Maritime News and Comment

March 2006

   HALTER DELIVERS ATB TO CROWLEY.   VT Halter Marine has delivered the first of six 185,000-barrel articulated tank barges (ATBs), to Crowley Marine.  The barge, christened "650-1", was built at Halter's shipyard in Pascagoula, Mississippi, and the tug, christened "Pacific Reliance", at its shipyard in Moss Point, Mississippi.  Read Crowley's announcement here.  March 30, 2006.

   SURGE IN ORDERS FOR LARGE PRODUCT CARRIERS.   There are now 40 Aframax-sized product carriers on order, roughly 30% of the 130 that are in the fleet today, the average of which is only ten years.  It's not hard to see a trend here.  If it's too expensive and time-consuming to build refineries in the developed world, more crude will have to be refined at source and shipped as product.  March 30, 2006.

   LARGEST LNG CARRIERS ORDERED.   Qatar Gas Transportation Company, which is know as "Nakilat", has contracted with Korea's Daewoo Shipbuilding and Samsung Heavy Industries for the construction of six LNG carriers - three at each yard - which, at 265,000 cubic meters, will be about 25% larger than the largest yet ordered and 76% larger than the largest now in service.  The price is said to be about $300mm per ship and deliveries are all in late 2008.  The ships will be chartered for 25 years to Qatargas II - a joint venture of Qatar Petroleum, ExxonMobil and Total - and will trade between Qatar and the U.S.  Read the report in AME here and see a table of all LNG carriers currently on order here.  Reliable reports say that Nakilat has also ordered another ten or eleven ships for Qatargas 3, but no announcement yet.  March 30, 2006.

   COAST GUARD MAY DUMP FRC DESIGN.   Apparently $53mm wasn't enough for the Lockheed/Northrop Grumman J.V. to design the Coast Guard's Fast Response Cutter (FRC).  "Defense Today" reports that the Coast Guard is now considering dumping the Lockheed/Northrop Grumman design and reprocuring from a third party.  This is particularly interesting because, according to the Coast Guard, the plastic FRC just cleared a critical design review and began detail engineering.  Maybe they just worked out how expensive it will be and are turning back toward a more affordable boat built by more efficient shipbuilders, which was, after all, the original plan.  March 29/30, 2006.

   KEPPEL GETS YET ANOTHER JACK-UP CONTRACT.   India's Jindal Group has contracted with Keppel Offshore in Singapore for a second KFELS Mod. V B jack-up, only three weeks after signing up for the first one.  The contract price is $13mm higher than #1, at $184mm, and delivery will be the same than #1, December 2008.  Read Keppel's press release here and see a table of all drill rigs currently on order here.  March 29, 2006.

   SANBORN WITHDRAWS.   The President's nominee for Maritime Administrator, David Sanborn, has withdrawn.  Sanborn's nomination had been held up by congressional idiots because his current employer is DP World.  What BS.  Read the White House's announcement here.  March 28, 2006.

   EC CLEARS AKER'S ACQUISITION OF CDA.   The European Community has cleared the deal under which Aker Yards will gain control of Chantiers de l'Atlantique.  Read the press release here and see a table of all cruise ships currently on order here.  March 28, 2006.

   TODD STOCKHOLDERS GET BONUS.   Todd Shipyards will pay its stockholders a special dividend of $4.00 a share, at a cost of $22 million.  Well why not?  Certainly it would be a terrible waste to spend a sum like $22 million on anything frivolous like facility improvements or business development.  In addition, the next quarterly dividend will be $0.15, up 50% from the amount paid in each of the past four quarters.  There's nothing on Todd's web site about this - I guess they've laid off the webmaster - but read their announcement on Yahoo here.  Note that there is no mention of any bonus for the employees.  March 27, 2006.

   DDG HITS CARGO SHIP.   The USS "McCampbell", (DDG 85), collided last night with the Kiribati-flag tanker "Rokya I" in the waters off Iraq.  Both ships have bow damage: two sailors and two seamen were slightly hurt.  No word yet of how the accident came about.  Read the Navy's press release here.  Interestingly, "Rokya I" is not listed in any of the usual sources and the Kiribati register is mostly fishing vessels.  One suspects that there might be more to this incident than at first appears.  March 26, 2006.

