Maritime News and Comment

November 2007

    TRANSOCEAN AND GSF MERGE.  Transocean's acquisition of GlobalSantaFe was completed yesterday.  Read the announcement here.  The combined company operates 140 offshore drilling rigs, about 20% of the world fleet.  November 28, 2007.

    WSF FERRIES IN ACTION.  Here's another reason why Washington State Ferries needs to bite the bullet and buy some new boats.  And instead of looking for a Jones Act waiver to bring in a surplus boat from BC, they should just dump the state law that restricts them to shipbuilders in Washington State.  The picture here is of the "Cathlamet", one of the five 26-year-old boats built by Lockheed.  It was taken on the Mukilteo-Clinton route last month.  See the full set of nine pictures here.  November 28, 2007.

    AKER AMERICAN TO BUILD 13 MORE?  Tradewinds reports that Aker American Shipping has signed an agreement with Aker Philadelphia Shipyard for the construction of up to 13 additional product carriers.  Not firm contracts, mind, just "option orders".  Good news for the shipyard, which keeps improving, but only in theory: they are not firm orders and may never be firm orders.  If these ships are built, this would take Aker American's fleet from 12 to 25.  How the additional ships would earn a living is not clear, but these guys are Norwegians, so of course they know more about the Jones Act market than we do.  See Aker American's latest presentation to investors here.  Of course it would be most improper to suggest that this is just a way of making the shipyard look good before they float it on the Oslo Stock Exchange.  Perish the thought.  November 27, 2007.

    AKER AMERICAN TO SPIN OFF SHIPYARD.  Aker American Shipping has announced that it will spin off Aker Philadelphia Shipyard as a separate entity.  The new company will be traded on the Oslo Stock Exchange and Aker American Shipping will retain at least 53% of the stock.  Read the announcement here and their third quarter report here.  Note that the report says, on page 3, that "The product tanker newbuilding projects announced to date in the United States do not compensate for the supply reduction due to the single hull tonnage that will be retired by 2015."  This is factually inaccurate.  There are only 20 single-hull tankers remaining in the Jones Act fleet - 15 product carriers and 5 chemical carriers.  At least 5 of these 20 ships will probably be double-hulled, but, even if they aren't, current newbuilding projects cover 24 firm orders for product carriers - 12 for OSG (3 of which have already been delivered), 9 for US Shipping and 3 for AHL.  Ah, those Norwegians, they are so much better at arithmetic than ordinary folk like you and me.  November 26, 2007, expanded November 27.

    WASHINGTON PULLS OLD FERRIES.  Washington State Ferries (WSF) have withdrawn their four 80-year-old "Steel Electric" class ferries for hull surveys and have terminated the Port Townsend-Keystone ferry service.  Read the WSF's announcement here.  The four ships - "Illahee" (ex-"Lake Tahoe"), "Klickitat" (ex-"Stockton"), "Nisqually" (ex-"Mendocino") and "Quinault" (ex-"Redwood Empire") - plus two others - "Enetai" (ex-"Santa Rosa") and "Willapa" (ex-"Fresno"), were built in 1927, for the Southern Pacific Railroad, for service on San Francisco Bay.  They were sold to the Black Ball Line, (formally known as Puget Sound Navigation Company), in 1940, for service on Puget Sound.  Puget Sound Navigation was bought by the Washington Toll Bridge Authority in 1951 and became WSF.  The "Enetai" and the "Willapa" were sold in the 1960s: the "Enetai" is now Hornblower Cruise Line's headquarters in San Francisco, while the "Willapa" is currently being restored, after years of lay-up and deterioration: both have recovered their original names.  Construction of the six ships was split between three yards: "Fresno", "Stockton" and "Mendocino" were built by Bethlehem Steel, in San Francisco (Hulls 5331, 5332 and 5333), while "Lake Tahoe" and "Redwood Empire" were built by Moore Dry Dock, in Oakland, (Hulls 172 and 173) and "Santa Rosa" was built by a newcomer, General Engineering, in Alameda, (Hull 6).  November 22, 2007.

