Maritime Memos                                                                                    March 2010


RIVERHAWK APPARENTLY WELL IN WITH THE COAST GUARD AS WELL AS THE NAVY

The Coast Guard has awarded a sole-source contract to RiverHawk Marine, of Tampa FL, for dry-docking and repair of the USCGC Kodiak Island, (WPB 1341).  Read the announcement here.  The contract is valued is $1,168,046 and has a 60-day performance period.  March 31, 2010.

AMERICAN HEAVY LIFT IN TROUBLE

Tradewinds reports that AHL Shipping has missed a payment on its Title XI bonds and is still trading only by courtesy of MARAD, which would obviously prefer not to have to foreclose, pay off the bonds and put four unsellable ships into the NDRF.  OSG, Seacor and Crowley are reported to be taking the contrary position: no surprise there, either.  I'm with the operators on this one: these ships are third-rate, steam-powered conversions that were a bad idea in the first place.  March 30, 2010.

THE LCS WAR ESCALATES

The Mobile Register escalated the LCS war today with the cartoon on the right.  Read the full story hereMarch 30, 2010.

MORE ON RIVERHAWK

It turns out that the principal of this mystery company, RiverHawk Fast Sea Frames, to which the U.S. Navy has entrusted the task of building two $35-million OSVs for the Iraqi Navy, is involved in a rather nasty lawsuit in Chatham County, Georgia.  Global Ship Systems, the former owner of the old Intermarine shipyard in Savannah, together with two other companies and four individuals, is suing Mark Hornsby, together with six other individuals and thirteen corporations, for $50 million in damages deriving from a whole string of alleged offenses, the general thrust of which is multiple breaches of contract.  RiverHawk does, in fact, have a shipyard in Tampa, although it has subcontracted the actual construction to Gulf Island Marine.  They operate the former WestShip yard on Rattlesnake Point: visit them hereMarch 27, 2010.

VTHM GETS FOURTH FMC

The Navy has modified its contract with VT Halter Marine to add a fourth Fast Missile Craft for the Egyptian Navy.  The contract value is $165.4 million, with delivery in December 2013.  Read the announcement here.  I estimate that VTHM's backlog is now close to $1.5 billion, more than double that of any of the other mid-sized yards.  March 27, 2010.

FOURTH JHSV TO BE NAMED FALL RIVER

The Navy has announced that its second JHSV - JHSV 4 - will be named Fall River, after the city in Massachusetts.  Read the announcement here.  The first Navy JHSV is to be named Vigilant, so perhaps someone could please explain the naming system to me.  Or maybe SECNAV thinks it is an LCS: the LCSs are being named after mid-sized cities.  In addition, there's no contract for this ship yet, so he might be a tad premature.  When first posted, the announcement described the first Fall River as a cruise ship rather than a cruiser, but this has now been corrected.  Oh dear, what is the Navy coming to?  March 26, 2010.  An additional thought: why are these boats designated JHSV and not T-APc or even T-AKR ?  March 27, 2010.

OSG VISION ON THE WAY TO WORK - OPA 90 CONSTRUCTION WINDING DOWN

The biggest ATB ever, OSG America's 45,000-dwt OSG 350, coupled with the 12,000-hp tug OSG Vision, has finally been handed over and is on its way to Delaware Bay to begin work lightering the big tankers that call there.  The vessel was completed for OSG by VT Halter Marine after the original construction contract with Bender Shipbuilding was terminated.  It is interesting to note that, since the passage of OPA 90, the tank barge sector has withdrawn 56 large - that is, over 5000 GT - single-hull barges, with a total capacity of about 0.9 million dwt, and replaced them with 106 new double-hull barges, with a total capacity of about 1.7 million dwt: by contrast, the product carrier sector has withdrawn 62 single-hull ships, with a total capacity of about 2.5 million dwt, and replaced them with only 17 new double-hull ships, with a total capacity of only about 0.8 million dwt.  And there are now only nine large tank barges and six product carriers still to be delivered, plus whatever emerges from the wreckage of the Shell/AHL project.  March 24, 2010.

LOCKHEED MILKING LCS PROGRAM

The Navy has added $14 million to Lockheed Martin's contract for the LCS program, for "baseline design services, class configuration management services, class documentation services, ship interim support, ship systems development, and other technical and engineering analyses".  Read the DefenseLink announcement here More taxpayers' money into the Lockheed maw.  I know this is small potatoes by the Navy's standards - look at the hundreds of millions they have frittered away on designing replacements for the DDG 51s - but it's still ridiculous.  March 23, 2010.