   DUBAI AFTERMATH PART 2.   Now we are scared of Hutchison International Port Holdings.  Again: this is the company that operates a container terminal in Panama, giving rise a few years ago to the hysterical claim from certain of our elected representatives that "The Chinese Army is taking over the canal!"  Hutchison, the world's largest terminal operator and a private-sector company headquartered in Hong Kong, has been contracted by the Department of Energy to screen containers passing through its terminal in Freeport, Grand Bahama, for nuclear materials.  Read the AP report here.  Note the quote "Li Ka-Shing is pretty close to a lot of senior leaders of the Chinese government and the Chinese Communist Party."  Ooh, scary.  One of the richest men in the world - #20 on Forbes' list - is going to take orders from Beijing.

Does it not occur to any of our elected nincompoops that there are much easier ways of smuggling WMDs into the U.S. than hiding them in a container?  Will someone please ask Secretary Jerkoff - and why hasn't he been fired yet? - what percentage of illegal small-boat entries his department manages to intercept?  March 25, 2006.

   MARAD SCRAPS TWO MORE.   The Maritime Administration (MARAD) has executed a contract valued at $742,000 with Bay Bridge Enterprises for the demolition of the former USS "Howard W. Gilmore" (AS 16), which was built by Mare Island Naval Ship Yard in 1943.  MARAD has also sold, for $76,000, the underwater explosions barge UEB 1 (IX 509), which was built by Norfolk Naval Ship Yard in 1942.  Read MARAD's press release here.  March 24, 2006.

   NAVY BUYS KOREAN CRANE.   The Navy has exercised an option on an FY-97 contract to buy another 60-ton shipyard crane from Samsung Heavy Industries.  The contract value is $8.7mm and the crane must be delivered to Portsmouth Naval Ship Yard (the one that was nearly BRACed last year) by end-September 2007.  Read the DefenseLink announcement here.  This is (I think) the 14th and last crane to be built by Samsung under this contract.  March 23, 2006.

   DUBAI AFTERMATH PART 1.   The first of what will no doubt be a long string of outrageous, xenophobic reactions to the Dubai Ports World fiasco has already surfaced.  Dubai International Capital's acquisition of Doncaster Group Limited, a British company which makes parts for tank and aircraft engines and happens to have a plant in Savannah GA, is now getting the DPW treatment.  Read about it on Congressman John Barrow's web site here.  March 23, 2006.

   KEPPEL GETS ANOTHER JACK-UP CONTRACT.   Seadrill has exercised an option with Keppel Offshore in Singapore for a fourth KFELS Mod. V B jack-up.  The contract price is $132mm and delivery will be in the 2nd quarter of 2008.  This will be the fourth rig that Keppel is building for Seadrill and the 22nd in its order book.  Read Keppel's press release here and see a table of all drill rigs currently on order here.  March 23, 2006.

   ELDERLY CANADIAN FERRY LOST.   The 37-year-old ferry "Queen of the North" grounded and capsized this morning, about 85 miles from Prince Rupert BC.  All 101 passengers and crew were rescued.   Read BC Ferries' press release here.  The "Queen of the North" was originally built in Emden, by A.G. Weser, as the "Stena Danica", and acquired by BC Ferries in 1974.   March 22, 2006.

   MODEC GETS FPSO ORDER.   MODEC has announced that it will provide a turnkey FPSO to BHP Billiton Petroleum, for service offshore Australia.  The new vessel, which is being built for MODEC by Samsung, will process 80,000 bpd and store 900,000 bbls.  Read MODEC's press release here.   March 22, 2006.

   KEPPEL TO DEVELOP QATARI SHIPYARD.   Keppel Offshore & Marine, (Keppel O. & M.), has been selected by Qatar Gas Transportation Company, (QGTC or Nakilat), to jointly develop and manage the giant ship repair facility that Nakilat is planning in the port of Ras Laffan.  Read Keppel's press release here.  The new shipyard will be designed to support Qatar's growing fleet of LNG carriers but will also compete directly with ASRY in Bahrain and DDD in Dubai.  March 22, 2006.

