Jones Act Fleet Financing

As political chatter centers on rebuilding the U.S. maritime industry, Brett Hewitt, Executive Director, Marine Finance, Wells Fargo Equipment Finance, offers a lender’s-eye view of a market where vessels are expensive, assets can remain productive for decades and the quality of the operator can be every bit as important as the collateral.

For lenders, one of the Jones Act market’s biggest attractions is remarkably straightforward: boats last a long time.“The collateral has a long useful life,” Hewitt said, noting that vessels are documented with the U.S. Coast Guard and subject to inspection, maintenance and regularly scheduled drydockings. “We know that collateral is going to be there to support our deals as we structure them.”

The Jones Act itself provides another layer of comfort. The law creates a defined domestic market protected from foreign competition, something Hewitt says can contribute to relatively consistent cash flows for established operators. But collateral is only one piece of the credit puzzle.

Whether Wells Fargo is providing conventional term debt or bareboat charter financing — where the bank owns the vessel, takes the depreciation and charters the asset — Hewitt said cash flow remains paramount. Beyond that, Wells Fargo digs deeply into an operator’s safety record, reputation, management team, market position and customer relationships.

Safety, in particular, is hardly a box-checking exercise.

“If you make a mistake, you’re at fault, there’s a major casualty or significant environmental event, that could take the whole house down,” Hewitt said.

Hence, lenders like companies with proven management, pricing power, meaningful market share and long-standing customer relationships. In the marine business, history matters.

Inflation Changes the Math

That history becomes particularly important when the price of the asset being financed keeps climbing.

Shipyard labor, steel, engines, components and tariffs have driven newbuild prices significantly higher. Hewitt said the important question for a lender is whether those elevated prices represent a temporary spike or a durable shift in vessel values.

After more than six years of inflationary pressure, Wells Fargo increasingly views higher newbuild costs as a structural reality. For familiar assets — hopper barges, ship-assist tugs and dredges, for example — the bank can rely upon decades of experience and established secondary markets.That can translate into surprisingly flexible financing.

“We might like to see 20% down, maybe 10%, maybe 100% financing for the right credits,” Hewitt said.

Change the asset to an all-electric tug, wind turbine installation vessel or service operation vessel, however, and the equation changes. With fewer comparable assets and less historical evidence of residual value, Wells Fargo might require 25% to 50% equity.

Simply put: the less the lender knows about the collateral, the more skin it wants the owner to have in the game. That philosophy extends directly into maritime decarbonization.

Diesel-electric propulsion has now accumulated enough operating history to provide lenders with some comfort. Batteries, hydrogen fuel cells, ammonia and other emerging solutions bring greater uncertainty.

Hewitt worries not simply about whether a technology works, but whether today’s cutting-edge propulsion system might become tomorrow’s Betamax.

“If we have to take something that all of a sudden is the three-year-old model that no one else wants anymore,” Hewitt said, liquidating that asset becomes a very different proposition. The answer can be more owner equity, less lender residual-value exposure and shorter financing terms.
That does not mean Wells Fargo is unwilling to finance new technology. Quite the opposite. Hewitt said the bank wants to become involved early and understand why the technology fits an operator’s fleet, how it will be deployed and, importantly, whether customers are willing to pay for it.

Follow the Cargo

No discussion of vessel finance gets very far without eventually arriving at cargo.

The inland barge market illustrates why. Commodity cycles can swing sharply from one year to another, but Hewitt said Wells Fargo tries to smooth those fluctuations and evaluate operators over longer periods.

On the dry side, grain remains cyclical, influenced by harvests, global competition and commodity prices. Hewitt particularly likes vertically integrated businesses that control more of the transportation chain and operators with customer relationships stretching 20, 30 or even 50 years.
Tank barges present a somewhat different picture. Hewitt believes high construction prices have actually helped the sector by discouraging speculative overbuilding. “It feels like a good supply-demand balance as of today,” he said.

Ship-assist tugs are another bright spot. Large operators still have 40-, 50- and even 60-year-old vessels that eventually must be replaced, while larger ships calling at U.S. ports require increasingly powerful, sophisticated tugs. LNG export facilities are adding another demand driver, with Hewitt estimating that an export terminal will typically support two to four purpose-built tugs.

With Fuel, Read the Fine Print

The dramatic increase in diesel prices during 2026 has also reminded lenders that revenue alone does not service debt. Margins do. Fuel exposure can vary radically according to contract structure. A dredging contractor that bid a two-year fixed-price U.S. Army Corps of Engineers job based on significantly lower fuel assumptions can watch its profit disappear as diesel rises.

Conversely, short-duration contracts allow operators to regularly reset fuel assumptions. And some ship-assist contracts include fuel surcharges that effectively pass higher costs through to customers.

Wells Fargo is therefore scrutinizing the cost side of borrowers’ income statements to determine whether rising fuel prices are eroding — or, in certain cases, actually enhancing — profitability. It is another reminder that marine lending is about considerably more than calculating loan-to-value ratios.

The potentially larger story, thought, is what comes next.

Hewitt sees unprecedented political and industry enthusiasm surrounding revitalization of U.S. maritime and shipbuilding. Foreign investment and expertise flowing into American shipyards could improve productivity, but financing cannot overcome an inadequate business case.

“The optimism, the amount of discussion, the amount of ideas being traded around both in industry and in the political realm is at an all-time high,” Hewitt said. “But at some point the talk needs to convert to action.”

For large commercial vessels, that means creating durable policy, tax and cargo incentives capable of surviving election cycles. A U.S.-built vessel costing multiples of its foreign-built competitor cannot simply be dropped into the international market and expected to compete economically.
Hewitt believes the answer will require some combination of Jones Act cargo, government-preference cargo, tax policy, grants and other incentives — backed by a strategy measured not in four-year political cycles, rather in decades. For lenders, that long horizon is familiar territory.

Ultimately, financing a Jones Act vessel comes down to a deceptively simple combination: the right asset, operated by the right company, serving a defensible market with sufficient cash flow to support the debt. The vessel may be the collateral, but the business behind it is what makes the deal bankable.