Maritime News and Comment

February 2007

   HEAVY LIFT SHIP MISHAP IN L.A.  The heavy-lift ship "Jumbo Challenger" dropped a 638-ton reactor headed for BP's Carson CA refinery in the Port of Los Angeles the other day, doing what looks like more damage to the ship than to the reactor.  Read the Coast Guard's announcement here.  February 28, 2007.

   ANOTHER $11MM FOR LPD 18.  The Navy has awarded a contract to BAE Systems San Diego (the old Southwest Marine) for a Fitting Out Availability (FOA) on the USS "New Orleans", (LPD 18).  The contract is valued at $11.3 million, with completion by July.  Read the DefenseLink announcement here.  Note that the scope includes "post-repair sea trials".  Wonderful.  Sounds like they are still trying to get this ship finished.  February 28, 2007.

   DOES NCL AMERICA WANT OUT?  The item below raises a number of questions but here's something even more curious.  NCL's parent company - Star Cruises of Malaysia - has just announced really terrible results for 2006, much of which can be laid to NCL America.  Read their announcement here.  Simultaneously, the U.S. corporate entity - NCL Corp., Ltd. - filed a 6-K with the SEC this morning that suggests that they are looking to get out of the US-flag business: I can't link you to it but here's a report in the Honolulu Advertiser.  Note the language: "We, therefore, are closely examining all options in our efforts to bring NCL America to profitability, and to reduce the negative impact of NCL America on the overall group result."  Maybe they could sell it to the Carlyle Group.  Does anybody know what's going on?  Let me know.  February 26, 2007.

   SS INDEPENDENCE TO BE REACTIVATED?  The Coast Guard's self-appointed Supreme Court Justice has responded to a request from Preston Gates concerning the SS "Oceanic", formerly the fine old liner "Independence", built at Quincy in 1950.  Read it here.  It's curious that the letter nowhere mentions the owner's name.  Is it still NCL America?  In fact, a casual reader might not realize that the "Oceanic" is the old "Independence".  It's also curious that Mr. Cameron seems to be suggesting, somewhat tentatively, a course of action to be taken by the owners and/or their lawyers.  What's he up to?  Does anybody know what's going on?  Is anyone out there doing design work or working up a shipyard estimate?  Let me know.  February 26, 2007.

   OSG ACQUIRES HEIDMAR LIGHTERING.  OSG has agreed to buy Heidmar Lightering Services, Inc., (HLSI), a move that should further strengthen its close-to-dominant position in the U.S. tanker business.  Read OSG's announcement here.  Visit HLSI here.  HLSI operates four Aframaxes plus some workboats: two rather elderly (19-year-old) ships - the "Heidmar Brazos" and the "Heidmar Sabine" - which are NOT double-hulled and have MARPOL phase-out dates in 2013, and two slightly less elderly (13-year-old) ships - the "Ania" and the "Beryl", which are both larger and double-hulled.  February 26, 2007.

   NGSS BOUNCES BACK.  The big two, Northrop Grumman, (NYSE:NOC), and General Dynamics, (NYSE:GD), published their 10-Ks for 2006 last week.  It seems that NOC is recovering nicely from Katrina without any excessive help from the taxpayer.  Its Ships sector, i.e., NGSS plus Newport News, had reduced sales but much increased operating margin: $393 million, or 7.4% of revenues of $5.3 billion, the highest figures since NOC took over.  GD Marine Systems, meanwhile, increased both sales and profits to wind up with very similar results: it had an operating margin of $375 million, or 7.6% of revenues of $4.9 billion.  So why, exactly, is Northrop Grumman screaming for federal help?  Read the NOC 10-K here and the GD 10-K here, and my simple-minded analysis here.  Oh and, by the way, Trinity Industries, (NYSE:TRN), published its 10-K last week too - (you'll be able to link to it here when Trinity gets around to posting it on its web site): its shipbuilding unit had revenues that were more than 50% up on last year, generating an operating margin of 12%.  February 26, 2007.

   SECNAV EASILY IMPRESSED.  The Navy NewsStand reports that Secretary Winter was impressed by the technology on display at the Vosper Thornycroft yard in England, which he visited last week.  Read the article here.  Unfortunately, none of the technology described in the article would be new to U.S. shipyards.  In addition, maybe he needs to be reminded that Vosper Thornycroft was the source of the designs for the Coast Guard's under-strength "Island"-class cutters and the Navy's dismally unsatisfactory "Cyclone"-class patrol ships.  In addition, if he thinks VT is efficient, maybe it should be pointed out to him that VT required at least three times the manhours to build an "Island"-class cutter than did our own Bollinger Shipyards.  February 25, 2007.

   ANOTHER JONES ACT SHIP GOES TO CHINA.  The Coast Guard continues to flout the clear intent of the Jones Act with a ruling that allows Keystone to double-hull the "Delaware Trader" in China.  Read the ruling here.  They even get to reconfigure the ballast tanks.  Good lord, this is disgraceful.  More law suits are needed, now.  This guy Cameron has to be stopped.  This makes ten tankers that have been so blessed - US Shipping's six ITBs, Seabulk's three old ships and now the Delaware Trader.  February 23, 2007.