   CHESAPEAKE SHIPBUILDING TO BUILD TWO MORE COASTAL CRUISE SHIPS.   American Cruise Lines announced at the Seatrade cruise conference last week that it would contract with Chesapeake Shipbuilding, of Salisbury MD, to build two more US-flag coastal cruise ships.  At 130 passengers, the new ships will be larger than the ship now under construction by Chesapeake, and will be delivered in 2008 and 2009.  March 18, 2006.

   HORIZON TO CHARTER FOREIGN-BUILT SHIPS.   Horizon Lines has announced that it has done a deal with Ship Finance International to charter five new 2800-teu sub-Panamax containerships, to be delivered by Hyundai Mipo Dockyard in 2007.  The going price for this design is about $48mm, although it was probably about $44mm when these ships were ordered.  Although US-flagged, the ships would only be eligible for foreign trade, so the deal, although a good move in itself, doesn't solve Horizon's Jones Act fleet replacement problem.  In addition, if they've been chartered for 12 years, it doesn't solve their debt problem either, because they will have to recognize the charters on their balance sheet.  Read Horizon's announcement here.  March 17, 2006.

   MATSON TO SCRAP TWO, CONVERT ONE.   Matson Navigation has sold two of its three 35-year-old converted barge carriers for scrap.  "Chief Gadao" and the "Ewa" - Avondale's hulls 1188 and 1190 - were originally built for Pacific Far East Line as the LASH ships "Golden Bear" and "Japan Bear", and converted to containerships in 1978.  Matson's third old girl of this class, "Lihue", ex-"Thomas E. Cuffe", remains in service.  In addition, Matson announced recently, and I failed to comment, that it will convert the containership "Mokihana" to a combination roro-containership.  The "Mokihana" was originally built for American President Lines in 1983 as "President Monroe" - Avondale hull 2331, the last foreign-trade containership built in the U.S.  March 17, 2006.

   EASTERN TO BUILD THREE MORE FOR HARVEY.   Harvey Gulf International Marine has ordered two more 280-foot PSVs and an AHT from Eastern Shipbuilding of Panama City FL.  Eastern is already building a 265-foot multi-purpose support vessel and one 280-foot PSV for Harvey.  The additional vessels are all scheduled for delivery in 2007.  March 15, 2006.

   MATSON RAISES FUEL SURCHARGE.   The fuel surcharge on Matson's freight rates to and from Hawaii will be increased from 15% to 18.5% on April 2.  Read what the company says here.   March 13, 2006.

   CRAZIES 1, SANE PEOPLE 0.   So Dubai Ports World has admitted defeat and agreed to transfer its U.S. terminal operating contracts to a U.S.-owned entity.  It should not be difficult to find a suitable candidate, since we are only talking about novating some existing operating contracts: almost anyone in the maritime industry could take them over and leave all the existing operating management in place.  Let's just hope it doesn't turn out to be Halliburton.

Questions remain.  Will the crazies now proceed to force out all the other terminal operators that are controlled by foreign governments, and, if not, why not?  What about Dubai's other investments in the U.S., which include, among other things, a big piece of Chrysler, the Essex House Hotel on Central Park South, and 69 apartment buildings with a total of over 21,000 apartments, many of them right here in Houston.  (Do we really want red-blooded, quail-hunting Texans to have to live in thrall to Arab landlords?)  How much of a deterrent will this fiasco be to foreign investment in the U.S.?  Will there be any retaliatory resistance to U.S. investment in Dubai or elsewhere?

And having pissed off Dubai, what should we do next to shorten the list of friendly nations?  March 9, 2006.

   COMMON SENSE ABOUT TERMINALS.   Amid all the crazy talk about the "threat" from Dubai Ports World, one can occasionally find some rational thinking.  One bright light shines out of the Port of Tacoma.  Read what they have to say here.   March 9, 2006.

   CONRAD GETS CONTRACTS.   Conrad Industries has announced the award of contracts for construction of three deck barges and four tank barges.  Read their press release here: it doesn't tell you much but it's better than no press release at all.   March 7, 2006.

