Washington has overhauled the rules governing its Title XI ship and shipyard financing programme, lowering application costs and removing a potential bottleneck for projects that use foreign equipment.

The US Maritime Administration's (MARAD) interim final rule took effect on August 28 and cuts the Title XI application fee from $5,000 to $1,000. The agency has also replaced its investigation fee with a commitment fee capped at the lower of 0.25% of the guaranteed debt or $250,000, with qualifying professional-services costs deducted from that amount.

MARAD has additionally changed how foreign components are handled. Projects can now continue through processing and approval while a waiver covering foreign-sourced equipment remains outstanding. If the waiver is ultimately granted, the equipment can be included in the project's eligible cost; if it is rejected, the cost is excluded. Major foreign components forming part of a vessel's hull or superstructure remain outside the waiver regime. The adjustment matters for US builders because many domestic shipyard supply chains, particularly for engines and other specialized components, rely on foreign-sourced items, and under the previous rules an unresolved waiver could stall a financing application.

The rules have been reduced from 34 sections to 20 as MARAD seeks to simplify a programme used to guarantee debt for US-flag ships constructed, reconstructed, repaired or reconditioned at American yards, as well as investments in US shipyard modernisation. Title XI, originally enacted in 1936, allows the government to back private-sector debt for maritime projects on preferential terms, making lenders more willing to finance ship construction and yard upgrades that can otherwise be difficult to fund commercially.

The revision also spells out which projects move to the front of the queue. Ships judged suitable for use as US naval or military auxiliaries and capable of addressing sealift shortfalls receive first priority, followed by vessels formally designated as being of national interest. The prioritisation ties the loan programme directly to Pentagon concerns about the availability of US-flag tonnage to move military cargo in a crisis.

The changes come amid a much wider Washington push to rebuild domestic shipbuilding capacity, driven by the shrinking share of global commercial shipbuilding held by US yards compared with shipbuilding nations in Asia. Splash reported last year that a major legislative package included around $29bn for shipbuilding and the maritime industrial base. This summer, the US and South Korea also opened the operational centre for their $150bn shipbuilding partnership, covering yard modernisation, supply chains, workforce training and technology. As an interim final rule, the new Title XI framework takes effect immediately, though further adjustments could follow once MARAD reviews public comments.

Source: Splash247