CONCERN ABOUT THE LCS DOWN-SELECT PROCESS

There's a very interesting post today on the U.S. Naval Institute's blog and it has already attracted multiple comments.  Read it here.  There seems to be some disagreement within the Navy hierarchy over the extent to which the Navy will consider life-cycle costs in making its evaluation of the Austal and Lockheed designs.  Austal is correct when it says that there is no requirement in the RFP for submission of life-cycle costs and that they play no role in the evaluation.  The only mention of life-cycle costs occurs in the requirement to propose a post-contract plan for their reduction.  I posted the RFP here before and I'll post it again now - here.  See for yourselves.  Has the Navy stacked the deck against the boat with higher capital costs but much lower life-cycle costs?  There are, of course, many differences between the two designs but the one with the most impact on life-cycle costs is fuel consumption, in which category the Austal boat beats the Lockheed boat hands down.  The Navy itself has published its estimates, which are summarized in the graph you see here.  March 22, 2010.

COAST GUARD CHANGES FRC NAMING POLICY

The Coast Guard's new class of fast-response cutters, (FRC), is designated the Sentinel class and the first two names were to have been Sentinel and Guardian.  But that was last week.  Now the boats are to be named for Coast Guard enlisted heroes, with the first one to be the Bernard C. Webber.  Read the Commandant's announcement hereMarch 22, 2010.

ENSCO SELLS TWO JACK-UPS

The Ensco 50 and Ensco 51, two F&G L-780 Mod. II-C jack-ups built in the early 1980s, have been sold for $95 million, about 50% more than their book value.  Read Ensco's announcement here.  There are still a lot of those old rigs that need to be replaced: see the age profile with its obvious 30-year cycle, on the right.  March 21, 2010.

THE USMMA'S STRATEGIC GOALS

There may not be a strategic plan but there is a Strategic Planning Committee.  The Academy's recently departed Superintendent promulgated some "strategic goals" back in September - read them here - and some "institutional goals" in October - read them here.  I have a feeling that we are going to be building on these two documents over the next few months.  March 18, 2010.

SEVEN FIRED IN NEWPORT NEWS DRUG PROBE

Seven employees have been fired so far as a result of Northrop Grumman's investigation into drug abuse at its Newport News shipyard.  Read the Daily Press' story hereMarch 18, 2010.

READ WHAT I WROTE

As expected, I've already received a bunch of reactions to the item below about Kings Point, including both some constructive comments, particularly from the younger graduates, and some depressingly knee-jerk, defensive, responses from people who apparently did not read what I wrote.  Please note that I did not say that KP should be closed down.  I postulated five alternative courses and inquired about the existence of a strategic plan.  And, if you're interested, the course that I favor is #2 - the one that involves expanding it into some form of federal transportation academy.  When the flow of comments eases up, I will try to summarize some of the better ideas.  And I'm still waiting for a copy of the strategic plan.  I cannot imagine that there's no strategic plan.  March 16, 2010.

MSC CHARTERS KOREAN TANKER

MSC has chartered the 5,657-dwt product/chemical carrier Samho Moonstone for nine months' service in the Far East, for $8,630,000, or $32,000 a day.  Read the DefenseLink announcement here.  The ship, which was built last year by Samho Tongyoung Shipyard and is owned by Samho Shipping, of Busan, will be brought under the U.S. flag and managed by the ubiquitous Maersk Lines Limited.  March 16, 2010.

KINGS POINT IS FALLING APART

You could read the report of the U.S. Merchant Marine Academy Capital Improvements Advisory Panel - here - but, take it from me, you don't really need to.  Basically it says that the place is falling down and something needs to be done.  Also of interest is their search for a new Superintendent - read that announcement here: the qualifications seem to me to be very narrowly defined.  Every time I write about Kings Point I get into trouble with that fine institution's graduates - not with anyone else, mind you, just with the Kings Pointers themselves - but never mind, here I go again.  I think the problem is more serious than the condition of the facilities themselves.  I think it's with the academy's whole reason for existence.  What is Kings Point for?  Remember that it was an emergency creation in World War II.  In addition, we also have six state maritime academies, all fine institutions and all receiving taxpayer support.  So, how many merchant marine officers do we need to train every year?  I don't know but it wouldn't be hard to estimate.  Do we really need seven separate establishments training merchant marine officers - and that doesn't include the maritime unions' training schools - or is there some room here for rationalization?  Now, the state academies are all subsets of state universities, which presumably provides some of the economies associated with being a division of a large organization rather than a stand-alone entity, but the USMMA is a stand-alone entity: as a result, I would bet that it costs more to produce a Kings Point graduate than it does to produce a state maritime academy graduate.  So, what should be done with Kings Point?

(1) Nothing: just fund it adequately. 

(2) Recognize the reality of the transportation industry today and turn it into a sort of federal Transportation University, training people for a managerial career in any mode of transportation.

(3) Give it to the State of New York, to be merged with the NY State Maritime Academy at Fort Schuyler, just a short boat ride across Long Island Sound.

(4) Close it down.

(5) Something else.

At a minimum, there should be a strategic plan of some kind.  Maybe there is one, but, if so, it's well hidden.  Has anyone ever seen one?  If so, please send me a copy.  March 13, 2010.

