Maritime News and Comment

April 2007

    KEEL LAID FOR OSG #4.  Aker Philly has laid the keel of the fourth of OSG's tankers, the future "Overseas New York".  Read the announcement here.  See the yard's key event dates here.  Moving right along!  April 27, 2007.

    FIRE ON LCS 1.  The Marinette Eagle-Herald reports that there was a fire yesterday on LCS 1, the future USS "Freedom".  Read the article here.  Congressman Taylor will probably want to hold a hearing and have someone fired.  April 26, 2007.

    SEABULK MARINER TO CHEVRON.  The Double-Eagle tanker "Seabulk Mariner" - Newport News hull #650 - has been bareboated to Chevron Shipping and renamed the "Mississippi Voyager".  April 26, 2007.

    COAST GUARD PETARDED.  The U.S. Coast Guard has hoisted itself on its own petard.  Crowley today filed suit against the Coast Guard's recent rulings allowing Seacor, US Shipping and Keystone to double-hull tankers overseas.  Good for Crowley.  Read their filing here.  Note, in particular, Exhibit A, which starts on page 43.  Exhibit A is the Coast Guard's own NVIC 2-90, which clearly says that "The retrofitting of double hulls, sides or bottoms within or upon a vessel will be considered to be a rebuilding within the meaning of 46 CFR 67.27-3."  Is that not clear enough?  Case closed.  April 25, 2007.

    MOKIHANA OUT OF JONES ACT.  Matson has conceded that the work being done on the "Mokihana" in Nantong constitutes reconstruction and the ship has lost its Jones Act privileges.  Round 1 to the shipbuilders: the implications for USS, Keystone and Seacor are obvious.  Under the law, the "Mokihana" should also lose its CCF status, but we can expect to see MARAD, which doesn't give a damn about its statutory obligation to support the shipbuilding industry, attempt to fudge that one.  April 25, 2007.  Since there seems to be some public doubt about this, I attach here a copy of the CG-1258 that Matson filed on April 12.  This clearly requests a revised Certificate of Documentation without a Jones Act endorsement.  I attach here the revised CoD issued by the Coast Guard on April 17, which clearly does not include a Jones Act endorsement.  April 30, 2007

    MORE ON THE LPD 17 DISGRACE.  I know that you folks don't think I'm making this up about LPD 17, but here's the damning evidence.  Click here to read the INSURV report on the final contract trials.  I've edited the format (NOT the content) to make it easier to read than the original, which is one great dense block of type.  It's still 25 pages of devastating criticism.  Here's the key sentence:

DELIVERED IN JUL 05, USS SAN ANTONIO REMAINS AN UNFINISHED SHIP.

As Congressman Taylor would say "Why hasn't anyone been fired?"  I think a whole bunch of people should be fired, starting with Phil Teel and some senior Navy people.  And read the Navy Times article on this topic here.  April 19 and 28, 2007.

    TAYLOR GRANDSTANDING AGAIN.  I'm sitting here watching the webcast of today's hearing by the House Transportation and Infrastructure Committee into the problems with the Coast Guard's 123-foot patrol boats, which has now been going on for seven hours and probably has at least two more to go.  Congressman Gene Taylor's grandstanding again.  He keeps insisting that someone needs to be fired and he keeps linking this problem to the problems with the LCS program, which he wants cancelled because the boats are a tad over budget.  He's horrified by the cost involved in the 123 problem, which is all of about $100 million.  Why doesn't he link it to the mess with the rest of the Deepwater program, with the FRCs and NSCs, which are screwed up at far greater cost?  (Reliable sources tell me that the cost of the first NSC is now north of $750 million and headed toward a billion.  A billion dollars for a Coast Guard cutter?  Only at NGSS.)  Or with the LPD 17 program, which is screwed up to the tune of billions of dollars.  Or with the dysfunctional DDG 1000 program, which is also screwed up to the tune of billions of dollars.  Oh but those are all NGSS screw-ups, not Lockheed Martin's and I guess the congressman thinks he's entitled to be selective in his outrage.  Mote and beam, Congressman, mote and beam.  April 18, expanded April 23, 2007.

