Maritime News and Comment

November 2006

    USCG BENCHES STRETCHED BOATS.  The Coast Guard has summarily removed its eight 123-foot WPBs - the stretched "Island"-class boats - from service, as a result of serious structural problems.  Read the USCG's announcement here.  Well, this should add an extra element of urgency to the task of getting the FRC program moving.  November 30, 2006.

    MARITRANS BECOMES OSG AMERICA.  OSG's completion of its acquisition of Maritrans has resulted, inevitably, I suppose, in the adoption of the name OSG America for its US-flag operations.  The name Maritrans doesn't go back many years, so no big deal.  But OSG had a perfectly good name for its US-flag operations already: remember Maritime Overseas Corporation?  Read OSG's announcement here.  November 29, 2006.

    TSV GOES TO NORWAY.  Eagle-eyed "Tradewinds" reports that the US Army's Incat "TSV 1X" has been bought by Norway's Master Ferries and will be redeployed in commercial service in Norway early next year.  Read Master Ferries' announcement here.  Is this not a surprise?  Have I missed something?  What went wrong?  If the Army suddenly no longer wants high-speed transports, could the Navy not use it?  Or MARAD - remember short-sea shipping?  November 28, 2006.

    DDG NAMED FOR WAYNE MEYER.  The Navy has announced that DDG 108, currently under construction by Bath Iron Works, will be named the USS "Wayne E. Meyer", after the retired Rear Admiral who presided over the development of the Aegis weapon system for roughly 15 years.  It's not often we get a combatant ship named after an engineer: this is very appropriate.  Read Lockheed Martin's announcement here.  November 27, 2006.

    END OF WORLD APPROACHING.  I am sure that we are all deeply grateful to Yahoo for including in its maritime news on Thanksgiving a report that a giant tsunami is shortly going to wipe out the entire eastern United States.  Read the story here and be sure to check out the web site that provided this news - www.worldends.co.uk - which offers some of the most confused thinking you could hope to find outside the White House.  November 27, 2006.

    VT HALTER GETS GO-AHEAD FOR EGYPTIAN FMC PROGRAM.  The Navy has exercised an option on its contract with VT Halter Marine for advance procurement and other front-end activities geared to the construction of three Fast Missile Craft for the Egyptian Navy.  The amendment is valued at $165 million.  Read the DefenseLink announcement here.  Read ST Engineering's announcement here.  This program seems to have been going on for ever: it's great that it's finally becoming steel.  This has been a good year for VT Halter, which has secured contracts for 4 ATBs for $236mm; the T-AGM(R) for $199mm; an FSV for NOAA for $30mm; the NOAA SWATH for $15mm; two tank barges for Poling & Cutler for maybe $40mm; and now this, for a grand total of $685mm.  November 22, 2006.

    FLAMING BEETS!  Holy cauliflower, Batman, what will they think of next?  Wagenborg Shipping's 9,600-dwt "Virginiaborg" is being lightered in Sault Ste. Marie today after it's cargo of sugar beets caught fire.  Read the article in the Soo Evening News here.  November 20, 2006.

    USCG SEEKS BIDS FOR NEW FRC.  Having finally given up on Northrop Grumman's expensive plastic boat - designated FRC-A - getting to production any time soon, the Coast Guard has now identified some COTS alternatives and is planning to solicit bids for the construction of a dozen of these FRC-Bs, enough, they reckon to hold them over until NGSS can get its act together.  What would you bet that they end up buying all FRC-Bs?  An RFP will be released on December 5.  Read the current Navy Times article on this subject here: curiously, the Coast Guard's own Deepwater web site provides a link to this article.  November 20, 2006.

    MATSON STICKS IT TO HAWAII AGAIN.  Matson Navigation has announced that it is raising its Hawaiian service rates by $100 a box westbound and $50 eastbound, and its terminal handling charges by $150 a box westbound and $75 eastbound.  The increase is said to be required to pay for its new ships and other investments.  Read the announcement here.  But since when are capital expenses recoverable from operating revenues?  And don't these investments actually result in lower operating costs?  Shouldn't Matson in fact  be lowering, not raising its rates?  Hell no, as long as the pussies at the Surface Transportation Board will roll over when so instructed, Matson will continue to stick it to the poor people of Hawaii and will keep paying dividends to Alexander & Baldwin's stockholders.  Predictably, Horizon Lines will follow suit with identical increases some time next week: but since Horizon doesn't have all those capital costs to recover, why don't they try holding their rates steady, or even lowering them? They might find themselves taking business away from Matson and making more money.  November 18, 2006.

