Maritime News and Comment

September 2005

   CROWLEY BUYS TITAN.  Crowley Maritime Corporation has announced that it is buying Titan Maritime LLC for an undisclosed amount.  In business for 25 years, Titan is now well established as the world's leading salvor and should fit well into the Crowley organization.  Read Crowley's announcement here.  September 30, 2005.

   CP SHIPS ADDS FIVE TO U.S. FLAG.  CP Ships has reflagged and renamed the first of five 3200-teu containerships for service in the Maritime Security Program (MSP).  The five ships are the CP Yosemite, CP Everglades, CP Denali, CP Shenandoah and CP Yellowstone, all of which are in service between U.S. Gulf ports and Europe.  Read CP Ships' announcement here.  September 30, 2005.

   INTERNATIONAL SHIPHOLDING ADDS ANOTHER US-FLAG PCTC.  In an 8-K filing, International Shipholding Corporation, (ISC), the last remaining US-owned US-flag liner company, has revealed that it has added a fifth pure car/truck carrier (PCTC) to its US-flag fleet.  No more details than that.  (ISC has one of the least informative web sites in the industry: goodness knows how they get any customers.)  Read the announcement in the Investor Relations section of their web site, here.  September 30, 2005.

   BROWN GONE BUT NOT GONE.  In a gratuitous kick in the teeth of the people of the Gulf Coast, it now emerges that the ex-Director of FEMA, Michael Brown, is still on the taxpayers' payroll, as a consultant to FEMA, at his old salary of $145,600 a year.  Is this the dumbest and most insensitive Administration since Buchanan or what?  September 27, 2005.

   HORNBECK PLANS MORE NEWBUILDINGS.  Hornbeck Offshore Services plans to build 20,000 dwt of new OSV capacity for a budget of about $170mm and 400,000 bbls of ATB capacity for a budget of about $95mm (9/27).  Read their announcement here.  September 27, 2005.

   JONES ACT WAIVED AGAIN.  In the wake of Hurricane Rita, the President has again waived the Jones Act for distribution of refined products.  The duration of this waiver is 30 days: the waiver for Katrina ran from September 1 through September 19.  Read the White House fact sheet here.  In an emergency, it is to be expected that certain laws and regulations may need to be temporarily suspended, depending, I suppose, on the nature of the emergency.  The Katrina/Rita recovery efforts clearly constitute some form of emergency.  It is not clear to me, however, why the application of the Jones Act to the distribution of refined products needs to be suspended.  If refineries are closed, the demand for US-flag product carriers must be lower than usual, not higher.  And, in fact, there are several Jones Act product carriers that are currently unemployed.  If specialized tonnage is needed to shuttle crude from offshore production platforms, maybe we need a little help for that, but for product distribution?  We make up for lower domestic production by increasing imports, which already move in foreign-flag product carriers.  My brain must be fuddled by repetitive evacuations: would some kind person please explain the need for this suspension to me?  And would MARAD please provide us with a public accounting of the actual waivers that have been granted and the justification for each one of them?  September 27, 2005.

   JONES ACT WAIVER FOR DRY BULK?  The Maritime Cabotage Task Force, (MCTF), which stayed tactfully silent during the recent short-lived (and totally unnecessary) waiver of the Jones Act for product carriers, has come out strongly against the request from the agricultural industry for similar waivers for dry bulk shipping (and rightly so).  Read the MCTF's statement here and its letter to the President here.  September 23, 2005.

   REBUILDING NEW ORLEANS.  Goodness knows we must rebuild New Orleans.  It's impossible to imagine a world without New Orleans.  But, and it's a big but, we can't just rebuild it as it is and hope for the best.  A big part of New Orleans' many problems is the lack of any significant business or industrial base.  There's a very interesting article in the Wall Street Journal today: it may annoy some folks, but it makes a number of excellent points.  Read it at:

http://online.wsj.com/article/0,,SB112743777035049469,00.html?mod=opinion%5Fmain%5Ffeatured%5Fstories%5Fhs

September 23, 2005.

   HORIZON LINES MODIFIES ITS IPO.  Not too surprisingly, Horizon Lines has had to withdraw and modify its recent IPO, after finding no interest in the market.  Horizon had hoped to raise over $300mm by selling about 16 million shares at about $16, but no buyers.  The line has now had to settle for only $125mm, based on selling 12.5 million shares at only $10, with no recovery for Castle Harlan for its investment.  And here I was about to dump on this IPO: now I don't have to.  September 23, 2005.

