Maritime News and Comment

September 2006

   FINAL FY-07 SHIPBUILDING APPROPRIATIONS.  The bill cleared the Congress yesterday.  It's not entirely clear whether the DDG-1000 figure is for one ship or a down payment on the first two.  (Can these be the most expensive ships ever built?  By my arithmetic, which may not be perfect, the Navy has already spent over $6 billion on the design of the DD-21, the DD(X) and now the DDG 1000.)  It's also not clear where that T-AGS money came from: Senator Cochrane, I imagine.  No ships funded by either the National Defense Sealift Fund or by the RDT&E account this year, for a change.  Regardless, it's way too much per ship but not enough in total.  September 30, 2006.

    ATLANTIC GETS MATSON DEAL.  Matson Navigation has contracted with Atlantic Marine Mobile for modifications to the containership "Mokihana".  The job is worth $17 million and will take about two months between April and June next year.  Read Matson's announcement here.  Good for Atlantic Marine.  It's a curious contract, however.  When you allow for the time and cost of bringing the ship through the canal and back again, was Atlantic really cheaper than all the West Coast yards or is that $17mm price tag artificially low?  And since this work does not appear to involve much hull structure, could they have done it in China?  Let's face it, we would all be more impressed if Matson were to order some new ships from Atlantic but maybe that's next week.  September 30, 2006.

    WHAT'S GOING ON AT ABS?  It's been over four months since Bob Bauerle died and all the fuss over a mysterious internal audit.  (Read about it here.)  When are we going to get a statement from ABS?   And it's been over three months since the management shuffle with gaps.  (Read about it here.)  When are we going to hear about the other changes?  September 28, 2006.

    HALTER WINS T-AGM(R).  The Navy has awarded a contract to VT Halter Marine for detailed design and construction of the T-AGM(R).  The contract is valued at $199.2 million and the ship is to be delivered by June 2010.  Read the DefenseLink announcement here.  Read Senator Lott's announcement here.  Read ST Engineering's announcement here.  No surprise here - this ship was always too big for Marinette and too complex for Bender.  Good for Halter anyway: with all those ATBs for Crowley and the NOAA SWATH boat, it's been a good month for them.  September 27, 2006.

    HALTER WINS NOAA SWATH.  NOAA has exercised an option on a current contract with VT Halter Marine for the construction of a SWATH "Coastal Mapping Vessel" or CMV.  The option is valued at a mere $15 million, which seems like a good deal, and the 124-foot ship is to be delivered by June 2008.  The new ship will replace the splendidly named "Rude", (S-590), which was built in 1967 by Jakobson Shipyard, in Oyster Bay NY.  Read ST Engineering's announcement here.  September 27, 2006.

    OSG BUYS MARITRANS.  In the surprise of the year, ATB-scorning OSG has bought tanker-scorning Maritrans for what appears to be the premium price of $37.50 a share.  Read OSG's announcement here.  Read Maritrans' announcement here.  September 25, 2006.

    FIRST LCS LAUNCHED.  Marinette Marine has launched the first of the Navy's new class of littoral combat ship, the future USS "Freedom", (LCS 1).  Watch a clip of the launch here - an excellent example of a tilt-beam side-launch.  Read Marinette's announcement here.  Read the Navy's announcement here.  It's a good looking ship, but it still looks like a corvette to me.  September 24/30, 2006.

    DOT TO FUND FERRY.  More than a year after Katrina, the DoT has agreed to provide a ferry service across St. Louis Bay, connecting the Mississippi towns of Bay St. Louis and Pass Christian, until the US Highway 90 bridge can be rebuilt.  Better late than never, I suppose.  Read the announcement here.  September 22, 2006.

    CHOUEST TO BUILD A FOURTH YARD.  In addition to the new yard under construction on the Industrial Waterway in Gulfport MS, it now appears that Edison Chouest Offshore is planning to build a new yard on the Houma Navigation Canal.  Now there's a shipbuilder that knows what it's doing.  Read the report in Marine Log here and in the Thibodeaux Daily Comet here.  September 22, 2006.

