Maritime News and Comment

October 2007

    NASSCO LAUNCHES T-AKE 5.  NASSCO has launched the fifth T-AKE, the future USNS "Robert E. Peary".  Read the announcement here.  October 30, 2007.

    COAST GUARD BACKS MATSON ON MOKIHANA REBUILD.  The Coast Guard has ruled that Matson Navigation's "Mokihana", rebuilt in China, nonetheless qualifies for Jones Act service.  No surprise, really.  Read the highly imaginative ruling here.  Note that it nowhere addresses the requirement that the entire rebuild be performed in the U.S.  October 29, 2007.  OK, let's take a closer look.  I have five problems with this "final determination".

1. 46 App. U.S.C. 883 (2005) clearly states "That no vessel which has acquired the lawful right to engage in the coastwise trade, by virtue of having been built in or documented under the laws of the United States, and which has later been rebuilt, shall have the right thereafter to engage in the coastwise trade, unless the entire rebuilding, including the construction of any major components of the hull or superstructure of the vessel, is effected within the United States, its Territories (not including trust territories), or its possessions".  The Coast Guard does not address this fundamental requirement.

2. The Coast Guard determined that the ship's new "auto platforms and ramps" are considered "outfitting" and not subject to the steel weight limitation.  This is arrant nonsense.

3. The Coast Guard asked its Naval Architecture Division, (NAD), for an opinion on the weight issue but carefully withheld from them any detailed weight estimates, thus compelling them to hedge their opinion with cautious language.  I guess that's what the Coast Guard and Matson wanted.

4. Much of the argument revolves around the ship's original steel weight.  It appears that the inclined weight of the ship back in 1982 was 5.9% more than the final contract weight estimate.  Matson argues that this 5.9% was uniformly distributed and the ship's actual steel weight was 5.9% more than the estimated weight.  Pasha argues that the estimated steel weight was correct and all the extra weight must have been in the outfit.  The Matson position is reasonable in the absence of more information, as the NAD says.  Both positions are somewhat illogical and, of course, self-serving.  But why doesn't someone look in the file?  Anyone with shipyard experience could tell you that, if you incline a ship and find that it's almost 6% heavier than it's supposed to be, all hell breaks loose and no one goes to sleep until the exact location of the extra weight is nailed down.  It's in the file, guys.  Matson should have the file but it may not be complete; Avondale should have the file but will probably claim that it was lost in a flood; and MARAD has the file (because this was a CDS-built ship) and should have no excuse for not producing it.  And by the way, this ship was the third of the three.  Weight discrepancies should have been resolved on the first ship.  Were the first two ships overweight as well?  Or what?  This cries out for further investigation, but the Coast Guard hasn't investigated.

5. Finally, we get this superficially loony, but fundamentally very significant, argument about the definition of a "major component" and the capacities of the shipyard's cranes.  Matson, supported by the Coast Guard, argues that the heaviest lift performed by the shipyard was 26.4 tons and, as a result, nothing that they added to the ship in China constituted a major component.  The NAD correctly points out that, in the absence of a clear definition, a component can be whatever you want it to be.  An efficient shipyard would have added the new above-deck structure in only two or three lifts: the fact that the Chinese shipyard did not have adequate crane capacity is irrelevant to the determination of whether or not the new structure constituted a "major component".  But this is important, because, if it is allowed to stand, an operator will be able to make any major change he wants just by breaking it down into itsy-bitsy pieces, as some of us suspect another Jones Act operator is, in fact, doing.

Come on, Pasha and the SCA, let's see you go to court and put a stop to this nonsense.  And while you're about it, let's get an amendment to the Jones Act that properly defines a "major component".  October 30, 2007.

    COAST GUARD TRANSFERS 65-YEAR-OLD CUTTER TO COLOMBIA.  The Coast Guard has transferred the 180-foot buoy tender "Gentian", built in Duluth MN by Zenith Dredge in 1942, to the Colombian Navy.  That should make all the difference in the war against drugs.  October 29, 2007.

    TECO TRANSPORT SOLD.  Teco Energy has sold its shipping subsidiary, Teco Transport, to Greenstreet Equity Partners, of  Miami FL, for $405 million.  Read the announcement here.  Teco Transport includes Teco Ocean Shipping, which owns 3 self-propelled bulkers, 7 ATBs and 6 other barges, although only 2 of the other barges are listed on Teco's web site; Teco Barge Line, which owns 812 inland barges and at least 20 towboats; and Teco Bulk Terminal, which operates a river terminal in New Orleans which serves as the interface between the barge line and the ocean shipping company.  Note that the Teco Ocean Shipping fleet has an average age of 33 and needs to be renewed.  October 29, 2007.

