Ocean Shield: Making the American Flag Worth Flying How insurance, protection and strategic cargo could rebuild the U.S. merchant fleet

A PROPOSAL TO UPDATE US SHIPPING INTO THE NEXT CENTURY

The Strait of Hormuz crisis demonstrated that naval power alone cannot keep commercial shipping moving. Ships also need insurance, financing, willing crews and owners confident that their vessels will not be abandoned if conditions deteriorate.

Washington recognized this problem and announced a government-supported maritime reinsurance facility that eventually reached approximately $40 billion in public and private capacity. Chubb was selected as lead underwriter, supported by several major American insurers, while the U.S. International Development Finance Corporation provided the federal component.

The facility looked formidable on paper. In practice, it reportedly insured no voyages during its critical opening period.

The problem was not a shortage of announced money. Insurance had been separated from the operational system required to make it useful. Application procedures, vessel eligibility, underwriting conditions, naval protection and convoy schedules were not ready to operate together.

Ships needed insurance before attempting the passage. Coverage depended partly upon American protection, but the United States lacked a sustained escort program capable of supporting the number of vessels requiring passage. Without dependable escorts, coverage could not be confidently issued. Without usable coverage, owners remained reluctant to move.

Washington announced financial capacity before constructing the system needed to use it.

Hormuz should therefore become the foundation for a permanent American maritime program designed before the next crisis.

That program should be called Ocean Shield.

Make the American flag commercially valuable

The United States will not rebuild its merchant fleet simply by constructing ships and hoping cargo appears. Shipowners, lenders, insurers, crews and cargo companies need compelling reasons to enter and remain within the American maritime system.

Flying the U.S. flag should mean something.

A qualified American-flagged vessel should enter a standing system of maritime intelligence, insurance continuity, emergency response, diplomatic support and, when necessary, physical protection.

This would not mean assigning a Navy escort to every American merchant ship. It would mean that piracy, terrorism, hostile militias and state proxies trigger predetermined responses rather than improvised debates over whether assistance will be provided.

Ocean Shield would continuously compare the location and needs of enrolled vessels with available American and allied surveillance, mine-countermeasure, rescue and escort capacity. Protected corridors, assembly areas, convoy schedules, emergency ports and communications procedures would be established beforehand.

Had Ocean Shield existed before the Hormuz crisis, Washington would have known how many enrolled ships were inside the Gulf, which cargoes they carried, how vulnerable they were and how many protected sailings were required. If there were insufficient escorts for individual vessels, ships could have been organized into scheduled convoys.

Insurance would have been connected to an executable movement plan instead of an escort requirement that had not yet been organized.

Ocean Shield should never announce more immediately usable insurance capacity than the United States and its partners can operationally support.

Preventing another insurance veto

The United States was caught unprepared at Hormuz because maritime commerce did not depend solely upon ships and naval forces. It also depended upon insurers, reinsurers, P&I clubs, lenders, charterers, cargo owners, flag states and crews.

Private insurers had legitimate reasons to limit exposure to potentially catastrophic losses. Nevertheless, their commercially rational decisions helped immobilize ships already inside the danger area.

Ocean Shield would reduce that vulnerability through standing federal war-risk binders established before a crisis. Commercial marine insurance would remain primary during ordinary operations. Federal coverage would activate when commercial protection was cancelled, withdrawn, made prohibitively expensive or conditioned upon protection the market could not provide.

Private insurers such as Chubb would remain valuable participants. They could provide primary coverage, technical underwriting, broker distribution, inspections and claims administration. The government would assume the unavailable, catastrophic or strategically necessary portion of the risk.

Commercial insurers may decide which risks they will accept with their own capital. They should not possess an effective unilateral veto over the movement of strategically necessary American commerce.

America has done this before

Ocean Shield would not be an entirely new experiment.

During World War II, private insurers eventually became unable or unwilling to carry the full war risk associated with merchant shipping. The federal government, principally through the War Shipping Administration, supplied the insurance necessary to keep vessels operating.

The wartime system divided responsibilities. The government assumed catastrophic risk, controlled or chartered ships and allocated capacity according to military and essential civilian requirements. Private shipping companies continued operating many vessels as government agents. The Navy organized routing, convoys, communications and physical protection.

Insurance, cargo allocation and naval protection remained distinct functions, but they operated within one national system.

After the war, construction- and operating-differential subsidies helped American carriers compete against lower-cost foreign operators. United States Lines benefited from this structure, while vessels such as the SS United States combined commercial employment with potential national-defense service.

At its postwar high point in 1947, U.S.-flag ships carried approximately 58 percent of American foreign-trade tonnage. Today, the American share is approximately 1 to 2 percent.

Ocean Shield would not recreate the War Shipping Administration or restore the old subsidy system unchanged. It would recover the underlying principle: if maritime capacity is essential to national security, the country must support that capacity before war begins.

Strategic cargo creates the commercial base

Ships cannot survive on emergency promises. They require dependable peacetime cargo.

Ocean Shield should give qualified vessels preferred access to strategically important imports and exports, including LNG, critical minerals, refined fuels, defense-related equipment, transformers, semiconductors, pharmaceuticals, fertilizer, nuclear components, data-center systems and heavy industrial machinery.