    SHIPBUILDING IS SUCH FUN.  Many of you have heard me say that one of the great joys of being in the maritime industry is that, on any given day, all you have to do is turn around once to see someone doing something really stupid.  Now comes Cala Corporation to reinforce this principle.  Cala Corporation proposes to build no fewer than twelve 1000-foot floating condo blocks, each offering condos of various sizes, at only $2000 per square foot for a 99-year lease.  These monsters have been designed by Ray Francis, formerly of Alabama Shipyard, who is described on Cala's web site as "the world's leading naval design engineer".  (Hi there, Ray: when did you get to be the world's leading naval design engineer?)  He certainly is the world's leading naval design engineer if he has designed these ships to last 99 years.  And who will build these colossi?  Why, who else but Northrop Grumman Ship Systems!  Read the announcement here.  Don't you love it?  I mean, you wouldn't want to go to Fincantieri or someone who might have some expertise in this area, would you?  No, let's go to the world's most expensive and almost terminally unreliable shipbuilder.  For further entertainment, visit Cala's web site here: be sure to read the Frequently Asked Questions.  This project makes World City and FastShip look positively sensible.  I think the only real question is, how long will it fester before Mr. Cala either gives up or goes broke?  April 18, 2007.

    OMI SOLD TO TORM AND TEEKAY.  Although OMI is no longer a US-flag tanker company, it's not been so long since it was called Ogden Marine and was a sister company to Avondale Shipyards.  Ah, well, those were the days.  Anyway, the new OMI has announced that it is being acquired by Canada's Teekay Shipping Corporation and Denmark's A/S Dampskibsselskabet TORM, who will split OMI's assets 50/50.  The deal values the company at $2.2 billion, which is a credit to Craig Stevenson and OMI's management team.  Read the announcement here.  April 17, 2007.

    USCG TAKES CONTROL OF DEEPWATER.  The Coast Guard announced today that it plans to take direct control of the Deepwater program, something that some of us told it it should have done right back at the beginning, in the 1990s.  In the meantime, the phrase "waste and abuse" continues to fly around and there is talk of criminal prosecutions.  Read the Commandant's testimony at tomorrow's hearing here.  April 17, 2007.

    NCL CONFIRMS THAT PRIDE OF HAWAII WILL BE RENAMED AND REFLAGGED.  The "Pride of Hawaii", will be reflagged to the Bahamas, renamed "Norwegian Jade" and modified to include a casino before its transfer to the European market.  Read NCL's announcement here.  April 17, 2007.

    UPPER MISSISSIPPI CLOSED.  The Coast Guard has closed part of the upper Mississippi River, as a result of an accident in which a towboat lost power and ran its 25-barge tow into a dock.  Read the announcement here.  April 16, 2007.

    THE LPD 17 DISGRACE.  After costing $400 million more than was budgeted and almost five years after the original contract delivery date, the LPD 17 still doesn't work.  Read the article in yesterday's "Virginia-Pilot" here.  Now this white elephant  has to go into Norshipco (sorry, I mean BAE Systems Norfolk Ship Repair) for three months and $36 million of fixes.  Is this a disgrace, or what?  What's the betting that this ship will never actually be operational but will be turned into some kind of training vessel or experimental platform, with an IX designation?  And reliable sources say that LPD 18, which was delivered in December, is in even worse shape: informed sources say that she has been stuck in Pensacola ever since it got there right after its commissioning on March 10, with its steering gear inoperable from what was either unconscionably incompetent quality control or outright sabotage.  How about terminating this contract, Secretary Winter?  And for cause, not for convenience.  What was that about no more blank checks, Congressman Taylor?  How about no more blank checks for Northrop Grumman Ship Systems?  Oh, sorry, I forgot, they're in your district, aren't they?  April 15, expanded April 17 and 19, 2007.

    PRIDE OF HAWAII TO BE FLAGGED OUT?  According to CruiseCritic.com, NCL has apparently decided not only to redeploy the "Pride of Hawaii" to the European market, but also to re-flag and rename her, presumably to eliminate the extra costs associated with the U.S. flag.  They appear to think that they are at liberty to do that.  They also say that they will bring her back in to the U.S. registry when the Hawaiian market justifies it.  They appear to think that they will be at liberty to do that too.  Doesn't NCL America have a U.S. maritime lawyer?  Or have they cleared all this in advance with good old Senator "bend the rules for my friends" Inouye.  April 14, 2007.

    NAVY TERMINATES LCS 3.  Lockheed Martin's proposal to fix-price the contract for LCS 3 was apparently unacceptable and the Navy has terminated the contract for convenience.  Read the announcement here.  This is BS.  If this contract needs to be terminated, what about all those ridiculous DDX 1000 design contracts, not to mention the entire LPD 17 construction program?  Why is the Navy picking on this program?  Is SECNAV trying to prove some kind of a point at the expense of people who live in south Louisiana?  April 13, 2007.