    CONOCO HEADS FOR THE EXIT.  ConocoPhillips, once adamant about the importance of taking responsibility for all aspects of its operations and managing the risks involved, is now following ExxonMobil's lead and dumping its marine business.  A couple of weeks ago, it revealed that it was looking for buyers for its international fleet and now we hear that it has sold its domestic inland fleet to the privately held, New Orleans-based operator, Canal Barge Company.  This just leaves the Polar Tankers fleet, which would be really hard to get rid of, however much they might like to, and a sole North Sea shuttle tanker.  October 23, 2007.

    BAE TO ENLARGE SF DRY-DOCK.  BAE Systems has renewed its lease on the former Bethlehem shipyard in San Francisco and will spend $5 million to enlarge Dry-Dock #2 to allow it to handle post-panamax cruise ships and tankers.  $3 million will be contributed by Princess Cruises.  October 23, 2007.

    JOHN DANE ON OLYMPIC TEAM.  John Dane III, President of the world's leading megayacht builder, Trinity Yachts, Chairman of the special-purpose boatbuilder, United States Marine, and former Chairman of Halter Marine Group, has been selected to represent the United States in the "Star" class yacht races at the summer Olympics next year, in Qingdao, China.   Read the Star Class announcement here.  So who says U.S. shipbuilders can't compete?  October 18, 2007.

    LPD 19 DELIVERED.  According to the Naval Vessel Register, the third of the "San Antonio"-class LPDs, the future USS "Mesa Verde", (LPD 19), was delivered to the Navy by Northrop Grumman Ship Systems on September 28.  Neither the Navy nor NGSS thought that this event justified a press release.  Given their customary enthusiasm for press releases about the most insignificant events, this is curious.  But, whatever, this ship is said to be a fine example of what U.S. shipbuilders can do when they are allowed to.  October 13, 2007.

    HAWAII SUPERFERRY LAY-OFFS.  Faced with an indefinite delay to the start of its service and a negative cash flow of about $650,000 a week, Hawaii Superferry has laid off about 80% of its workforce.  October 12, 2007.

    DDG 51 PROBLEMS.  Navy Times reports that some of the "Arleigh Burke"-class DDGs are experiencing structural problems.  Read the report here.  That's not the news we need, just as some of us were hoping that the Navy would wise up and cancel DDG 1000, building more of the apparently reliable DDG 51s instead.  Another design screw-up: who's responsible for this one?  October 12, 2007.

    FINALLY, SOME IMPORTANT NEWS.  Fairplay Solutions reports that:

"A Philadelphia longshoreman was fined nearly $20,000 after being found guilty of mowing down 189 seagulls with a truck at the Packer Marine terminal.  Municipal Court Judge Deborah Shelton imposed the minimum fine of $75 per bird against Daniel Gallagher, the president of an International Longshoremen’s Union local, and also ordered him to pay $5,000 in restitution to his employer for wrecking the truck.  The incident occurred in February 2006 when Gallagher was driving across the terminal in a pickup truck.  According to local media reports, he was talking on a two-way radio and trying to grab spilling coffee when he looked up and saw the flock of birds.  But rather than stopping, Gallagher said he panicked, hit the gas and ran down the 189 seagulls before crashing into a parked container chassis.  Prosecutors showed the court a videotape of the massacre and claimed the incident was intentional in asking the court to impose a fine of $47,800.  But the judge bought Gallagher’s story and only fined him $14,175 – plus the $5,000 for the truck. Gallagher’s lawyer says he’ll appeal."

Well, I never thought that seagulls were particularly smart, sort of on a par with Lockheed Martin managers, but 189 stupid seagulls?  Wow!  Maybe they had been indulging in too many Philly cheese steaks.  October 10, 2007.

    ASN (R,D&A) QUITS.  Defense News reports that ASN Delores Etter has quit, after less than two years on the job, to return to her old job as Professor of Electrical Engineering at the Naval Academy.  Read the report here.  With only just over a year to go of this Administration, don't expect anyone competent to be appointed to replace her in this critically important position.  October 10, 2007.

    LCS 1 PROBLEMS ARE ALL IN THE DESIGN.  Following a week of tests and inspections on LCS 1 in Marinette, reliable sources tell me that the Navy personnel taking part felt that the shipyard had done a superb job: all the problems are in the design.  Despite the fire a few months ago, the mess decks and galley are apparently all fully and properly finished.  Everything was exceptionally well laid out  and organized.  One quote was "Every US Navy ship should have cableways as well arranged and tightly run as this."  The negative comments concerned the Engineering spaces, which were described as "a design nightmare", "far too crowded", "inexcusably badly designed", "providing insufficient  work space", "cramming far too much stuff into every compartment" and "a maintenance nightmare".  So who's responsible for this mess?   Well, obviously not the shipyard.  As everybody in the industry knows, our best second-tier shipyards, such as Marinette and Bollinger, are far superior to the big yards in terms of productivity, reliability and quality.  The fact is that the LCS is a design screw-up: look no further for villains than the Navy itself, which, as usual, is trying to fit a quart into a pint pot; Lockheed Martin, which knows absolutely nothing about shipbuilding and never did; and Gibbs and Cox, who should be ashamed of themselves.  October 9, 2007.