    PHILLY LAUNCHES FIRST TANKER.  The future "Overseas Houston" was floated in Dock 4 at the Philly shipyard on Sunday, only 46 weeks after keel-laying - a huge improvement on the yard's performance on the four Matson containerships.  Not exactly Korean-level performance but all things are relative.  If they can deliver in November, as planned, that will be pretty impressive for a U.S. shipyard, boding well for the future and setting a standard for competing yards.  Read the shipyard's announcement here.  September 21, 2006.

    ATLANTIC CHALLENGE.  The sale of 30% of Austal USA for only $15mm, valuing the company at around $50mm,  compares strangely with the sale of Atlantic Marine Holdings for a figure that is said to be somewhere north of $150mm.  The fact is that Austal USA, although small, has a significant chunk of a significant market, and it's a high-value market with excellent long-term prospects.  Atlantic, by contrast, appears to be comatose: how can it possibly both grow and prosper (growth alone won't cut it) by the factor of three or four that will be needed to throw off enough cash to satisfy the new owners, who are financial rather than strategic investors?  The yards in Florida are now pretty well dependent on Navy repair work: they haven't built a ship in the past three years, despite the healthy market.  The yards in Alabama are now pretty well dependent on commercial repair work: they just built a dredge but otherwise haven't built anything in the past three years, again despite the healthy market.  They no longer have any of the production support functions - engineering, planning, project management - that are essential to efficient shipbuilding and you can't hire those skills at any price in the current market.  Additional repair work?  Where?  Using what docks?  Industrial fabrication?  Name a single shipyard that's ever made money in industrial fabrication.  Hull blocks for other yards?  They tried that and failed.  Prospects are bleak.  September 20, 2006.

    AUSTAL BUYS OUT BENDER.  Australian shipbuilder Austal has bought out the minority investor in Austal USA, reports Marine Log.  The minority investor is Tom Bender, who controls Bender Shipbuilding and Tampa Bay Shipbuilding.  The report says that Austal is paying AUD20.6mm (about USD15.5mm) for Bender's 30% of the business, a figure that implies a total value for the company of about USD52mm.  This is a remarkably low number, suggesting that Mr. Bender doesn't have much faith in the company's future as an LCS contractor.  (See picture of Austal's LCS at right.)  If so, it's probably a good thing for everyone that he got out.  September 19/20/27, 2006.

    T-AGM (R) AWARD IMMINENT.  The contract for construction of the replacement for the USNS "Observation Island", (T-AGM 23), is now imminent, the project having cleared the Defense Acquisition Board last week.  The winner will be one of the three Phase I contractors - Bender, Halter and Marinette.  See the elegant old ship (New York Shipbuilding's hull # 494)  here.  See the ugly new ship here.  September 18, 2006.

    BULKER AGROUND IN PORT EVERGLADES.  The 28,500-dwt bulk carrier "Clipper Lasco" ran aground in the anchorage outside Port Everglades this morning.   Read the Coast Guard's announcement here.  September 15, 2006.

    CONTAINERS FALL ON BUNKERING BARGE.  According to Platts, there was a bizarre accident in the Port of Long Beach this week, in which two loaded 40-foot containers were dropped from the containership "MSC Loretta" on to a bunkering barge.   Nothing from the Coast Guard, strangely.  September 15, 2006.

    BILL KIME DIES.  Admiral Bill Kime, who was Commandant of the Coast Guard from 1990 to 1994 and also served as President of SNAME while serving as Commandant, has died of cancer.  He was only 72 and will be missed.  Read the Coast Guard's announcement here.  September 15, 2006.

    NOT SO NON-PROFIT.  In the law suit between the American Bureau of Shipping and the Government of Spain, being heard in the Southern District of New York, the dastardly Spaniards had the presumption to draw attention to the compensation packages paid to ABS management, specifically its Chairman, Bob Somerville, who apparently got $4.8 million last year.  Spain reckons that if ABS weren't paying so much to its management it might be able to afford to hire more and better surveyors in Europe.  Another way of looking at it might be that they could lower their rates and thus generate more business.  If Bob Somerville got that much, how much did Frank Iarossi make?  $20 million?  This gives new meaning to the expression "non-profit": at ABS it seems to mean "we make huge profits and give them to the management".  September 14, 2006.