Cargo owners moving these products should evaluate more than the lowest freight quote. They should consider whether insurance will survive a political crisis, whether the vessel can receive American protection, whether its ownership is transparent and whether it has a credible plan for completing or safely exiting the voyage.

An Ocean Shield vessel would sell more than transportation. It would sell continuity.

Over time, Ocean Shield could pursue a national objective of carrying as much as 40 percent of strategically designated U.S. oceanborne trade aboard U.S.-flagged or American-controlled vessels. This would be a long-range, capacity-dependent objective—not an immediate quota that strands cargo or damages American exporters.

The U.S. Maritime Assurance Registry

The United States does not presently possess enough ships, mariners or shipyard capacity to transfer a substantial portion of its trade immediately into full American registry.

Ocean Shield would therefore include a transitional U.S. Maritime Assurance Registry.

The Assurance Registry would not pretend that a foreign-flagged vessel had legally become American. It would be a contractual affiliation for qualified ships carrying designated American trade.

Participating vessels would accept full ownership and financing disclosure, Coast Guard-equivalent inspections, audited maintenance records, American routing and reporting requirements, exclusion of hostile-state control, emergency availability obligations and progressively greater employment of American mariners.

The Registry would also provide training berths for American maritime-academy cadets and establish a pathway toward full U.S. international registry.

It would be a bridge to the American flag, not a permanent substitute for it.

LNG should be the first pilot

LNG demonstrates both the opportunity and the present weakness.

The United States is the world’s largest LNG exporter and supplied approximately 26 percent of global LNG exports in 2025. Yet American LNG is transported overwhelmingly aboard foreign-built, foreign-flagged and foreign-crewed vessels.

The guiding principle should be straightforward:

If it is American LNG, an increasing share should move aboard American-controlled ships.

An immediate American-build requirement would be impractical. The United States has not constructed these specialized carriers at scale for decades. Previous government analysis found that American-built LNG carriers could cost two to three times as much as comparable Korean-built ships.

Ocean Shield supplies a transition.

Modern LNG carriers could initially be built in allied shipyards and enter the Assurance Registry under American ownership, lease or long-term operating control. They could employ increasing numbers of American mariners, establish U.S.-based technical management and commit to long-term American LNG trades.

Qualified vessels could eventually transition to full U.S. international registry without automatically receiving Jones Act coastwise privileges. Maintenance, systems production, modular construction and licensed allied designs could then move progressively into American yards.

The objective would be to develop American LNG-operating capability now while domestic construction capacity is rebuilt.

Build an investable system

Ocean Shield must be a long-term commitment. Shipowners and investors will not acquire vessels, reflag ships, recruit American crews or accept emergency obligations around benefits that can disappear after one budget cycle.

Participating vessels should receive 10- to 15-year operating agreements. In return for strategic-cargo access, continuity insurance and security support, operators would commit ships, crews and logistics networks to American service during emergencies.

This structure could attract shipowners, energy companies, merchant banks, infrastructure funds, pension capital, insurers and vessel-leasing companies.

Ocean Shield could generate billions of dollars in annual freight, charter, insurance, finance, repair, port-service and maritime-technology revenue. Ship acquisition, shipyard expansion and supporting infrastructure could generate billions more in capital investment.

A narrowly designed Maritime Security Charge could help cover the audited difference between competitive foreign freight and qualified Ocean Shield service. The charge could apply to designated strategic cargo carried aboard nonparticipating foreign vessels, while Ocean Shield carriage received a credit or exemption.

The cost would not disappear. It would be converted into American ships, crews, insurance capacity, shipyards and strategic resilience.

A general tariff collects money. An Ocean Shield charge would purchase transportation sovereignty.

Protection requires responsibility

Government protection must not reward unsafe operation.

The loss of El Faro while sailing from Jacksonville to Puerto Rico demonstrated that the American flag alone does not guarantee effective maintenance, sound decision-making or a strong safety culture.

Ocean Shield eligibility should require independent vessel-condition assessments, verified watertight integrity, propulsion reliability, modern weather routing, shore-side voyage monitoring, personal locator beacons, audited safety-management systems and protected authority for officers to challenge unsafe decisions.

The compact must operate in both directions:

The United States protects the vessel from external enemies. The operator protects the vessel and crew from preventable internal failure.

American assurance should follow verified American standards—not merely American paperwork.

Before the next cancellation notice

The next maritime crisis will not wait for Washington to create an insurance portal, identify eligible ships, find escorts, negotiate policy language and determine which cargo should move first.

Those decisions must be made beforehand.

Ocean Shield would make the American flag worth flying by connecting insurance, protection, strategic cargo, safety and private investment. The U.S. Maritime Assurance Registry would provide transitional capacity while the permanent fleet develops. LNG would supply an immediate and commercially meaningful pilot.

America cannot rebuild its merchant marine by constructing ships and hoping the market supports them. It must create a protected commercial system capable of attracting cargo, capital, crews and operators.

If a cargo is strategic to the United States, the country should progressively possess the ability to transport it aboard ships it can insure, protect, activate and trust.