    MINOR OIL SPILL IN PORT FERNANDINA.  The 400-foot, 700-teu, 13-year-old containership "Seaboard Rio Haina" has spilt oil in Port Fernandina FL.  Read the Coast Guard's announcement here.  November 20, 2007.

    NASSCO CUTS T-AKE CONSTRUCTION TIME.  NASSCO has delivered the fourth T-AKE, only 20 weeks after its predecessor and construction took only 63 weeks, compared to 71 weeks for #3.  Encouraging.  They've probably cut the cost, too.  Goodness, a major shipbuilder with a learning curve!  Whatever next?  November 15, 2007.

    MARAD SEEKS HELP WITH THE LAW.  MARAD is seeking guidance on "what standards the Maritime Administration should apply when making determinations of foreign reconstruction of U.S.-built vessels that participate in the Capital Construction Fund program and foreign rebuilding of U.S.-built vessels that participate in the cargo preference program".  Read the Federal Register notice here.  Among other things, this notice says that the statutes raise "difficult problems of interpretation and enforcement".  No they don't, they are crystal clear, but, never mind, let's answer MARAD's questions anyway.

1. What substantive standards should the Maritime Administration apply to determine whether a CCF vessel has been reconstructed or a cargo preference vessel has been rebuilt?

Answer: Has its hull structure been modified or added to in any way at all?  If so, it's been reconstructed/rebuilt.

2. What procedures should the Maritime Administration adopt to investigate whether a CCF vessel has been reconstructed or a cargo preference vessel has been rebuilt?

Answer: Owners should be required to obtain MARAD's approval before contracting for or beginning any work involving modifications or additions to hull structure.

3. What role, if any, should unrelated third parties, such as competitors or shipyards, play in developing a record for decision on whether a CCF vessel has been reconstructed or a cargo preference vessel has been rebuilt?

Answer: The comments, opinions and records of what MARAD is pleased to call "unrelated" third parties should be welcomed by MARAD.

4. What public disclosure criteria should apply to the record for decision on whether a CCF vessel has been reconstructed or a cargo preference vessel has been rebuilt?

Answer: The owners are beneficiaries of publicly funded programs and MARAD is a public agency: all information concerning any proposed reconstruction should be publicly disclosed except competition-sensitive cost data.

We never had stupid questions like these back in the days of Title V.  Just apply the law, MARAD, and try to remember that you are supposed to be promoting the U.S. shipyard industry as well as the US-flag shipping industry.  November 14, 2007.

    PREDICTABLE PANIC IN S.F.  The politicians are over-reacting, as usual: we will probably end up having to rebuild the entire world fleet of containerships.  Yes, it was a screw-up.  Either the master or the pilot was probably at fault, possibly both of them: who else could it be?  End of investigation.  Does the industry get any credit for the fact that about 3600 cargo ships pass under that bridge every year and this is the first time that one of them has ever hit it?  Ever, ever, ever?  Probably not.  Oh, and all you bird-huggers: most rational people regard gulls as pests.  They are the maritime version of pigeons, only larger, noisier, messier and more aggressive.  (And pigeons are, of course, only rats with feathers.)  Seagulls are almost as annoying as politicians.  There are close to a million California gulls out there and they are only one of about 40 members of the laridae family.  You might also be interested to know that the gull population increases more rapidly than does the human population.  I say, let's have a gull hunting season and not fuss so much when a few of them die.  Nobody fusses over the millions of ducks and doves and other much less obnoxious birds that get massacred by southern "hunters" every year.  And nobody fussed when 189 gulls were killed by a longshoreman in Philly last month (reported here).  But those were Philadelphia gulls.  California gulls are special, like the Beach Boys said.  November 13, 2007.

    LAST WWI VET WAS IN MARITIME INDUSTRY.  The sole surviving U.S. veteran of World War I, 106-year-old Frank Buckles, of Charles Town WV, gets a lot of well deserved news coverage today.  What's not mentioned much is that he spent his civilian career in the maritime industry, working for White Star Line.  He was in Manila on their business when the Japanese took over, as a result of which he spent World War II in a prison camp.  November 12, 2007.

