Maritime News and Comment

April 2008

    ENERGY THOUGHTS.  It should go without saying that all the politicians are pandering fools, but I feel the need to say it again anyway.  Let's use this space to propagate some simple thoughts on energy.  Send me your ideas.  April 30, 2008, expanded May 1, May 3.

    WHAT IS A POCKET BOOK?  I love this term "pocket book".  It's only ever actually used by politicians and journalists.  Apparently we Americans are always being hit in our pocket books.  Whom do you know who carries a pocket book, other than of the type that was invented by Penguin Books?  I suppose they do it because "wallet" is too masculine and "purse" is too feminine.  If you want to convey the concept of personal economic pain, what's wrong with "bank balance"?  April 30, 2008.

    NGSB ABANDONS ALUMINUM.  Northrop Grumman Shipbuilding has apparently decided not to rebuild the Katrina-damaged aluminum fabrication facility at its Pascagoula shipyard.  Its hard to imagine a warship builder who can't work in aluminum, but this presents a major opportunity for second-tier shipbuilders and fabricators to do it for them.  Probably better, cheaper and faster, too.  Good move.  In fact, now that they've got Newport News, Bath and Signal doing hull blocks for them, and the LHD 8 fiasco seems to indicate that they aren't that good at the mechanical and electrical stuff either, maybe they should consider giving up shipbuilding in Pascagoula altogether.  The good people remaining in that yard would have no trouble finding employment in other Gulf Coast yards.  April 29, 2008.

    AKER AMERICAN STILL IN THE RED.  The owners of OSG's series of Jones Act product carriers continue to bleed.  Read their first-quarter report here.  April 29, 2008.

    ATLANTIC FOR SALE AGAIN ALREADY.  Reliable sources say that J. F. Lehman & Partners are offering Atlantic Marine for sale again already.  Apparently, there's a prospectus of some kind, put together by Morgan Stanley, in circulation.  (If anyone has a copy, please share it with me.)  That didn't last long, did it?   They only bought it in July 2006.  Do I spy BAE Systems lurking in the bushes?  Fincantieri?  Rolls-Royce even?  What about Singapore Technologies?  They could add Atlantic's Jacksonville and Mobile shipyards to VT Halter.  And who's going to buy Marinette Marine? April 29, 2008.

    HORIZON STILL HEADING DOWN.  Horizon Line's stock price continued its dive today, closing at only $10.85.  Is it any wonder?  Read their latest 10-Q here.  Property, plant and equipment valued at only $192 million, and long-term debt of $628 million.  They are a goner.  Anybody interested in putting some modern, efficient tonnage on those routes?  April 28, 2008.

    AUSTAL ROLLS OUT LCS 2.  Austal USA rolled out and floated the second prototype LCS on Saturday.  The future USS "Independence", (LCS 2), was transferred to Bender's floating dry-dock and then floated.  Local sources say, however, that it was not a smooth operation and the vessel sustained a number of hull cracks.  Weird-looking boat, innit?  Read the report in the Mobile Press-Register here.  Read Austal's press release here.  April 28, 2008, expanded 4/29.

    NY TIMES DISCOVERS THE EMISSIONS PROBLEM.  Suddenly the New York Times has gone all maritime.  Following yesterday's article about LCS, today we get articles about the environmental cost of (a) shipping and (b) emissions.  Read the stories here and here.  April 26, 2008.

    NGSB RECRUITING IN BATH.  All's fair in love and shipbuilding.  The Maine Times-Record reports that Northrop Grumman Shipbuilding has distributed a glossy flier in the Bath area that offers up to $10,000 to anyone who will relocate to Pascagoula.  Read the story here.  See the flier itself here.  April 25, 2008, expanded 4/26.

    MARAD MONEY FOR SMALL YARDS.  MARAD has announced that it has handed out $10 million in grants to 19 small shipyards for facility improvements.  The sums are very small but so are the shipyards.  Except, that is for NYSE-traded Todd and its subsidiary, Everett Shipyard: how did they get in here?  All in all, a good program, but let's see about increasing the funding next year.  Read the announcement here.  April 25, 2008.

    HORIZON CONTINUES TO STRUGGLE.  Horizon Lines reported another bad quarter today, with a net profit less than 1% of operating revenues.  Read the story here.  Its closing price of $14.63 is only 40% of its high point of $36.55, eight months ago, and on Friday it fell by another 23%, to only $11.25.  Surprise, surprise.  Castle Harlan must be breathing sighs of relief.  April 25, 2008, expanded 4/26.

    NY TIMES TURNS SPOTLIGHT ON LCS.  The New York Times turned its front page spotlight on the LCS program today, with a major article headlined "Costly Lesson on How Not to Build a Navy Ship".  Read the story here.  The NYT often displays an alarming lack of understanding of technical issues, but they've certainly got this one right, complete with sensible quotes from one of the two hard-done-by shipbuilders.  It's almost as if I had written it for them (I didn't).  And, while we are on this subject, I reiterate my view that the cost of the LCS program is not the real problem, despite the hysterical squeakings of some congressmen.  Read the latest from the always excellent Ron O'Rourke on the LCS program here.  April 25, 2008.