    DD-1000 BUDGETS INCREASED.  "Inside the Navy" reports that the DoD Comptroller has directed that the DD-1000 program's budget be increased by $385mm in FY-08, $334mm in FY-09, $221mm in FY-10 and $224mm in FY-11, the money to come from other Navy procurement budgets.  (The budgets for DD-1000 are currently $2.7bn in FY-08, $2.2bn in FY-09, $2.5bn in FY-10 and $2.1bn in FY-11, so the increases amount to about 12% overall.)  DoD is effectively telling the Navy and, by extension, PEO Ships and the DD-1000 program office, that it doesn't believe their projections of program cost savings.  And, given the Navy's track record in this regard, who can blame them?  November 18, 2006.

    HORIZON'S NON-STORY.  OK, the scoop is that Horizon Lines is going to redeploy some of the ancient steam-powered ships it has in the Guam/Saipan trades, which won't be needed there once its new non-Jones Act ships are delivered, to a new Houston-Puerto Rico trade.  So now you know.  Exciting, isn't it?  November 17, 2006.

    IS LPD 18 AS BAD AS LPD 17?  Reliable sources who are very close to the action tell me that the physical condition of LPD 18, which recently underwent builders trials, is almost as bad as that of LPD 17 at this point.  I am warned that the acceptance trials will be fudged and the ship accepted, regardless of condition, then moved to the Norfolk Navy Yard for completion, using OMN funds.  Is it possible that the Navy would do this?  (No need to answer that.)  Is the Navy so scared of Trent (Strom Thurmond for President) Lott and/or of its own contractors that it is willing to roll over like this?  November 17, 2006.

    SHIPBUILDERS FILE SUIT AGAINST COAST GUARD.  The Shipbuilders Council of America and Pasha Hawaii Transport Lines have filed a complaint in the U.S. District Court for the Eastern District of Virginia alleging that the Coast Guard's ruling that allowed Matson Navigation to convert a ship in China is in contradiction of the Jones Act.  Go after them, guys.  This will be interesting.  November 16, 2006.

    CASTLE HARLAN HEADING FOR EXIT.  Horizon Lines has announced the upcoming sale of the remaining shares owned by investment group Castle Harlan.  Read Horizon's announcement here.  Castle Harlan paid about $660 million for Horizon in July 2004 and ended up owning about 37% of it, equivalent to an investment of about $250 million.  In June, they sold about 6 million shares for about $80 million.  In September, they sold about 5.3 million shares for about $75 million.  Now they are dumping their remaining 2.3 million shares: at today's inflated share price, this could bring them about $60 million and get them out of the Jones Act shipping business.  And does the man who got them into it, Marcel Fournier, still work at Castle Harlan?  Sure he does.  November 16, 2006.

    ORANGE TO BUILD BIG ESCORT TUGS.  Bay-Houston Towing and Suderman & Young Towing have each ordered a 98-foot, 6,300-hp escort tug from Conrad Industries.  Conrad's Orange shipyard will build the boats, which, together with an existing Moran tug, will be employed by ConocoPhillips at the LNG import terminal under construction in Freeport TX.  Read Conrad's announcement here.  November 16/18, 2006.

    PLANNING AHEAD.  The Navy has awarded a cost-plus contract to Northrop Grumman Newport News for preliminary design work on CVN 79.  That's right, CVN Seventy-Nine.  Read the DefenseLink announcement here.  We haven't even committed to building the $15-billion CVN 78 yet and they are spending taxpayers' money on CVN 79.  November 16, 2006.

    FOSS ORDERS MORE BUNKERING BARGES.  Foss Maritime has ordered three more bunkering barges from Conrad Industries: they will be built at Conrad's Orange TX shipyard.  These will be 35,000 barrels, one third larger than the two that Conrad is already building for Foss.  Read Conrad's announcement here.    November 14, 2006.

    HORIZON PLANNING AN EVENT IN HOUSTON.  Sources say that Horizon Lines is planning some kind of event for next Monday at the Barbers Cut container terminal in Houston.  Chairman Chuck Raymond will be there, together with Maritime Administrator Sean Connaughton.  Does anyone know what's up?  They are going to announce a fleet renewal program maybe?  (There's wishful thinking for you!)  According to the Port of Houston Authority, the Maritime Administrator has a press conference scheduled for 5.30 at the Four Seasons.  I'm probably reading too much into this.  It now appears that the Maritime Administrator is in Southeast Asia with the Prez - Condi was too busy, so Sean went in her place - and won't be back until Wednesday.  November 14/15/17, 2006.

    FIVE MORE FOR SCRAP.  The Maritime Administration has announced the award of scrapping contracts for five more old NDRF ships.  Read the announcement here.  The five ships, all built by shipbuilders who are no longer with us, are Vulcan, (AR 5), built by New York Ship (Hull 422) in 1941, Jason, (AR 8), built by Todd Los Angeles in 1944, Queens Victory, built by California Shipbuilding (Hull V73) in 1945, Maumee, (AO 159), built by Sun Ship (Hull 598) in 1956, and Maryland, a tanker built as Texaco Maryland by Bethlehem Sparrows Point (Hull 4597) in 1963.  November 14, 2006.