    COAST GUARD APPROVES NEWPORT NEWS SECURITY.  The Coast Guard has determined, after an 11-month review, that Newport News Shipbuilding does not have to participate in the TWIC program, because it "has a very high level of security already".  Well, doh, as they say.  It took them 11 months to work that out?  Given the currently overwhelming scope of the Coast Guard's responsibilities, many of which they are not beginning to keep up with, one might think that it would not take more than about three minutes to determine that a nuclear shipbuilder, with a DoD security plan in place and patrolled by heavily armed marines, is already pretty well covered.  Read the report in the Virginia Pilot here.  November 12, 2007.

    MINI CRUISE SHIP AGROUND IN INTRACOASTAL.  The 178-foot, coastal cruise ship "Spirit of Nantucket" grounded in the Atlantic Intracoastal Waterway yesterday, near Virginia Beach.  The ship, formerly the "Nantucket Clipper", was built by JeffBoat in 1984.  Read the report in the Virginia Pilot here.  Read the Coast Guard's announcement here.  November 9, 2007.

    CONTAINERSHIP HITS BAY BRIDGE.  The 6-year-old, 5500-TEU, post-panamax, containership "Cosco Busan" allided with one of the towers of the San Francisco Bay Bridge at about 0830 PST today.  The ship, formerly the "Hanjin Cairo", is German-owned, German-flagged, GL-classed, Korean-built, Korean-operated and Chinese-chartered.  Read the report in the San Francisco Chronicle here.  Read the Coast Guard's announcement here.  And before anyone picks on her crew as not being up to Kings Point standards, please note that there was a San Francisco Bay pilot on board.   November 7, 2007.

    US SHIPPING HAS ANOTHER BAD QUARTER.  U.S. Shipping Partners L.P. has reported another weak quarter, with a net loss of  $2.0 million on revenues of $45.6 million.  Read the announcement here.  November 7, 2007.

    SPARROWS POINT SHIPBREAKER DEFAULTS.  North American Ship Recycling, (NASR), has apparently not only defaulted on its contracts with MARAD to scrap old ships at Sparrows Point but has also done a moonlit flit.  NASR is, however, owned by the same people, Barletta Willis, as own the shipyard.  Read the Baltimore Sun's story here.  Here's another "told you so" situation: see below what I wrote when these clowns bought the shipyard four years ago this week.    November 5, 2007.

   SALE OF SPARROWS POINT SMELLS LIKE ANOTHER FIASCO IN THE MAKING.   The company that apparently bought the assets of BMI at its liquidation auction on November 5, Barletta Willis LLC, is described in the Baltimore Sun as a Boston investment group.  It's hard to say how big an investment group it is, because it can't be found either on the internet or in the Boston phone book.  Mr. Willis is quoted as saying that they plan to hire a shipyard operator or form a joint venture with one.  Oh dear, apparently he doesn't know anything about running a shipyard and he bought a shipyard without having anyone to run it for him: there's a familiar recipe for disaster.  Mr. Willis is also quoted as saying that his company plans to pump about $20 million into the site initially to make it operational but envisions a long-term investment of about $200 million over five years.  Oh dear again, there's nothing like having a well-thought-out business plan, is there?  Mr. Willis is also quoted as saying that he has an option to buy another, unnamed, shipyard and is negotiating the purchase of two more shipyards.  Oh dear, yet again.  Pardon my skepticism, but horsefeathers.  This is a very small industry and it has a very tight information mill.  If there was somebody out there buying up shipyards, it would be well known by now. 

Now to be fair, Mr. Willis is actually quoted as saying one thing that make sense.  According to the Sun, he said that "his team could make a go of a failed shipyard by 'packing a couple more lines of business into the yard, trying to bring some additional users into more space than we're likely to consume' ".  Well, he's right.  The Sparrows Point yard is much, much bigger than is needed for a ship repair operation and assets need to work, not to lie idle: that was one of BMI's mistakes.  Putting the under-utilized assets to work, however, is easier said than done, especially in the run-down dump that Sparrows Point has regrettably become.