    ANSWER TO THE QUIZ.  There were several interesting guesses and partially correct answers but the best and most comprehensive response came from loyal reader Peter Stareńczak, in Poland.  (Aren't you impressed that I have readers in Poland?)  They appear to be as follows:  (1) What are these vessels?  Crew boats.  (2) Who built them?  Damen Shipyards.  The fact that the photograph was taken in a U.S. port was unintentionally misleading.  (3) Who owns and/or operates them?  Grupo Diavaz, of Mexico.  (4) Who designed them?  Damen.  They are of a design that Damen calls "Fast Crew Supplier 3307": they carry up to 70 passengers and 40 tons of cargo at up to 28 knots.   And (5) Why do they look like that?  It's called the "axe bow".  I assume that it reduces slamming in heavy seas.  September 14, 2006.

    NAVY DUMPS SEA SHADOW.  The Navy is looking for someone to whom it can give the experimental patrol craft "Sea Shadow", (IX 529), shown in the photograph on the right, and its floating garage, the "Hughes Mining Barge", (HMB-1).  Read the announcement here.  Why would anyone want them?  "Sea Shadow" was built by Lockheed - at Redwood City, not the shipyard - in 1985 and was considered so revolutionary that it was kept under wraps for a long time.  HMB-1 was built in 1972 by NASSCO (Hull 360), as a complement to the "Hughes Glomar Explorer", which was built by Sun Ship (Hull 661): it was intended to be used to contain the Soviet submarine K 129 after the "Glomar Explorer" had picked her off the ocean floor.  In case you were wondering, the "Glomar Explorer" is now the "GSF Explorer" - GSF being the result of the merger of Global Marine and Santa Fe - and is drilling in the deep waters of the Gulf of Mexico.  September 14/27, 2006.

    THIS WEEK'S QUIZ.  This week we're having a quiz.  The photograph below was taken recently in a U.S. port.  (1) What are these vessels?  (2) Who built them?  (3) Who owns and/or operates them?  (4) Who designed them?  And (5) Why do they look like that?  Send your answers to me at tim@coltoncompany.com.  September 13, 2006.

    NAVY RELEASES RFP FOR NGSS BAILOUT.  The Navy has released a Request for Proposals, ( RFP),  for "infrastructure improvements at Gulf Coast shipyards that have existing Navy shipbuilding contracts and that were damaged by Hurricane Katrina in calendar year 2005".  They are apparently going to hand out "not less than $140 million".  Read the RFP here.  Goodness, the requirements are rigorous.  Can you hold your hand out, palm upwards?  Yes?  OK, here's $140 million.  Oops, sorry, at least $140 million, i.e., conceivably more than that.  NGSS thinks this is just for them but it could be for any shipbuilder in the disaster zone who has a contract or subcontract funded by SC,N, which would include, for example, Austal USA.  September 12/27, 2006.

    LEBOEUF PLANNING FOUR NEW DOCKS.  LeBoeuf Bros. Towing is planning to expand its repair yard in Bourg LA, Bourg Dry Dock & Service, by adding four new 400'-by-200' graving docks.  Once built, the existing facility will return to new construction.  September 11, 2006.

    CASCADE AND OIW FORM U.S. BARGE.  Vigor Industrial, LLC, the parent company of Cascade General, and Oregon Iron Works, Inc., (OIW), have formed a joint venture called U.S. Barge, LLC., to build barges at Cascade's Portland shipyard.  They have signed a contract with Hawaii's Young Brothers for eight barges of an unspecified type and size.  The price is also unspecified but the first delivery is in late September 2007.  Read the announcement here.  Young Bros., which operates a ten-barge inter-island fleet of deck barges, announced in April that they planned to build eight new barges, saying that the first new one would be an enclosed ro-ro barge for both cars and trailers.  This sounds like a positive development to me.  The Cascade yard has been seriously underutilized ever since they made the unfortunate, if necessary, decision to sell their big dock.  And Oregon Iron Works is an excellent, forward-looking outfit.  September 11/20, 2006.