MAERSK LINE ADDS TWO US-FLAG CAR CARRIERS

Maersk Line Limited, the U.S. arm of the giant Danish shipping company, has added two more car carriers to its US-flag fleet operating under the MSP and VISA.  The two ships, Alliance Beaumont and Alliance Charleston, were built by Daewoo in 2004 and 2008, respectively: each has the capacity for the equivalent of 6,500 cars.   MLL has opted to bring back the Farrell Lines name for these ships and their two sister ships, Alliance St. Louis and Alliance Norfolk, presumably because these slots in the MSP program were originally Farrell Lines' slots.  But MLL's announcement makes it sound as though they think they are doing something wonderful.  March 12/13, 2010.

MORE ON THE RIVERHAWK PROJECT

My spies tell me that the shipbuilder involved in this project is Gulf Island Marine Fabricators, the recently formed boatbuilding subsidiary of the well established platform builder.  So far, they have delivered only two vessels, the towboats AEP Leader and Danny Whitford March 10, 2010.

CHEVRON TAKES ANOTHER FROM SEABULK

No announcements or anything, but the Seabulk Energy is now the Oregon Voyager.  That makes three of the six Double Eagles wearing Chevron's livery.  March 10, 2010.

NGSB STRIKES AGAIN

The saga continues.  Click here to read the Navy's justification for sole-sourcing about $13.7 million of emergency repairs on the USS San Antonio, (LPD 17), to Earl Industries.  What a fine, reliable, quality, product Northrop Grumman turns out, to be sure!  March 10, 2010.

FMS CONTRACT FOR WHOM?

The Navy has awarded a sole-source contract to RiverHawk Fast Sea Frames, LLC, of Tampa FL, for two OSVs for the Iraqi Navy.  The contract value is $70 million, with the work to be done not in Tampa but in Houma.  Read the DefenseLink announcement here.  Who are they, do you ask?  RiverHawk is run by Mark Hornsby, formerly of Global Ship Systems, the company that used to operate the former Intermarine USA yard in Savannah.  See their patented design hereMarch 6, 2010.

AUSTAL AND BIW PART COMPANY ON LCS

The Mobile Press-Register reports that Austal USA will bid for the LCS program on its own, not as a subcontractor to BIW.  Read the story here.  Makes sense to me, simultaneously lowering the cost of the Austal version of the LCS and freeing BIW to go after the second-source contract.  Now, if only Marinette could dump Lockheed Martin!  March 5, 2010.

SEAPOWER SUBCOMMITTEE TESTIMONY ON THE 30-YEAR PLAN

The HASC's Seapower Subcommittee held a hearing yesterday.  Read the Navy's testimony here, GD's David Heebner's here and NG's Mike Petters' here.  Depressing stuff.  March 4, 2010.

MAERSK DITCHES HORIZON LINES

Maersk Line has terminated its TP-1 (Trans-Pacific) service, which involves a slot charter for Horizon Lines' five US-flag but Korean-built ships: read Maersk's announcement here.  This comes only four days after Horizon announced expansion of its Trans-Pacific services: read that announcement here.  Not good news for Horizon.  March 3, 2010.

NCL TO SCRAP THE UNITED STATES?

Marine Log reports that the owner of the legendary liner United States is getting bids for her demolition.  Read the story here.  No surprise here.  NCL's acquisition of the United States and the Independence in 2003 was always more to do with getting waivers for its cruise ships under the PVSA than actually preserving the two old liners.  Note that, in contrast to the sordid saga of the Independence, it will almost certainly be legal to scrap the United States overseas, because she was cleaned of asbestos etc back in 1994.  March 3, 2010.

WATERWAYS COUNCIL AIRS TV AD

Finally, a response to all that BS from CSX!  The Waterways Council has produced an excellent television ad promoting the industry.  Watch it here.  Let's hope that it gets plenty of air time.  March 2, 2010.

DRUG PROBLEMS AT NEWPORT NEWS

If it's not one thing, it's another.  Newport News Shipbuilding is being racked by an investigation into the illegal possession and use of drugs.  Read the story in the Daily Press here. People are people and a percentage of any group will be users of illegal drugs, but shipyards have mandatory drug testing programs for safety, not law enforcement, reasons.  This seems to be another indicator of management failures at Northrop Grumman.  March 2, 2010.

INCOMPLETE SHELL TANKERS BEING SHOPPED AROUND

Compass Maritime Services, the Fort Lee NJ shipbroker, has been appointed by the Bankruptcy Court in New Orleans to sell the three incomplete product carriers that were being built at Atlantic Marine Alabama for companies aligned with American Heavy Lift Shipping and Shell.  Personally, I cannot imagine why anyone would want them.  The much more interesting question concerns Shell's plans for their replacement: I've heard several rumors but none that have any credibility.  In addition, this problem appears to have revived speculation about a possible sale of Atlantic Marine.  I love rumors but what's the reality?   March 1/2, 2010.


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