    SHIPBUILDERS WIN JONES ACT SUIT.  The Shipbuilders Council, supported by Crowley and OSG, has won its suit against Seabulk over their reconstruction of the "Seabulk Trader".  Read the opinion here and the court's order here.  As a result of this decision, the "Seabulk Trader" (and probably also the "Seabulk Challenger") loses its Jones Act trading rights.  A great victory, (and I say that as a Seacor stockholder), with obvious implications for the "Mokihana" case!  Let's face it, this job could have been done by any one of about 15 U.S. shipyards.  Sure, it would have cost more, but so does the Jones Act requirement of building new ships in U.S. shipyards.  The extra cost of compliance with the Jones Act is passed on to you and me but is unnoticeable unless you live in Hawaii.  The extra cost of building those ridiculously expensive Alaskan-trade crude carriers at Avondale and NASSCO converts into only about one cent per gallon of the gasoline that is made from the crude they carry, and Seabulk's double-hulling project is a drop in the ocean by comparison.  And in terms of protecting our defense infrastructure, doesn't it make at least as much, if not more, sense in today's post-cold-war world to maintain a ship repair industry than a commercial ship construction industry?  April 24, 2008, expanded 4/25.

    A REAL SHIPBUILDER!  NGSB has appointed Danny Hunley as VP Operations for Newport News.   Read the press release here.  Good lord!  An actual shipbuilder, an Apprentice School graduate even, to run a NG shipyard!  There was a time when Newport News Apprentice School graduates were running shipyards all over the place.  Maybe NG has finally got the message.  Whatever next?  April 19, 2008.

    THE FEDS INVESTIGATE.  Well, you all know by now that the FBI is all over the Jones Act general cargo operators in what appears to be a rate-fixing probe.  I shall refrain from commenting until there's something specific on which to comment.  But chuckle, chuckle, it couldn't happen to a more deserving bunch.  April 19, 2008.

    A PALPABLE HIT.  Our comment on LCS 1 has brought a reaction from both Lockheed Martin and the Navy.  Read the story in Defense News here.  Did you realize that this column (I don't think it's really a blog) had such influence?  How can the ship be going on Builder's Trials next month if she's only 82% complete?  Let me see now, the contract was awarded in December 2004, which is 40 months ago, so that's about two percentage points of progress a month, right?  Yes, I know it's an s-curve, not a straight line, but remember how hard that last 5% always is.  I think I'll stick to my projection of a delivery in the Spring of next year, if then.  And what's the betting that, if it is delivered then, the Navy takes it like it took LPD 17, with months of work still to do?  Time will show who's right.  April 17, 2008, expanded April 18.

    HARVEY GULF SOLD?  Sources say that Harvey Gulf International Marine, the privately held operator of a fleet of 17 decidedly high-end OSVs, has been sold.  You read it here first.  April 16, 2008.

    FIRST TUGS FROM GULF SHIP.  Gulf Ship, the Chouests' new shipyard on the Industrial Waterway in Gulfport MS, has delivered its first four vessels.  The 110-foot tractor tugs "SP Amber", "SP Coral", "SP Ivory" and "SP Pearl", have been chartered to Cheniere Energy for service at the new LNG terminal at Sabine Pass.  The yard is now building four more for ExxonMobil's nearby Golden Pass LNG terminal.  April 16, 2008.

    FIRST LNG AT FREEPORT AND SABINE PASS.  The "Excelsior", the first LNG carrier to call at the new terminal in Freeport TX, docked successfully yesterday.  Read the Coast Guard's press release here.  Down south, they get on with the business of solving our national energy problems, unlike the eejits in New York State.  A few days earlier, the LNGC "Celestine River" made the first call at Cheniere Energy's new terminal at Sabine Pass.  April 16, 2008, expanded April 23.

    MORE PROBLEMS FOR NGS.  Things must be really bad in Pascagoula for Northrop Grumman to make such an embarrassing public admission as the company's Chairman had to do yesterday.  Read the press release here.  Read an insightful article in Defense Industry Daily here.  More heads to roll?  More Newport News managers to move to Pascagoula?  What does Congressman Taylor have to say about this?  Let's face it, if Pascagoula can't manage to install a diesel-electric power plant, how can it be expected to be able to build a nuclear-powered cruiser, as Congressman Taylor wants?  April 16, 2008, expanded April 18.

    SAFETY NOT FOR SALE.  The Chairman and CEO of ABS told its Annual Meeting yesterday, forcefully enough, that "Safety is not, and never should be, for sale."  Right on.  Read the press release here.  Unfortunately, the bulk of the statement is about how ABS is increasing its market share, i.e., its sales, with no mention of its safety record or any other qualitative assessment of why a shipowner should go to ABS rather than another society.  Sales come first.  Got to keep paying those inflated management salaries.  April 16, 2008.