    TIDEWATER PRESENTATION REVEALS POSITIVE TRENDS.  Tidewater has just posted its latest investor presentation and it contains indications of the continuing positive trends in the offshore service sector.  See the presentation here.  (If you go to their web site, here, you can listen to the spiel that goes with the pictures, but if you don't bother, you haven't missed a thing.)  September 6, 2006.

    CHEVRON'S DEEP-WATER FIND IS GOOD NEWS, BUT.  The Chevron-led consortium's apparently significant find in Walker Ridge is, of course, good news, especially when so many oil-and-gas people seemed to have almost given up on the deep-water Gulf.  (If you haven't already, read their announcement here.)  Of course, some people - me, for instance - are never satisfied.  Where are the rigs going to come from to develop this find and any neighboring finds?  Place an order today and you might have a rig in 2010.  Opening up the deep-water Gulf is going to be a long, slow, expensive process.  Oh and, by the way, I hear people on the radio talking about the pipelines that will be needed, but isn't this a bit far out and far down for pipelines?  Bring on a fleet of US-flag, US-built shuttle tankers.  September 6, 2006.

    HALTER TO BUILD FOUR MORE ATBS FOR CROWLEY.  As predicted exclusively here on this web site, six weeks ago, Crowley Marine has contracted with VT Halter Marine for the construction of four more 185,000-barrel ATBs.  This makes ten vessels of this size to be built by Halter for Crowley: the first has already been delivered.  The new units will cost $59mm each - a startling 25% increase on the prices paid for the preceding batch of four - and will be delivered in 2009 and 2010.  Read Crowley's announcement here.  It seems that Crowley, like Maritrans, sees no particular threat from OSG and USS and their expensive product carriers.  September 6/27, 2006.

    BENDER TO BUILD TWO PSVS FOR TRICO.  Trico Marine has announced that it has contracted with Bender Shipbuilding for the construction of two PSVs.  The boats will be 210-foot GPA-640s and will be delivered in March and July of 2008.  The contract price is $35mm.  Read Trico's announcement here.  September 6, 2006.

    ANOTHER $307MM TO DESIGN THE DDG 1000.  Apparently the $336mm cost-plus contract awarded to Bath Iron Works last month for detail design of the DDG 1000 was just their share of the pot of gold.  The Navy has now awarded a $307mm cost-plus contract to NGSS, also for the detail design of the DDG 1000.  Read the announcement here.  Unbelievable.  They are really going to have to scrub this program and just keep building the current design.  September 6, 2006.

    MARITRANS PRESENTATION HIGHLIGHTS TANKER/ATB ECONOMICS.  Maritrans has just posted its latest investor presentation on its web site and it has some interesting data on the relative economics of product carriers, large ATBs and not-so-large ATBs.  Read it here.   September 5, 2006.

    PRESIDENT ADDRESSES SIU ON LABOR DAY.  Our great leader visited the SIU's Paul Haul (sic!) Center for Maritime Training and Education at Piney Point MD yesterday and addressed an audience of maritime industry folks.  Read his words of phenomenal wisdom here.   September 5, 2006.

    MARAD PUBLISHES ANNUAL COMPILATION OF MARITIME LAW.  One of the really useful things that MARAD does, and I don't say things like that often, is publish an annual compilation of U.S. maritime law.  And better still, it's now on-line.  Click here and either bookmark it or download it.  September 5, 2006.

    MARAD PUBLISHES ANNUAL REPORT FOR 2005.  Read MARAD's report for 2005 here.  September 5, 2006.

    COUGAR ACE UNDER TOW.  In a salvage operation that's a credit to the maritime industry, the capsized car carrier "Cougar Ace" is now upright and under tow, headed for Portland OR.  Read the Coast Guard's announcement here.  September 5, 2006.

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