   THE NAVY'S NEW 30-YEAR PLAN.  The CNO has published this year's edition of the "Annual Long-Range Plan for Construction of Naval Vessels".  Read it here.  February 22, 2007.

   NEW OSG TANKER IN TROUBLE.  The "Overseas Houston", the first of OSG's series from Aker Philadelphia, had main engine failure off Florida last night, on its positioning voyage from Philadelphia to the Houston area, and a Maritrans tug is now towing her into Tampa.  February 19/20, 2007.

   TEEL OUT-DURS DUR.  If you thought that the last President of Northrop Grumman Ship Systems, Phil Dur, was a consummate BS specialist, check out his successor, Phil Teel.  Click here to read his letter to employees in a recent issue of the company's weekly newsletter.  Amazing stuff.  "The U.S. Coast Guard is pleased with the quality of construction of NSC 1 and 2."  I don't think so.  Does Teel think his employees are stupid?  It also seems that, according to Teel, the first two National Security Cutters both "surpass yard records for first time quality".  Golly that's scary.  Further, it seems that all this trouble with the Deepwater program is nothing to worry about - it's just a function of the Democrats taking control of the Congress and the onset of something called the "hearing season".  (That's hearing, not herring.)  Yeah, right.  Does Teel also think that U.S. Rep. Gene Taylor, whose district includes Pascagoula, who is now Chairman of the Coast Guard Subcommittee, and who just happens to be a Democrat, is stupid?  Look, we all know that a leader has to give his troops a pep talk from time to time and that it's often necessary to put a positive spin on bad news, but this is ridiculous.  February 12, 2007.

   RIVER TOW HITS CRUISE SHIP.  A six-barge tow loaded with rice and being pushed by the towboat "Repentance" hit the cruise ship "Fantasy" in New Orleans yesterday.  No damage to the barges but a 30-foot gash in the cruise ship's side and a cancelled cruise.  Read the Coast Guard's press release here.  February 12, 2007.

   TANKER HITS I-10 BRIDGE.  The Bahamian-flag Panamax crude carrier "Kition" hit the I-10 bridge over the Mississippi in Baton Rouge on Saturday.  Read the Coast Guard's press release here.  February 12, 2007.

   MORE BP TANKER PROBLEMS.  The Anchorage Daily News reports that Alaska Tanker Company is replacing the mooring bitts on its four new ships after several of them failed.  Read the article here.   Note the ignorant quote from some nitwit called Devens:  

In BP's defense, Devens said the company under federal law had to build its new ships in a U.S. shipyard and those yards don't have the same experience or modern construction techniques as much busier Asian yards.  "The facility that built the BP tankers, it would seem obvious that some of the materials they used were substandard," Devens said. "We don't blame BP for it."  He added that, to his knowledge, the problems aren't due to BP cost cutting.

Well, let's see now.  Weren't these bitts actually made in China? Weren't the vendor and the design both approved by BP?  And weren't their materials and manufacture approved by ABS before they were shipped?  No, no, it was all due to NASSCO's inexperience.  After all, NASSCO has only been building ships since WWII, while China's been at it since 1982.  Oh, and, by the way, those faulty anchor shackles were made in China too and the faulty rudders were made in Korea.  February 10, revised February 12, 2007.

   AKER TO BUILD SIX MORE FOR OSG.  The crazy Norwegians are going to build three-plus-three more Jones Act product carriers for charter to OSG.  As before, minimal risk for OSG, lotsa risk for Aker American Shipping's Norwegian investors.  Read OSG's announcement here and Aker's here.  Note that the first ship in this series was delivered the following day.  Read Aker's announcement on this subject here.   February 8, revised February 12, 2007.

   TECO TRANSPORT FOR SALE.  The largest US-flag dry bulk shipping company, TECO Transport, is up for sale.  Read the announcement, in TECO's latest 8-K, here.  TECO Transport includes TECO Ocean Shipping, which operates 3 self-propelled bulkers and 9 oceangoing dry bulk tug-barge units, and TECO Barge Line, which operates 822 inland dry barges and 20 towboats.  February 8, 2007.

   MASTER SENTENCED TO TIME SERVED.  The Master of the "Zim Mexico III", which knocked down a crane in the port of Mobile, killing an electrician, has been sentenced to time served and sent home.  Read the story in the Mobile Press-Register here.  February 8, 2007.

   MARAD CHANGES M&R RULES FOR MSP SHIPS.  The Maritime Administration has posted final regulations for recovery of qualified maintenance and repair costs on MSP ships.  Read the Federal Record announcement here.  February 6, 2007.

   CHESAPEAKE PILOT LOST.  Lynn Deibert, a pilot from the Chesapeake Federal Pilots Association, was lost when he fell while boarding the "Energy Enterprise", off Cape Henlopen on Monday.  Read the Coast Guard's announcement here.  February 6, 2007.

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