The U.S. Title XI Program and Boom Markets: A Comparison

by Arthur Dimopoulos

On January 30, 1997, the U.S. Maritime Administration (MarAd) issued a 25 year loan guarantee commitment under Title XI of the Merchant Marine Act of 1936, as amended,1 to COSCO Line (America), Inc. for $137,687,000 or 87-1/2% of the actual cost of the construction of four 1,432 TEU Containerships at Alabama Shipyard in Mobile, Alabama.

The significance of the transaction is its confirmation of a change in times, markets and MarAd policy. Since the last building boom in the U.S. during the 1970′s and early 1980′s, when MarAd had $8.1 billion of outstanding Title XI transactions, the world has undergone dramatic change. Fueled by the Asian Tigers’ growing thirst for trade and energy, the COSCO Title XI transaction and a glance at the current Title XI orderbook, indicates a strong and robust resurgence of the U.S. shipbuilding industry and, in general, for the U.S. shipping industry as well.

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