So, anyway, let's give Mr. Willis the benefit of the doubt and see what he can do.  None of us want to see Sparrows Point die.  I'm not optimistic but it would be nice to be pleasantly surprised.  November 8, 2003.

    TANKER HITS AMBROSE LIGHT.  The Coast Guard reports that the Aframax crude carrier "Axel Spirit", operated by Teekay Shipping, hit the Ambrose Light on Saturday night, while approaching New York Harbor.  Significant damage was caused and the light is out.  Good grief, it's hard not to see the Ambrose Light.  Read the announcement here.  November 5, 2007.

    HORNBECK MPSVS DELAYED.  The two 370-foot MPSVs being converted from sulfur carriers by Cianbro, in Portland ME, will apparently be more than a year late.  Hornbeck Offshore Services revealed on Thursday that deliveries are now scheduled for "mid-2008" and "late 2008 or early 2009": the original deliveries were "mid-2007" and "late 2007"  The total project cost has apparently increased from $65 million to over $150 million.  Probably wasn't a very smart idea in the first place.  Read Hornbeck's press release here.  November 4, 2007.

    NICHOLS BROS. TO CLOSE.  The Seattle Times reports that Nichols Bros. Boatbuilders, in Freeland WA, has closed, apparently as a result of financial difficulties brought about by their attempt to build some platform supply vessels for Hornbeck.  Read the report here.  This is a good yard, however: don't expect it to be closed for long.  November 3, 2007.

    SAVANNAH SHIPYARD CLOSED.  The assets of Global Ship Systems will be sold on the courthouse steps on Tuesday: the company was unable to survive the impact of a dispute with its insurers and closed this summer.  The yard, which was established in 1912 as Savannah Machine & Foundry, was best known in recent times as Intermarine USA, where the Navy's "Lerici"-class minehunters were built, and since then as a megayacht refit yard.  November 3, 2007.

    BOLLINGER GULF REPAIR TO CLOSE.  Bollinger Shipyards has revealed that it will close its yard on the Industrial Canal in New Orleans, because of the closure of the Mississippi River Gulf Outlet (MRGO).  The dry-docks will be relocated to other Bollinger yards.  This yard has an interesting history.  Started by L. F. Alexander before WWII, it built tugs and barges until acquired in 1956 by Les Durant, a Webb-trained naval architect and rig designer, who renamed it American Marine Corp.  It was a pioneer of the offshore industry, building not only the "Breton Rig 20" and John LaBorde's early submersibles but also the first supply boats for Tidewater.  November 2, 2007.

    OSG'S THIRD COMPLETES SEA TRIALS.  The third of OSG America's fleet of Jones Act product carriers, the "Overseas Los Angeles", has completed sea trials and is essentially ready for delivery, although her christening and delivery will not actually take place until later in the month.  Good work by Philly Shipyard.  Read the construction update here.  November 1, 2007.

    NAVY CANCELS LCS 4.  The Navy has terminated for convenience its contract with GD and Austal USA for LCS 4.  Read the announcement here.  What next?  It is expected that the next step will be to finish both LCS 1 (the LMT/Marinette/Bollinger ship) and LCS 2 (the GD/Austal ship), and then have a head-to-head competition.  November 1, 2007.

    ROWAN ORDERS FOUR JACK-UPS FROM AMFELS.  Rowan Companies, owner of the Letourneau jack-up designs and of its own yard in Vicksburg MS, has ordered four Super-116E rigs from Keppel's AMFELS yard in Brownsville TX.  The value of the contract is said to be about $195 million per rig: deliveries are scheduled at four-month intervals, starting in the second quarter of 2010.  This brings AMFELS' backlog to ten rigs, a very healthy situation.  Read Rowan's announcement here and Keppel's here.  November 1, 2007.

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