   SHIP DESTROYS CRANE IN MOBILE.   The feeder ship "Zim Mexico" hit and destroyed a container crane at the Alabama State Docks in Mobile, on Thursday.  One person was killed.  Read the Coast Guard's press release here.  Several alert readers have pointed out that this is the same ship that collided with the offshore supply vessel "Lee III" in the lower Mississippi in December, resulting in the sinking of the "Lee III" and the deaths of five of her crew.  March 7/22, 2006.

   KIRBY TAKES OVER DIXIE CARRIERS.   Kirby Corp. has paid $15.6mm for the 65% of Dixie Fuels Transportation that it did not already own.  This gives it control over four identical oceangoing 17,400-dwt dry bulk tug-barge units that move coal from the Mississippi to Florida.  The four are "Louise Howland" (built by Tampa Shipyards in 1978), "Miss Dott-O" (built by Ingalls Iron Works in 1978), "Amy Thompson" and "Micky Birdsall", (both built by Todd Galveston in 1982).  Read Kirby's announcement here.   March 4, 2006.

   TOTE PRESIDENT LOSES MIND.   The Alaska Gasline Port Authority, which is promoting the idea of a gas pipeline across Alaska, with onward transportation on Jones Act LNG carriers to terminals in the lower 48, held a briefing for state legislators recently.  The star witness was Bill Deaver, President and C.O.O. of Totem Ocean Trailer Express, (TOTE), which has apparently signed a memorandum of understanding with the port authority to provide advice and services on construction and operation of the LNG carriers.  If this project were to come to fruition, that would actually be a good thing for TOTE to do.  On the other hand, one begins to worry when one reads what Mr. Deaver is reported by the excellent Alaska Journal of Commerce to have said.

"We believe LNG tankers can be built in U.S. shipyards."  Deaver said TOTE has considerable experience in vessel construction related to Alaska, having just completed new domestic-built container ships for the company's service to the state.

"There is a lot of misunderstanding about the Jones Act. In the 1950s and 1960s it was true that the Jones Act required all parts of a vessel to be U.S.-built to be able to offer domestic cargo services. But it's almost a different law today. While the hull and much of the superstructure must be U.S.-built, most of the large pieces of machinery and even specialty-shaped steel pieces installed in American shipyards come from outside the U.S." If the equipment or specialty steel can't be obtained in the United States, it can be sources from foreign manufacturers, he said.

Today, virtually all of the large diesel engines, pumps, winches and other specialized equipment on new domestic vessels come from overseas -- even if it is installed in U.S. shipyards, Deaver said.

U.S. shipyard workers are just as productive as shipyard workers in foreign yards in terms of manhours per ton of steel constructed, but the wages of American workers are still higher. "The productivity is just the same, but U.S. yards still pay family wages," Deaver said.

U.S. shipyards are also forming joint-ventures with foreign competitors covering agreements on things like engineering and design. TOTE spent $40 million in engineering alone for its two new Alaska vessels. However, through joint-venture agreements on services, American shipyards would be able to reduce costs on items like LNG ships, many of which are now under construction in foreign yards.

For example, for a shipyard now building LNG tankers, detailed engineering designs could be obtained for $2 million to $2.5 million, so that a U.S. shipyard doesn't have to spend $20 million on engineering and design, he said. There are now 125 large LNG tankers on order, primarily with shipyards in Japan and Korea, Deaver said.

It would take about six years to build an LNG vessel, and while as many as eight might be needed to handle expected volumes of LNG from Alaska, they wouldn't all be needed at first. It is likely that Congress would allow LNG vessels now flagged for foreign service to be reflagged for domestic trade as long as orders are in place for construction of new tankers in U.S. yards, Deaver said.

In fact, there have been 16 LNG tankers built in U.S. shipyards. Three of these have been scrapped and 13 have been reflagged to operate elsewhere in the world, Deaver told the legislators. One or more of these ships could be brought back into domestic service until new U.S.-built ships are ready, he said.

This is all so absurd that it requires no comment from me.  There are people at TOTE who understand the U.S. shipbuilding industry, including the Chairman, Bob McGee, who started his career at Sun Ship, building some of the ships he now operates.  Where did they find this guy Deaver?   March 1, 2006.

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