   WHAT A DIFFERENCE!  Following up from their extraordinary performance in almost effortlessly accommodating several hundred thousand survivors of Katrina, the State of Texas (and the City of Houston and many other local governments) continue to amaze with their level-headed, competent handling of the evacuation for Rita.  And look, surprise, surprise, Coast Guard admirals are better at disaster management than political advance men.  And Houston is four times the size of New Orleans.  Tim Colton, September 23, 2005.

   PPL BUYS SABINE SHIPYARD.  Leading rigbuilder PPL, a subsidiary of Singapore's SembCorp, has acquired Sabine Shipyard, a spacious but lightly capitalized facility in Sabine Pass, Texas.  Curiously, we reported this here in August 2001.  It seems to have taken them a while to close.  September 23, 2005.

   JOHN McMULLEN.  John McMullen, who died on Friday at the good age of 87, was a leader of the U.S. maritime industry for over 50 years, although you wouldn't know it from his obituaries, which inevitably concentrate on his record as an owner of sports teams - first the New York Yankees, then the Houston Astros and finally the New Jersey Devils.  The basic data are simple: Naval Academy class of 1940, D.Sc. from Zurich, Chief of the Office of Ship Construction at MARAD in the 1950s, founder of John J. McMullen Associates, Inc., (JJMA).  The background is much more interesting.  Although he kept his public image low-key, he was very much larger than life in the maritime world and particularly in the office.  I worked for JJMA in New York for ten years - 1968 to 1978 -  for most of which time I was responsible for projects involving shipyards and ports, and was closely involved in some of Doctor John's many extraordinary projects.  I have never met anyone in this industry with his imagination and vision.  I cannot attempt to write a proper obituary - someone who was closer to him for a longer time needs to do that - but I can recall some of the highlights of my time with him.  I may add to this as I think of more instances:

Quite a man.  September 23, 2005.

   AMO LEADERS INDICTED.  The National President, Michael McKay, the National Secretary-Treasurer, Robert McKay, and two employees of the American Maritime Officers Union, (AMO), have been indicted in Fort Lauderdale on federal charges of election-rigging, embezzlement and fraud.  Read the U.S. Attorney's press release here.  September 14, 2005.

   TRINITY YACHTS TO MOVE TO GULFPORT.  Rumor has it that Trinity Yachts is making an offer for the former Halter Gulfport shipyard.  Felix Sabates' highly successful small company apparently intends to move its new construction operation to Gulfport and to rebuild its damaged facility on the Industrial Canal in New Orleans as a repair and refit yard.  Smart move.  September 14, 2005.

    "NOBODY COULD HAVE FORESEEN THIS."  Except, that is, for anyone who read the article in the October 2004 edition of National Geographic:

http://www3.nationalgeographic.com/ngm/0410/feature5/?fs=www7.nationalgeographic.com

September 13, 2005.

   EXIT BROWN, REALLY.  It turns out that all the important business that the Director of FEMA, Michael Brown, had to get back to Washington to take care of, wasn't so important after all.  If it were, why would he abandon ship so quickly?  Maybe Secretary Jerkoff will now apologize to the press people he was so rude to about this.  No, that's not going to happen.  Maybe Secretary Jerkoff will resign in sympathy for his loyal supporter.  No, that's not going to happen, either.  Well at least Brown's gone.  Jerkoff's next.  September 12, 2005.

   ACADEMICS IN GOVERNMENT.  Barely had I uploaded this page with the comment below about admirals in industry than word comes that the President is planning to appoint Delores M. Etter, a professor of electrical engineering, as Assistant Secretary of the Navy (Research, Development & Acquisition), replacing John Young.  Dr. Etter is currently a professor in the Electrical Engineering Department at the United States Naval Academy.This is the job that includes responsibility for all the Navy's capital budget, i.e., not just ships but planes, missile systems and all the rest.  What exactly are her qualifications for this hugely important job?  Beats me.  She's written some textbooks: maybe that's what has impressed the Pres.  Sometimes one despairs.  September 11, 2005.

   ADMIRALS AND GENERALS IN INDUSTRY.  General John W. Handy, USAF, Commander of U.S. Transportation Command, will join Horizon Lines in an unspecified executive position when he retires this month.  No formal announcement from Horizon - curiously, the announcement came from GEN Handy himself - but read the Business Wire report here.