    NGNN RE-INSTALLS A RUDDER.  In the most stunning news item of the year, if not the decade, Northrop Grumman has revealed that its Newport News shipyard has managed to re-install a ship's rudder.  Goodness, I don't think that I can remember the last time a shipyard did this.  Congratulations to everyone at Newport News!  Read NG's press release here.  I particularly like this sentence: "The rudders weigh approximately 50 tons each and are used to steer the ship from right to left."  No kidding!  I always wondered what rudders were for.  But hold it a moment: how do they steer the ship from left to right?  November 14, 2006.

    FIRST OSG TANKER CHRISTENED.  The first of OSG's new US-flag tankers, the "Overseas Houston", was christened on Saturday, two months after it was launched.  Very strange.  (I may be tough on Northrop Grumman but at least they understand that you christen a ship when you put it in the water.)  And the ceremony was not accompanied by a press release, either from the owner or from the builder.  Also very strange, especially given Morten Arntzen's passion for publicity.  November 13, 2006.

    LITTLE OLD TANKER GROUNDS IN NEW YORK.  The 2,160-dwt, single-hull, coastal tanker "Kristin Poling", owned by Poling & Cutler, grounded in East Rockaway inlet on Friday, but was freed on Sunday.  She had a cargo of heating oil but there was not, apparently, a spill.  Read the Coast Guard's announcements here.  Interestingly, the same ship ran aground in the same place almost exactly two years ago: read the Coast Guard's almost identical announcement at that time here.  The "Kristin Poling" is almost a museum piece: she was built in 1934 for Standard Oil of New York, (later Mobil Oil), by United Drydocks, (later Bethlehem Steel's Staten Island shipyard), as the "Poughkeepsie Socony".  Why is she still operating?  Ask the people who drafted the Oil Pollution Act of 1990.  On a linguistic note, I see that the Coast Guard's three announcements describe this ship first as a "tanker ship", then as a "barge" and finally as a "tanker": will somebody please take those Public Affairs folks outside and educate them?  November 13, 2006.

    FIRST WMSL LAUNCHED.  The first of the Coast Guard's new-generation of high-endurance cutters, USCGC "Bertholf", (WMSL 750), was launched on Saturday.  She's a good-looking ship, if a tad pricy at $300 million and counting.  (The "Hamilton" class WHECs cost $15 million each when built in the mid-1960s and were SLEPed and extensively upgraded in the mid-1980s for $67 million each in the mid-1980s.)  Read Northrop Grumman's announcement here.  November 12, 2006.

    MARINETTE GETS INLS OPTION.  The Navy has exercised an option on its contract with Marinette Marine for the FY-07 batch of components of the Improved Navy Lighterage System, or INLS.  This amendment, which is valued at $65.8 million, covers construction of 300 additional modules, both powered and unpowered.  That's an average price of $219,000 per module.  Read the DefenseLink announcement here.  November 10, 2006.

    NGSS GETS CONTRACT FOR EIGHTH LPD.  The Navy has exercised an option on its contract with No Good Ship Systems for construction of the eighth of the "San Antonio" class of LPDs.  The value of the option is $1,454.3 million.  This includes funds for advance procurement of materials for the ninth and last ship, but the previous option did the same for this ship.  The completion date is given as March 2011, which is actually seven months earlier than that for the preceding ship.  Read the DefenseLink announcement here.  Note that it says that 90% of the work will be done in Pascagoula: goodbye, Avondale.  For your amazement, the table below shows the history of the shipyard contract prices for these ridiculous ships: in addition to these sums, there has been a total of $691 million in miscellaneous options, for a grand total, to date, of $7,378 million.  And that doesn't include what has been spent on program development, what has been paid to Raytheon and other LPD program contractors, the Government's own costs or what has been paid to NGSS for its humongous cost over-runs.  The Navy says that the total cost per ship is expected to average about $1.2 billion.  November 7, 2006.

    DEFENSE INDUSTRY DAILY SUMMARIZES THE LPD 17 STORY.  The authoritative journal "Defense Industry Daily", which last week summarized the DD-1000 program very effectively, has now summarized the LPD 17 program.  Read the article here.  Note that the program has been reduced from 12 to 9 ships.  This is not, of course, anything to do with the average cost per ship.  November 7, 2006.

    REINAUER BUYS SENESCO.  Leading tank barge operator Reinauer Transportation has bought SENESCO, the failed Rhode Island builder of tank barges.  Read Reinauer's brief announcement here.  No word on what they plan to do with the yard.  November 1, 2006.

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