    MORE EXPERTS SAY THE DDG 1000 IS UNSTABLE.  You know, I know, just about everybody knows that the DDG 1000 is a non-starter and needs to follow its predecessors into the shredder.  Read the latest authoritative criticism here.  April 13, 2007.  

    JUDGE FINDS FOR MATSON IN CHINA DISPUTE, BUT.  United States District Judge T. S. Ellis, III, has dismissed the suit by Pasha Hawaii Transport Lines, (PHTL), and the Shipbuilders Council of America, (SCA), against the Coast Guard and Matson Navigation, in their attempt to block Matson's conversion of three ships in a Chinese shipyard.  Read the judgment here.  But this may be a Pyrrhic victory.  Essentially what the judge said was "This is the wrong time to address the issue: you need to wait until the conversion is complete."  So Matson - and Seabulk and US Shipping and Keystone - now have to invest the money in the conversions, taking the risk that they will not be allowed to operate the converted ships in domestic trade.  This should be interesting.  April 12, 2007.  

    K-SEA BUYS ANOTHER TUG.  K-Sea Transportation has bought the tug "Pete" from McAllister Brothers, built as "Mister Pete" by Halter Moss Point in 1976, to add to its West Coast operation.  April 12, 2007.  

    SEN. INOUYE PROPOSES MMA AMENDMENT.  Senator Inouye of Hawaii has introduced a bill to amend Title V of the Merchant Marine Act of 1936.  Read it here.  The revised language reflects the existing language of paragraph (1) of section 512(b): it eliminates paragraph (2), which says "Paragraph (1) shall not affect any requirement to make payments under Section 506."  Section 506 is the bit that requires operators who bring CDS-built ships into the domestic trade to make repayments, as follows:

SEC. 506. OPERATION OF SUBSIDY CONSTRUCTED VESSEL LIMITED TO FOREIGN TRADE; REPAYMENTS TO SECRETARY FOR DEVIATIONS (46 App. U.S.C. 1156 (2005)). Every owner of a vessel for which a construction-differential subsidy has been paid shall agree that the vessel shall be operated exclusively in foreign trade, or on a round-the-world voyage, or on a round voyage from the west coast of the United States to a European port or ports which includes intercoastal ports of the United States, or a round voyage from the Atlantic coast of the United States to the Orient which includes intercoastal ports of the United States, or on a voyage in foreign trade on which the vessel may stop at the state of Hawaii, or an island possession or island territory of the United States, and that if the vessel is operated in the domestic trade on any of the above-enumerated services, he will pay annually to the Secretary of Transportation that proportion of one-twenty-fifth of the construction-differential subsidy paid for such vessel as the gross revenue derived from the domestic trade bears to the gross revenue derived from the entire voyages completed during the preceding year. The Secretary may consent in writing to the temporary transfer of such vessel to service other than the service covered by such agreement for periods not exceeding six months in any year, whenever the Secretary may determine that such transfer is necessary or appropriate to carry out the purposes of this Act. Such consent shall be conditioned upon the agreement by the owner to pay to the Secretary upon such terms and conditions as it may prescribe, an amount which bears the same proportion to the construction-differential subsidy paid by the Secretary as such temporary period bears to the entire economic life of the vessel. No operating-differential subsidy shall be paid for the operation of such vessel for such temporary period.

No prizes for guessing who this could possibly help.  Good old Senator Inouye of Hawaii, long-time friend of the maritime industry in general and tireless supporter of special interests in particular.  April 12, 2007.

    BULKER AGROUND IN SAN JOAQUIN RIVER.  The Coast Guard reports that the two-year-old, Chinese-built, 53,000-dwt, Norwegian bulker "Spar Lyra", fully loaded with petroleum coke, broke free of its moorings at Tesoro's Pittsburg CA refinery yesterday and is aground on Brown's Island.  Read the announcement here.  April 12, 2007.

    JEFFBOAT GETS TANK BARGE ORDER.  The leading inland shipbuilder, JeffBoat, has secured a contract for a 50,000-barrel tank barge from Andrie, Inc.  The contract, which has an option for a second barge, is valued at $15 million, with delivery in 2009.  Read JeffBoat's announcement here.  April 11, 2007.