We already have retired Navy admirals and Army generals who think they can run shipyards.  They can't.  Now we have an Air Force general who thinks he can run a container shipping company.  He can't.  What is it with these companies that they think admirals and generals can run industrial operations?  There is nothing in their education, training or experience that qualifies them to run industrial operations.  Sure, they know people in Washington, but you will soon find that the crowd in Washington is not particularly interested in being imposed upon by retired admirals and generals.  Some of them have run DoD facilities, such as naval shipyards, but I've never yet seen a DoD facility that was a model of efficiency: just think of the Philadelphia Naval Shipyard!

Why don't these guys retire when they retire?  They have had their careers.  They have done their duty, served their country honorably, and they deserve every penny that they get in pension and benefits.  So go play golf, spend time with your grandchildren, help with charities, take up knitting.  If you must work, set up as a consultant and see who will hire you.  But leave industry to the professionals.  (There are a few exceptions to this principle, some of whom actually read this web site.  But only a few.)

For Horizon Lines, hiring General Handy is idiocy: he isn't going to bring you one dollar's worth of additional business or save you one dollar in operating costs.  He's just going to suck up half a million or so in salary and benefits that you could have spent on maintaining those old rustbuckets of yours.  September 11, 2005.

   EXIT BROWN.  No doubt as a direct result of the banner on my home page, the incompetent Director of FEMA, Michael Brown, has been replaced, at least in respect to Katrina.  Not fired, mind you, this Administration never fires anybody.  Secretary Jerkoff says that Mr. Brown has to get back to Washington to attend to all FEMA's other business, whatever that is.  There are two issues here.  The first is the longstanding and widespread problem of the appointment of political hacks to run government departments.  Mr. Brown is a classic example.  Read his bio.  Not only is he patently unqualified to run FEMA, he's not qualified to run anything.  He couldn't organize a decent party if you gave him the keys of the liquor store.  And there are hundreds more like him in Washington.  How do we solve this problem?  The second and less serious problem is this Administration's inability to fire anyone.  They keep going on about not playing the "blame game" and "the time for inquiries is later".  But, if a general screws up in wartime, he gets canned on the spot: they don't wait until the war is over to decide what to do about it.  Similarly in business and industry, although regrettably less often nowadays.  No previous President that I can think of has been so reluctant to fire people: what's the matter with this one?  (Don't answer that.)  September 10, 2005.

   45,000-DWT ATBs?  Maritrans has ordered three 45,000-dwt ATBs from Bender Shipbuilding.  The total cost of each vessel will be $77.5mm: deliveries are scheduled for October 2007, May 2008 and December 2008.  They will be employed by Sun Oil in lightering service in the Delaware River, presumably replacing "M 300", "M 400" and "Integrity", which are currently employed in that activity, although all three of these are double-hulled.  Read Maritrans' announcement in the News Releases section of the Investor Relations segment of their web site here. 

Now this is interesting.  How do the economics of the 45,000-dwt ATBs to be built by Bender for Maritrans compare to the economics of the 47,000-dwt tankers to be built by Kvaerner for OSG?  And where does this leave the 35,000-dwt tankers to be built by Bollinger, maybe, for Seacor?  How do they make any sense anyway?  To learn more, you had better attend the forum on the economics of the Jones Act tanker trades, at the SNAME annual meeting, here in Houston, on October 21 (Trafalgar Day).  And no, it hasn't been and isn't going to be cancelled.  To learn more, click here.  September 7, 2005.

   PRESS COVERAGE OF KATRINA.  I'm getting a tad pissed off with the media coverage of the Katrina disaster.  Sure Nawlins is a mess, a horrible mess, but the media seem to have forgotten about the rest of the coast.  In Plaquemines Parish, the coastline is now 40 miles north of where it used to be.  In Mississippi, Waveland, Bay St. Louis, Pass Christian and Long Beach are essentially destroyed, the areas of Gulfport and Biloxi south of Pass Road are gone and Ocean Springs and Pascagoula have terrible beachfront damage.  And in Alabama, Bayou La Batre is a mess too.  But where's the media coverage of these communities?  I guess that, because they don't have looters, people shooting at helicopters and raving nutters who won't evacuate, they are not news.  Get your priorities straight, please.  September 7, 2005.

   NUCLEAR SUB IN ACCIDENT.  The nuclear attack submarine USS Philadelphia has collided with the 52,400-dwt Turkish bulker "Yasa Aysan" in the Arabian Gulf.  Read the Navy's statement here.  September 5, 2005.

   JONES ACT WAIVED.  The Administration has waived the Jones Act for petroleum and petroleum products through September 19.  Why?  More on this later, no doubt.  September 3, 2005.

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