    MORE DELAY ON LCS 1.  There's a mass gathering of incompetent people in Marinette WI this week, trying to work out what to do about LCS 1, which was launched in September 2006 but which will now probably not be delivered before the spring of 2009, if then and if ever.  Endless test failures, mostly involving this simple ship's ludicrously complicated engineering plant.  Where will it all end?  Is it time to recognize that this design just doesn't work, and terminate the program?  Then, let's fire everyone in PMS 501 and sue Lockheed Martin, the world's most incompetent shipbuilding contractor.  There was a reason that the old Lockheed got out of shipbuilding - they were no good at it - but apparently nobody now remembers that.  April 15, 2008.

    CROWLEY BUYS JENSEN.  Crowley Maritime has bought Jensen Maritime Consultants, one of the best of our many small naval architects.  Read the announcement here.  The company will not be wrapped into the Crowley organization but will continue to operate independently.  Should be a good deal for both parties.  I'd be tempted to say it was synergistic if I did not hate that word so much.  April 14, 2008.

    NY STATE OPPOSES BROADWATER LNG.  The Governor of New York has come out in opposition to the Broadwater FLNG project planned for Long Island Sound and approved by the feds.  Cheers from the tree huggers, of course, but no suggestion of any alternative solutions.  What must it cost to heat a house on Long Island these days, both in terms of cash and of carbon footprint?  One is reminded of that famous bumper sticker from the 1970s: something about letting the silly people freeze in the dark?  April 11, 2008.

    FIRE ON "QUEEN OF THE WEST"  The Coast Guard reports that there was a fire in the engine room of the sternwheel river cruiser "Queen of the West" yesterday.  The ship had to be beached and the passengers offloaded.  Read the Coast Guard's report here.  April 9, 2008.

    NASSCO LAUNCHES T-AKE 6.  The sixth of the "Lewis and Clark" class of combat support ships, the future USNS "Amelia Earhart", (T-AKE 6), was christened and launched at NASSCO's yard in San Diego on Sunday evening.  It's not often you see a night-time launch.  As one wit observed, the new ship promptly vanished without trace.  April 7, 2008.

    K-SEA BARGE GROUNDS OFF TAMPA.  The double-hull tank barge DBL-151, with the tug Yankee, grounded three miles west of Egmont Key yesterday, near the mouth of Tampa Bay.  Read the story in the local press here and the Coast Guard's report here.  April 4, 2008.

    WSF TO REBID FERRY CONTRACT.  Washington State Ferries will rebid the 50-car ferry contract for which Todd was the sole bidder, with a price that was about 50% above the State's estimate.  Read the story here.  They plan to incorporate some performance incentives in the new contract, a move that will, of course, make all the difference, bringing bids from Dakota Creek and Nichols Bros. that are way below Todd's.  I don't think so.  April 4, 2008.

    FOSS SELLS UPRIVER FLEET TO TIDEWATER.  Foss has sold its up-river fleet - 2 towboats and 20 barges - to Tidewater Barge Lines.  Read the story here.  April 3, 2008.

    ROWAN TO SELL LETOURNEAU.  Rowan Companies has announced its intention to "pursue a monetization" - dreadful phrase - of its rigbuilding division, LeTourneau Technologies, Inc., historically the world's leading builder of jack-up drilling rigs.  Read the announcement here.  So why on earth would Rowan want to sell LeTourneau?  Well, I'm not sure that they really do.  Read the announcement.  It appears that Rowan's new investor, Steel Partners II, LLP, which is a $4 billion dollar activist hedge fund, based in San Francisco and run by Warren Lichtenstein, and which owns about 9% of Rowan's stock, is bullying them into doing it.  It's either sell LeTourneau or put Mr. Lichtenstein on your Board.  So they are selling.  Who will buy it?  I suppose that Keppel can't be allowed to buy it, because that would give them way too big a share of the market, but there's still Sembawang, Brian Chang, and maybe others.  Any U.S. companies willing to step up?  Shoot, if nobody else wants it, I'll take it.  April 1, expanded April 3, 2008.

    GD TO BUILD BLOCKS FOR NG.  No Good Shipbuilding has subcontracted block fabrication on LPDs to Bath Iron Works.  Read the announcement here.  (Note that they call the deal "successful" already: a bit premature, surely?)  Well, this is pretty pathetic: with all the unused capacity at NG's three huge shipyards, they need BIW to bail them out?  What next?  It's also pretty ironic: the original contractual arrangement for this program was that pre-NG Avondale, as prime contractor, would build two out of every three ships and BIW would build every third ship, but when NG came along, they swapped four of Ingalls' DDGs for BIW's share of the LPD program.  April 1, 2008, expanded April 2.

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