    WHAT MARAD'S POLICY SHOULD SAY.  You may have read the Maritime Administration's absurd  "policy paper" on shipbuilding and repair - find it here.  It annoyed me so much that I have drafted my own version.  Read it here.  I've probably overlooked something important but no doubt y'all will write and tell me.  October 7, 2007.

    THE FIRST US-FLAG SHUTTLE TANKERS.  Overseas Shipholding Group has announced that two of the product carriers now under construction in Philly will be modified to serve as GoM shuttle tankers and chartered to PetroBras America.  This is excellent news, for OSG of course, but really for the whole U.S. maritime industry.  Here we go with a whole new market sector.  Read OSG's announcement here.  October 5, 2007.

    SL-7s TO RRF.  The Navy's first serious sealift ships, the SL-7s, the eight containerships that they bought from Sea-Land in 1981 and converted to ro-ros, have been transferred to the RRF, at the ripe old age of about 34.  Just in case you've forgotten, these ships were built in Europe back when oil was cheap but became unaffordable when oil suddenly wasn't cheap.  They are 946 feet long by Panamax beam and have a 120,000-hp steam plant that drives them at 33 knots (officially) and 35 or 36 knots (unofficially).  Collectively, the eight of them could move an entire armored division, though not any more.  When, in 1983, we transferred the "Capella", (T-AKR 293), from a floating dry-dock to a level slab, the easier to perform the conversion, she was said to be the largest man-made object ever brought ashore.  Read MARAD's announcement here.  Read MSC's fact sheet here.  October 5, 2007.

    AKER AMERICAN MAY SPLIT.  Tradewinds reports today that Aker American Shipping is considering splitting itself into two companies, one to build the ships and one to own them.  That would be interesting because, to establish the value of each enterprise, they would have to nail down the price of each ship and then we would be able to see whether or not the shipyard is really performing.  October 5, 2007.

    OSG TAKES TWO MORE.  Overseas Shipholding Group has exercised options with Aker Philly for two more product carriers, extending the series to 12, two of which have already been delivered.  Read OSG's announcement here and the shipyard's here.  October 4, 2007.

    MARAD HAS A POLICY.  The Maritime Administration has published a "policy paper" on Shipbuilding and Repair.  Read it here.  Comments later, maybe.  OK, I've read it.  That's a policy?  Good grief!  Pathetic.  Sometimes I think we should just close MARAD down.  Admiral Land must be spinning like a top in his grave.  October 4, expanded October 5, 2007.

    USCG TO GUARD SUPERFERRY.  The Coast Guard will protect the Hawaiian Superferry if necessary.  Read the story in the Navy Times here.  October 4, 2007.

    MORE ON CALA.  Cala Corporation - the company planning the ginormous undersea resort with the projected 99-year life - is now talking about buying Malta Shipyards.  Read Mr. Cala's letter in the Times of Malta here.  Now Mr. Cala is a serious businessman, so if he says he has $300 million in tax-free bonds from the State of Alabama, I'm sure he means it.  Can any of my loyal readers in Alabama tell me how I can get $300 million in tax-free bonds from their State?  I feel like buying a shipyard too, but maybe I'll buy one in Alabama.  October 2, 2007.  Now here's more.  First, the Mobile Press-Register reported six weeks ago that Cala Corp. had dropped its plans to build the Under-Sea Resort in Alabama, because the $300 million in state bonds is no longer available, although there appears to be a bit more to it than that.  Read the article here.  Note that the proposed Cala shipyard is described as "the first new major shipyard to be constructed in the U.S. in nearly a century."  Yeah, right.  I guess Ingalls isn't a shipyard and WWII never happened.  Second, Cala Corporation yesterday announced that it is "ready to sell" the first ship, for only $460 million, despite the fact that it does not yet have a shipyard.  Read the announcement here.  Note that it says, among other things, that "The company does not foresee any major obstacle in selling the ships because the costs are from $300 to $460 million which is much lower, as compared with any shipbuilders around the world."  Yeah, that will happen.  So what new entertainment can we expect from these folks now?  I love the U.S. maritime industry, don't you?  October 4, 2007.  Now check here: this was just posted on Yahoo on Tuesday and it's priceless.  October 5, 2007.  But we've wasted enough time on this clown: no more Cala news.

    ANOTHER N.A. SOLD.  Only two weeks after American Commercial Line bought Elliot Bay Design Group, Rolls Royce Marine has bought Seaworthy Systems.  Read RR's announcement here.  October 1, 2007.

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