Sources say that the US Virgin Islands is considering a new registry for ships.

Four sources with knowledge of the matter say that President Donald Trump’s administration is evaluating a proposal for the creation of an international shipping registry on the U.S. Virgin Islands, as part efforts to expand the small commercial shipping fleet flying under the American flag.

The Trump administration believes that increasing the number of U.S. flagged vessels will help the U.S. Commercial Shipping Fleet to better support the military during wartime and reduce Washington's dependency on foreign ships for transporting supplies and equipment along sea routes.

The U.S. flag fleet is currently around 187 ships, and only 80 of them are involved in international commerce. According to estimates from the industry and U.S. legislators, China controls at least 5,500 vessels.

Since decades, the U.S. Flag Registry has had difficulty attracting ship owners due to higher costs and a heavier tax burden. There are also multiple requirements like having an American crew. A congressional report last year showed that China had 230 times the shipbuilding capacity of the U.S.

According to Eric Dawicki of the Center for Ocean Policy and Economics, which made the proposal, using the U.S. Virgin Islands could be the best way to "strengthen American naval posture", because the island territory would provide a U.S. controlled flag without the expensive restrictions that come with a U.S. straight flag registration.

To comply with safety and environment rules, all commercial ships are required to be registered or flagged with a specific country or jurisdiction.

Uncertainty about the status of the proposal was expressed by a U.S. official who said that the proposal has been sent to the National Security Council. A second U.S. official confirmed the proposal was known to the National Security Council.

Officials from the White House and USVI did not respond when asked for comments.

In past conflicts, like the 1991 Gulf War the U.S. relied on foreign-flagged ships to boost shipping access.

"The continued reliance on voluntary chartered arrangements with foreign flagged vessels to supplement America’s sealift capability poses a vulnerability for U.S. Maritime interests," said COPE’s Dawicki. A U.S. marine industry veteran, Dawicki co-founded Dominica flag registry.

Some lawmakers are in favor of the idea, but unions and those who want to see a resurgence in shipbuilding at home will likely oppose the proposal.

Salvatore Mercogliano is adjunct professor and associate professor of history, at North Carolina Campbell University, at the U.S. Merchant Marine Academy.

FLAG OF THE NATIONAL

A century-old law called the Jones Act governs most U.S. flagged ships. This law stipulates that U.S. flagged vessels must be constructed in the U.S.A., have a U.S. crew and be owned or controlled by an American.

These requirements were intended to assist U.S. shipowners, but ultimately they limited the growth of the U.S. Fleet, said Basil Karatzas. He is a consultant with Karatzas Marine Advisors & Co., a shipping specialist based in America.

As a national flag it cannot compete with the labor of foreign nationals on price.

According to COPE, unlike the U.S. flag, which is vetted and regulated by the U.S. Coast Guard. The USVI authority will administer and regulate a registry international that imposes fewer restrictions. It said that the vessels could, for instance, be built abroad and crewed with non-U.S. citizens.

Requests for comment from the U.S. Coast Guard or union officials were not answered.

During World War II the U.S. Merchant Marine, a civilian organisation of the commercial fleet, played a crucial role in the defeat of the Axis power, with more than 10,000 ocean-going ships involved in operations.

Separate U.S. statistics showed that the U.S. fleet currently represents less than 1% of shipping value in the world.

COPE stated that the idea of creating an international flag for the USVI first came up in 2022, but was never presented to the former administration under Joe Biden.

Trump's administration wants to revive the U.S. shipbuilding industry and attract more ships under the U.S. Flag Registry.

According to U.S. legislators, there are only 20 shipyards left in the United States. Many of them are old and need major investments. There were over 80 shipyards at the end World War II.

The SHIPS for America Bill was introduced by members of the U.S. Congress from both parties on April 30. This bill aims to bolster the maritime industry in the United States and ensure consistent funding.

Dawicki stated that a USVI Registry would complement the SHIPS Act "without affecting the cabotage (coast-to-coast shipping) or the Jones Act".

Senator Todd Young, who is one of the legislators involved in this bill, has not responded to a comment request. Reporting by Jonathan Saul, Jarrett Renshaw and Simon Webb; Editing by Richard Valdmanis, David Gregorio and Simon Webb

(source: Reuters)