does not demonstrate that independent shipowners will pay US construction prices.

The price gap is difficult to dismiss. Kinder Morgan’s January 2026 investor presentation estimates that a new medium-range Jones Act tanker would cost more than $240 million and require a long-term charter above $115,000 per day to justify construction. The existing charter market was around $90,000 per day. Kinder Morgan operates 16 tankers, with its fleet fully utilized, yet the gap between current charter revenue and the cost of a replacement vessel remains substantial. High utilization establishes a need for shipping services; it does not establish a financeable order for a new American-built tanker at today’s prices.

Coastal petroleum shipping also competes with other domestic infrastructure. A 2025 report to the Commodity Futures Trading Commission estimated moving gasoline from Houston to New York Harbor at under 8 cents per gallon by pipeline, about 20 cents by ship, and roughly 35 cents by rail. These illustrative route costs do not cover every destination, and tankers remain essential where pipelines are unavailable. They do show why expensive new tankers cannot count on charter customers accepting whatever price domestic construction requires. Longer term, the International Energy Agency estimates that electric vehicles displaced 1.7 million barrels of oil per day worldwide in 2025 and could displace about 5 million by 2030 under its policy scenarios. That does not mean US tanker demand vanishes, but fleet investment must account for changes in the cargo market over several decades.

LNG export carriers have a more plausible near-term growth market, although their prospects are different from the prospects of LNG-fueled container ships. US gas exports may expand, and LNG tankers will be needed to carry them. The commercial test for a US-built LNG carrier is whether it can win an arm’s-length contract against established Korean, Japanese and Chinese shipyards. Hanwha’s plan to train Philadelphia workers through its Korean shipyards can strengthen US industrial capability, and affiliated orders can provide an initial production run. The central uncertainty is whether independent buyers will still choose these ships once the group’s internal demand and any cargo preference are removed.

A broader domestic vessel market already exists. US-flag Great Lakes freighters carried 71.3 million tons in 2025, much of it iron ore, limestone, cement, coal and other bulk materials. Those cargo flows will change as steelmaking and energy systems evolve, while ferry services, harbour vessels, inland cargo craft and multipurpose ships will still require renewal. Battery-electric and hybrid-electric propulsion offer practical options on routes with manageable energy requirements and reliable charging access. Large, long-distance bulk ships need a more selective technology assessment, rather than an assumption that every vessel can run on batteries.

Recent projects demonstrate what a committed customer can contribute to ship economics. CMA CGM, Nike and Gemadept launched an electric inland barge in Vietnam for a 180-kilometre round trip. Nike agreed to fill 90% of its capacity for eight years, helping justify a vessel reportedly costing about twice as much as its diesel equivalent. A dedicated charging installation and renewable electricity form part of the service. That is a commercially structured freight proposition, with its higher capital cost supported by contracted utilization and expected operating savings.

Electric propulsion does not cure the American shipbuilding cost problem by itself. Washington State’s three new hybrid-electric ferries carry a $714.5 million shipbuilding contract, and the state’s estimate including additional equipment and other program expenses is approximately $1.15 billion. Construction has started; the ferries are not yet in service. The path to a productive shipbuilding industry still runs through standardized designs, modular fabrication, trained workers, repeat orders, reliable delivery and falling labor-hours per vessel. It would be a mistake to treat electrification as a substitute for manufacturing reform.

Hanwha’s South Korean capital and know-how could contribute to that reform by developing US suppliers and production skills that serve several vessel classes. That is a meaningful way to rebuild domestic capability even though the parent company remains foreign-owned. Its progress should ultimately be measured by independent repeat customers, improving construction costs and commercially competitive vessels, rather than affiliated orders or investment announcements. A US maritime strategy anchored to the fossil-fuel cargoes of today risks missing a growing opportunity to build modern domestic vessels for the freight, port and ferry services of tomorrow.

My TFIE Strategy Briefing assessment examines Hanwha’s orders, Kinder Morgan’s tanker economics and the market for repeatable electric and hybrid maritime construction. It follows my earlier analysis of the Jones Act’s shipbuilding capacity gap.