    NCL AMERICA BAILING FAST.  The sadly misnamed NCL's US-flag venture, NCL America, which has been losing huge amounts of money on its Hawaiian business, took a step backwards yesterday when it announced that it will withdraw the newest of its three ships, "Pride of Hawaii", and redeploy it in Europe.  Well, that's going to work, a US-flag, US-crewed cruise ship in the Mediterranean.  Read the announcement here and marvel at Colin Veitch's nonsensical statements.  April 11, 2007.

    MARAD TO BE REORGANIZED.  The new Maritime Administrator has announced a plan for reorganization of the agency.  Read it here.  Yeah, that'll make a big difference, like renaming the Short-Sea Shipping initiative the American Marine Highway.  April 10, 2007.

    THE USCG IN CHINA.  It's not just personnel from the shipping companies and their army of contractors that are spending a lot of time in China these days.  The Coast Guard's there too.  Read about it here.  April 9, 2007.

    "GREAT LAND" NOT FOR SCRAP?  The trailership "Great Land" - built by Sun Ship in 1975 - may not be headed for the scrapyard, as I suggested yesterday.  Sources say that she came off her charter to Matson at the end of February and is now at Cascade's yard in Portland getting some steel renewed prior to dry-docking next week.  (By the way, please note that Portland is not in China: well done, TOTE.)   TOTE already has her younger sister ship "Westward Venture" - built by Sun Ship in 1977 - laid up but it looks as though they are not planning to dump either ship just yet.  April 8, revised April 9, 2007.

    MORE DOUBTS ABOUT DDX.  An article in Defense News raises the issue of the DDX's stability.  Read it here.  This is not, of course, new, but the Navy, with its astonishing suicidal tendencies, keeps pressing on.  Maybe when Congressman Gene Taylor, a normally sane person, has got through beating up on the LCS program and promoting nuclear powered cruisers, he could pay some attention to this travesty of a program.  Stop it now and build an improved version of the DDG 51.  April 5, 2007.

    WHAT'S WITH ABS?  It's now been almost a year since the American Bureau of Shipping's CFO, Bob Bauerle, was killed in such curious circumstances, amid a police investigation and a mysterious internal audit.  (Read about it here.)  Isn't it about time for some kind of public statement from the ABS leadership?  The Annual Meeting of this non-profit, tax-exempt organization is coming up later this month.  Will we see another round of gigantic cash handouts to the management?  What does the Board of Directors have to say for itself?  April 4, 2007.

   MORE CONTRACTS FOR CONRAD.  Conrad Industries has announced three new contracts, involving six new barges.  Read their announcement here.  April 4, 2007.

   STRIKE AT INGALLS MAY BE OVER.  The Metal Trades Department is recommending that its members accept the latest offer from NGSS.  If they do, the strike at NGSS Pascagoula shipyard, which has been going on for a month, will, of course, end.  Read the details in NSS' announcement here.  Read the Metal Trades Department's announcement here.  But don't hold your breath, the guys at Ingalls have ignored their leadership before.  April 3, 2007.  But this time they didn't: the vote was overwhelmingly in favor and the yard is back to work.  April 5, 2007.

   MORE ON MATSON'S JONES ACT WORK IN CHINA.  Matson Navigation's "Mokihana" is now being converted in Cosco Nantong Shipyard, in China.  Click here to see a couple of drawings and some pictures of this 100-day project.  If this isn't hull structure, I'm a Dutchman, but y'all can judge for yourselves.  Click here to read the Motion for Summary Judgment filed last week by Pasha Hawaii Transport Lines, (PHTL), and the Shipbuilders Council of America, (SCA).  Note that, in the last of the four pictures listed, mokihana.pdf, you can see the "Seabulk Trader" lying outboard of the "Mokihana": another "minor" job that's only taken six months so far.  April 3, 2007.

   MCTF PUBLISHES ANNUAL REPORT.  The Maritime Cabotage Task Force, (MCTF), which is the pro-Jones Act lobby group, has published its annual report.  Read it here.  April 2, 2007.

   RIVERBOAT IN COLLISION.  The Mississippi riverboat "River Explorer", with 160 passengers, was struck by a stray barge on Friday and holed below the waterline.  The accident occurred on the Kenner bend just above New Orleans.  Read the Coast Guard's announcement here.  The "River Explorer" is a sort-of European-style river barge: it was created in 1998, at Leevac Shipyards, by combining two barges built by Nashville Bridge in 1974, and is propelled by the towboat "Miss Nari", built by St. Louis Ship in 1951.  Take a look at her here.  April 2, 2007.

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